3 medical tax breaks prompted by COVID-19

February 8, 2022
Emergency room-cropped-filtered

Photo by Kay Bell

Regular readers probably noticed that this blog post is much later than usual. The reason is I lost around eight hours today. There were spent at our local hospital emergency room.

The hubby fell and hit his head pretty hard. So, unable to get an appointment with our primary care physician until later this week, we decided to go to the ER today out of, as the saying goes, an abundance of caution.

We’re glad we did. The official diagnosis is a concussion, but a relatively minor one. That’s a relief.

The ER doctor and consulting neurologist said the hubby’s CT scans showed that he’s just going to have to wait for the wooziness and other side effects to subside. I’m just glad that the imaging didn’t reveal his grey matter was Abby Normal.

But cooling our heels — literally; what’s up with the chill in hospitals!? — in the ER most of the day naturally got me thinking of tax-deductible medical costs.

And since the visit also was made while we’re still dealing with the COVID-19 pandemic, here are three health care cost tax changes that were part of recent coronavirus relief laws.

1. Deductible PPE purchases: Last year, in Announcement 2021-7, the Internal Revenue Service announced that the costs of personal protective equipment, aka PPE, purchased for the primary purpose of preventing the spread of coronavirus are deductible medical expenses.

This includes face masks, hand sanitizer and sanitizing wipes. This tax-deduction addition applies to PPE used by the taxpayer, his or her spouse and dependents.

These total PPE expenses can be added to all your medical costs that you claim as an itemized expense on Schedule A.

A quick side note here about teachers. Educators also got special PPE consideration, and they don’t need to itemize them. Certain school employees can claim, on 2021 tax returns, up to $250 they personally spent to provide their students and classrooms with necessary educational material.

These expenditures are part of the educators’ expenses above-the-line deduction. The maximum amount that be claimed is adjusted annually for inflation. For 2021 taxes you’re filing now it’s $250; it’s bumped to $300 for the 2022 tax year. And COVID-19 protective items purchased for classroom use count toward the $250/$300 totals.

2. Return to 7.5 percent itemizing threshold: While PPE probably won’t come to a whole lot, every expense helps when you’re looking to itemize your medical deductions. That’s because your claims must exceed 7.5 percent of your adjusted gross income (AGI). This means if you make $50,000, you can deduct qualifying medical expenses that exceed $3,750 for the 2021 tax year.

Yes, that means you’ve had to deal with a lot of costly illness during the tax year. But that 7.5 percent threshold is better than the previous limit. The Affordable Care Act, or Obamacare as it’s still popularly known, bumped the allowable medical deductions amount to more than 10 percent of AGI for most taxpayers.

Enter COVID-19 and myriad related legislation, such as Consolidated Appropriations Act, 2021 that was signed into law in late December 2020. The bill also contained several coronavirus relief provisions, including a permanent reversion to the 7.5 percent threshold for claiming itemized medical expenses on Schedule A.

3. Rx no longer needed for OTC meds’ FSA, HSA reimbursement: Another ACA change required us to get a prescription from our doctors for over-the-counter (OTC) medicines if we wanted to pay for them with medical flexible spending account (FSA) or health savings account (HSA) funds. The Coronavirus Aid, Relief and Economic Security (CARES) Act changed that.

When the CARES Act became law in March 2020, it removed the Rx requirement for HSA and FSA reimbursement of OTC medicines. It also added feminine hygiene products to the list of expenses eligible for reimbursement. So the money in these tax-advantaged medical accounts now can be used for these every day, necessary items.

I hope these medical tax law changes can help you.

I also hope you never have to spend any time in an emergency room!

You also might find these items of interest:

 

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