By Lauren Bikoff, MLS
Ancestry-related services provided through genetic testing do not fall under the medical care definition, only the health reports qualify.
In Private Letter Ruling (PLR) 201933005, the IRS has concluded that the health-related portion of genetic testing services would qualify as medical care under IRC Sec. 213(d). The IRS notes that PLRs are intended only for the taxpayers that request them and cannot be used or cited as precedent (Private Letter Ruling, August 16, 2019).
The IRS letter is in response to a health flexible spending account (FSA) participant who is interested in purchasing genetic testing services and reports regarding ancestry and health. The participant asked the IRS if the amounts spent on the health-related services and reports and the DNA collection kit were a Sec. 213(d) expense. The taxpayer noted that the health-related services include genotyping using the collected DNA and reports providing lab results and general information intended to help individuals understand their health risks and encourage them to see their health care providers for further testing, diagnosis, or treatment.
The letter observes that under Sec. 213(d), medical care includes the diagnosis of disease, and the term diagnosis includes a determination that a disease is or is not present—even if performed without a physician’s recommendation on individuals not experiencing symptoms of illness. With respect to the genetic testing services about which the participant had inquired, some of the health-related services (e.g., genotyping) were medical care, while others were not (e.g., reports providing general information).
The IRS stressed that the ancestry-related services were not medical care. Thus, the participant will be required allocate the price of the DNA collection kit between the ancestry services and the health services using a percentage. In addition, the participant will have to use a reasonable method to value and allocate the cost of the health services between services that are medical care and non-medical services or items.
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