Is Medical Alert Tax Deductible?
Independent seniors living on a fixed retirement income are often looking for ways to save money, and this is especially true for those who live alone and are on a tight budget. Medical alert systems let seniors retain their independence without putting their well-being and safety at risk, but they do come at a cost.
One way to offset the expense is by reducing the amount of income tax a senior owes the Internal Revenue Service (IRS) on a yearly basis. If you or a loved one are considering investing in a medical alert system, you may be curious as to whether these devices and their monthly monitoring fees are tax deductible.
Eligible Medical Expenses According to the IRS
The IRS allows taxpayers to deduct some medical-related costs incurred for themselves, their spouse or other eligible dependents to help lower their taxable income, and they published a detailed guide on the topic that’s updated annually. It includes a long list of permissible out-of-pocket costs, including supplies, equipment and devices used to diagnose, treat, prevent and cure various physical and mental illnesses, disabilities and disorders.
The deductible medical expenses listed include:
- Health insurance premiums
- Prescription medications
- Various types of medically necessary equipment
- Devices, such as hearing aides, eyeglasses and dentures
- Supplies, such as blood glucose testing strips
- Communication aids for deaf or blind individuals
How Medical Alert Systems May Qualify as a Medical Expense
Medical alert systems and monitoring services aren’t specifically mentioned on the IRS list of qualifying medical costs, but they may fit into two equipment expense categories:
- Equipment that’s prescribed by a physician to aid a person living with a specific condition, illness or disability
- Special equipment related to necessary medical care that’s installed in a taxpayer’s home
Funds paid to a medical information plan are also considered allowable expenses, and the IRS guide states this can include amounts paid to a program of medical expenses, which stores medical information in a computer database and retrieves and delivers the information to an attending physician upon request.
Many medical alert providers keep a copy of each subscriber’s medical history stored electronically and furnish it to emergency responders or physicians when necessary. If your medical alert company provides this service, it may be possible to deduct a portion or all of the monthly fees you pay as a medical expense on your federal tax return.
How to Claim a Deduction for Medical Expenses
The IRS has certain requirements you must meet to claim a deduction for medical expenses, such as installing medical alert system equipment or monthly fees paid to a medical alert company for storing and providing your medical records.
To take the deduction:
- The total dollar amount of your eligible medical expenses must exceed 10% of your adjusted gross income (AGI)
- You must itemize your deductions instead of using the standard deduction
- You must file your taxes using IRS Form 1040 and itemize deductions using Schedule A
- You may only claim amounts paid for medical expenses during the current tax year
Is Claiming a Medical Expense Deduction Worthwhile?
Even if you’re able to claim expenses paid for a medical alert system as a deduction on your taxes, you still need to determine if doing so will reduce the amount of tax you’ll owe the IRS.
First, you need to calculate the amount you can deduct for medical expenses by multiplying your AGI by 10% and then subtracting your total spent on eligible medical expenses. For instance, let’s say you have an AGI of $50,000 and $8,500 in medical expenses. Multiplying $50,000 by 10% gives you $5,000. If you then subtract $5,000 from $8,500, you end up with a potential deduction of $3,500.
Next, decide whether itemizing your deductions is worthwhile versus taking the standard deduction of $12,200 (single) or $24,400 (married). To do so, you’ll need to calculate and add in all the other available deductions you can itemize. These include:
- Mortgage interest you’ve paid up to $750,000 in debt on a personal residence along with up to $100,000 owed on a home improvement loan
- Donations you’ve made to charitable organizations, which can total up to 60% of your AGI
- State income tax or sales tax you’ve paid, but not both
- Property taxes, which can include taxes you’ve paid on a home, boat, car and other personal property
Seek Expert Advice About a Medical Alert Deduction
For a definitive answer about whether you, your spouse or dependent can use medical alert system costs as a tax deduction — and if it’s worth itemizing your deductions — it’s best to seek the advice of a professional tax preparer who’s familiar with the IRS rules about qualifying medical expenses. Depending on the advice you receive, it may also be a subject to discuss with your family physician in case a prescription is necessary.
If you find out that it’s not possible to claim a medical alert system tax deduction, there may be other ways to help defray the cost. These systems are covered by Medicare Advantage plans in some states as well as some Medicaid waivers and non-Medicaid assistance programs funded by individual states. Most medical alert system providers also offer a range of packages at various price points, so you may find one that allows you to stay within your budget and still enjoy greater peace of mind and safety at home.