A benefit can support someone’s health without automatically qualifying for favorable tax treatment. And an expense that qualifies as medical care does not, by itself, establish the tax treatment of every payment connected with it.

The tax code distinguishes employer-provided health coverage from benefits paid under that coverage. Section 106 generally addresses the coverage exclusion; Section 105 addresses certain amounts received under accident and health arrangements. Those questions should not be collapsed into one.

That distinction provides the starting point for reviewing wearable-device expenses—and the programs through which employers or employees propose to pay for them.

The original source—and what is new

Original source: IRS, Frequently asked questions about medical expenses related to nutrition, wellness and general health, Question 15. Addition date: September 23, 2026. Document type: Website FAQ. No separate effective or applicability date is stated.

The underlying FAQ collection is older. The IRS announced it on March 17, 2023, in IR-2023-47, addressing expenses potentially payable or reimbursable through health savings accounts, health flexible spending arrangements, health reimbursement arrangements, and Archer medical savings accounts. The new item is the wearable-device answer—not the entire medical-expense framework.

Its legal weight also matters. The IRS explains that FAQs outside the Internal Revenue Bulletin are not precedential guidance. The law controls if an FAQ inaccurately describes its application to a taxpayer. Reasonable, good-faith reliance can support relief from certain penalties, but it does not guarantee the underlying tax treatment or eliminate tax owed.

What the wearable-device answer says

Q15 addresses mixed-use wearables. Health measurements alone do not qualify the purchase. The individual must purchase and use the device primarily for a specific disease-related diagnostic, treatment, mitigation, cure, or prevention purpose.

Relevant evidence can include clinical recommendations, symptoms, diagnoses, abnormal tests, risk factors, the data’s disease connection, and its actual use. Accessories and subscriptions need their own qualifying primary purpose. These are considerations, not a mandatory diagnosis-and-prescription checklist. Read the IRS answer.

The broader statutory definition remains important. Section 213(d)(1)(A) encompasses disease-related medical care and care affecting a structure or function of the body. It should not be rewritten as a universal requirement that every medical expense involve an already diagnosed disease. IRS Publication 502 also recognizes qualifying diagnostic devices while distinguishing medical care from purchases merely beneficial to general health.

Documentation should explain the facts—not substitute for them

A receipt establishes what was purchased and its price. A clinical recommendation can help explain its medical purpose. Neither document should be treated as answering questions it does not actually address.

That concern predates the wearable FAQ. In IR-2024-65, issued March 6, 2024, the IRS warned against claims that doctors’ notes based merely on self-reported information could convert otherwise personal food, wellness, and exercise expenses into medical expenses. The warning concerned unsupported conversion of personal expenses—not a blanket rejection of medical recommendations.

SIMERPU’s practical recommendation: Ask whether the documentation explains the relevant medical circumstances and actual use, rather than simply repeating that the product is “eligible.”

Expense eligibility does not settle the reimbursement question

For arrangements subject to Section 105, Section 105(b) provides an exclusion for qualifying medical-expense reimbursement, subject to its conditions. It covers direct and indirect reimbursement; an employee does not necessarily have to pay a provider personally before a plan can satisfy an incurred medical obligation. Treasury Regulation §1.105-2 expressly addresses payment to the obligee.

The current Treasury Regulation §1.105-2 draws another boundary: Section 105(b) does not exclude a payment the employee is entitled to receive whether or not medical expenses are incurred. It also limits the reimbursement exclusion to actual medical expenses.

Consider this hypothetical—not an IRS example or a description of a provider:

An employee incurs a qualifying $300 device expense. One arrangement reimburses that expense under its governing terms. Another promises $300 every month for uploading wellness data, whether or not the employee has any qualifying expense.

Assume there are no other eligible expenses and no unpaid reimbursement balance from the purchase. The second arrangement cannot establish a Section 105(b) exclusion merely by pointing to the original $300 expense. Its independent payment promise requires separate analysis. See §1.105-2.

The issue is the basis for payment, not the calendar alone. The regulation does not impose a monthly medical-visit requirement. Applicable coverage periods, claim deadlines, and reimbursement rules still need to be examined for the particular arrangement. See §1.105-2 and Publication 969.

SIMERPU’s Can One Annual Wellness Activity Support Monthly SIMERP Payments? explores the separate questions of participation, expenses, and payment timing.

Funding can change the analysis

“Paid through work” does not identify how a benefit was funded. Nor does describing an outgoing payment as “after-tax” establish that the insurance premiums supporting it were paid with after-tax money.

These distinctions also prevent an overbroad statement that all cash benefits are taxable. Conversely, an employer’s cash wellness reward does not qualify for the de minimis fringe-benefit exclusion merely because the amount is small. Any claimed exclusion needs its own basis. See Section 104(a)(3) and Publication 15-B, De Minimis (Minimal) Benefits.

For related analysis, see SIMERPU’s IRS CCA 202323006: Which Wellness Plan Differences Matter? The underlying Chief Counsel Advice was dated May 9, 2023, and released June 9, 2023. It is expressly nonprecedential—not a new 2026 ruling or a decision about every differently structured arrangement.

HSAs, health FSAs, and HRAs do not use one interchangeable process

The practical recommendations must account for who is responsible for establishing the expense.

For an HSA, the account holder bears the relevant determination and recordkeeping responsibility. Notice 2004-2, Q&As 29–30 explains that HSA trustees, custodians, and contributing employers are not required to determine whether distributions were used exclusively for qualified medical expenses. Current IRS guidance likewise requires the account holder to retain supporting records.

For a health FSA, substantiation is part of plan administration. Publication 969 describes independent third-party information establishing the expense and amount, confirmation that another plan has not already paid or reimbursed it, and recognized card-substantiation methods that can avoid additional documentation in qualifying circumstances.

An HRA is employer-funded. It cannot be funded through employee salary reduction. Its governing terms and applicable reimbursement requirements must be reviewed rather than inferred from another account’s procedures. See Publication 969, Health Reimbursement Arrangements.

There is a further regulatory qualification: §1.105-2 retains language addressing certain payments made solely to reimburse actual medical expenses even without proof of their amount. That sentence should not be presented as eliminating separate substantiation requirements applicable to a particular arrangement.

Treasury and IRS proposed changes to that regulation in July 2023, but the April 2024 final rule did not finalize those tax amendments. The proposal should not be substituted for current regulatory text. SIMERPU’s rulemaking analysis provides related context.

Questions and documents to examine

The following is SIMERPU’s recommended review framework, not a newly announced IRS documentation mandate.

For payroll teams, review federal income-tax withholding, Social Security and Medicare taxes, and federal unemployment tax separately. IRS Publication 15-B distinguishes those tax treatments; an income-tax conclusion should not be treated as an unexplained payroll instruction.

SIMERPU’s Can Your SIMERP Provider Answer These Compliance Questions? offers a related framework for organizing the document request and follow-through.

SIMERPU’s assessment

Our editorial assessment is that this topic calls for more precise explanations—not broader promises.

We recommend asking a reimbursement administrator to demonstrate both an approval and a denial using hypothetical facts. What evidence changes the decision? Which provision supports it? Who communicates the result?

For HSA education, the discussion should instead make the account holder’s responsibilities clear. A transaction being processed is not the same thing as a determination that its tax treatment is correct. Notice 2004-2, Q&As 29–30.

For arrangements marketed as SIMERP, WIMPER, or wellness-based payroll-tax savings programs, our recommendation is to evaluate each component rather than infer a common result from the acronym. Coverage, funding, medical expenses, and payment entitlement require distinct analysis.

Access to a service, completion of an activity, or an actuarial valuation does not, standing alone, establish that a cash payment reimburses an incurred medical expense under Section 105(b). That is a conclusion drawn from the statutory reimbursement requirement—not a new rule announced by the wearable FAQ.

Mardy Gould’s Take

Editorial perspective—not an IRS statement or legal-counsel opinion.

I would start with a simple question: what exactly is being paid for?

Show me the expense, the funding, and the provision explaining the payment. Then show me who is responsible for deciding whether the facts support it.

I would also ask what happens when they do not. An explanation that only works for approvals is not enough.

We should be able to explain a benefit’s value without overstating the authority behind its tax treatment. That is the standard I would want this conversation to meet.

Continue the research

Return to the IRS & Treasury hub for source cards and related analysis, or review the SIMERPU Research Library record for the medical-expense FAQs.

Educational analysis only—not legal or tax advice, a coverage determination, or approval of any program. A particular arrangement requires review of its documents, funding, claims, and actual operation. Research reviewed November 1, 2026.