Self-prescribed diagnostic tests qualify as deductible medical expenses

[Guest guest]

Good info from another board I'm on. What it means in essence is that

you can deduct these on your Schedule A a long as the total is above the

IRS set limits for deduction. You will get a proportion. I'm not sure,

but my reading also gave me the impression that you can use an employer

cafeteria plan to pay for the tests. (Employer cafeteria plans are

pre-tax deductions that the employer takes to save for you in the case

of uncovered medical expenses. The employer usually manages these, so

they would have to know they can disburse the money for the expense.)

This info came from the tax code, with IRS examples translated into

plain language by someone else.

P.

" " *Self-prescribed diagnostic tests qualify as deductible medical expenses

*Rev Rul 2007-72, 2007-50 IRB 1154

A new revenue ruling makes it clear, in the context of three distinct

factual situations, that amounts paid by healthy individuals for

self-initiated diagnostic and similar procedures qualify as deductible

medical expenses under Code Sec. 213(a) .

RIA observation: Because they qualify as medical expenses, these items

also can be reimbursed under a tax-favored flexible spending account.

Background. Code Sec. 213(a) allows a deduction for expenses paid during

the tax year, not compensated for by insurance or otherwise, for medical

care of the taxpayer, spouse, or dependent, to the extent that they exceed

7.5% of adjusted gross income. Medical care includes amounts paid for the

diagnosis, cure, mitigation, treatment, or prevention of disease, or for

the purpose of affecting any structure or function of the body. ( Code

Sec. 213(d)(1)(A) )

Medical care includes X-rays and laboratory and other diagnostic services.

Amounts paid for obstetrical services are deemed to be for the purpose of

affecting a structure or function of the body and therefore are paid for

medical care. ( Reg. § 1.213-1(e)(1)(ii) )

" Diagnosis " is the determination of a medical condition, such as a

disease, by physical examination or study of symptoms. (Black's Law

Dictionary (8th ed., 2004)) A diagnosis may encompass a determination that

disease is absent. The determination of a medical condition may include

testing for changes in the functions of the body, such as those resulting

from pregnancy, that are unrelated to disease. In determining whether an

expense is for either medical or personal reasons, the recommendation of a

physician is important. (Havey, (1949) 12 TC 409 ) However, this

determination is unnecessary in the case of expenses for items that are

wholly medical in nature and serve no other function in everyday life.

(Stringham, (1949) 12 T.C. 580 , affd (6th Cir. 1950) 39 AFTR 777 , 183

F.2d 579 )

The amount of the deduction under Code Sec. 213 is not limited by a

ceiling and although additional costs for personal convenience are not

allowable, Code Sec. 213 does not limit the deduction to amounts paid for

the least expensive form of medical care available. (Ferris, (7th Cir.

1978) 42 AFTR 2d 78-5674 , 582 F.2d 1112 )

Common facts. In each situation described below, the costs paid by the

taxpayers are not compensated by insurance or otherwise, and the taxpayers

are not experiencing any symptoms of illness.

Situation 1 facts and result. Ann undergoes an annual physical

examination, which is performed by a physician. She pays for the

physician's services and laboratory tests. Result: The amount Ann pays for

the annual physical examination is for diagnosis and qualifies as an

expense for medical care even though she is not experiencing any symptoms

of illness.

Situation 2 facts and result. Bob pays for a full-body electronic scan, a

relatively high-cost procedure, performed by a technician at a clinic. The

scan examines the condition of his internal organs and may identify

disease or other abnormalities. The procedure can be obtained without a

physician's direction. Before undergoing it, Bob neither consulted a

physician nor determined if less expensive alternatives were available.

Result: The amount Bob pays for the full-body scan is for diagnosis and

qualifies as an expense for medical care even though he is not

experiencing symptoms of illness and has not obtained a physician's

recommendation before undergoing the procedure. The ruling observes that

the procedure serves no non-medical function and the expense is not

disallowed because of the high cost or possible existence of less

expensive alternatives.

Situation 3 facts and result. Carole buys a test kit and uses it to

determine whether she is pregnant. Result: The amount Carole pays for the

pregnancy test qualifies as an expense for medical care even though its

purpose is to test the healthy functioning of the body rather than to

detect disease. " "