I paid a doctor for services ($500) in September before it could be determined if my Medicare Advantage would pay for the treatments. The treatments were later approved and the doctor was paid by my Medicare Advantage plan in November and December. I expect him to reimburse me for the $500 in January.
Question: How to handle on 1040? My guess is that I should deduct the $500 in 2011 and then when he reimburses me in 2012, show the $500 as Line 21 income. Is that the way to do it or is there another option (or a better way)?