Travel insurance as medical expense?

I do not see any language in Pub 535 that would disallow a Schedule C filer from including this amount on form 1040, line 29. But I do not know of any specific cases confirming this is acceptable.

Steve

Concur

ChEAr$, Harlan Lunsford, EA n LA

I would include it on Line 24a (Schedule C) with your other transportation expenses if you are not using the C-EZ.

A taxpayer's medical expenses, and this is one, are not deductible on Schedule C. I agree with Steve and Harlan.

I don't view "trip" insurance as a medical expense.

"Alan" wrote

I've not taken out any of this type of travel insurance, but I see it as being more of a medivac policy instead of a "I don't feel well, let's cut the trip short" type of insurance.

They probably won't cover the costs because of a belly ache.

I'm not sure what point you are trying to make. My response to Bill Brown was merely to point out that this is a travel insurance policy. It is sold as travel or trip insurance. It only covers the traveler for that specific trip. As such, it is deductible as travel expense on the Schedule C. It is not medical expense.

The original post does not make it clear if the person is employed and the employer pays their health insurance premiums (in full or part). If this is the case, then you cannot deduct self-employed health insurance costs.

"Alan" wrote

Sorry if I ruffled your feathers. I am finding it difficult to see how this is an ordinary and necessary ~business~ expense. Travel for medical purposes are generally not an allowed business expense. The travel, from the foreign country back to the US say, isn't being done for business purposes but for personal medical reasons. There's no valid business reason to get you back to your US doctor in a hurry.

I think there is a distinction here between a business expense and a personal expense. Yes, the trip itself might be qualified business travel, but the extra cost to medivac back to the US because of a medical problem is a personal decision. That the traveler doesn't like foreign doctors or foreign hospitals is one of a personal choice and not a business related choice.

This is a different type of policy than a trip interruption policy. It only pays due to a medical problem. Not because of bad weather or other trip related issues.

I can't imagine a medical condition, which would trigger the insurance paying the return trip costs, would even be considered as business related.

An interesting point, and I would want to see some case history supporting this. If the uninsured medical expenses occured during a business trip, they would not count as travel expenses, so I do not see why the insurance should -- unless it is a customary and reasonable part of business travel, if true there'd be case law supporting it.

Steve

Yes, definitely the line 29 adjustment to income is subject to these restrictions. There must not be employer-paid or spousal-employer-paid health insurance, and there must be sufficient Schedule C income.

Steve

"Travel insurance" can mean a few things. I would agree if it were a travel cancellation policy. But not if it's a medivac policy, which is apparently what it is. If it's one policy covering both then you may have to break it out.

Steve

Au Contraire. You didn't ruffle my feathers. I couldn't understand your point. Now I do. You are saying it is not a deductible business expense. It is a personal expense.

To be a deductible business expense it must be ordinary & necessary for the business and the amount must be reasonable. It can't be deducted if it is a personal expense or an expense that is specifically excluded as a business deduction. E.g., a medical expense is not a deductible business expense. Health insurance premiums paid under your business are not a deductible business expense but rather an adjustment to income.

The IRS and the courts have carved a pretty wide latitude on the ordinary & necessary. Ordinary means it is common and accepted in the fields of business. Necessary (here is where the latitude narrows) means it is helpful and appropriate for your business. The IRS has tried many times, sometimes successfully and sometimes not) to narrow "necessary" to mean vital.

A person running a small business who has to travel out of country is exposed to additional costs that one would not be exposed to if one traveled in-country. One's health insurance typically covers foreign emergencies but usually does not cover air ambulances to get back to the US. This is very expensive and I can see where one might want to buy some insurance to protect oneself against that potential cost. There are many situations where getting one back to US hospitals and US doctors is critical to the care.

The question becomes do we have a policy that is a health insurance policy or a travel policy? I don't believe it is a health insurance policy and therefore there is no adjustment to income. I do believe it is a travel policy so we must look to see if it is ordinary & necessary and not personal.

A small business where the sole proprietor could conceivably be wiped out by air ambulance costs or whose business would suffer severe losses if the owner could not get adequate medical care can make the argument that this type of trip or travel insurance is necessary or even vital to the continuing operation of the business.

It may be a stretch.. but I would not be uncomfortable deducting it.

(snipped.....)

All you say argues that it is a purely personal expense and not business related.

Just like if I never again got a haircut and was looking all scraggly and scare away clients... would that make my haircuts deductible? (Old argument : "but my hair grows on company time.")

Yep, a really looooonnnng stretch, and no way is it deductible.

ChEAr$, Harlan Lunsford, EA n LA

Are you a retired academic, are you a published author, or are you an experienced public speaker?

If you are 77 and healthy, you are most fortunate. However, if you are healthy, it's unlikely you would have medical expenses exceeding 7.5% of AGI to create an actual deduction.

If this is a legitimate business trip (or you can make it one), most (if not all) of your trip related expenses may be deductible.

Considering my health, such insurance would be a good idea. But for it to be a business dexecution, there would need to be a business purpose. That gets you into the issues of being a retired academic, a published author, or a public speaker.

Dick

As the OP, I was attempting to ask about insurance that would cover "medical" events only -- that is, emergency medical care and "medevac" type services, etc -- not cruise ships running aground, flights cancelled, any of that kind of thing.

Again commenting as the OP, I suspect you may be significantly younger than I am!