Two Great Reasons to Track Your Medical Expenses
Medical expenses have been climbing for everyone, but they hit retirees harder than most. That’s because most retirees are living on a fixed income, so their out-of-pocket costs take a bigger dent out of their budgets. And of course, we know that health problems – and therefore healthcare bills – become more prominent in our sixties and beyond. If you’re frustrated with your healthcare expenses, we urge you to keep track of all your bills for two very important reasons.
First, tracking your healthcare expenses each year will tell you how well your current Medicare plan is working for you. If your out-of-pocket spending feels too high, you have two different opportunities to reevaluate your Medicare plan. During the Annual Election Period in the fall, you can change from your current plan into a new one which will take effect on January 1. Or from January 1 to March 31, you can participate in Medicare Open Enrollment, which allows those enrolled in a Medicare Advantage plan to switch between plans or go back to Original Medicare.
Working with an experienced insurance broker, who is familiar with Medicare options, can help you identify a plan that helps you to manage your expenses.
And there’s another reason to keep track of all your receipts and statements: On your tax return in the spring, you can claim a valuable deduction for unreimbursed medical expenses. “Unreimbursed” means that your healthcare plan did not cover them nor reimburse you for the expense. You can claim expenses relating to…
- Surgeries, treatment, or preventive care
- Dental care, including dentures
- Vision care, including eyeglasses or contact lenses
- Hearing exams and/or hearing aids
- Payments for prescription medications
- Payment for insulin products
- Travel expenses when you must travel to receive medical care
Only medical expenses which exceed 7.5 percent of your adjusted gross income can be deducted. In order to claim the medical expense deduction, you will need to file an itemized tax return. Use IRS Form 1040 and attach Schedule A to list your deductions. Consult a tax professional to learn more about this potentially valuable deduction, and remember to call us if you need help with your Medicare plan.