Tax Relief on Medical Expenses

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| Naomi Butler

A very common conversation that we have with clients is that they have to spend a huge amount on medical expenses and why can’t they claim any of it back? The answer is they can claim back from Revenue but you also need to ensure that they are claiming smartly too.

This means ensuring that before you submit a claim to Revenue you are checking that the monies cannot be refunded to them from another party. There are monthly limits to the amount you pay on prescription medication – anything paid over this should be reclaimed from the HSE directly. This monthly limit is per household too so make sure all dependents, including spouses, are linked with their local pharmacy. Then, if they have private health insurance submit a claim to them before making your submission to Revenue. Finally, are they due repayment of their medical costs due to a compensation claim? If so, then the repayment is offset against the medical expenses before any claim to Revenue is made.

The first thing to note to your clients is you can only get a refund of taxes based on medical expenses if you have paid tax. And by tax, I mean income tax or PAYE, not PRSI or USC. If they have not paid nor are due to pay any income tax either through a tax return or a payroll then they will not get a refund regardless of how much they spent on medical costs during the year.

They can claim tax relief on allowable medical expenses that they paid for themselves and for any other person, they do not have to be a family member. But you can only claim tax relief if they cannot recover the expenses from any other source, for example, HSE, an insurance policy, or compensation.

The other point to note is with regard to prescription medicines. Under the Drugs Payment Scheme, the individual and their family only have to pay a maximum of €80 each month (2022, was €114 in 2021) for approved prescribed drugs and medicines. The €80 monthly payment does qualify for tax relief – so if you have paid tax or are due to pay tax then a maximum credit of €16 per monthly payment could be available, which means that the actual cost is €64. Now, the €80 limit is not per person – it is per household, so you, your spouse/partner, children up to the age of 18 (or 23 if in full-time education) and family members with a physical or intellectual disability or mental illness who cannot maintain themselves fully. You need to link your drug payment scheme card to a pharmacy and ensure that all allowable family members are also linked. By doing so, the maximum paid is €80 per month. If they do not link the card they could end up paying more than €80 per month and they will need to apply directly to the HSE for any overpayment, they will not be entitled to tax relief on anything paid over the €80 per month. You must be living in Ireland in order to apply for this scheme – it is not income dependent.

If your client or a family member has a long-term illness make sure they are registered for a long-term illness card. There are 16 medical conditions that qualify for this card. It means they do not have to pay a prescription charge for the drugs they are approved for under this scheme. Further details can be found here - Long-Term Illness Scheme - HSE.ie .

What can they claim tax relief on – To qualify for the tax relief the health care must be carried out, prescribed or advised by a registered practitioner such as a doctor or a dentist. For example, if on a Saturday morning you pull your hamstring while playing rugby and go to see a physio straightaway – Revenue can disallow the expense if it was not advised, prescribed or carried out by a registered practitioner such as a doctor. Just one to watch out for.

If you are a diagnosed coeliac and have evidence from the GP / Consultant confirming the same make sure that your client registers their condition with their local supermarket who at the end of the tax year can issue them with a statement showing the amount spent on specific gluten free products for the year. This statement will be accepted by Revenue for tax relief purposes.

If they are a kidney patient who has to travel for dialysis treatment they can claim relief on the cost of travelling to and from the hospital. For those using a dialysis machine at home, they can claim flat-rate relief for electricity, laundry, protective clothing and telephone expenses. Flat-rate electricity and telephone expenses are also available for those being treated at home without dialysis for Chronic Ambulatory Peritoneal Dialysis. You should refer to this link for further information - Additional expenses for a kidney patient (revenue.ie). Be watchful if also claiming working from home allowances.

If there is a child (under 18) who has a life-threatening illness or permanent disability as well as being able to claim the incapacitated child tax credit of €3,300 they may also be able to claim on certain additional expenses such as overnight accommodation while the child is in hospital, travel, telephone, hygiene products and special clothing.

If there is travel abroad for health care the claim can qualify for tax relief provided the medical practitioner is registered under that country’s law to practice medicine or dentistry there. Also, if they travel abroad to receive health care that is not available in Ireland they can also claim relief on reasonable accommodation and travel costs as well as the accommodation and travel costs of a person who accompanies them (if their condition requires such assistance).

Rather than list what else your clients can claim tax relief on, the list of what you cannot claim is a lot shorter. They cannot claim for routine dental care such as filings, hygienist visits, the annual dental check-up. Some of the cost of the hygienist and the annual dental check-up may be covered by the PRSI record, Class S contributors now qualify for these visits. Check with the dentist, they can generally confirm there and then if you qualify for the relief. If there is any non-routine dental work ensure that a Form MED2 is obtained from the dentist or orthodontist to ensure that the eligible cost can qualify for tax relief. Routine ophthalmic (eye) care such as eye tests and glasses do not qualify for tax relief. Again, speak to the optometrist as you may be entitled to a free eye test and also a contribution towards lenses depending on the PRSI record.

In general, cosmetic surgery or procedures do not qualify for tax relief. However, if the surgery or procedure is being carried out on medical grounds (rhinoplasty for breathing difficulties) then relief can be claimed. Finally, while you cannot claim costs for a guide or assistance dog under medical expenses you may be able to claim either the guide dog or assistance dog allowance.

**The contents of this article are meant as a guide only and are not a substitute for professional advice. The authors accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.

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About the Author

Naomi is a member of our technical support team, providing advice on all tax heads in response to queries submitted through our Knowledge Hub Platform. In addition, as a speaker for OmniPro CPD events, she creates content and presents on a variety of taxation topics. A Chartered Tax Advisor, Naomi trained and worked in practice since 2004. She progressed from trainee up to Head of Tax Compliance and Personal Tax Manager. Naomi has a range of experience overall tax heads with a strong understanding of personal taxes and payroll. Naomi also lectures in taxation for both CPA and Accounting Technicians Ireland through Griffith College.

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