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‘Qualified Medical Expenses’
by Tony Novak, CPA, MBA, MT
,last updated on 12/1/2011
The federal tax code uses the term “qualified medical expenses” to describe transactions that are provided preferential treatment on individual tax returns and under an employer-provided health plan. An accurate understanding of the definition of this term is essential to correctly calculate many tax individual and business tax returns. This definition also affects taxpayers who make withdrawals from Individual Retirement Accounts, Medical Savings Accounts, Flexible Spending Accounts and Health Savings Accounts.
Qualified medical expenses may include expenses paid for the prevention or alleviation of a physical or mental defect or illness. Medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or treatment affecting any structure or function of the body. Drugs are covered. Medical expenses include fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and Christian Science practitioners. Also included are payments for hospital services, qualified long–term care services, nursing services, and laboratory fees. Payments for acupuncture treatments or inpatient treatment at a center for alcohol or drug addiction are also covered medical expenses. You may include amounts you paid for participating in a smoking–cessation program and for drugs prescribed to alleviate nicotine withdrawal. However, you may not include amounts paid for nicotine gum and nicotine patches, which do not require a prescription. You may deduct the cost of participating in a weight-loss program for a specific disease or diseases, including obesity, diagnosed by a physician. You may not include the cost of purchasing diet food items. In addition, you may include expenses for admission and transportation to a medical conference relating to the chronic disease of either yourself, your spouse, or your dependent (if the costs are primarily for and essential to the medical care). However, you may not include the costs for meals and lodging while attending the medical conference.
The cost of items such as false teeth, prescription eyeglasses or contact lenses, laser eye surgery, hearing aids, crutches, wheelchairs, and guide dogs for the blind or deaf are qualified medical expenses.
You may not include funeral or burial expenses, health club dues, toothpaste, toiletries, cosmetics, a trip or program for the general improvement of your health, or most cosmetic surgery.
Transportation costs primarily for and essential to medical care qualify as medical expenses. The actual fare for a taxi, bus, train, or ambulance can be included. If you use your car for medical transportation, you can include actual out–of–pocket expenses such as gas and oil, or you can deduct the standard mileage rate of 12 cents a mile. With either method you may include tolls and parking fees.
You may include in medical expenses the incidental cost of meals and lodging charged by the hospital or similar institution if your main reason for being there is to receive medical care.
This article was adapted from IRS publications intended for the 2003 tax year. See the latest version of IRS Publication 502 for more detail an updates.
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