What You Need to Know About Reimbursement for Medical Expenses
Healthcare reimbursement is a complicated process requiring multiple steps and sometimes can take a month or more.
Whether you receive public assistance or pay for your healthcare coverage, knowing how much you owe and how much your insurance covers is essential. You may ask guide or help from experts like superbill. What is a superbill? This article will help you understand the basics of medical reimbursement and how to make it work for your situation.
What Are Qualified Medical Expenses?
Most medical expenses are tax-deductible, including health insurance premiums, doctor and hospital visits, prescriptions, and home care services. However, certain expenses don’t qualify as medical expenses and can’t be deducted from your income tax return.
For example, you can’t include in medical expenses amounts paid for a trip or vacation merely to improve your general health, even if a doctor recommends the trip. You can, however, include in medical expenses the amount you pay for transportation, primarily for medical care and essential to your treatment, such as a trip to the doctor’s office or a rehabilitation facility.
Also, you can include in medical expenses the amounts you pay for special equipment and improvements to your home if their main purpose is to accommodate your disability. These items may consist of a porch lift, an elevator, special plumbing fixtures, or other changes to the layout of your house.
You can also include in medical expenses a portion of the cost you pay for permanent improvements that increase the value of your home, even if the increase isn’t related to your disability. Unlike the exceptions described above, this rule applies to all costs you pay for property rented to you or your dependents, regardless of whether the original cost of the improvement qualified as a medical expense.
What Are Non-Qualified Medical Expenses?
Generally, you can’t include in medical expenses the amounts you pay for personal care services or household help (e.g., laundry, cleaning, cooking), even if a doctor recommends the help. However, certain nursing-type services you receive because of a disability or chronic illness can be included as qualified medical expenses.
You can also include amounts you pay to a licensed dentist for dental treatment, such as fillings, crowns, caps, dentures, extractions, and fluoride treatments. You can also include fees paid to a physiatrist or dietitian as long as a physician prescribes these services to treat a medical condition.
If you or your spouse are disabled, costs for the installation of hand controls and other special equipment for use in a car can be included in full as medical expenses. Similarly, costs for the purchase of a wheelchair can be included in full as medical expenses.
Finally, if you or your dependent are trying to get pregnant, the cost of medications or ovulation kits that a physician prescribes can be included as medical expenses. Be sure to retain the prescription or other order with your tax records.
Other costs you can include in full as medical expenses are specific improvements to your home that accommodate a disability. These improvements don’t usually increase the value of your home, but they may be deductible in full as medical expenses.
How Do I Reimburse My Medical Expenses?
In today’s era of healthcare, consumers are quickly becoming responsible for the cost of their own healthcare. As a result, employees may wonder how they will cover unexpected or unaffordable costs. Fortunately, several options are available to help mitigate these challenges, including insurance plans, flexible spending accounts, and medical expense reimbursements.
One of the best ways to pay for a doctor’s visit or other healthcare-related incident is through your employer’s employee benefits program. The most common option is the health reimbursement arrangement (HRA), also known as the medical expense reimbursement plan or MERP. The HRA is a no-fee option that allows employers to reimburse qualifying expenses incurred on behalf of their employees for eligible healthcare-related items and services.
The most important part of this process is choosing the right HRA for your company. There are many factors to consider, including the size of your budget and your desired coverage level. Using the right HRA can help ensure that your employees have access to quality health insurance while saving you money in the long run. Lastly, you’ll want to choose your company’s most reputable HRA provider.
How Do I Know If My Medical Expenses Are Qualified?
Generally, medical expenses include costs for health insurance premiums (if they aren’t deducted in pretax dollars from your paycheck), doctors, dentists, hospital stays, diagnostic testing, prescription drugs, and equipment.
However, expenses that don’t fit neatly into these categories can also be qualified medical expenses. For example, the cost of collecting, freezing, and storing umbilical cord blood could be considered a medical expense if it’s authorized by a physician to treat a disease.
The same goes for the cost of weight loss drugs, which could be deductible if they’re prescribed by a doctor and intended to help you lose weight. Amounts paid for counseling (e.g., behavioral, marriage, and pastoral counseling) for a family member with a medical condition qualify as medical expenses when authorized by a physician.
Other personal use items that could be qualified include the full cost of a wig purchased upon the advice of a physician to treat hair loss from illness. Check with your physician or the IRS for guidance if you need to know whether a specific item is a qualified expense.
Most taxpayers can claim their unreimbursed medical expenses as a tax deduction. However, those whose income exceeds 7.5% of their adjusted gross income may be required to itemize their medical expenses instead of taking the standard deduction.