24 Aug, 2021

Ever Wondered If Medical Expenses Are Tax Deductible?

Ever Wondered If Medical Expenses Are Tax Deductible?
Written by: - Phil Baker

Have you ever found yourself in a situation where the medical expenses have broken your bank, and you've wished it to be a tax-deductible expense? Are medical expenses tax-deductible as per your knowledge? Well, the good news is, it is! We all are moving into the revolutionary world of technology, where we are dealing with various kinds of diseases and medical emergencies.
The way of dealing with medical problems too has evolved, and therefore the rising medical expense is a no-brainer. It can cost a huge amount out of your budget. The new advancements in the medical field have made it possible for people to prevent and cure diseases, but they are expensive too. That's where the need for tax deduction comes so people could lead a healthy life without spending too much.
Before we get into the details of which medical expenses are tax-deductible, it is important to know what actually a medical expense is.

What Is A Medical Expense?

Any cost that is used in the prevention and treatment of disease or injury is known as a medical expense. Dental and health insurance premiums, hospital visits, OTC (over-the-counter) drugs, wheelchairs, prescriptions, contact lenses and glasses, co-pays, crutches are a few of the non-reimbursed medical expenses that are tax-deductible.
Of course, this deduction is within certain limits. This should also be noted that eligibility to claim for medical expenses on Schedule A is only possible if you itemize your deductions instead of claiming the standard deductions. Also, the deduction will take place only if the taxpayer’s adjusted gross income (AGI) exceeds 7.5%.  
As per the tax reform held in 2017, the AGI percent was reduced to 7.5% from 10%, representing more tax deductions in your medical expenses.

What’s More To Know?

Those taxpayers among you who have access to a health insurance group will rarely be able to get this medical expense deduction as it is not reimbursed on your taxes. It is important to know that the deduction of medical expenses is an itemized deduction, and you can only use it if you turn down the standard deduction to claim it.
Another crucial point to know here is; you can be eligible for a medical expense deduction if you aren't covered by your health insurance over the past few years. Some other eligible cost deductions include well-child care for the newborns, acupuncture; hospital stays for medical visits and special diets, etc., that are usually overlooked.

Deduction Value For Medical Expenses: Here’s An Example

Suppose if you have an IGA worth $50,000 and $6000 of medical expenses, you’ll simply multiply 50,000 by 0.07 and find out that $3500 can be included as an itemized deduction. Now this means you have a medical expense deduction of $2500 ($6000 minus $3500). According to TCJA (Tax Cuts and Jobs Acts), the standard deduction doubled from where it was a few years back in 2016.
For single taxpayers, the standard deduction is $12,400, whereas, for married taxpayers, the deduction is $24,800. If your deductions are higher as compared to your standard deduction, you won't itemize it usually and, therefore, won't receive medical expense deduction.

Covid-19 Treatment is Tax-Deductible!

This pandemic has hit the world badly and is affecting every other person. The medical treatment for covid-19 patients is not that cheap. If you are affected by this virus, you can get the medical expense deduction as it is just like any other unreimbursed expense.

Medical Expenses That Are Not Tax-Deductible

Any of the medical expenses that you reimburse to your employer or insurance group will not be entertained for a tax deduction. You cannot deduct medical expenses that you are ultimately going to pay the next year. Similarly, you cannot have tax deductions on nonprescription drugs and nicotine products or products related to general health, such as diet food, vitamins, and toothpaste, or health club dues.
Below is the list:

  1.  Hair removal or electrolysis

  2.  Cosmetic surgery

  3. Maternity clothes, medicines from other countries, and household help excluding nurses

  4. Teeth whitening

  5. Personal use items

  6.  Veterinary fees

  7. Nutritional supplements

  8. OTC drugs

Health Insurance Premiums Excluding Tax Deduction

Upon calculating your medical expenses for tax deduction purposes, be mindful of the fact that there are medical insurance premiums that will exclude your medical expense for a deduction. These are as follows:

  1. Life insurance policy

  2. Insurance of your eyesight, limb, life, or function losses

  3. The part of your other insurance that provides you a medical insurance

  4. Insurance that provides payments when you suffer from loss of earning

  5. Any insurance policy that provides a dedicated amount each week for a certain number of weeks when you are hospitalized for any sickness or injury

Qualifying Medical Expenses For Tax Deduction!

Now there’s no need to question ‘are medical expenses tax-deductible’ as you've got a clear idea of expenses that are not included in the deduction. Many medical expenses are easily overlooked, but they have a great impact on our budget. Now stop wondering what kind of medical expenses are tax-deductible as below are discussed a few of them. 

  1. Costs For Newborns

Costs for newborns do not at all include baby diapers or related products for baby care. It includes breast pumps and other supplies related to nursing that plays a role in assisting lactation. Also, if your baby requires any special kind of formula prescribed by the doctor, it will be included in the tax-deductible medical expense.

  1. Unconventional Treatments 

Now, if you are prescribed by your doctor any kind of alternative treatment, you'll definitely think ‘are medical expenses tax-deductible’ when it comes to alternative treatment. Well, it surely is when your doctor orders them.

  1. Adaptive Equipment For Disability

Anyone who is dealing with any kind of disability and requires assistance in movement by different equipment such as bath chairs, wheelchairs, commodes, etc., is also eligible to get a tax deduction on their expenses.

  1. Ear And Eye Related Issues

Both of these organs, eye, and ear, are quite crucial, and that's why to stop wondering are medical expenses are tax-deductible for such eye and ear-related issues. The cost of your contact lenses, prescription glasses, including sunglasses and eye examination, etc., are all tax-deductible, assuming that the costs for these are not reimbursed to your insurance group.
Whether you have LASIK eye surgery to correct your vision problem or buy a Braille book, you will get a tax deduction. Also, if someone has a hearing problem, he/she will get a reduction in the cost of ear examinations and hearing aids such as batteries.

  1. Home Improvements For Disabled Personnel

If you have a disabled person at home and you want to carry out some permanent changes to accommodate them, such as handrails in the bathroom and wheelchairs ramps, you will get a complete tax deduction in these circumstances.  

  1. Cost For Personal Attendee

Anyone who is not able to manage the daily personal chores, if hires a caregiver, will get a tax deduction on their expenses. These tasks don’t include household chores such as cleaning and sweeping. Yes, the cost of food for the attendee might be deductible.

  1. Cost Related To Lodging

Suppose if you have to move out of your town to some other city or state for your medical treatment, you'll get a deduction there too. Your stay at the hotel will provide you a deduction of up to $50 per night. Now, if parents have to accompany their child, they too will get a deduction individually per night. Note that this deduction is only limited to lodging and doesn't count meals.

  1. Rehabilitation Programs

You might come across certain people who need rehab attention. Such people might be present in your home. Now, if you think medical expenses are tax-deductible for rehab purposes, then it's a yes! The cost of different outpatient and inpatient treatments for drug addiction and alcohol are all tax-deductible.

  1. Cost Of Special Diet Of Certain Conditions

People who are dealing with certain medical conditions such as diabetes, obesity, celiac disease, or hypertension have their doctor-prescribed meals. The cost for these meals is, to a degree, deductible. Only the cost that exceeds the cost of regular food is fully tax-deductible.

  1. Cost Of Attending A Medical Conference

People usually ask ‘are medical expenses tax-deductible’ if it is related to attending a medical conference. Well, if you are dealing with a chronic condition and to attend a medical conference to educate yourself is tax-deductible. Be mindful that the meals and lodging expenses aren't included in this deduction.

  1. Cost Related To Reproduction

You'll be glad to hear that expenses related to reproduction that come your way are tax-deductible. This includes pregnancy test kits, birth control pills, vasectomies, abortions, and fertility treatments such as surgery for reverse vasectomy or in-vitro fertilization.

  1. Obesity Control Programs

Suppose if you are a person who is recommended to lose weight as it is a threat to your health. Any program that is prescribed by your doctor in this regard will be tax-deductible. However, expenses for general good health maintenance don't count in this deduction.

  1. Wigs For Cancer Patients

Wigs! Are the medical expenses tax-deductible for wigs? Yes, it is! People undergoing chemotherapy or are dealing with alopecia are given the relief of tax deduction. Great, isn't it?

  1. Organ Transplantation

The expenses of organ transplantation for the person receiving the organ are deductible. Also, the donor of the organ too will have a reduction in expenses for a hospital stay, testing, and transportation.

  1. Cost For Smoking Cessation Efforts

If you are a smoker and are determined to quit smoking, your doctor would prescribe you some treatments; all of these will be tax-deductible. Keep in mind that nicotine patches and over-the-counter drugs are not covered in the deduction.

  1. Traveling Cost To Medical Facility

You are eligible to deduct the expenses that are used in transportation to the medical facility. For example, the cost for cab fare or public transport when you are heading towards pharmacies, hospitals, therapy sessions, etc., is all tax-deductible.

  1. Expenses Related To GID

People dealing with GID (Gender Identity Disorder) usually have to undergo hormonal treatment or sex reassignment surgery. The cost to treat the disorder is tax-deductible. Note that breast augmentation surgery, even being a part of gender transition, doesn't include tax deduction.

  1. Cost For Special Education

Are medical expenses tax-deductible for carrying out special education? Yes, it is! Anyone who is dealing with any emotional, mental or physical condition such as ADHD, autism, or dyslexia is tax-deductible. Are medical expenses tax-deductible? It is no more a question for you as you've read a list of expenses related to the medical field that offers a tax deduction.
People need to manage their budget with heavy medical expenses. Tax deductions in this regard play a significant role in providing relief to people out there.

The Bottom Line

As you go through the whole read, what kind of medical expenses are tax-deductible is quite clear now, isn't it? Additionally, you got an idea about qualifying medical expenses for tax deduction. You are eligible to get this deduction if you've itemized your expenses and they are not reimbursed to an insurance group or your company. 
Whether it is the cost for special education or traveling for a medical conference, cost related to smoking cessation or organ transplantation, expenses for the personal attendee, or cost for lodging for medical treatment, you will get a text deduction on all of these expenses. These tax deductions for medical expenses deduction provide a way out to help your pocket bear other expenses.
Many people out there dealing with a disability find it quite a relief as it won't break their bank for various treatments and buying different equipment to help their accommodation. Most importantly, people who couldn't afford it find this deduction a blessing. You are eligible to get this deduction if you've itemized your expenses and they are not reimbursed to an insurance group or your company.
The only eligibility criteria to get this tax deduction is your expenses being free of reimbursement by different fields such as an Insurance group. Keeping all the paystubs and other proof of income might be useful as well when you need to file for taxes later on. Check out the paystub creator if you need to create your own paystubs.

In addition, you might want to find out how much life insurance you need in case you need protection for your future families. Be sure to also check out the other kinds of taxes in our other blog posts such as futa tax rate, bonuses tax as well as how to create a paystub for an EFT transfer.

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