topic Medicare Recovery Demand Payment Deduction? in Deductions & credits

Medicare Recovery Demand Payment Deduction?

rcblaze — Wed, 26 Feb 2025 19:41:09 GMT

Are Medicare recovery demand payments tax deductible as a medical expense? Yes or No what is the logic?

I am referring to payments to CMS Benefits Coordination and Recovery Center (BCRC) from insurance or injury lawsuit settlement proceeds for medical care payment already made to providers by Medicare. Medicare provider benefits are conditional meaning they are subject to recovery. The specific case is a demand payment for a share of a uninsured motorist coverage claim. I now understand that Medicare is automatically notified of liability insurance payment similar to how injury lawyers are required to notify Medicare of a case.

Re: Medicare Recovery Demand Payment Deduction?

AmyC — Fri, 28 Feb 2025 22:42:52 GMT

Probably no, unless you have specific special circumstances beyond what you stated. According to IRS guidelines, medical expenses that can be deducted must be for services or items that are directly related to medical care. Payments made to Medicare for recovery demands do not typically fall under this category.

Re: Medicare Recovery Demand Payment Deduction?

rcblaze — Sat, 01 Mar 2025 21:53:51 GMT

AmyC - I very much appreciate your well reasoned answer. I obviously asked the question because I was already suspicious it might not be a valid deduction. That said, it is still early and I welcome other comments. In other words, I am not ready to answer Turbotax prompts to declare my problem solved.

fwiw - My suspicion the recovery payment may not be deductible is based on settlement money not being taxable and Medicare usually demands only a share of the settlement even when medical bills are greater than the settlement, much greater in this case.