Medcial Expense Deduction - Questions

[taxea]

A written recommendation by the dr for an OTC drug should be kept in the client file.
As for the lab tests....I wouldn't include them if there was no dr. order. The SOP way is the dr orders the tests, the client goes to lab and a dr. appt is made when the tests are completed and available to the doctor.

[JohnH]

Many thanks to everyone for the wide-ranging discussion. I lean toward the deduction being questionable at best, even if we stay away from the "Prescription Drug" issue. On that score, there's no question it's non-deductible.

I'm comfortable with the deduction under the "supplement" category because it isn't a general-health recommendation. Rather, it is universally recommended as part of the course of treatment for a specific illness. But it's clear even this might be questioned. If the deduction is taken, then at about $300 - $400 per year it wouldn't be the basis for a serious fight in an audit.

[TAXNJ]

Does this have anything to do with the underlying issue of taking OTC medications as a deduction on Schedule A ? ?

FE

You could be correct whether if and how IRS Notice 2010-59 would apply (Original Poster knows the specifics of the scenario and makes that decision), but think that the following does apply:

Section 213(d) (3)Prescribed drug.—
(b) Limitation with respect to medicine and drugs
An amount paid during the taxable year for medicine or a drug shall be taken into account under subsection (a) only if such medicine or drug is a prescribed drug or is insulin.

Think Original Poster has enough information at this point.

[FEDUKE404]

IRS cite

Does this have anything to do with the underlying issue of taking OTC medications as a deduction on Schedule A ? ?

FE

[TAXNJ]

ANOTHER DEFINITION if you want to consider it

One would think the definition of a "prescription drug" would be somewhat self-explanatory. Doctor writes a prescription, patient's insurance company considers payment, pharmacist dispenses.

While there obviously are gray zones for other items "suggested" by a doctor (think daily aspirin, vitamin supplement, shoes for a regular walk) it is a stretch for those to cross the threshold into deductibility.

OTOH, you have cases like ibuprofen: Buy a bottle of same at pharmacy and take four 200 mg tablets for injury. OTC = no deduction. Doctor writes prescription for 800 mg tablets, and then you have a clearly deductible prescription medication.

FWIW, I usually go by annual printout of prescription drugs that any pharmacy will provide upon request.

From current IRS Pub 502:
You can include in medical expenses amounts you pay for prescribed medicines and drugs.
A prescribed drug is one that requires a prescription by a doctor for its use by an individual.
You can also include amounts you pay for insulin.
Except for insulin, you can't include in medical expenses amounts you pay for a drug that isn't prescribed.

FE

-What Is a Prescription?
For purposes of these rules, the Notice clarifies that a prescription means a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state.

-What About Other OTC Items?
The Notice makes clear that the requirement to get a prescription does not apply to OTC items that are not medicines or drugs, including equipment such as crutches, supplies such as bandages, and diagnostic devices such as blood sugar test kits. These items can qualify for medical care if they otherwise meet the tax code’s definition of medical care, which includes expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting
any structure or function of the body.

However, expense for items that are merely beneficial to the general health of an individual, such as an expenditure for a vacation, are not expenses for medical care.

SOURCE: LAWLEY BENEFITS GROUP

http://www.lawleyinsurance.com/wp-content/uploads/2014/09/IRSGuidance-OTCDrugs.pdf

[TAXNJ]

JOHN H - more info because remembered seeing what you are saying

Not necessarily so.
It is true that all doctors' prescriptions are in writing, but it is not true that all writing by doctors is a prescription. They often write treatment plans and make other recommendations. It is a universal recommendation in the treatment and disease management plan for the patient diagnosed with AMD to take the AREDS supplements. Hence the question.

There has been a change with OTC medicines since the IRS released IRS Notice 2010-59, which provides additional information on this requirement. Wondering if that is causing any confusion as to what we knew prior to that notice? see below:

SOURCE: LAWLEY BENEFITS GROUP
Note that expenses incurred for OTC medicines or drugs purchased without a prescription before January 1, 2011,
may be reimbursed tax-free at any time, pursuant to the terms of the plan.

"The Patient Protection and Affordable Care Act (PPACA) changed the requirements related to reimbursements for over-the-counter (OTC) drugs. These changes affect health FSAs, HRAs, HSAs and Archer MSAs, which will need a prescription to reimburse the costs of OTC drugs purchased after December 31, 2010.

On September 3, 2010, the IRS released IRS Notice 2010-59, which provides additional information on this requirement. The notice states:

• Reimbursement is restricted to prescribed drugs, insulin and OTC drugs that have a prescription;"

http://www.lawleyinsurance.com/wp-content/uploads/2014/09/IRSGuidance-OTCDrugs.pdf

SOURCE: IRS
Affordable Care Act: Questions and Answers on Over-the-Counter Medicines and Drugs
1. How are the rules changing for reimbursing the cost of over-the-counter medicines and drugs from health flexible spending arrangements (health FSAs) and health reimbursement arrangements (HRAs)?
A. Section 9003 of the Affordable Care Act established a new uniform standard for medical expenses. Effective Jan. 1, 2011, distributions from health FSAs and HRAs will be allowed to reimburse the cost of over-the-counter medicines or drugs only if they are purchased with a prescription. This new rule does not apply to reimbursements for the cost of insulin, which will continue to be permitted, even if purchased without a prescription.

3. When will the changes become effective?
A. The changes are effective for purchases of over-the-counter medicines and drugs without a prescription after Dec. 31, 2010. The changes do not affect purchases of over-the-counter medicines and drugs in 2010, even if they are reimbursed after Dec. 31, 2010.


https://www.irs.gov/uac/affordable-c...ines-and-drugs

[TAXNJ]

Not necessarily so.
It is true that all doctors' prescriptions are in writing, but it is not true that all writing by doctors is a prescription. They often write treatment plans and make other recommendations. It is a universal recommendation in the treatment and disease management plan for the patient diagnosed with AMD to take the AREDS supplements. Hence the question.

Think at this point you have your answer as to what you are going to do. We are not the ones to convince. Keep in mind your quote "If it's too good to be true, then it's neither good nor true."

[FEDUKE404]

Reading between the lines

I think this is the central issue. Nobody is claiming the AREDS supplement is a drug, so that's essentially off the table. The question revolves around whether the supplement is tax deductible, and the wording in Pub 502 addressing supplements suggests that it may be.

I assume you are referring to page 17 ("nutritional supplements") of https://www.irs.gov/pub/irs-pdf/p502.pdf .

While I see your point, I'm not sure the "recommendations" would cross the threshold. Many heart attack patients take a daily aspirin. My doctor recommends two Vitamin D tablets daily. Deductible?? What do you do with a "recommendation" to eat more expensive gluten-free and/or organic food?

Like many things in the IRS world, they just like to keep us guessing.

FE

[JohnH]

I think this is the central issue. Nobody is claiming the AREDS supplement is a drug, so that's essentially off the table. The question revolves around whether the supplement is tax deductible, and the wording in Pub 502 addressing supplements suggests that it may be.

[JohnH]

Not necessarily so.
It is true that all doctors' prescriptions are in writing, but it is not true that all writing by doctors is a prescription. They often write treatment plans and make other recommendations. It is a universal recommendation in the treatment and disease management plan for the patient diagnosed with AMD to take the AREDS supplements. Hence the question.

[FEDUKE404]

What exactly IS a "prescription drug" ??

One would think the definition of a "prescription drug" would be somewhat self-explanatory. Doctor writes a prescription, patient's insurance company considers payment, pharmacist dispenses.

While there obviously are gray zones for other items "suggested" by a doctor (think daily aspirin, vitamin supplement, shoes for a regular walk) it is a stretch for those to cross the threshold into deductibility.

OTOH, you have cases like ibuprofen: Buy a bottle of same at pharmacy and take four 200 mg tablets for injury. OTC = no deduction. Doctor writes prescription for 800 mg tablets, and then you have a clearly deductible prescription medication.

FWIW, I usually go by annual printout of prescription drugs that any pharmacy will provide upon request.

From current IRS Pub 502:
You can include in medical expenses amounts you pay for prescribed medicines and drugs.
A prescribed drug is one that requires a prescription by a doctor for its use by an individual.
You can also include amounts you pay for insulin.
Except for insulin, you can't include in medical expenses amounts you pay for a drug that isn't prescribed.

FE

[TAXNJ]

As long it is in writing, for a specific health condition, and not for general nutritional needs, it should be deductible.

I think it is originally based on Revenue Ruling 55-261 which allow special foods to be deductible (see #15 on the link ... whiskey was deductible).

http://www.stepnowskilaw.com/IRS55-261.html

There have been numerous other rulings since then, but it seems like they are all based on the original 55-261.

It is based on a "prescription" by a medical doctor (that's what "in writing" means) whether you look at the code or revenue ruling.

[TaxGuyBill]

As long it is in writing, for a specific health condition, and not for general nutritional needs, it should be deductible.

I think it is originally based on Revenue Ruling 55-261 which allow special foods to be deductible (see #15 on the link ... whiskey was deductible).

http://www.stepnowskilaw.com/IRS55-261.html

There have been numerous other rulings since then, but it seems like they are all based on the original 55-261.

[JohnH]

Here's the quote from Pub 502. (Yes, I know the Pubs aren't the Regs.)
But this wording is in there for some reason.
It clearly makes allowance for this situation by what it says after the word "unless".

--->Nutritional Supplements
You can't include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. These items are taken to maintain your ordinary good health and aren't for medical care. <---

The routine recommendation by virtually all medical practitioners is that patients diagnosed with AMD should use the AREDS supplements, but these supplements are not available by prescription. This is why I am raising the question.

Of course, maybe in this case the Pub is simply mistaken...

[spanel]

Need a prescription for any over the counter drugs.

Chris