We get a rebate of Medicare premiums paid as part of my retirement package. How do we report the $900 received?

[ldparshall]

Late in the year we are eligible to apply for up to $900 reimbursement on our Medicare premiums from the company my husband retired from.  This is a provision of the IBM Medical plan. It is referred to as "Special Health Assistance Provision Reimbursement."(SHAP)  Do we report this as income or medical expense reimbursement?

[KrisD · Accepted solution]

The rebate or reimbursement is tax-free.

You do not need to report the reimbursements as income, however you would need to reduce your medical deduction by the reimbursement amount.

In the TurboTax programs you would list it as medical reimbursement when entering medical expenses.

"A Health Reimbursement Arrangement (HRA) is an account that has been established for you and funded by IBM. You can use the funds in your HRA to receive reimbursements for eligible health care expenses up to the allocated amount. The HRA is tax-free—that is, you do not owe any taxes on the money in your HRA. IBM has established certain requirements that you must meet in order to qualify for the HRA funding, which are explained in the next answer."

CLICK HERE for information about SHAP

[CCB03]

I am confused. If SHAP is to be considered an HRA, then there is a contradiction posted on 6/6/2019 by DoninGA where it is stated. "The reimbursement is for medical expenses that you have paid with out of pocket funds. Those medical expenses paid would NOT be entered as a medical expense itemized deduction on Form 1040 Schedule A since they have been reimbursed." What is the source for the correct answer to handle SHAP?

[KrisD15]

DoninGA and I have said the same thing. 

The MEDICAL EXPENSES paid are not eligible to be used as MEDICAL EXPENSE DEDUCTIONS since they were reimbursed. 

The person I answered had at least 900 in premium payments, which COULD be entered as medical expenses, HOWEVER they were reimbursed by the SHAP, so whatever they paid as premiums -900= what they can claim.

The REIMBURSMENTS are not reported, they are not income. 

DoninGA says:

"The reimbursement is for medical expenses that you have paid with out of pocket funds. Those medical expenses paid would NOT be entered as a medical expense itemized deduction..."

Same difference, either subtract the reimbursements from the expenses, or just don't enter those expenses to begin with.