Are Co-Pays Deductible Medical Expenses on a Tax Return?

by Mark Kennan, Demand Media
    Your copay for each hospital visit could lower your taxes.

    Your copay for each hospital visit could lower your taxes.

    Many health insurance plans require copays that vary in size. Even if the individual copays aren't overly high, over the course of the year they can add up. If they end up totaling a large enough amount, you can claim a tax deduction when you file at the end of the year.

    Qualified Copays

    Any copay paid for a qualifying medical, dental or vision expense counts toward calculating your medical-expenses deduction. These include your annual checkups, testing, diagnosis, prescription drugs and other treatment or preventative care. For example, if you cut your head and have to go to the emergency room to get stitches, your copay qualifies. Copays you pay for your spouse or dependents also qualify.

    No Reimbursement

    If you are later reimbursed for your copay, you can't claim that cost as a tax deduction. For example, if you have a supplemental insurance plan that pays you back for your copays, even though you must pay out-of-pocket when you're at the doctor's office, you can't include that in your deduction.

    Additional Barriers

    The medical-expenses deduction only allows you to take a deduction for the portion of your qualifying expenses that exceeds the adjusted gross income threshold. Through the 2012 tax year, the threshold is 7.5 percent, but beginning in 2013 it's set to increase to 10 percent. Since your copays alone aren't likely to exceed the limit, keep track of all your qualifying expenses and combine them. For example, say in 2013 your adjusted gross income is $75,000. Even if you have $3,000 in copays, you can't take a deduction. However, if you have $5,000 in other qualifying medical expenses, you could write off $500 on your taxes.

    Claiming the Deduction

    The write-off is an itemized deduction, so you can only claim it after you've given up your standard deduction. Use Schedule A to report your copays, as well as any other itemized deductions you're eligible to claim. On line 1, enter your total qualified medical expenses, including copays. On line 2, copy your adjusted gross income from line 38 of Form 1040. Line 3 requires you to calculate the threshold for claiming the deduction, and line 4 reports your deduction amount. When you total your itemized deductions, only the amount on line 4 is included; lines 1 through 3 are just used to figure your deduction.

    About the Author

    Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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