Now is the time to get your receipts together and submit your claim for medical expenses
FOLLOWING a change in last year’s Budget, 2008 will be the last year that you can claim back your medical expenses at the higher rate of tax of 41 per cent. As such, now is the time to get your receipts together and submit your claim. But what expenses are eligible and how do you do it?
While you may know that you can claim back on expenses such as visits to a consultant, laser eye surgery and specialised dental treatment, the range of eligible expenses is actually wider than you may realise. Did you know for example, that coeliacs can get tax relief on the cost of gluten-free food? Or that visits to an educational psychologist also qualify?
Moreover, if you go to Northern Ireland for specialised dental treatment or to New York for surgery, the cost of your treatment will also qualify for tax relief, while if the treatment is available only outside of Ireland, then reasonable travelling and accommodation expenses are also allowable for the patient and an accompanying adult.
Tax relief at your marginal rate of tax (41 or 20 per cent) is available on all medical expenses incurred during the year that have not already been reimbursed by a private health insurer. Almost all expenses, apart from routine dental or ophthalmic services, are eligible to be claimed against, provided that the expenditure was for the provision of healthcare – “prevention, diagnosis, alleviation or treatment of an ailment, infirmity, defect or disability”, according to the Revenue Commissioners.
This means that treatments such as plastic surgery are eligible only when carried out on the advice of a doctor, not for cosmetic reasons.
Although there is no longer a disallowance of the first €125, or €250 for spouse and dependants, which used to be the case up until 2007, 2008 will be the last year you can claim at the higher rate of tax, with only one exception – nursing home fees. These will be subject to relief at the marginal rate for a further year, until January 1st, 2010.
So, for example, if you spent €5,000 on your health in 2008, and received only €2,000 back from your private health insurer, you can claim a refund on the remaining €3,000.
If you paid tax at the higher rate of 41 per cent last year, then your refund will be €1,230, while you can claim €600 back if your marginal rate of tax was 20 per cent. If you had no health insurance, then the refunds will be greater – €2,050 and €1,000 respectively.
If you are looking to claim against dental expenses, you will also have to submit a Med 2 form, which needs to be completed by a dentist. Although tax relief is not available for routine dental work such as scaling, extraction and filling of teeth, or the provision of artificial teeth or dentures, it is available for more specialised treatment, such as bridgework, root canal treatment and periodontal treatment. The extraction of wisdom teeth is also eligible for relief.
Relief is also available on the cost of drugs and medicines, up to €90 a month for expenses incurred during 2008. Anything over this is repaid by the Health Service Executive under the Drugs Payment Scheme. From January of this year, the rate has been increased to €100.
There are a number of ways of submitting a claim. If you are a PAYE worker, you can do so over the internet by logging on to the “PAYE anytime” section of www.revenue.ie. Alternatively, you can download either a Med 1 or Med 2 form from the Revenue’s website, fill it out and send it to your regional Revenue office along with evidence of payment of tax for that year such as a P60. If you are self-employed, you need to submit your medical expenses in your tax return form.
Tax relief can be claimed after December 31st of the year of the claim, and the Revenue will review claims for the past four years. So, if you think you may be due a refund for any year from 2004 (as claims are made on a preceding year basis, claims for 2005 will involve expenses for 2004), get working on your claim. But remember, up until 2007 the first €125, or €250 for spouse and dependants, of each claim was disallowed. Similarly, the total recoverable for prescribed medicines was €85 from 2005-2007 and €78 for 2004.
While you don’t have to submit receipts with your claim, be sure to keep all relevant ones for six years, as you will be requested to produce them should your claim be chosen for detailed examination by the Revenue.
Not all receipts have to be medically related either. If you are a coeliac, for example, a letter from your doctor stating that you are coeliac is generally acceptable, but you should also keep receipts from your weekly shop, itemising the gluten-free food purchased. Similarly, diabetic patients can get tax relief for specialist diabetic food, and while a doctor’s letter is acceptable, receipts from supermarkets for the purchase of such food should also be kept.
When filling out your form, you can claim expenses incurred not only by you, but also on behalf of a dependant or a relative such as your spouse, brother or sister, or child.
You can also choose whether you want the relief given for the year in which the payments were made, or for the year in which the expenses were incurred. For example, if you had treatment in 2008, but only paid for the services last month, you can choose which year you would like to claim relief for – ie, 2008 or 2009. Of course, with the ending of relief at the higher rate, it makes sense to claim it now for 2008.
And your refund cheque shouldn’t take too long to arrive. The Revenue deals with all online claims within five days, while paper claims take 20 days to be resolved.
ELIGIBLE EXPENSESE - YOU CAN CLAIM FOR:
Doctors’ and consultants’ fees
Speech and language therapy
Transport by ambulance
Educational psychological assessments
Maintenance or treatment in a hospital or an approved nursing home
Specialised dental treatment
Routine maternity care
In vitro fertilisation
Drugs and medicines
Hearing aids
Cost of gluten-free food for coeliacs
Calculate your refund
Laoise has a “Level 2 Everyday” plan with Hibernian Aviva Health, which gives reimbursements on a variety of out-patient costs.
In total, Laoise spent €4,320 for medical services or medicines during 2008. While Laoise also spent some time in hospital having her baby, this bill was paid directly and in full by her health insurer so is not included.
Having submitted her receipts to Hibernian, Laoise receives €790 back, bringing her total bill down to €3,530. She can now claim tax relief on this total, but not all her expenses are eligible. For example, baby massage is not a qualifying treatment, nor are the three fillings.
When these are discounted, Laoise’s total eligible costs are €3,400. As she pays tax at the higher rate she can receive benefit at 41 per cent. This means that she is due a refund of €1,394 from the Revenue. If she was to incur the same expenses in 2009, she would only receive €680 back, as she will only get relief at the standard rate of tax, 20 per cent.
