More chores are the last thing any of us want, but when it comes to medical expenses, keeping track of them can benefit you later. In fact, there are two very good reasons to maintain meticulous records of your out-of-pocket spending on healthcare.
Evaluate your Medicare options. Understanding how much you’re spending on premiums, copays, deductibles, medications, and medical equipment can help you understand whether your current Medicare plan is a good fit for your needs. If your expenses seem too high, you have the option to enroll in a different plan during the Annual Election Period each fall or the Open Enrollment period from January through March (only for those enrolled in Medicare Advantage plans).
Sometimes, switching plans can help you shave off some of your excess expenses.
Deduct your unreimbursed medical expenses on your tax return. A healthcare expense is “unreimbursed” when it is not covered nor reimbursed by your healthcare plan (including Medicare plans). Assuming that is true, you can claim the following unreimbursed expenses as a potentially valuable deduction on your federal income tax return:
- Out-of-pocket spending on surgeries, treatment, or preventive care
- Dental care, including dentures
- Vision care, including eyeglasses or contact lenses
- Hearing exams and hearing aids
- Payments for prescription medications
- Payment for insulin
- Travel expenses when you must travel to receive medical care, such as mileage, bus fare, parking and toll fees, etc.
If your expenses exceed 7.5 percent of your adjusted gross income (AGI) you can deduct those on your tax return. This can be helpful to retirees, who must budget a fixed income while working to reduce income tax liability. Do consult with a tax professional before making any changes to your tax filing status, so that they can guide your decision in the direction that best benefits you.