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Over the Counter Drugs No Longer Deductible

Posted on May 9, 2012 by Leasa Magnuson in Individual Tax

For years taxpayers have been able to claim an itemized deduction for medical expenses to the extent they exceed 7.5% of adjusted gross income. Medical care is generally defined broadly as amounts paid for diagnosis, cure, mitigation, treatment or prevention of disease. However under the Affordable Care Act any amount paid during the tax year for medicine or drugs is deductible only if it is a prescribed drug. Thus any amount paid for non-prescription medicine is not deductible as a medical expense including any medicine recommended by a physician. Therefore taxpayers that have a cold and would normally self-medicate with an over the counter medication to relieve the symptoms will now be filling up physicians’ offices and requesting a prescription for relief. Our already over burden family health care system just took another hit by Congress when it enacted this law. In order to use your debit card on your FSA or HSA account to pay for medications an Rx number needs to be assigned.

My question is how much money did the IRS expect to raise by limiting the medical deduction to only prescribed medications? How much does it cost the health care system in added doctor visits? I don’t know the numbers for sure but I would hazard a guess that the health care system costs far outweigh the income raised and in the big picture this was not a well thought out move by Congress.

Itemized deductions, Medical Expenses, Over the counter drugs

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4025 Automation Way #D1 (Map), Fort Collins, CO 80525 - Phone: 970-226-4686