Any medical expense that will be covered by a third party liability (TPL) reimbursement or an excluded vendor payment is not allowed as a deduction. The portion of the medical expense not covered by TPL or excluded vendor payments is allowed as a medical expense to the EU. TPL includes Medicare, Medicaid, or other health insurance.
- If a person claims medical expenses and has TPL, do not allow medical expenses until the amount paid by the third party is verified.
EXAMPLE: Mr. M., who is entitled to medical deductions, has total medical expenses of $635 and has Medicare. Mr. M. receives the medical bill for $635 in February. In June Medicare pays $400 on the bill. Mr. M. is then responsible to pay $235. After verifying the third party payment has been made, enter the medical expense of $235 on the Medical Expense screen. This amount can be allowed in one lump sum the month in which it is verified, averaged over the certification period, or according to a negotiated payment plan. If the medical deduction is averaged over the certification period, the total amount for which Mr. M. is responsible to pay ($235) is averaged. If Mr. M. is certified for 24 months, is in the first 12 months of his certification, and chooses to average the expense over the remainder of his certification, divide the expense by the number of months remaining in the certification. Enter the prorated amount on the Medical Expense (FMXA) screen and frequency code monthly as there is no frequency code for more than 12 months. If Mr. M. is certified for 24 months and is in the first 12 months of his certification period, he has a third option of averaging the expense over the remainder of the first 12 months. FAMIS excludes the first $35 from the averaged amount to arrive at the monthly allowable medical deduction.
NOTE: If Mr. M. chooses to average the expense over the remainder of the first 12 months, set a reminder to remove the expense at the end of 12 months.
- Medical expenses pending verification of third party reimbursement are not considered past due until 30 days after the reimbursement is verified.
EXAMPLE : Ms. L. is billed $1000 in May for an allowable medical expense. The bill is submitted to the insurance company. On July 12, Ms. L. is notified that the insurance company paid $800. Ms. L. is responsible for paying $200 of the expense. The bill is not past due until August 11 or the date supplied on the billing notice.