Just for clarity: Generally a "deposit" is just that. Deposits are generally something that gets refunded. For example, when you rent a car, sometimes to have to pay a security or damage deposit. Then when you return the car and pay the rental fees, those deposits are refunded. (Not many car rental companies do this anymore - but there's a few that do.) What you have is a pre-payment. A pre-paid medical expense is claimed in the year the payment is made. But if it's refunded to you later, after you've already claimed/deducted it, then you have to report it as taxable income. It gets tricky though, if you're itemized deductions don't exceed your standard deduction in the tax year you claim it.
