Taxes

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Medical Tourism & Taxes

Certain aspects of your medical vacation may be tax deductible, and it’s worth consulting with your accountant, insurance company, and medical practitioner (dentist or doctor) to discuss any potential.  Obviously, tax codes vary from state to state and country to country, so make sure that any answers you receive are specific to whatever region applies.

The following deals specifically with U.S. tax code, but it might serve as a useful starting point for those who live outside the United States.  According to IRS Publication 502 (2006): 

Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. They also include dental expenses. 

Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.  

Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract….  

You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income (Form 1040, line 38). 

Travel Expenses

Depending on the structure and nature of your trip, you might also be able to deduct medically related expenses such as travel to your destination, lodging during treatment and recovery, and even food.  Below are additional excerpts taken directly from IRS Publication 502.  For a full list of deductible expenses, please consult the IRS’s Web site. 

Transportation

You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care.  

You Can Include:   

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  • Bus, taxi, train, or plane fares or ambulance service,
  • Transportation expenses of a parent who must go with a child who needs medical care,
  • Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and
  • Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment.

Trips

You can include in medical expenses amounts you pay for transportation to another city if the trip is primarily for, and essential to, receiving medical services. You may be able to include up to $50 per night for lodging.

You cannot include in medical expenses a trip or vacation taken merely for a change in environment, improvement of morale, or general improvement of health, even if the trip is made on the advice of a doctor.

Lodging

You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care.  

You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. You can include the cost of such lodging while away from home if all of the following requirements are met.  

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  • The lodging is primarily for and essential to medical care.
  • The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital.
  • The lodging is not lavish or extravagant under the circumstances.
  • There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.

The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. You can include lodging for a person traveling with the person receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Meals are not included.  

Do not include the cost of lodging while away from home for medical treatment if that treatment is not received from a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital or if that lodging is not primarily for or essential to the medical care received.

MEDICINES AND DRUGS FROM OTHER COUNTRIES

In general, you cannot include in your medical expenses the cost of a prescribed drug brought in (or ordered shipped) from another country, because you can only include the cost of a drug that was imported legally. (You can include the cost of a prescribed drug the Food and Drug Administration announces can be legally imported by individuals.) However, you can include the cost of a prescribed drug you purchase and consume in another country if the drug is legal in both the other country and the United States.

How each patient approaches taxable deductions is a matter of personal choice.  Obviously the above stipulations might change the nature and structure of your trip.  If you’re concerned about financing and saving, you might opt to remove some of the more “touristy” components from your medical vacation and stay well within the boundaries of what the IRS considers medically essential.