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Requesting Examples of Radon as a Qualified Medical Expense by Aug 26th

Radon Colleagues,

Please see the below request and reply to Gina Bowler at bowler.gina@epa.gov by Friday, August 26, 2011. Thank you.

Qualified Medical Expense

The Internal Revenue Service Publication 502, “Medical and Dental Expenses,” does not list radon testing and mitigation among the medical expenses that can be claimed on Schedule A (Form 1040) when figuring out and reporting the deduction on your tax return.

The definition of “medical expenses” provided in IRS Publication 502 is copied below:

“Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of diseases, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.

“Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.

“Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract.”

Tax-Favored Health Plans

The Internal Revenue Service Publication 969, “Health Savings Accounts and Other Tax-Favored Health Plans” explains various programs designed to give individuals tax advantages to offset health care costs:

  • Health savings accounts (HSAs);
  • Medical savings accounts (Archer MSAs and Medicare Advantage MSAs);
  • Health flexible spending arrangements (FSAs); and
  • Health reimbursement arrangements (HRAs).

For example, EPA participates in the Federal Flexible Spending Account Program (FSAFEDS). Employees can contribute money from their salary to an account before taxes are withheld, and get reimbursed for out-of-pocket health care and dependent care expenses. FSAFEDS has included “Radon Mitigation” as a “Condition/Type of Service/Expense” in its “Eligible Expenses Juke Box”:

“Additional Information: If a physician requires radon mitigation in your home due to a medical condition caused or aggravated by an unacceptable level of radon, some expenses may be eligible. However, if the home’s value is increased due to the mitigation, some or all of the expenses may not be reimbursable. Use the Capital Expense Worksheet to determine how much of the expense is eligible.”

The language in FSAFEDS “Eligible Juke Box Expenses” suggests an individual seeking reimbursement for a radon mitigation would: (1) be diagnosed with a medical condition, i.e., lung cancer; (2) receive notification that his/her physician requires radon mitigation of the home; (3) treat the radon mitigation as a capital expense following diagnosis; and (4) be disallowed reimbursement for a radon test pre- or post-mitigation or at any time.

Analysis

Health plan administrators may not be aware that radon testing and mitigation are actions that help prevent radon-induced lung cancer. Including radon testing and mitigation among the listed includable medical expenses that can be claimed on Schedule A (Form 1040) would ultimately save lives.

Additionally, radon systems are similar to improvements to accommodate a disabled person in that they are not commonly known to increase the value of property. Although a home buyer may ask the seller to install a radon mitigation system during the sales negotiation, this still would not constitute an increase to the value of a property.

Request

If you have anecdotal information or personal experience with respect to whether and how radon testing and mitigation is treated as an includable qualified medical expense under tax-favored health plans, we'd be interested in your perspective. Your replies will help us in knowing more about what’s happening in the market. That information will help us develop our next steps to having radon included as an allowable medical expense at the Treasury Department level and by the community of health plan administrators.

Please send your replies to Gina Bowler at bowler.gina@epa.gov by Friday, August 26, 2011. Thank you.