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Popular Ancestry DNA Test May Be Eligible for FSA Reimbursement

An MIT Technology Review recently found that more than 26 million consumers have taken ancestry tests such as those offered by AncestryDNA and 23andMe.

In fact, as many consumers completed the tests in 2018 as in every prior year combined. This spike is largely attributable to the DNA tests becoming popular holiday gifts in recent years.

Now, thanks to IRS Private Ruling Letter 201933005, consumers may be able to seek reimbursement via a flexible spending account (FSA) for some of the costs of the DNA testing if it is deemed a qualified medical expense.

The IRS defines “qualified medical expenses” as “the costs of diagnosis, cure, mitigation, treatment, or prevention or disease, and for the purpose of affecting any part or function of the body.”

While most of the DNA tests started as a means to learn about your ancestry, many now offer additional services that include a health analysis such as identifying predispositions to certain health conditions. For consumers that buy up to the more comprehensive testing that also includes a health assessment, the portion of the testing that is health-related may be reimbursed by the individual’s FSA. The private ruling letter permits the individual to, “use a reasonable method to value and allocate the cost of the health services between services that are medical care (such as the testing at the laboratory) and non-medical services or items (such as the reports that provide general information on a test result).”

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