fbpx

< Back to Thought Leadership

Don’t Overlook How You Can Maximize Medical Expenses in 2018

The cost of healthcare has been on an upward trajectory for years. With proper planning, taxpayers could take advantage of deducting medical expenses in 2018, but only if you itemize and have enough expenses to exceed 7.5% applicable floor. At the same time, several taxpayers might not benefit from the deduction due to the increase of the standard deduction under the Tax Cuts and Jobs Act (TCJA).

The Changes

Various limits apply to most tax deductions, and one type of limit is a “floor,” which means expenses are deductible only to the extent that they exceed that floor (typically a specific percentage of your income). One example is the medical expense deduction.

Because it can be difficult to exceed the floor, a common strategy is to “bunch” deductible medical expenses into a particular year where possible. The TCJA reduced the floor for the medical expense deduction for 2017 and 2018 from 10% to 7.5%. So, it might be beneficial to bunch deductible medical expenses into 2018.

Medical expenses that aren’t reimbursable by insurance or paid through a tax-advantaged account (such as a Health Savings Account or Flexible Spending Account) may be deductible.

However, if your total itemized deductions won’t exceed your standard deduction, bunching medical expenses into 2018 won’t save tax. The TCJA nearly doubled the standard deduction. For 2018, it’s $12,000 for singles and married couples filing separately, $18,000 for heads of households, and $24,000 for married couples filing jointly.

If your total itemized deductions for 2018 will exceed your standard deduction, bunching nonurgent medical procedures and other controllable expenses into 2018 may allow you to exceed the applicable floor and benefit from the medical expense deduction. Controllable expenses might include prescription drugs, eyeglasses, and contact lenses, hearing aids, dental work, and elective surgery.

Planning for Uncertainty

Keep in mind that legislation could be signed into law that extends the 7.5% threshold for 2019 and even beyond.

Please contact your local Blue & Co. advisor if you have any questions on determining whether bunching medical expenses in 2018 would be beneficial.

Tax Reform Resource Center

Read More Thought Leadership Articles Like what you read? Subscribe to our newsletter. Click Here.

Blue & Co., LLC Announces New Partnership With Vsimple | Vsimple and Blue and Co logo

Blue & Co., LLC Announces New Partnership With Vsimple

CARMEL, Ind. (May 5, 2022) – Blue & Co., LLC is excited to announce our new partnership with Vsimple, a workflow management software company based in New Albany, IN.  Blue & Co and Vsimple will be working closely together to address the workflow and process improvement challenges of manufacturers throughout the Midwest. “At Blue & […]

Learn More
Proposed Rule FY 2023 for Skilled Nursing Facilities

Proposed Rule FY 2023 for Skilled Nursing Facilities

It is that time of year again! The Center for Medicare and Medicaid Services (CMS) has issued the proposed rule that would update Medicare payment policies and rates for the fiscal year (FY) 2023’s Skilled Nursing Facility (SNF) Prospective Payment System (PPS). The Patient Driven Payment Model (PDPM) was implemented on October 1, 2019. This […]

Learn More
Coverage Scheduling Solutions for Physician Practices and Hospital Systems

Scheduling Solutions for Clinician Work-Life Balance

One of the most challenging conversations in any multi-physician practice or specialty-based hospital employed group is about how to create a fair distribution of on-call and/or inpatient hospital service coverage while balancing the duties of an outpatient practice. The COVID-19 pandemic has contributed to clinician burnout, and physicians and Advanced Practice Providers (APPs) place significant […]

Learn More