Transgender Counseling or Surgery: HSA Eligibility

What is transgender counseling or surgery?

Individuals who consider themselves as transgender are those whose internal sense of themselves, such as identifying as a man or woman, directly conflicts with the body they were born in. As such, this feeling of mistaken identity can manifest itself in psychological issues from a young age and can persist into adulthood, which is why many transgender individuals will seek out counseling that may result in medical treatment to make a gender transition down the line.

Transition-related medical care is eligible with consumer-directed healthcare accounts, which was a result of the United States Tax Court's 2010 decision in O'Donnabhain v. Commissioner which ruled that a transgender woman's medical expenses for hormone therapy and sex reassignment surgery were legitimate treatments for GID and therefore tax-deductible under Federal law. As a result of this pivotal court decision, on November 21, 2011, the Internal Revenue Service (IRS) affirmed that transgender people can deduct the costs of hormone therapy and sex reassignment surgery from their gross income as medical expenses for the treatment of gender identity disorder (GID) (National Center for Transgender Equality).

A letter of medical necessity (LMN) may be required for reimbursement with a consumer-directed healthcare account to show the expense was incurred primarily for this purpose. As always, it is best to check with your plan administrator.