Medical Expenses Retirees (and Others) Can Deduct on Their Taxes

Long-Term Care and Insurance

If you or your spouse requires long-term care, you may be able to deduct the unreimbursed cost for in-home care, assisted living and nursing home services as medical expenses. The long-term care must be medically necessary for a chronically ill person. A person is considered chronically ill when at least two activities of daily living cannot be performed without help for 90 days or more. Anyone in need of long-term care because of dementia or another cognitive impairment is also considered chronically ill if substantial supervision is needed to protect the individual’s health and safety. The chronic illness must be certified by a licensed health care practitioner. The cost of meals and lodging at an assisted living facility or a nursing home also counts if you are there mainly for medical care.

If you purchased a long-term-care insurance policy, a portion of your premium payment qualifies as a medical expense. The deduction is capped based on age. For 2020 returns, the maximum per-person limits are $5,430 for taxpayers 71 or older, $4,350 for taxpayers 61 to 70, $1,630 for individuals who are 51 to 60, $810 for people 41 to 50 and $430 for those 40 and younger. These amounts are a bit higher for 2021: $5,640, $4,520, $1,690, $850 and $450, respectively.

Home Improvements

The cost of certain home improvements to accommodate a disability or physical illness may also be deducted as a medical expense—for instance, ramps, wide doorways or entrances, railings and wheelchair lifts. But an elevator is generally not deductible because it adds value to the house.

Weight Loss Programs

Weight reduction programs that are ordered by doctors to treat obesity or hypertension or alleviate another ailment are deductible medical expenses.

Diet foods, weight loss supplements or reduced-calorie beverages, however, are not. A weight reduction plan to improve your appearance doesn’t count either.

Expenses for Service Dogs

Veterinary costs for a service dog to assist the visually impaired and others with physical disabilities are eligible medical deductions. The same is true for the cost to buy and train the dog, plus feed and groom it. An emotional support animal also counts if it’s needed primarily to alleviate a mental disability or illness.

Genetic Testing

If you use a DNA ancestry company for genetic health testing, such as 23andMe, the portion of the DNA collection kit’s cost that pertains to genetic testing may be treated as a deductible medical expense.

Deductions for Self-Employed Workers

Self-employed individuals get an even greater tax benefit. They can deduct the cost of health insurance and long-term-care premiums (subject to the age caps above) for themselves, a spouse and any dependents, regardless of whether they itemize on Schedule A. The costs can be claimed on Form 1040 (opens in new tab), Schedule 1, line 16, without regard to the 7.5% threshold.