Medical deductions when on SSDI

[applecruncher]

What is the name of your state (only U.S. law)? Ohio

A relative (age 60) is on SSDI and his only income for 2009 was his disability benefit (about $12,000 for the year). He is covered by medicare (no other health insurance) but he had to pay a little over $5,000 in out-of-pocket medical and dental expenses throughout the year (he has all the bills/receipts/cancelled checks). He did a little research and says when he files his income tax he can deduct his medical expenses because it’s over 7.5% of his adjusted gross income. I did a rough calculation and because his annual SSDI is so low, his AGI would be –0- . So, is it true that he can claim the medical deduction on Schedule A and get a refund? If not, is there any way he can recoup any of the money he spent on medical and dental?
Thanks.

 

[LdiJ]

What is the name of your state (only U.S. law)? Ohio

A relative (age 60) is on SSDI and his only income for 2009 was his disability benefit (about $12,000 for the year). He is covered by medicare (no other health insurance) but he had to pay a little over $5,000 in out-of-pocket medical and dental expenses throughout the year (he has all the bills/receipts/cancelled checks). He did a little research and says when he files his income tax he can deduct his medical expenses because it’s over 7.5% of his adjusted gross income. I did a rough calculation and because his annual SSDI is so low, his AGI would be –0- . So, is it true that he can claim the medical deduction on Schedule A and get a refund? If not, is there any way he can recoup any of the money he spent on medical and dental?
Thanks.

No, he could not file that on Schedule A and get a refund. A deduction is a reduction of taxable income, it is not a refundable credit.

There really is no way that he can recoup any of that money.

 

[applecruncher]

Thought so. I explained to him that the IRS is not a supplemental health plan that will reimburse him for medical expenses he had to pay if he has no taxable income. Just thought I’d check to make sure. He says he’s gonna call the IRS help line to ask, but I was curious. I also advised him to look into getting a supplemental medical plan – in the long run it would be cheaper.

 

[commentator]

I'd think the medicaid program of his state would be a viable option for him as well.

 

[applecruncher]

Good point, commentator. However, when he got approved for SSDA he got quite a bit of backpay which he uses to supplement his living expenses. I don't know how much he has left, but it's my understanding Medicaid puts limits on resources. Regardless, the remaining backpay won't last forever, and it's something he needs to think about. He'll have no income from retirement, etc. as the years go by and it's unlikely that he will be working again.

As far as the $5k he spent last year out of pocket he said $2k was for dental which was a one-time (hopefully) incident. But still - looking at the total picture - it would be to his benefit to try to minimize dipping into his savings. As I pointed out, one never knows what might happen,

I appreciate the feedback.

edited typo

 

[commentator]

No, actually, you're thinking of this from the "middle class" point of view, of how it's better to have savings for emergencies, etc. In fact, at your uncle's age and stage in life, it'd be better to use up his savings buying assets he needs and can use, such as getting his teeth fixed, repairing his vehicle, doing home repairs, buying a modest burial program, even a supplimental health insurance program, things that will not be counted as income in public assistance, and then getting on every part of Medicaid, Food Stamps, and commodity, 55plus and assistance he can get.

There is such a thing as keeping yourself just on the borderline above being qualified for such programs, while still having an extremely minimal existence. It sounds as though your uncle is used to being a taxpayer and a worker. This means he has certainly paid into these assistance systems all his working life.

With a prognosis that got him on disability, his chances of building up enough weath again to have a good quality of life are very limited. The first serious health episode he experiences will wipe away any savings he has tried to maintain, and he will be steered to medicaid by the hospitals or doctors he is using.

Even if he is not currently qualified, it would be good planning to know all about what it takes ahead of time. They are very used to dealing with Social security back pay and other types of income and life circumstances. They can certainly tell him whether he may qualify, and at what point he would qualify even if he does not now.

 

[applecruncher]

commentator - I see what you're saying. Right - I'm looking at it with the "it's best to keep a nest egg just in case" mindset. btw it's a cousin and he was disquaified from food stamps because of the amount he still has in savings. He was thinking he'd get that $5k back from IRS but that's not gonna happen. He doesn't drive/have a car but he gets a discount on monthly bus pass, his land line phone, and his gas bill. Not much, but every little bit helps. He had the dental repair work done at the college dental school (private dentist woud have cost at least twice as much). He has a small life ins policy thru AARP. Yes, looking into more options can't hurt and might help.