Doctor visits, insurance premiums and paramedical, oh my!

We hope our clients don’t have enough medical expenses during the year that would impact their financial health, but unfortunately these costs are likely to happen. However, one silver-lining is that at a certain point these expenses allow you to make a medical claim when you file your taxes. If you didn’t know you could claim medical on your taxes, then this article will give you some much needed information. For those that are aware you can make this claim, there are probably a few things that will help you determine what counts towards this claim that you didn’t realize. 

1.     General Medical Claim

First, the basics. A medical claim can be made by any person filing a tax return to include themselves, their spouse and their eligible dependents (usually children under 18, but not necessarily limited to this). It is often best for one person to claim all medical expenses, as there is a minimum threshold for a medical claim to be made – A minimum of 3% of the taxpayer’s net income, up to a maximum of $2,352.00 for the 2019 tax year (this amount tends to be slightly adjusted each year). If you and your spouse are earning a net income under $78,400, the lowest income earner would likely want the deduction, as it would provide a lower threshold. However, if both of you are earning more than $78,400 net income, then the $2,352.00 maximum would be in effect for either claimant. 

2.     Defining Medical Expenses

So, what constitutes a medical expense? CRA defines them as “Medical Supplies, Dental Care and Travel Expenses”, which is a little vague and can be misconstrued. It might be more appropriate to state that “any expense directly related a person’s health and well-being from a licensed practitioner.” While CRA has a lengthy list on the specific items, they also do not claim the list to be all-inclusive. It should also be stated that this is for an expense that has not been reimbursed (you can’t claim something you got paid back). All this really boils down to is whether you have the proper paperwork. For any claim to be accepted, you need to provide medical receipts. Typically, these will have a licensed practitioner’s name, number and a receipt showing what has been paid, when and for what product or service, and proof that it was not reimbursed by insurance or subsidy.

For example, the newest item available to claim as a medical expense would be cannabis products. Typically, those with a medical need have been prescribed an oil or pills to assist with pain, so if there is a receipt that shows the name and number of the licensed doctor prescribing the product, this is an acceptable expense. However, going to the dispensary on the corner and picking up a few products for recreational use – this would not be an acceptable expense due to the lack of a licensed practitioner and their license number. The most common items are:

·       Prescription Drugs

·       Dental Care

·       Optometry

·       Non-cosmetic surgery (since 2010)

·       Medical Emergencies

·       Travel Medical – Issues abroad, or travel required for special treatment not locally available

·       Paramedical – Chiropractic, Massage/Athletic Therapy, Psychology, Acupuncture, etc.

·       Private Health Care Premiums (more on this below)

For most of these services, including pharmacies, it is possible to request a statement for the year so that you do not need to submit every receipt, provided the statement includes the same information required on specific receipts. Your accountant is likely to be very thankful for any statements you provide as it can save their time and your money for providing it. While it is very difficult to provide a full list of all available products and services, it depends mostly on the individual and their family making the claim. At a certain point, a disability tax credit may also come into play, so it is best to discuss this with your accountant so they can help you determine what would or would not be acceptable.

3.     Insurance Premiums

Another item that people often forget are their medical insurance premiums. It you are making payments to a private insurance provider, or if you have a medical plan through work, there is a good chance these payments are acceptable for a medical claim. For employees, you might notice a box on the bottom of a T4 or other T-slip with Box 85, which is “Employee paid premiums for private health services plans.” Outside of this, if you have a private health insurance plan you directly pay for that is 90% towards eligible medical expenses, you can usually request a statement from the insurance provider that states how much your payments for the year have been, or a detailed statement showing payments made throughout the year. The same can be said for any travel medical insurance you paid for during the year. 

4.     Optimizing Your Medical Claim

Now that you know what items are classified as medical expenses, and have the appropriate statements or receipts, that’s it, you’re done, right? Well, sure you could be, but maybe there is more you can do. Previously discussed, you might decide it is better to have your spouse claim all the expenses for both of you and your eligible dependents. However, there are a couple of things you can do to optimize your claim. Sometimes, it is better for the higher income earner to claim the expenses if there is a large disparity in how much each person earned. If you have one earner making $80,000 and another making $30,000, the minimum thresholds for a claim are $2,352 and $900 respectively. If the family then had $10,000 in medical expenses along with other deductions, there is a good chance the claim would be more beneficial under the higher income earner’s return as the lower income earner might not get the full benefit of all $10,000. 

Another tool to use is to adjust the period of the claim. A medical claim can be made for “any 12-month period ending in 2019 and not claimed by you or anyone else in 2018” per CRA’s website. This means that you could claim the time period of January 1, 2019 – December 31, 2019, or go back further to claim January 2, 2018 – January 1, 2019, or any other 1-year period between these dates provided those expenses had not been claimed by you, your spouse or dependents in the previous year. Therefore, if you had several expenses in the later months of 2018, but not enough for a valid claim in 2018, you can use those expenses, paired with other expenses in early 2019 to increase your total claim for this tax year. In the unfortunate circumstance that a person has died in 2019, a claim can be made for up to 24 months prior to and including their date of death for their final tax return providing no previous claims were made for that period. 

If you are lucky enough to have a good accountant, such as those at Zablocki & Associates Inc, who are looking out for your best interests, they’ll take a look at whether a claim would be beneficial, whether claiming prior year medical expenses would be optimal, and whether it would be worthwhile to hold onto those expenses for the following year so you can get the most out of your medical claim that you can. Our policy is to only claim expenses if they will save you money!

C. Zablocki