Using Your FSA or HSA for Diabetes Health Coaching Services: A Complete Guide

You can use your FSA and HSA dollars for virtual diabetes health coaching with Hangry Woman, or our Glucose Guide Diabetes Food Journal. You just need the proper documentation.

Health coaching has gone digital – from weight-loss apps to telehealth wellness programs – and many people are discovering they can use tax-advantaged funds like FSA and HSA for Diabetes Coaching services.

As a Board Certified Diabetes Health Coach, I’m always looking for ways to ensure my clients can save money and get access to tools.

Whether it’s via the immense free resources of this blog, the free webinars I host in Diabetes is expensive, and

Yes, you can use your Flexible Spending Account (FSA) or Health Savings Account (HSA) to cover eligible health coaching and digital wellness programs in many cases.

In this comprehensive guide, we’ll explain exactly which services qualify, what criteria must be met (including when you need a Letter of Medical Necessity), how to obtain and submit that letter, and step-by-step instructions to document and file for reimbursement.

FSA vs. HSA: A Quick Refresher

Before getting into health coaching specifics, let’s briefly clarify these accounts:

• What is a Flexible Spending Account (FSA)?: Offered through employers, funded by pre-tax payroll contributions. FSAs cover qualified medical expenses not paid by insurance (copays, meds, etc.).
  Use-it-or-lose-it: funds generally expire at year-end (some plans offer a short grace period or small rollover). That’s your money, so you want to be able to use, or it’s literally like throwing dollar bills into the garbage. Many FSAs provide a special debit card for eligible purchases or require you to submit claims for reimbursement.

• What is a Health Savings Account (HSA)?: Available if you have a high-deductible health plan. You contribute pre-tax (or tax-deductible) money and can invest unused funds. HSAs roll over indefinitely and are your property, even if you change jobs. They also cover qualified medical expenses tax-free. HSAs often come with a debit card too, but you’re ultimately responsible to use funds only for eligible expenses (keep receipts for tax time!).

Both account types rely on the IRS definition of “qualified medical expenses.” That’s where health coaching comes in – if your coaching service meets the current IRS criteria, you can pay for it with FSA/HSA funds. You may want to consult with a CPA or Tax Attorney.

Now, let’s see what qualifies.

When Is Health Coaching a Qualified Medical Expense?

Under IRS rules, an expense must primarily diagnose, cure, treat, mitigate, or prevent a disease or condition to be considered a medical expense.

Expenses that are merely beneficial for general health (think ordinary gym memberships or wellness retreats) are not eligible.

So, health coaching services are only FSA/HSA-eligible if they are used to treat or prevent a specific diagnosed medical condition – not just for general well-being. In practical terms, this usually means:

• A physician or licensed medical provider has diagnosed you with a condition or risk factor (for example, obesity, diabetes, hypertension, heart disease, etc.).
  
• The doctor specifically recommends health coaching as part of your treatment or prevention plan. It could be to aid weight loss for a patient with obesity or pre-diabetes, a wellness program to manage hypertension, or lifestyle coaching to prevent progression of heart disease. The coaching should be aimed at that condition, not purely “general wellness.”

If those conditions are met, the IRS has signaled that health and wellness coaching can be considered a qualified medical expense.

In 2023, the IRS provided guidance (in response to an inquiry) that expenses for health coaching can be reimbursed by HSAs and FSAs if the services are provided for the treatment or prevention of a disease.

In other words, when your health coach is effectively part of your healthcare plan – helping you manage or avert a real medical issue – then the fees may qualify for tax-free payment.

Example: If your physician refers you to a digital weight-loss coaching program to treat obesity or prediabetes, that program’s fees could be eligible. But signing up for a generic wellness app just to “get healthier” would not qualify, since it’s not tied to a diagnosed medical need.

The bottom line: Health coaching isn’t automatically covered, but it can be if it’s truly a form of medical care. The key is documenting the medical necessity, which we’ll cover next.

What Services and Platforms Typically Qualify?

Not all health coaching is created equal when it comes to eligibility. Here are some types of coaching services and digital platforms that often qualify when you have a supporting medical reason:

Weight-Loss and Nutrition Programs: These are among the most common. Weight management programs (online or in-person) are eligible if treating a specific disease like obesity, diabetes, hypertension, or heart disease. Many popular digital programs fall in this category.

For example, Weight Watchers (WW) memberships (including workshops and coaching) and app-based plans like Glucose Guide have been approved for HSA/FSA use when accompanied by a doctor’s note.

Essentially, if your doctor says “you need to lose weight to treat X condition” and recommends a program, you can likely use tax-advantaged funds for that program’s fees.

Chronic Disease Management Coaching: Digital health coaching platforms aimed at managing chronic conditions can qualify as well. Examples include diabetes prevention or management programs.

If you’re at risk of diabetes or have been diagnosed, a coaching program to improve diet, exercise, and blood sugar control can be considered treatment/prevention of disease.

The IRS specifically allows costs for nutritional counseling and weight-loss guidance for diseases like diabetes, obesity, hypertension and similar – many of these programs are essentially health coaching with a specific focus. Always get a medical recommendation first.

Smoking Cessation & Addiction Programs: Quitting smoking or overcoming substance use is definitely disease prevention/treatment. Smoking cessation programs (whether an app, coach, or program) are typically eligible expenses because nicotine dependence is a medical condition.

Similarly, treatment programs for substance use disorders are qualified medical expenses. If you find a digital coaching service or telehealth program for quitting smoking, those fees can be paid with HSA/FSA funds (and usually do not require a special letter since treating addiction is inherently medical, but check with your administrator).

Mental Health Coaching/Therapy Apps: Services provided by licensed mental health professionals (therapists, psychologists) via telehealth are generally eligible without extra paperwork, since therapy for a diagnosed mental health condition is a medical expense. (For example, tele-therapy apps like BetterHelp or Talkspace allow HSA/FSA payments for counseling sessions.)

However, “life coaching” or general mental wellness coaching by unlicensed individuals is not eligible if it’s not treating a diagnosed medical condition.

If a doctor prescribes a stress-management coaching program to alleviate anxiety or insomnia, it might qualify with a letter – but pure self-improvement or career/marriage coaching does not qualify.

Physical Fitness or Rehabilitation Coaching: Normally, gym or fitness costs are personal and not reimbursable. But there are cases where a digital exercise or physical therapy coaching program could qualify.

For instance, if you have an injury or specific condition and your doctor “prescribes” a tailored exercise program (like a virtual physical therapy or rehab coaching app), it can be eligible.

The IRS allows gym memberships or exercise programs only if purchased for a physician-prescribed plan to treat a disease or injury (e.g. physical therapy for rehabilitation, or exercise regimen to treat obesity).

A virtual physiotherapy coaching service or an app with guided exercises for back-pain patients could fit, with supporting documentation. Always confirm with your plan.

In short, the service must be primarily for medical care of a specific issue. Many modern wellness apps blur the line between general wellness and medical care, so when in doubt, get a doctor’s confirmation in writing. Which brings us to the all-important Letter of Medical Necessity.

The Letter of Medical Necessity: Your Ticket to Eligibility

If you take one thing away from this article, let it be this: for health coaching expenses, a Letter of Medical Necessity (LMN) is usually the key to unlocking your FSA/HSA funds.

What is an LMN?
It’s a letter from a licensed healthcare provider (usually your physician) explaining why a particular product or service is recommended to treat or mitigate a specific health condition.

In our context, it would state that health coaching services are necessary for your medical care. The letter typically must include:

• Your diagnosed condition (the illness or risk being addressed, with specifics like an ICD-10 code if applicable).
• The recommended service and why it’s needed – e.g., “health and wellness coaching for weight management to treat obesity and prevent progression to Type 2 diabetes.”
• Duration or frequency of the recommended service – for instance, “weekly coaching sessions for 6 months” or “weight-loss program membership for one year.”
• Any other details your FSA/HSA administrator requires. (Some administrators have their own LMN form that your doctor can fill out – always check if a specific form is needed.)

The purpose is to prove the expense is for medical treatment, not just personal benefit. An LMN essentially says: this is not a general wellness or luxury spend; it’s part of the patient’s healthcare plan.

When is an LMN required?
Generally, if the item/service isn’t obviously medical, you’ll need an LMN. Health coaching is a classic “dual-purpose” service – it can be for general wellness or for medical therapy.

So plan administrators will require a letter to justify coaching expenses. Many common wellness costs (fitness programs, supplements, even massage therapy) become eligible only with an LMN describing the medical necessity.

Think of the LMN as bridging the gap between a non-traditional service and the IRS’s medical expense definition.

How to get a Letter of Medical Necessity

Talk to your doctor about your health goals and why you believe a coaching program will help your condition. If it’s indeed medically relevant, most doctors are willing to write an LMN. Explain that you want to use FSA/HSA funds for a program and need a letter supporting the medical need.

Provide details of the program to your doctor. For example, share a printout or email of the program description (what it includes, how it works). If the program is something like a weight-loss app or diabetes coaching platform, mention how it aligns with your treatment.

Use a template if possible: Some doctors appreciate having a template or sample. The National Board for Health & Wellness Coaching (NBHWC) has sample LMN templates for health coaching that include all necessary info (patient info, diagnosis, recommended coaching service with provider details, and rationale).

You can also ask our team at Hangry Woman for a template letter prior to booking your coaching sessions.

You can also get templates from FSA administrators or services like Truemed. For instance, a sample LMN will include your diagnosis, the specific service/coach (with credentials) being recommended, and a clear statement that this coaching is medically necessary for your condition.

Make sure the letter is on official letterhead and signed by the provider. A quick note scribbled on a prescription pad usually won’t cut it – the admin wants a detailed letter or completed form.

Submitting the LMN: Once you have the letter, you’ll usually need to submit it to your FSA/HSA plan administrator for approval. We’ll cover the submission process in detail in the next section (it often goes hand-in-hand with filing a reimbursement claim).

One important tip: you typically only need to submit the LMN once for a given expense (often once per plan year).

For example, if the letter says you need 6 months of coaching, you file it with the first claim; the admin will keep it on file for subsequent claims for that service.

Do check if it expires – many plans require a new LMN each calendar year or if the treatment extends longer than originally stated.

Now that your doctor’s on board and paperwork is in hand, let’s walk through using your FSA/HSA step by step.

Step-by-Step: Using FSA/HSA Funds for Telehealth Coaching

Ready to put those funds to work? Here’s a simple step-by-step guide to document and file for reimbursement of a digital health coaching service:

Verify the Service is Potentially Eligible: First, double-check that the type of coaching you want aligns with eligible categories. Is it for a specific health issue?

If unsure, contact your FSA/HSA administrator before you spend. You can usually find an online list of eligible expenses. For example, weight-loss programs are eligible with a doctor’s letter, but something like general life coaching is not.

When in doubt, ask “If my doctor prescribes X for my condition, will you reimburse it?” It’s better to confirm upfront than fight a denied claim later.

Obtain a Letter of Medical Necessity from Your Doctor: Have your physician write an LMN that includes your diagnosis and states that the specific coaching service is medically necessary for treatment or prevention.

This letter effectively makes your expense qualify as medical care. Without it, your claim will likely be denied. Pro tip: get the letter before or soon after you start the program, so you have it on file.

Pay for the Service and Save Documentation: You have two options:

Pay directly with your FSA/HSA card: If your administrator allows, you can try using your benefits debit card to purchase the coaching program or app subscription. However, many digital health services won’t automatically run as “FSA-eligible” at the point of sale (their merchant coding might not be recognized as medical). If your card is declined or not available, use the out-of-pocket method.

Pay out-of-pocket: Use your personal credit card or other payment to purchase the program. Either way, save the receipt/invoice showing the amount paid, date, and description of the service.

You’ll need this for reimbursement. For an online subscription, the confirmation email or invoice works as a receipt. Some platforms will email you a detailed receipt.

If paying with HSA/FSA card, you might still need to submit proof later. Often, FSA administrators will follow up asking for documentation (and that LMN) to substantiate the swipe, since coaching isn’t a standard pharmacy or doctor charge.

Submit a Claim for Reimbursement: If you paid out-of-pocket, you’ll now file a claim to get paid back from your FSA or to justify an HSA distribution. This typically involves:

Whether you do that immediately or later is up to you. However, you still need to have the receipt and LMN in your personal records to prove it was a qualified expense in case of an IRS audit.

HSAs operate on the honor system: no one checks your expense up front, but you must ensure it qualifies. So keep that documentation!

Track the Reimbursement and Payment: FSA claims are usually processed in a few days to a couple of weeks. You’ll receive the reimbursement either by check or direct deposit, depending on your setup. If any issues arise (e.g., they request more info or initially deny it), follow up with the administrator.

With a proper LMN and receipt, it should go through. For HSA, if you paid with the HSA card, the money is already out of your account (so just document it); if you paid yourself back from HSA, ensure the correct amount was withdrawn and note it in your records.

Keep Copies of Everything: Create a little file (digital or paper) for this expense. Save the LMN, receipts, claim approval, and any correspondence. For FSAs, this covers you if there’s any retroactive review.

For HSAs, you should save receipts for all HSA purchases for at least a few years in case of a tax audit. It’s wise to note on the receipt what condition it was for and that you have a doctor’s letter, just for your own record-keeping.

By following these steps, you’ll have a clear paper trail and should smoothly get your coaching costs covered with tax-free dollars. It may feel like a bit of homework, but the savings can be substantial – you’re using pre-tax money, which is like a 20-40% discount depending on your tax bracket!

Real-World Examples of Eligible Digital Health Coaching

To make this even more concrete, let’s look at a couple of real examples:

• Chronic Condition Digital Coaching: Suppose you enroll in a diabetes prevention coaching program offered via an app, and your doctor has noted you’re pre-diabetic. You pay $0 because your employer covers it – great! But if it had a cost, you could use HSA funds because it’s clearly for disease prevention. Another scenario: a hypertension management coaching service that monitors your diet/blood pressure remotely. If prescribed by your doctor, that subscription is a valid medical expense. Always get a receipt and note the medical reason.
• Telehealth Therapy (bonus example): Let’s say you use a mental health coaching app that pairs you with a licensed therapist or counselor to manage stress and anxiety. If you have an anxiety disorder diagnosis and your psychiatrist recommends this service, it’s basically therapy delivered digitally – typically reimbursable by HSA/FSA (no LMN needed if it’s clearly therapy for a diagnosed condition). Just ensure the provider can give you an invoice that shows medical service (like “telehealth psychotherapy session”). Many online therapy platforms directly accept HSA/FSA cards since they’re clearly medical.

These examples underscore a common theme: pair the service with a medical rationale and documentation. The IRS doesn’t maintain an official list of “approved apps” – it all comes down to whether the expense fits the medical purpose criteria.

As one industry summary put it: out-of-pocket costs for health coaching might be reimbursable when used for the treatment or prevention of a disease. So almost any digital health coaching could qualify if you and your doctor can demonstrate it’s part of treating a specific health issue.

Tips for a Smooth Reimbursement Experience

Before we wrap up, here are some final nuggets of advice to ensure you get the most out of your FSA/HSA when paying for telehealth and coaching services:

Consult Your Plan for Specifics: Every FSA/HSA administrator might handle things slightly differently. Some may have an online portal where you upload LMNs, others might require a fax.

A quick call or look at their website can clarify the process (and whether they have their own LMN form). Also, some FSA plans might pre-authorize a service if you submit the LMN in advance – worth asking.

Timing Matters: Use FSA funds within the plan year or grace period. If you’re planning a health coaching program next year, you might allocate funds during open enrollment accordingly. HSA funds have no deadline, so you have flexibility on timing.

If using an FSA, consider starting the program early enough to use that year’s funds or see if you can pay upfront for a program (annual program fees might be paid at once, which you can claim).

Use Technology: Many FSA/HSA administrators have mobile apps that let you snap a photo of receipts and upload documents on the go. This can simplify claim filing.

Don’t hesitate to ask the service’s support team; you’re probably not the first client to use an HSA/FSA with them.

Be Prepared to Educate (if needed): Because health coaching is a newer category, you might encounter a confused benefits rep or a denial if they misunderstand the service.

If you get pushback, politely explain that the IRS has clarified such coaching is eligible when treating a disease. Provide the LMN and even cite IRS Publication 502 or the FAQ if necessary. In many cases, the claim denial is simply due to lack of documentation – which your LMN and receipt will solve.

Keep Personal Records for Tax Time: Especially for HSA users, maintain a personal ledger of what you spent HSA money on, with receipts.

FSAs are less concerning for taxes (your reimbursements aren’t individually reported), but HSAs have you report distributions. In the unlikely event of an IRS inquiry, you’ll want to quickly show that, for example, $300 from your HSA went to a “qualified medical expense” – your health coaching – backed by a doctor’s note and receipt.

Explore Other Coverage: See what your insurance offers. While Health and Wellness Coaching doesn’t currently have direct coverage, if you have health insurance, you may be able to get other perks or medically necessary services.

Using your FSA or HSA for telehealth coaching might require a bit of admin work, but the payoff is worth it. You’re effectively getting a discount by using pre-tax dollars, and you’re investing in your health in a proactive way.

Key Takeaways and Final Thoughts

Digital health coaching services – from weight-loss apps to chronic disease management programs – are increasingly eligible for FSA/HSA spending when used as part of a medical treatment plan.

The critical factors are a doctor’s diagnosis and recommendation, documented through a Letter of Medical Necessity, and proper record-keeping of your expenses. With those in hand, you can tap into your health accounts to cover coaching fees, making it more affordable to get the guidance and support you need for your health goals.

In practical terms:

• Check that your coaching service targets a diagnosed medical condition.
• Get a doctor’s letter stating it’s necessary for your health.
• Keep all receipts and file claims with the letter attached.
• Use that FSA/HSA card or reimbursement form to pay for the service tax-free.
• Save your documentation for your records.

By following the steps outlined above, you’ll navigate the process with ease.

Many people are still unaware they can use their FSA or HSA for things like a weight-loss coach or a diabetes prevention app – but now you’re in the know. It’s all about leveraging the rules to optimize your health spending.

Remember, these accounts exist to help you take care of your well-being, but coverage is not guaranteed.

Here’s to achieving your wellness goals and getting the most value from your benefits – a true win-win for your health and your wallet!