Understanding Letters of Medical Necessity and Their Role in Healthcare Spending

In the world of healthcare, not all treatments or medications are immediately covered by insurance or eligible for tax-advantaged spending accounts like Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs). This is also true for employers offering Individual Coverage Health Reimbursement Arrangements (ICHRA), where certain expenses may require additional documentation to qualify for reimbursement. Enter the Letter of Medical Necessity (LMN)—a formal document that bridges the gap for treatments not universally recognized as medically necessary.

Why Are Letters of Medical Necessity Required?

The requirement for LMNs stems from the guidelines outlined in Internal Revenue Code 213-d, which clarifies what qualifies as a medical expense for reimbursement under tax-advantaged accounts. To be eligible:

1. The expense must diagnose, treat, mitigate, or prevent a specific medical condition.
2. It cannot simply be for general health, well-being, or cosmetic purposes.

For treatments or items that blur the line between medical and elective use—such as Botox or semaglutides—an LMN is required to prove their medical necessity. This ensures compliance with IRS rules and protects the tax-advantaged status of these accounts.

When Are Letters of Medical Necessity Needed?

LMNs are typically required for treatments, medications, or services that are not universally recognized as medically essential but have legitimate therapeutic uses.

Common Examples:

1. Botox for Migraines: While Botox is often associated with cosmetic enhancements, it is FDA-approved for treating chronic migraines. An LMN is required to confirm that the treatment is medically necessary in your case.
2. Semaglutides for Weight Management: Medications like Ozempic or Wegovy, originally developed for Type 2 diabetes, are also prescribed for obesity or related conditions. If you're using these medications to manage a specific health risk, an LMN can justify the expense.
3. Massage Therapy: Frequently recommended for conditions like chronic pain or injury recovery, massage therapy may require an LMN to qualify for reimbursement.
4. Specialty Foods: For individuals with dietary restrictions due to medical conditions (e.g., gluten-free products for celiac disease), an LMN can help establish eligibility for reimbursement.

The Intersection with Venteur’s Health Wallet

The Venteur Health Wallet offers a seamless way to manage healthcare expenses, even for items requiring an LMN. Here’s how it works:

• Health Wallet Debit Card Usage: If an LMN is needed for an expense, such as Botox or semaglutides, the Health Wallet debit card will decline the transaction. But that does not mean your expense is not Health Wallet eligible. Employees will need to pay out of pocket and upload the expense to the Venteur platform along with the LMN for reimbursement.

• Submit Your Health Wallet Expense for Reimbursement: You can submit your Health Wallet expense for reimbursement via your Venteur account. For faster processing, include your LMN with your documentation.

Tips for Obtaining a Letter of Medical Necessity

1. Consult Your Healthcare Provider: Your doctor should detail why the treatment or item is necessary, including relevant diagnosis codes.
2. Check Employer and Plan Requirements: Ensure the LMN meets the specific documentation standards of your plan administrator or employer.
3. Keep Records Updated: LMNs often need annual renewal to maintain coverage or reimbursement eligibility.

Ready to improve your healthcare spending? Contact us to learn more about how Venteur can support your employees' needs.