RX Tax Deductions

I do not have allergies, that I am aware of; however, my son is allergic to most everything it seems.  At a certain time of the year, he sniffles, sneezes and has watery eyes for long stretches of time.  Fortunately, we are able to remedy a great deal of his ailments with over-the-counter allergy medicines.  Those who rely on EpiPens are in a bad place with the EpiPen price increases.

The lifesaving EpiPens are used when a person has an allergic emergency - anaphylaxis.  The EpiPen dispenses epinephrine; which, according to the NewYork Times, will reverse swelling, closing of the airways and other symptoms of severe allergic reactions to bee stings, peanuts or other allergens.  These pens are important for children and adults to carry at all times.  Mylan Pharmaceuticals acquired the EpiPen in 2007.  At that time, it was priced at $100 for a two-pen set.  It is now running at more than $600 for the set, according to GoodRx.

Mylan is undergoing questioning on the price hike.  The CEO, Heather Bresch, chalks it up to running a for-profit business.  

     

Meanwhile, what can you do with the expenses you incur from purchasing these pricey pens?  The best case scenario is your insurance carrier covering the cost of the pens.  If that is not the case or there is a copay involved, the out-of-pocket medical expenses can be paid or reimbursed with non-taxed dollars. 

• A Flexible Spending Account (FSA) is a great way to set aside pre-tax dollars to pay the cost of copays, medications and other medical expenses.  This option is beneficial tax wise as fewer dollars are subject to tax.  The drawback to this type of account-it is a use it or lose it plan.  The money must be spent by a certain date or it is forfeited.
• A Health Spending Account (HSA) plan is similar to the FSA except the money in the account is not forfeited at the end of the time period.  An HSA is a tax-exempt account that is part of a high deductible health plan.  This account is used to pay or reimburse certain medical expenses.  After-tax dollars contributed to the HSA can qualify for a tax deduction without itemizing.  Contributions can be made through the employer payroll deduction with pre-taxed dollars (these do not qualify for the tax deduction because they are pre-tax).  The contributions stay in the account until they are used. 
• Medical deduction through itemizing is another option.  All your medical expenses must exceed 10 percent of adjusted gross income (AGI).  If you are 65 or older you have a 7.5 percent limit.  How this works is if your AGI is 50,000, your medical expenses must be 5001 to take 1 dollar of medical deduction on your tax return (assuming your total itemized deductions are greater than the standard deduction-more on this another day). 

This is not an answer to the rising cost of medicine but hopefully it will help at tax time.