You can claim 20% of your entire family’s total out of pocket medical expenses - provided the total out of pocket expenses is more than $1500 in a financial year. Lets try to understand what this offset means:

Out Of Pocket Medical Expenses

This is the total medical expenses for your entire family minus the money you got back from medicare and private health insurance. So basically this is the money you spent on medical expenses from your pocket. The total out of pocket medical expenses for you and your entire family, has to equal or be more than $1500 in a financial year. Only then you will be eligible for this benefit.

Medical Expenses That Are Eligible

Not all medical expenses qualify to be included in this ‘Out Of Pocket Medical Expenses’ calculation. A complete list of what qualifies and what does not can be obtained from the ATO website. In this post I am going to include some of the not so obvious expenses…

Medical Expenses That Qualify:

1. Optical Laser Surgery
2. Accommodation and service fees to nursing homes and hostels
3. Prescription Glasses And Contact Lenses
4. Payments made to dentists, orthodontists or registered dental mechanics
5. Therapeutic treatment at the direction of a doctor (Eg..speech therapy, acupuncture, treatment for dyslexia)
6. Chemist bills (prescription ones) And also over the counter bills for a medical condition (like for cold, flu, pain relief)

Medical Expenses That Do Not Qualify:

1. Cosmetic Surgery
2. Chemist types (like for cold, flu, pain relief) bought from a super market or from other retail outlets (other than from a chemist)
3. Funeral Expenses
4. Travel Vaccinations
5. Ambulance charges

Consult ATO or your tax agent before you file your return.

Preparing Your Tax Return

Store Your Bills: If you have not done this for the current year then start doing this from the new financial year. Store all your bills - everything from chemist as well - for cold flu etc

Medicare Statement: Log on to Medicare website. Medicare gives you a ‘Medicare Tax Benefit Statement’ for you and your entire family - This statement will tell you all your medical expenses for that year and the amount you got back from Medicare.

Couple of things about this statement:
1. Will not include the expenses that you did not claim from Medicare - like chemist bills
2. Will not include the amount you got back from private health insurance

Private Health Insurance Statement: This depends on which private health insurer you are with. But most of them will give you a statement which lists the money you got back from them (for each medical expense).

Assume you spent 4000 dollars in the entire financial year for medical expenses. If you got back 1000 dollars from Medicare and Private Health Insurer, you can now claim 20% of 3000 dollars (4000-1000 ).

Don’t miss out on this tax offset…I must confess that I myself completely underestimated the benefits here…But I am glad that I am aware and will definitely do my sums to see if I am eligible for something here…

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