Medical alert systems aren’t explicitly listed under tax-deductible medical and dental expenses. However, seniors may be able to deduct them under certain circumstances. This is good news because medical alert systems help seniors stay independent without risking their safety.
The IRS allows deductions for installing special equipment as well as home improvements related to disabilities and medical purposes. Seniors can also deduct medical costs incurred by their spouse or dependents to lower their taxable income.
Eligible medical expenses are listed in publication 502, Schedule A (Form 1040 or 1040-SR). Pub 502 has an extensive list of out-of-pocket costs such as equipment, supplies and devices pertaining to the treatment of various illnesses, disabilities and disorders.
The deductible medical expenses include:
This is a difficult question to answer because it depends on your specific circumstances. If you are eligible to deduct the cost of medical alert systems, it would be under one of the following categories:
Further, money paid to store medical information is an eligible expense. This includes medical information stored in databases and delivered to a physician by a third party. Since many medical alert companies store your medical history and provide it to emergency responders, you may be able to deduct some of the cost of the system and the monthly fees if you itemize your expenses on your federal tax return.
If your tax professional determines you can claim the cost of a medical alert system as a tax deduction, you need to figure out if it will reduce your taxes. You can only deduct the amount of your total medical and dental expenses that exceed 7.5% of your adjusted gross income.
A professional tax preparer can answer your questions about IRS rules regarding medical expenses you can deduct on Schedule A. Depending on what your tax professional says, you might need a prescription for the service from your family doctor to meet the eligibility requirements.
If you can’t deduct your medical alert system, there are other strategies that let you recoup some of the cost. For example, Medicare Advantage covers medical alert systems in some states. You can also research whether your state has Medicaid waivers or other assistance programs that pay for some or all of the monthly fees.
Alternatively, you can use a health reimbursement arrangement (HRA) or a health savings account (HSA) to pay for medical expenses not covered by your insurance. Double-check with the HSA or HRA plan administrator to make sure the plan will pay for a medical alert system before increasing your plan to account for the monthly fees and the unit.
Tax laws change every year. So, speaking with a tax professional can help you understand whether the latest laws work in your favor. Maintain your receipts for all out-of-pocket medical expenses and HSA- or HRA-approved purchases to answer IRS inquiries if needed.
Medical alert systems allow seniors to maintain active lives secure in the knowledge that they can access emergency assistance by simply pushing a button on their medical alert pendant, bracelet or another device. For many seniors, the overall affordability of a medical alert system plays a huge role in their final decision. Whether or not your system is tax-deductible, shop around before selecting the system that provides the features needed to give you and your loved ones peace of mind and the price tag that works for you.