What's a Letter of Medical Necessity?

If you've been using a Health Savings Account (HSA) or a Flexible Spending Account (FSA), you may have encountered the term "Letter of Medical Necessity" (LMN). An LMN is often required when you use your FSA or HSA funds for items or services that aren't clearly defined as standard medical expenses by the IRS. Below is a straightforward guide to explain what an LMN is, why it's necessary, and how to obtain one.

1. What Is a Letter of Medical Necessity?

A Letter of Medical Necessity is a document written by a licensed healthcare provider (e.g., a doctor, dentist, or therapist) that states:

• Why a particular item or service is needed for a medical condition or treatment.

• How it aids in the diagnosis, treatment, or prevention of a specific illness or injury.

Think of it as additional proof for certain expenses that aren't obviously medical—the LMN helps justify their eligibility under FSA or HSA rules.

2. Why Is an LMN Required?

The IRS has outlined a wide range of qualified medical expenses for tax-advantaged accounts like HSAs and FSAs. However, some items or services fall into a gray area. An LMN clarifies that a product or service:

• Is medically necessary, rather than simply beneficial or convenient.

• Meets the IRS's criteria for FSA or HSA reimbursement.

Without this documentation, the expense might be deemed ineligible, potentially leading to denied claims or tax penalties.

3. Examples of Items or Services That May Need an LMN

• Massage Therapy: If prescribed by a physician for a specific medical condition (e.g., chronic pain or injury recovery).

• Nutritional Supplements: If used to treat a diagnosed vitamin deficiency or condition, rather than general wellness.

• Orthopedic or Ergonomic Equipment: In some cases, braces, special chairs, or custom inserts might require documentation.

• Alternative Therapies: Acupuncture, chiropractic treatments, or other therapies might need an LMN if not clearly covered under traditional guidelines.

For a comprehensive list of potentially eligible expenses, see IRS Publication 502 and IRS Publication 969 or read on.

4. Shopping with Burst's Partner Merchants

Determining whether an LMN is required can be challenging, especially as providers often have different rules. That's where shopping with Burst's partner merchants comes in:

• Automated LMN Processing: Many of our partners handle LMN requirements automatically, so you don't have to worry about documentation.

• Clear Eligibility Guidance: Our partners clearly indicate which items require an LMN, taking the guesswork out of the process.

• Streamlined Experience: Shopping with Burst partners means you can focus on your health needs rather than paperwork.

5. Obtaining a Letter of Medical Necessity

If you've identified a purchase or service that might need an LMN:

1. Consult Your Healthcare Provider: Request a formal letter stating the medical reasoning.

2. Include Relevant Details: The provider should specify the recommended treatment, duration, and how it benefits your condition.

3. Keep Documentation: Save a copy of the LMN for your records; you may need it when submitting a claim, reimbursement, or if you're ever audited.

6. Where to Find Official Guidelines

For the latest HSA and FSA rules, consult:

• IRS Publication 502: Medical and Dental Expenses

• IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans

• Burst: We make it easy for you to follow the IRS guidelines without thinking about it.

7. In Summary

A Letter of Medical Necessity can be the key to unlocking FSA or HSA coverage for items and services that aren't obviously medical. By obtaining an LMN from your healthcare provider—and shopping with Burst's partner merchants where many handle LMN requirements automatically—you can maximize your tax-advantaged healthcare savings without risking compliance issues.

If you have further questions about an LMN or need personalized advice, consult your healthcare provider, plan administrator, or a tax professional. Feel free to reach out to the Burst Team too – we'd be happy to help.