Hmm- I agree this could have been more clear. Thanks for pointing that out; for now I've taken out the reference to student health fees in the Forbes article for exactly the reason you cited.
Health expenses are particularly vexing, because you don't want account owners abusing 529 plans to pay for doctor and emergency room visits, checkups, and other ongoing medical costs that could result in double-dipping, but most schools will have a mandatory student health center fee baked in. For example, what would stop an account owner from making a 529 withdrawal and a flex-spending account withdrawal for a visit to the school ER? Health insurance is especially challenging because many schools require it for attendance, but it's not considered a qualified higher education expense.
I don't subscribe to the same logic for the very reason you mention: room & board. 529 plans are held to a different standard, and neither the IRS nor legislature has applied guidance from credits to 529 accounts that I'm aware of (people would riot to have room & board taken away, right?). And required fees baked into the semester bill can be confusing for these reasons. I'd really love to see more uniformity between all of these different plans, tax benefits, and other investments (why are K - 12 eligible for Coverdells and not 529s, for example? But, I digress!)
I think maybe I'll have to do an article that breaks down a sample tuition bill like this one from Princeton or this one from Ithaca, for exactly the reasons you cited above.
I'd agree with both of these for the reasons cited, though that is why I have disclosure below my signature! It is debatable, as you can see from the back-and-forth between @dcandmc and I, which is why it's a good idea to get an opinion from a qualified tax expert if you still have concerns.
VP, Research & Development
This information does not constitute tax advice and is provided for informational purposes only. Please consult your tax advisor, financial advisor, local taxing authority, and/or plan provider or sponsor for more information.