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While the many perks of FSAs and HSAs are
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What is an LMN? An LMN is a document completed by a licensed healthcare provider recommending a particular treatment, product or device as necessary for an individual's medical care. An LMN details how a product or service supports an individual's health needs.
When is an LMN needed? The IRS determines which products and services are eligible for reimbursement with FSA or HSA funds, and while eligibility rules may be clear cut for the majority of expenses, there is quite a bit of gray area in the rules. Expenses that fall within this gray area aren't always off limits, but they may require an employee to submit an LMN to their account administrator who will then confirm or deny eligibility based on the IRS rules. Examples of common expenses that may require an LMN include:
- Massage — This is deemed a dual-purpose expense. A relaxing massage may be declined as a personal expense. However, a therapeutic massage prescribed to treat a specific condition may be a qualified expense if it is accompanied by a LMN.
- Air purifiers — For general home use, air purifiers may not be covered, but if the air purifier is recommended by a physician to treat allergies, asthma or another respiratory condition, an LMN describing the medical need may make the case for reimbursement.
- Special foods and beverages — These products qualify as a medical expense only if the food is prescribed by a medical practitioner to prevent, cure, mitigate, or treat a specific illness; if the food is in addition to the participant's standard diet; if the food item is not part of the participant's normal nutritional needs; and if the individual has an LMN. If the food is part of the individual's normal nutritional needs but a specific type of food is required, such as gluten free food, an administrator may only approve the excess cost of that food over the cost of regular food.
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Sounds confusing, doesn't it? It's quite confusing, and this information may have you finding a new level of appreciation for your FSA or HSA plan administrator, who has to evaluate each LMN on a case-by-case basis. LMNs don't always guarantee eligibility and there are a lot of other considerations plan administrators must make before approving one, including factoring in
To pre-emptively address the need for an LMN, direct employees to a comprehensive
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Why should HR teams take time to understand LMNs? In short, HR teams should care about LMNs because they will likely be a first point of contact when a disappointed or frustrated employee discovers they need an LMN for a healthcare expense. Understanding how LMNs work and proactively communicating about claims that may require an LMN can help pave the way toward satisfied employees and smooth plan administration.
As open enrollment approaches, your HR team is likely planning out communications and educational meetings. Make sure you include the basics about FSAs and HSAs — from contributions and the financial advantages of these accounts to the healthcare needs they cover, to LMNs and steps they can take to proactively address eligibility. By understanding the LMN process, you can be better prepared to help employees navigate challenging claims and get the most value from their benefits.
