Does Medical Debt Qualify Me for an IRS Payment Plan?

Medical debt can be a daunting task that appears to have no end in sight. Just thinking of the endless testing for problems such as cancer, heart disease, and cholesterol are enough to have you almost grasping your wallet in defense. So with that knowledge, knowing the solutions to settling long and short term medical debt will allow you to explore what's out there in terms of payment options so that you don't have to worry about collections and going into further debt.


Owing massive medical debt is an unfortunate part of most of our lives, and is something that we may have to live with for a very long time. But fortunately, the IRS can help.

Believe it or not, the IRS knows the struggles each consumer experiences when they attempt to navigate a vastly complex and costly medical system.

Medical Debt and Fresh Start: Can You Qualify?

But can medical debt qualify you for a fresh start with the IRS when it comes to your tax levy? What can you do if you need to pay off your taxes you owe while trying to settle your medical bills? These questions are key to leading you to a solution that may relieve your tax bill, especially in cases where you may owe well into the thousands in back taxes.

Believe it or not, the IRS knows the struggles each consumer experiences when they attempt to navigate a vastly complex and costly medical system. Trips to doctors and specialists can make a huge difference in the size of your bank account as you continue to put more money towards treatments and medicines that treat illness or injury. Plus, think of times when you may have needed lifesaving treatments or surgeries.

The High Cost of Medical Codes

Medical coding can be confusing, and simply knowing the terminology can once again have you thinking of the IRS. Getting to know the right codes can have you feeling lost and confused, but in so doing, you may be able to understand what the cost is for. A cost for a test or a procedure will not be the same as paying for a routine checkup.

Mistakes in medical billing may be traced to medical coding issues, which can be resolved by making one simple phone call to your service provider. You should take this moment to check for any discrepancies that might have raised your costs so that you can help reduce your bill. Any outstanding charges for unwanted procedures may be challenged, but it's the mistakes that can increase your costs. Catching them before you go any further is one option, but in cases where the charges may be accurate, applying for a small, low-interest loan or working out a sensible payment plan are also options.

Medical Debt: How the IRS Can Help

Owing massive medical debt is an unfortunate part of most of our lives, and is something that we may have to live with for a very long time. But fortunately, the IRS can help. If anything, they can offer some options for relief such as an IRS payment plan. You might also be able to claim some of your medical expenses as exemptions. Places such as TurboTax offer customers options to declare expenses for services involving necessary treatments that save and sustain you, thus helping you live your life to the fullest in spite of your condition.

With that being said, you need to know what expenses can be deducted from your yearly taxes on both the state and federal levels. That can help you avoid further liens and fees down the road, and should serve to keep you out of trouble in the long run.

The deductibles that are allowed as far as your medical treatments are almost anything that isn't reimbursed to you by your insurance provider. This includes expenses as they relate to preventive care, such as an annual physical, for example. You can even claim exemptions on surgeries, dental, and vision exams. Travel expenses for certain treatments may also be factored in and can help to greatly reduced your overall taxes you may owe. They may factor in any mileage used on your car, as well as the gas it takes to get to the treatment facility. Some other expenses such as bus fare or hotel fees may also apply in cases where going out of state becomes a necessity.

But beware, as anything that's covered or reimbursed by your insurance provider or employer is not deductible by any means. Anything that's not a prescription is also not included as any part of your deductible. This includes elective surgeries such as cosmetic procedures and anything that you buy on a daily basis, such as dental floss or toothpaste. Other items that cannot be claimed as exemptions are also gym memberships, vitamins, or nicotine treatments of any kind. This includes patches, nicotine gum, and other similar products.

Itemizing Your Medical Deductions

Itemizing your deductions is the very first step in claiming them as exemptions on your annual taxes. Thankfully, the IRS 1040 can be used just for this purpose. You will need to attach a Schedule A, which is the part of your form where you list every expense you paid for and add up the yearly total and report that, along with your annual adjusted gross income, right on line 2 of that same form.

On line three, you take only 7.5% of your annual adjusted gross income and enter it there. From there, you simply subtract it from the total amount of your medical costs, where the difference can be used to reduce your tax bill. This can give you the personal and financial relief you deserve and bring forth an added peace of mind.

There may be cases, however, where your claims may be smaller than your regular deductions. In this case, not itemizing is the best solution, and this will ensure that what you owe is honest, even if the bill is a little higher than you might have hoped for.

Medical Deductions and Your Filing Status

Those who file as singles or as married and filing separately have certain restrictions as to the standard amount allowed, which, in this case, happens to not exceed $12,400. For those who are married and filing jointly, the standard amount is $24,800, while someone who is the head of household may claim up to $18,650. It all varies, and your local laws may have slightly differing amounts for taxes at the local level.

Any direct payments you make out of your pocket for general physician services are other examples of tax deductible expenses that can ease your taxes greatly. Plus, any personal expenses for lab work, x-rays, mammograms, and other annual procedures can be itemized and included to help reduce what you owe to the IRS. If you happen to owe for any hospital or nursing care, that can be added in as well. Anything that's a necessity as recommended by your physician is an example of what makes a good deductible. You may even get to claim fees for service animals or eyewear as needed.


Medical care is stressful enough, and the mere idea of seeing your doctor for anything is a headache in and of itself. Yet the mounting costs involved can be worse than the illness or injury it's designed to treat. Yet, as we face aging, medical treatment can become our new reality. Thankfully, there are ways to ease both the personal and financial burdens of medical care, and doing everything you can to help ease your tax burden is the biggest help.