Medical Expenses and Your Taxes
The tax law defines medical expenses as the costs for diagnosis, cure, mitigation, treatment or prevention of disease and for treatments affecting any part or function of the body. Obviously, this definition covers the costs for health insurance premiums (if they aren't deducted in pre-tax dollars from your paycheck), doctors, hospital stays, diagnostic testing, prescription drugs and medical equipment. But the IRS allows for a wide range of costs that may not fit neatly into any of these categories.
If you itemize your personal deductions at tax time instead of claiming the standard deduction, you can deduct a variety of healthcare and medical expenses. You can't take them all: For tax year 2019, you can only deduct out-of-pocket expenses that total more than 7.5% of your adjusted gross income (AGI). It may sound like a lot, but you’d be surprised what qualifies.
- If you've incurred a great deal of medical expenses in the past year that were not covered by insurance, you may be able to claim them as deductions on your tax return.
- These costs include health insurance premiums, hospital stays, doctors appointments, and prescriptions.
- Some other eligible costs that may be overlooked include alternative treatments like acupuncture, well-care for newborns, hotel stays for medical visits, and special diets, among others.
Easily Overlooked Expenses
- Alternative treatments. Acupuncture is definitely deductible. Other types may be too, especially if a doctor orders them.
- Adaptive equipment. The cost of wheelchairs, bath chairs, bedside commodes and other items needed for a disability or condition is deductible.
- Costs for newborns. No, we don't mean diapers. But breast pumps and other nursing supplies that assist lactation are deductible. If your baby formula requires a prescription, the cost in excess of the cost of regular formula may be allowed (see “Special diets” below).
- Diabetes-related costs. Blood-testing kits, including blood strips and batteries, are deductible. So, too, is insulin even though it is not technically viewed as a prescription drug.
- Eye- and ear-related conditions. The cost of eye exams, contact lenses, contact lens insurance and prescription glasses (including sunglasses) is deductible, assuming your insurance doesn't have a vision play. So, too, is eye surgery to correct vision problems, like Lasix. Braille books are also deductible. Those with hearing issues can deduct the costs of exams and hearing aids (including batteries).
- Home improvements. If you install permanent features to accommodate a disability (e.g., wheelchair ramps, handrails in bathrooms), the cost is fully deductible. However, the cost of special equipment in the home to address a health condition is deductible only for costs above any increase they might give to the home’s value. For example, putting in a swimming pool or steam room that costs $25,000 isn't deductible if it would add $30,000 to the worth of your residence.
- Lodging to receive medical treatment. If the treatment is out of town, a hotel/motel stay is deductible up to $50 per night. If a parent must accompany a minor child who is receiving treatment, the per-night dollar limit applies to both parent and child (i.e., $100 per night). This deduction only applies to the lodging itself, not meals.
- Attending a medical conference. The cost of admission and transportation to a conference on a chronic condition that a taxpayer or spouse or dependent suffers from is deductible. However, meals and lodging expenses are not deductible.
- Organ transplants. Not only are the costs of the organ recipient deductible, the expenses for the donor (including testing, hospital stay, and transportation) are too. It is illegal to pay for an organ donation, however.
- Personal attendant costs. For someone unable to manage the tasks of daily living (bathing, dressing, taking medications, toileting), the cost of caregiving to help is deductible. Generally, the deductible portion is limited to personal assistance with feeding, dressing, etc. and does not include the cost of housecleaning and other chores (though this may be hard to separate out, realistically speaking). However, the cost of meals for a personal attendant may be deductible.
- Rehab treatment programs. The cost of in-patient and out-patient treatment programs for alcohol, drug addiction and other medical problems is deductible.
- Reproduction-related costs. This includes the cost of birth control pills, pregnancy test kits, abortions, vasectomies and fertility treatments (e.g., in vitro fertilization or surgery to reverse a vasectomy).
- Service animals. Deductible costs for a seeing eye dog and other service animals include not only their initial price tag, but also their food, training costs and vet bills.
- Sex-reassignment surgery and hormone therapy to treat gender identity disorder (GID). The cost of breast augmentation surgery, even as part of a gender transition, may not be deductible, however.
- Smoking-cessation programs/efforts These costs include doctor-prescribed treatments. Over-the-counter gums, patches and other treatments do not count.
- Special diets. Doctor-prescribed foods to treat a medical condition (e.g., celiac disease, obesity or hypertension) may be partially deductible. Only the cost of special foods that exceeds the cost for regular foods is deductible, which can be difficult to prove.
- Special education costs that address diagnosed physical, mental or emotional conditions, like classes to manage dyslexia, for example.
- Travel costs to doctors, pharmacies, therapy sessions, etc. You can deduct the cost of cab fare or public transportation. If you use your personal vehicle, you can rely on an IRS-set mileage rate (18 cents per mile in 2018), but you must keep records of driving for medical purposes.
- Weight-loss programs for those who have a medical condition (including obesity). However, programs for maintaining general good health are not deductible.
- Wigs for cancer patients who lose their hair from chemotherapy or radiation therapy.
The Bottom Line
It's worth tallying up any and all health-related expenses that are not covered by insurance or other reimbursement method, to see if you meet the percentage-of-AGI threshold. That 7.5% of threshold, which was set by the Tax Cuts and Jobs Act of 2017, is slated to rise to the pre-tax reform level of 10% in 2019. So gather ye deductions while ye may.