Medical Expenses Can Only Be Claimed in the Itemized Deduction of Individual Income If They Meet Certain Criteria And No Insurance Benefits Are Received.
Recently, some people dissatisfied with the individual income tax bill sent by the National Taxation Bureau claimed that their medical expenses shall be applicable to claim itemized deductions as the medical insurance policies they purchased from insurance companies were not in the form of full medical expense reimbursement insurance, and they did not apply for insurance claims with the medical expense receipt; their claims were still rejected after they applied for a recheck by the National Taxation Bureau.
The National Taxation Bureau of Kaohsiung, Ministry of Finance stated that the legislative intent of the itemized deduction for medical expenses under the Income Tax Act is that medical expenses paid for treatment of physical ailments are deductible in the computation of the net income for individual income tax purposes because they are basic living expenses. However, if medical expenses have been covered by insurance benefits, they can no longer be claimed as deductions. Therefore, when claiming an itemized medical expense deduction in the filing of the individual income tax return, in addition to verifying that the expense is for medical treatment in nature and the medical institution meets the requirements set forth in Article 17 of the Income Tax Act, the taxpayer shall deduct the insurance benefits received from various insurances from the medical expenses first, and claim the deduction if there are still uncovered medical expenses.
The National Taxation Bureau further explained that most people are aware that medical expenses covered by insurance cannot be used as itemized deductions for individual income tax purposes, but they often mistakenly believe that it only applies to full reimbursement insurance benefits. The most common disputes arise from daily benefit insurance and group insurance, because only certificates of diagnosis are required to file claims to insurance companies for these two types of insurance policies, and no medical receipts are needed, causing misunderstandings among people. For example, Mr. A has a number of daily benefit insurance policies from insurance companies. In 2019, he was hospitalized for 46 days for cancer treatment and paid an inpatient medical expense of NT$170,000 and an outpatient medical expense of NT$80,000. The insurance company paid benefits of NT$460,000 for the inpatient medical treatment and NT$3000 for the outpatient medical treatment to Mr. A, based on the certificate of diagnosis provided by Mr. A. Therefore, the inpatient medical expenses that Mr. A paid to the hospital are fully covered by insurance and are not deductible for individual income tax purposes, and Mr. A can only claim the outpatient medical expenses of NT$77,000 (NT$80,000 - NT$3,000) that are not covered by insurance, plus other itemized deductions that can be claimed; the result or the standard deductions, whichever is higher, will be used as deductions for filing the individual income tax return.
If the public has any questions, they can inquire at the nearest branch or office of the National Taxation Bureau or call the toll-free service line at 0800-000-321 for inquiry.
Contact: Mrs. Shi, Revenue Assessor of the Second Legal Affairs Division
TEL: 07-7256600 #8706
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=2326f3cef13144e18bbfce0e4884a2ff