Qualified Medical Expenses
and Long-Term Care
A plain-English framework for CPAs, EAs, tax preparers, advisors, and business owners.
Written for
When clients ask whether a medical expense is deductible, the honest answer is usually, "It depends." The real issue is not whether the expense feels medical. It is whether the expense meets the tax rules, was paid for the right person, was not reimbursed, and can be supported with records.
Under IRS Publication 502, medical expenses generally include the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, along with treatments affecting any part or function of the body. That same IRS guidance also explains that taxpayers generally claim these costs as an itemized deduction on Schedule A, and only the amount above 7.5% of adjusted gross income counts.
Long-term care can be part of that conversation too, but this is where many people get tripped up. Some long-term care costs can qualify. Some do not. And the answer often turns on whether the individual is considered chronically ill under the IRS rules and whether the services are being provided under a plan of care.
Foundation
Start with the core rule
A good working test is simple.
1
Why was the expense incurred?
2
Who was it for?
3
Was it reimbursed?
4
Can it be documented?
If the expense was primarily for medical care, paid for the taxpayer, spouse, dependent, or a person who may still qualify under one of the IRS dependency exceptions, and it was not reimbursed, it may belong in the discussion. If it was mainly for general health, personal comfort, or convenience, it usually does not.
That distinction matters more than most people think. A lot of tax confusion starts when people lump all health-related spending into one bucket. The IRS does not do that. It separates medical care from general wellness, and that line is what drives the deduction analysis.
Qualifying Expenses
What usually counts
According to Publication 502, examples of medical expenses can include:
- Doctor and hospital bills
- Prescription medications
- Certain medical insurance premiums
- Transportation primarily for medical care
- Some home or facility-based costs when the primary reason is medical treatment or care
Medicare Premiums & LTC Insurance
The same IRS guidance explains that Medicare Part B premiums and Medicare Part D premiums can be treated as medical expenses. Qualified long-term care insurance premiums may also be included, subject to applicable limits under the tax rules.
In some cases, medical expenses paid for another person can still count even if that person did not fully meet the standard dependent definition for the year. The IRS says that a taxpayer may be able to include expenses paid for someone who would have been a dependent except for the gross income test, the joint return test, or because that person could be claimed as a dependent by someone else.
That point matters for families helping aging parents. It also matters for advisors reviewing whether out-of-pocket support for a parent, spouse, or dependent should be treated as part of the broader tax picture rather than dismissed too quickly.
Critical Definition
What long-term care really means
IRS Definition — Qualified Long-Term Care Services
Under the IRS rules, qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative, maintenance, or personal care services that are required by a chronically ill individual and provided under a plan of care prescribed by a licensed health care practitioner.
That definition is broader than many people expect, but it is also more specific. Not every elder-care or support expense qualifies just because the person is older or needs help. The tax treatment depends on whether the services meet the qualified long-term care standard.
Key IRS Criteria
What does "chronically ill" mean under the IRS rules?
The IRS also explains that a person is generally considered chronically ill only if a licensed health care practitioner has certified, within the previous 12 months, that the person meets one of two criteria:
Activities of Daily Living
Needs substantial assistance with at least two activities of daily living for at least 90 days due to loss of functional capacity.
Cognitive Impairment
Requires substantial supervision due to severe cognitive impairment.
Key planning point for CPAs and tax preparers: If the certification is missing, outdated, or never documented, the conversation can fall apart fast. This is one of those areas where good records do not just help. They change the answer.
Non-Qualifying Expenses
What usually does not count
- Publication 502 makes clear that you generally cannot deduct expenses that were reimbursed by insurance or any other source.
- You also generally cannot deduct insurance premiums paid with pre-tax dollars if those amounts were not included in taxable income.
- The IRS guidance separates medical care from expenses that are only beneficial to general health — everyday health spending, personal living costs, or items bought mainly for comfort, appearance, or convenience often do not qualify.
Where Mistakes Happen in Real Life
Families are under pressure. Owners are trying to organize tax documents late in the year. Someone remembers hearing that "medical stuff is deductible," and the gray areas get flattened into bad assumptions. A better approach is to stop and ask one question first: was this expense primarily for qualifying medical care under the IRS definition?
Practical Tool
A practical advisor framework
For advisory work, a clean framework beats a giant list.
Use this five-step screen:
1
Medical Purpose
Was the expense primarily for diagnosis, treatment, mitigation, prevention, or qualifying long-term care?
2
Eligible Person
Was it for the taxpayer, spouse, dependent, or a person who may still qualify under the IRS exceptions?
3
Reimbursement
Was any part of the cost reimbursed by insurance, an employer, or another source?
4
Documentation
Is there an invoice, physician recommendation, practitioner certification, or plan-of-care support where needed?
5
Threshold
Will the taxpayer actually benefit after the 7.5% AGI floor for Schedule A medical deductions?
That last step is easy to overlook. An expense can be medically valid and still produce little or no current deduction if the taxpayer does not itemize or if total medical expenses do not rise above the threshold. That does not make the analysis useless. It just means the planning conversation needs to be grounded in the real return, not in theory.
Practical Application
Real-world examples
1
A retired owner paying Medicare premiums.
If a retired business owner is paying Medicare Part B and Part D premiums out of pocket, those amounts can generally be treated as medical expenses under the IRS rules. Whether they create an actual tax benefit will depend on the rest of the return, especially itemization and the 7.5% AGI threshold.
2
An adult child helping a parent.
A client may be helping cover a parent's medical or care expenses and assume none of it matters because the parent was not a full dependent. That is not always the end of the story. Publication 502 explains that some expenses paid for a person who would have been a dependent except for specific IRS tests may still be includible.
3
Long-term care support.
A family may be paying for care services and assume all of it is deductible. Sometimes that works. Sometimes it does not. The better question is whether the individual meets the chronically ill standard and whether the services are qualified long-term care services provided under a prescribed plan of care.
For Professionals
Why this matters for CPAs and tax advisors
For many firms, medical-expense questions arrive as one-off tax questions. In reality, they often point to a bigger planning opportunity.
A client dealing with rising medical costs, retiree health expenses, or long-term care concerns may also be the same client who needs a more coordinated tax reduction and retirement strategy. That is especially true for successful business owners whose planning decisions affect deductions, cash flow, retirement timelines, entity-level strategy, and family support goals.
If that is the kind of client you serve, you can also explore our work with Retirement Actuarial Services and related planning support for tax professionals and business owners.
Common Questions
FAQ
What is a qualified medical expense?
Under IRS Publication 502, qualified medical expenses generally include costs for diagnosis, cure, mitigation, treatment, or prevention of disease, along with treatments affecting any part or function of the body.
Are Medicare premiums deductible as medical expenses?
The IRS says Medicare Part B and Part D premiums can be treated as medical expenses. Whether they create a deduction depends on the taxpayer's overall itemized deductions and the 7.5% AGI threshold.
When do long-term care expenses qualify?
Qualified long-term care services may be treated as medical expenses when they are required by a chronically ill individual and are provided under a plan of care prescribed by a licensed health care practitioner.
What does "chronically ill" mean for tax purposes?
The IRS generally requires certification within the previous 12 months that the person either needs substantial help with at least two activities of daily living for at least 90 days due to loss of functional capacity, or requires substantial supervision because of severe cognitive impairment.
Can I deduct medical expenses I paid for a parent?
Possibly. Publication 502 explains that some medical expenses paid for a person who would have been your dependent except for certain IRS tests may still qualify for inclusion.
Can reimbursed medical expenses be deducted?
No. The IRS guidance says reimbursed expenses generally cannot be deducted.
Contact Us
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