Weight-Loss Programs Tax-Deductible

People diagnosed as obese will be able to claim a tax deduction for the cost of weight-loss programs associated with treating the disease, the Internal Revenue Service ruled Tuesday.

The ruling was welcomed by obesity experts. But tax experts said those seeking to use the deduction still will have to meet the income standards for claiming a medical deduction--meaning that not all taxpayers being treated for obesity will be able to qualify for the break.

Under the ruling, enrollment and monthly membership fees in weight-loss programs are deductible as medical expenses when the programs are being used to treat obesity. In the past, the IRS allowed deductions for weight-loss treatments only when the patient’s weight was causing some other ailment, such as hypertension or diabetes. Now the agency is recognizing obesity as a specific ailment.

“This is fantastic, important and significant,” said Barbara Corkey, director of obesity research at Boston University. “It’s time we stopped treating people with this problem like they’ve been bad, and start treating obesity for the medical condition that it is.”

The ruling comes four months after the U.S. surgeon general called obesity a national epidemic, affecting roughly 35% of adults and 14% of children. Because most people assume that obesity is caused by overeating--a behavioral rather than a medical problem--health insurance and tax benefits available to those with other medical conditions were denied to the obese, Corkey said.

Under the IRS ruling, a taxpayer who has been diagnosed with obesity can deduct the cost of “the diagnosis, cure, mitigation, treatment or prevention” of the disease. That clearly covers formal weight-loss programs such as Weight Watchers. It is “not specified” whether it also would cover gym memberships and exercise equipment, IRS officials said.

Getting a doctor’s diagnosis is particularly important because the ruling doesn’t allow taxpayers to deduct weight-loss treatments that are for cosmetic reasons.

“We have people who have medical problems all the time,” said Michael Thurmond, whose Six-Week Body Makeover program costs $975 and includes follow-up visits.

The ruling also excludes tax deductions for the purchase of diet-related food. The IRS reasons that people have to buy food whether or not they’re trying to lose weight.

Taxpayers won’t need to provide proof of diagnosis or details about the weight-loss program when filing returns. But they should keep these documents in case they’re audited, IRS officials said.

Although welcome, the ruling probably will not result in huge tax savings, accountants say. That’s mainly because medical expenses are deductible only after they exceed 7.5% of a taxpayer’s adjusted gross income--which is income after such deductions as 401(k) and individual retirement account contributions.

“The 7.5% threshold is a big hurdle, which causes very few people to qualify,” said Phil Holthouse, partner in the Los Angeles tax accounting firm of Holthouse Carlin & Van Trigt.

Seriously overweight individuals often develop other health problems. A recent study found that obesity is associated with a 36% increase in health-related spending and a 77% increase in the need for medications.

The cost of weight-loss treatments may be added to other medical expenses that aren’t reimbursed to determine whether a taxpayer’s expenses exceed the deduction threshold in any given year.