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Publication 17

How Do You Treat Reimbursements?(p146)

You can include in medical expenses only those amounts paid during the taxable year for which you received no insurance or other reimbursement.

Insurance Reimbursement(p146)

You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. This includes payments from Medicare.
Even if a policy provides reimbursement for only certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse.


You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. The insurance you receive for the hospital and doctors' bills is more than their charges. In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses.

Health reimbursement arrangement (HRA).(p146)

A health reimbursement arrangement is an employer-funded plan that reimburses employees for medical care expenses and allows unused amounts to be carried forward. An HRA is funded solely by the employer and the reimbursements for medical expenses, up to a maximum dollar amount for a coverage period, are not included in your income.

Other reimbursements.(p146)

Generally, you do not reduce medical expenses by payments you receive for:
You must, however, reduce your medical expenses by any part of these payments that is designated for medical costs. See How Do You Figure and Report the Deduction on Your Tax Return, later.
For how to treat damages received for personal injury or sickness, see Damages for Personal Injuries, later.
You do not have a medical deduction if you are reimbursed for all of your medical expenses for the year.

Excess reimbursement.(p147)

If you are reimbursed more than your medical expenses, you may have to include the excess in income. You may want to use Figure 21-A to help you decide if any of your reimbursement is taxable.
Premiums paid by you.(p147)
If you pay either the entire premium for your medical insurance or all of the costs of a plan similar to medical insurance and your insurance payments or other reimbursements are more than your total medical expenses for the year, you have an excess reimbursement. Generally, you do not include the excess reimbursement in your gross income.

Premiums paid by you and your employer.(p147)

If both you and your employer contribute to your medical insurance plan and your employer's contributions are not included in your gross income, you must include in your gross income the part of your excess reimbursement that is from your employer's contribution.
See Publication 502 to figure the amount of the excess reimbursement you must include in gross income.

Reimbursement in a later year.(p147)

If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you generally must report the reimbursement as income up to the amount you previously deducted as medical expenses.
However, do not report as income the amount of reimbursement you received up to the amount of your medical deductions that did not reduce your tax for the earlier year. For more information about the recovery of an amount that you claimed as an itemized deduction in an earlier year, see Itemized Deduction Recoveries in chapter 12.

Figure 21-A. Is Your Excess Medical Reimbursement Taxable?


Medical expenses not deducted.(p147)

If you did not deduct a medical expense in the year you paid it because your medical expenses were not more than 10% of your AGI (7.5% of your AGI if either you or your spouse was born before January 2, 1950), or because you did not itemize deductions, do not include the reimbursement up to the amount of the expense in income. However, if the reimbursement is more than the expense, see Excess reimbursement, earlier.


For 2014, you were unmarried and under age 65 and you had medical expenses of $500. You cannot deduct the $500 because it is less than 10% of your AGI. If, in a later year, you are reimbursed for any of the $500 in medical expenses, you do not include the amount reimbursed in your gross income.