Tax-advantaged accounts — such as health savings accounts (HSAs), flexible spending accounts (FSAs), and health reimbursement arrangements (HRAs) — can be important tools for managing healthcare costs. These accounts help provide individuals and employees the opportunity to save money on qualified medical expenses using pre-tax dollars.
However, there are situations in which some expenses may not align with the Internal Revenue Service’s (IRS’s) definition of a qualified medical expense. In such cases, you might need a letter of medical necessity (LMN) from your healthcare provider to help you access the financial benefits of your healthcare accounts.
What is a letter of medical necessity?
A letter of medical necessity is a formal document provided by a licensed healthcare provider. It explains why a specific treatment, product, piece of medical equipment, medication, or medical service is essential for a patient’s health and well-being.1
You may see it abbreviated as LMN (or LOMN) and hear it pronounced as “lemon.”
When may you need a letter of medical necessity?
LMNs are often required by insurance companies, government health programs, or tax-advantaged healthcare accounts when you’re seeking reimbursement for medical expenses that may not be automatically covered or considered eligible by the IRS.
Examples of when you may need an LMN include:
- Receiving out-of-network medical care
- Obtaining medications or treatments not traditionally covered by health insurance
- Seeking coverage for non-standard medical equipment or devices
- Using tax-advantaged accounts for services not normally eligible for IRS reimbursement
What’s in a letter of medical necessity?
LMN content will vary, but they typically include key components such as:
Patient details: The patient’s name, date of birth, address, and contact information
Physician information: The healthcare provider's name, credentials, and contact information
Date and signature: Added by the healthcare provider
Medical condition and diagnosis: A description of the patient's medical condition, including the diagnosis, medical history and duration of the condition
Recommended medical treatment or intervention: The treatment, medication, procedure or medical equipment deemed necessary by the healthcare provider
Explanation of medical necessity: Why the recommended treatment is medically necessary for the patient's health
Additional supporting documents: Such as test results or medical records to further verify the medical necessity
An example of a letter of medical necessity
Your healthcare provider is responsible for drafting an LMN. The letters can look slightly different, depending on specific healthcare requirements.
Here’s a sample template for an LMN.
[Date]
[Payer's name]
[Payer’s address]
[Patient's name]
[Patient’s date of birth]
[Patient’s group/policy number]
[Policyholder name]
[Dates of service]
Dear [Contact name/medical director]:
I am writing on behalf of my patient, [patient name], to document the medical necessity for the following [treatment/service/equipment].
This letter offers insights into my patient’s medical history and diagnosis and outlines my treatment rationale. Please consult the enclosed [list any enclosures] for further details.
Summary of patient’s clinical history:
[Patient name] is [age] years old and has been diagnosed with [condition] as of [date]. [Patient name] has been in my care since [date].
[Brief description of the patient’s medical history, prior treatments and current symptoms and conditions. Referencing any relevant medical reports, test results or clinical notes.]
Treatment plan and rationale:
[Detailed explanation of the treatment plan, reasons for the treatment and clinical rationale using supporting research, medical guidelines and clinical evidence to substantiate the recommendation.]
Closing statement:
In summary, [treatment/service/equipment] is medically necessary to effectively address my patient’s health condition and improve their overall well-being. Please consider coverage or reimbursement for the mentioned [treatment/service/equipment] on behalf of [patient's name].
If you have any questions, you can reach me at [phone number] or via email at [email address].
Thank you for your time and consideration.
Sincerely,
[Physician's signature]
[Physician's typed name and credentials]
Enclosures:
[List of enclosures, which may include: clinical notes, medical records, diagnostic test results, research studies, photographs or images, insurance documentation, etc.]
How to get a letter of medical necessity
The process for obtaining an LMN may vary depending on your specific circumstances, but it typically looks like this:
- Consult with your healthcare provider and share your condition, diagnosis and any relevant medical history.
- Ask your healthcare provider to issue a letter of medical necessity for the treatment or service you’re seeking.
- Check the letter for accuracy and completeness, making sure it aligns with your specific needs.
- Review the guidelines of your insurance provider or healthcare account administrator, and make sure the letter complies with specific requirements.
- Submit the letter to the relevant entity for consideration and include additional supporting documents if required.
- Maintain a copy of the letter for your records in case you need to reference it for future medical expenses or insurance claims.
Before you request an LMN
A letter of medical necessity may be required when making insurance claims or trying to receive reimbursement for a healthcare expense from an HSA, FSA, or HRA. It’s a good idea to familiarize yourself with the IRS’s eligibility requirements for medical expense deductions before requesting an LMN from your healthcare provider.2 This can help prevent issues or rejections related to your claims, ensuring a smoother process overall.
To help you get started, you can review our articles on HSA-qualified expenses and eligible FSA expenses.