Jeffrey Wade
If you're wondering whether you can write off medical bills paid by insurance, you're not alone. The good news is that, in some cases, you may be able to deduct a portion of your medical costs if they exceed a certain percentage of your adjusted gross income (AGI). This is known as a medical expense deduction and it can help reduce your tax bill. However, it's important to note that you can only deduct unreimbursed medical expenses, so if your insurance has already covered the cost, you generally cannot claim it.
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What You'll Learn
Deducting medical expenses
The IRS allows you to deduct unreimbursed payments for preventative care, treatment, surgeries, dental and vision care, visits to psychologists and psychiatrists, prescription medications, appliances such as glasses, contacts, false teeth and hearing aids, and expenses that you pay to travel for qualified medical care.
You can only deduct medical expenses that are more than 7.5% of your adjusted gross income (AGI). You must itemize your deductions on IRS Schedule A in order to deduct your medical expenses instead of taking the Standard Deduction. You can also include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them.
If you are self-employed and have a net profit for the year, you may be eligible for the self-employed health insurance deduction. This is an adjustment to income, rather than an itemized deduction, for premiums you paid on a health insurance policy covering medical care, including a qualified long-term care insurance policy for yourself, your spouse, and dependents.
You can include in medical expenses the cost of meals at a hospital or similar institution if a principal reason for being there is to get medical care. You can't include in medical expenses the cost of meals that aren't part of inpatient care. You can also include amounts paid for admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent. The costs of the medical conference must be primarily for and necessary to the medical care of you, your spouse, or your dependent.
You can't deduct the cost of nonprescription drugs (except insulin) or other purchases for general health, such as toothpaste, health club dues, vitamins, diet food and nonprescription nicotine products. You also can't deduct medical expenses paid in a different year. Additionally, if you pay for your medical expenses using money from a flexible spending account or health savings account, those expenses aren't deductible because the money in those accounts is already tax-advantaged.
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Itemizing deductions
You can only deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI). This includes unreimbursed payments for preventative care, treatment, surgeries, dental and vision care, visits to psychologists and psychiatrists, prescription medications, appliances such as glasses, contacts, false teeth and hearing aids, and expenses that you pay to travel for qualified medical care. Deductible medical expenses may also include amounts paid for acupuncture treatments, inpatient treatment at a center for alcohol or drug addiction, and smoking-cessation programs.
If you are self-employed and have a net profit for the year, you may be eligible for the self-employed health insurance deduction. This is an adjustment to income, rather than an itemized deduction, for premiums you paid on a health insurance policy covering medical care, including qualified long-term care, for yourself, your spouse, your dependents, and your child under the age of 27.
Certain costs related to nutrition, wellness, and general health are considered medical expenses. However, you cannot deduct expenses for cosmetic procedures, nonprescription drugs (except insulin), or other purchases for general health, such as toothpaste, health club dues, vitamins, diet food, and nonprescription nicotine products. You also cannot deduct medical expenses paid in a different year or amounts paid for a trip or program for the general improvement of your health.
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Medical expenses and AGI
If you have medical bills that your insurance doesn't fully cover, you may be able to deduct the unreimbursed portion to reduce your tax bill. The IRS allows you to deduct unreimbursed payments for preventative care, treatment, surgeries, dental and vision care, visits to psychologists and psychiatrists, prescription medications, appliances such as glasses, contacts, false teeth and hearing aids, and expenses that you pay to travel for qualified medical care.
To deduct medical expenses, they must alleviate or prevent a physical or mental defect or illness. You can’t deduct expenses that simply benefit general health, like vitamins or a vacation. You must itemize your deductions on IRS Schedule A to deduct your medical expenses instead of taking the Standard Deduction. The IRS allows you to deduct qualified unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income (AGI).
Deductible medical expenses may include but aren't limited to the following:
- Amounts paid in fees to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners.
- Amounts paid for inpatient hospital care or residential nursing home care, if the availability of medical care is the principal reason for being in the nursing home, including the cost of meals and lodging charged by the hospital or nursing home.
- Amounts paid for acupuncture treatments.
- Amounts paid for inpatient treatment at a center for alcohol or drug addiction; amounts paid for participation in a smoking-cessation program and for prescription drugs to alleviate nicotine withdrawal.
- Amounts paid for transportation primarily for and essential to medical care that qualifies for the medical expense deduction.
- Amounts paid for transportation include your out-of-pocket expenses for your personal car such as gas and oil, or the standard mileage rate for medical expenses, plus the cost of tolls and parking; taxi, bus, or train fare; and ambulance costs.
- Amounts paid for insurance premiums to cover medical care or qualified long-term care.
- Certain costs related to nutrition, wellness, and general health are considered medical expenses.
Expenses that are not deductible medical expenses include:
- The portion of your insurance premiums treated as paid by your employer.
- For example, employer-sponsored premiums paid under a premium conversion plan, cafeteria plan, or any other medical and dental expenses paid by the plan aren't deductible unless the premiums are included in box 1 of your Form W-2, Wage and Tax Statement.
- Funeral or burial expenses.
- Amounts paid for nonprescription medicines.
- Amounts paid for toothpaste, toiletries, or cosmetics.
- Amounts paid for a trip or program for the general improvement of your health.
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Insurance premiums
If you're self-employed and have a net profit for the year, you may be eligible for the self-employed health insurance deduction. This is an adjustment to income, rather than an itemized deduction, for premiums you paid on a health insurance policy covering medical care, including a qualified long-term care insurance policy for yourself, your spouse, and dependents. The policy can also cover your child, who is under the age of 27 at the end of the year, even if the child is not your dependent.
If you are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program, you cannot deduct the premiums paid. This is because your share of the FEHB premium is paid by making a pre-tax reduction in your salary.
If you are a retired public safety officer, you cannot include premiums for long-term care insurance if you elected to pay these premiums with tax-free distributions from a qualified retirement plan made directly to the insurance provider. These distributions would otherwise have been included in your income.
You can include in medical expenses the cost of meals at a hospital or similar institution if a principal reason for being there is to get medical care. You cannot include in medical expenses the cost of meals that are not part of inpatient care.
You can deduct medical expenses for anyone who qualifies as your spouse or dependent. If you're divorced, you can deduct any qualifying bills you pay for your children as a medical expense, even if your former spouse claims your children as dependents.
You can only deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI). To receive a tax benefit, you have to itemize deductions on Schedule A, and your total itemized deductions—deductible medical expenses, state and local taxes, home mortgage interest, and charitable contributions—must be greater than your Standard Deduction.
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Medical expenses and taxes
If you have medical bills that aren't fully covered by your insurance, you may be able to take a deduction for those to reduce your tax bill. The IRS allows you to deduct unreimbursed expenses for preventative care, treatment, surgeries, dental and vision care, and visits to psychologists and psychiatrists. Unreimbursed payments for prescription medications and appliances such as glasses, contacts, false teeth, and hearing aids are also deductible. The IRS also lets you deduct the expenses that you pay to travel for medical care, such as mileage on your car, bus fare, and parking fees.
You can only include in medical expenses the amounts paid during the tax year for which you received no insurance or other reimbursement. You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. This includes payments from Medicare. Even if a policy provides reimbursement only for certain specific medical expenses, you must use the amount you receive from that policy to reduce your total medical expenses, including those it doesn't reimburse.
The IRS allows all taxpayers to deduct their qualified unreimbursed medical care expenses that exceed 7.5% of their adjusted gross income (AGI). You must itemize your deductions on IRS Schedule A in order to deduct your medical expenses instead of taking the Standard Deduction.
Certain costs related to nutrition, wellness, and general health are considered medical expenses. Amounts paid for insurance premiums to cover medical care or qualified long-term care can be deducted. However, the portion of your insurance premiums treated as paid by your employer cannot be deducted. For example, employer-sponsored premiums paid under a premium conversion plan, cafeteria plan, or any other medical and dental expenses paid by the plan aren't deductible unless the premiums are included in box 1 of your Form W-2, Wage and Tax Statement.
If you are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program, you cannot deduct the premiums paid with that money because you are an employee whose insurance premiums are paid with money that is never included in your gross income. If you are a retired public safety officer, you cannot include premiums for long-term care insurance if you elected to pay these premiums with tax-free distributions from a qualified retirement plan made directly to the insurance provider.
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Frequently asked questions
No, you can't write off medical bills that have been paid by insurance.
You may be able to deduct a portion of your medical costs if they exceed 7.5% of your adjusted gross income (AGI).
Deductible medical expenses include unreimbursed payments for preventative care, treatment, surgeries, dental and vision care, prescription medications, appliances such as glasses and contacts, and travel expenses for qualified medical care.
If you're self-employed and have a net profit for the year, you may be able to deduct premiums paid on a health insurance policy covering medical or qualified long-term care for yourself, your spouse, your dependents, and your children under 27.
If you're a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program, you can't deduct the premiums paid because they are paid with pre-tax money.
