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Tax and Medical Expenses

Tax and Medical Expenses

Old Oct 17th 2017, 6:22 pm
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Default Tax and Medical Expenses

Hi,
Quick question, l have had to go to the doctor a couple of times for a minor issue and wondered if you are able to offset the out of pocket expenses against tax?
Thanks in advance for your help.
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Old Oct 17th 2017, 6:26 pm
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Default Re: Tax and Medical Expenses

No. .... Only medical expenses exceeding a certain percentage of your annual income can be deducted, and the percentage is quite high - 10%, I think. ..... I know it is at least 7%, but I think it went up.

This is why a Flexible Spending Account (FSA) or Health Savings Account (HSA) is a good idea - you fund them with pre-tax cash and then use them tax free for qualified medical expenses.
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Old Oct 17th 2017, 6:33 pm
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Default Re: Tax and Medical Expenses

Originally Posted by Pulaski View Post
No. .... Only medical expenses exceeding a certain percentage of your annual income can be deducted, and the percentage is quite high - 10%, I think. ..... I know it is at least 7%, but I think it went up.

This is why a Flexible Spending Account (FSA) or Health Savings Account (HSA) is a good idea - you fund them with pre-tax cash and then use them tax free for qualified medical expenses.
Thanks for your quick response. I have never heard of an FSA or HSA,that sounds like a sensible approach. Thanks again for advise.
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Old Oct 17th 2017, 6:39 pm
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Default Re: Tax and Medical Expenses

Originally Posted by Ecto17 View Post
Thanks for your quick response. I have never heard of an FSA or HSA,that sounds like a sensible approach. Thanks again for advise.
You're welcome.

You can only sign up for an FSA or HSA as part of your annual insurance registration, which is usually during October or November (assuming you're employed), and whether you qualify for the FSA or HSA depends on which sort of health insurance policy you sign up for.

The HSA contains money that is "yours for life", the FSA money must be used within the year (usually plus 10 weeks - 3 months grace).
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Old Oct 17th 2017, 7:48 pm
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Default Re: Tax and Medical Expenses

Originally Posted by Pulaski View Post
You're welcome.

You can only sign up for an FSA or HSA as part of your annual insurance registration, which is usually during October or November (assuming you're employed), and whether you qualify for the FSA or HSA depends on which sort of health insurance policy you sign up for.

The HSA contains money that is "yours for life", the FSA money must be used within the year (usually plus 10 weeks - 3 months grace).
Do you just loose the money if you don't use it in the FSA?
I will definitely be getting hubby to ask about this as it is his cover we are on.
Thanks again
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Old Oct 17th 2017, 7:58 pm
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Default Re: Tax and Medical Expenses

Originally Posted by Ecto17 View Post
Do you just loose the money if you don't use it in the FSA?
I will definitely be getting hubby to ask about this as it is his cover we are on.
Thanks again
Yes. Can be hard to budget.
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Old Oct 17th 2017, 8:13 pm
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Default Re: Tax and Medical Expenses

Originally Posted by Ecto17 View Post
Do you just loose the money if you don't use it in the FSA? ....
Yes, what Tom said above. "Use it or lose it!"

I am a strong advocate for high deductible (HD) insurance, and that comes with the right to open an HSA, where the balance is yours for life. My wife and I have been funding ours for a decade, and even after making medical payments (deductibles and copays) from it, our HSAs (we have one each) have been growing at a rate of $'000's/yr.

I will warn you thought, that HD insurance isn't intuitively obvious when you have been used to the "all you can eat buffet" approach of the NHS, but if you can get your head around the idea that you can save a packet on health insurance in exchange for picking up the minor and routine medical expenses yourself (using funds in your HSA), then HD insurance is a very good deal.

I like to compare it to car insurance - if you expected car insurance to pay for tyres, wipers, and oil changes then the cost of car insurance would be very high. So likewise, if you are willing to pay for basic visits to the doctor, your prescriptions, and other minor expenses, you can potentially save much more in premiums each month than you will usually pay out in expenses. And of course the HD insurance kicks in for major medical bills if you get seriously I'll or injured.
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Old Oct 17th 2017, 8:18 pm
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Default Re: Tax and Medical Expenses

Originally Posted by Pulaski View Post
Yes, what Tom said above. "Use it or lose it!"
Not always. Some FSA plans now allow a certain amount (up to $500) to be carried over to the subsequent tax year:

https://20somethingfinance.com/flexi...arryover-rule/
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Old Oct 18th 2017, 12:43 am
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Default Re: Tax and Medical Expenses

Thanks guys, l haven't fully got my head around the health cover yet as still quite new but nothing like a minor medical incident to focus the mind!!
Thanks again for all the great response, really helps me understand.
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