Omar Bennett
Physical therapy is considered a medical expense under certain conditions. The Internal Revenue Service (IRS) allows for the deduction of certain unreimbursed medical and dental expenses that exceed 7.5% of an individual's adjusted gross income (AGI). For therapists, the cost of therapy can be deducted as a business expense if it helps them perform their job well. For private individuals, the total cost of therapy for the year must exceed 7.5% of their AGI to be deductible. Therapy must also be necessary and deal with specific issues that negatively impact one's life. Additionally, Medicare Part B covers medically necessary outpatient physical therapy services with no limit on the amount paid in one calendar year.
| Characteristics | Values |
|---|---|
| Therapy as a medical expense | Therapy can be considered a medical expense if it is necessary and deals with specific issues that negatively impact one's life. |
| Therapy as a business expense | If therapy is undertaken to help navigate job-related issues, it can be considered a business expense. |
| Therapy as a personal expense | Private individuals can only deduct the cost of therapy from their taxes if the total cost exceeds 7.5% of their adjusted gross income (AGI). |
| Therapy covered by insurance | Therapy covered by medical insurance is not eligible for deduction. |
| Outpatient physical therapy | Medicare Part B helps pay for medically necessary outpatient physical therapy. |
| Medical expenses | Medical expenses include the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any body function. |
| Medical expenses covered | Medical expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They also include the costs of medicines and drugs that are prescribed by a physician. |
| Medical expenses not covered | Medical expenses do not include expenses that are merely beneficial to general health, such as vitamins or gym memberships. |
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What You'll Learn
Outpatient physical therapy must be medically necessary
Outpatient physical therapy can be considered a medical expense, but only if it is deemed medically necessary. This means that the therapy must be part of a treatment plan to address a specific medical issue. For example, Medicare will only cover physical therapy services that are considered medically necessary.
To be considered a medical expense, physical therapy must be prescribed by a licensed healthcare practitioner as part of a treatment plan. This plan must outline the medical necessity of the therapy, detailing how it will improve the patient's functional abilities. It should also specify the anticipated number of therapy sessions and their frequency, based on the complexity of the condition and the expected treatment course.
The purpose of physical therapy is to restore or improve physical movement and strength following an injury, illness, or surgery. It can also be used to manage chronic conditions, such as arthritis or osteoporosis, or to slow decline. In these cases, the focus should be on improving the patient's ability to perform daily activities and maintain their independence.
It is important to note that general wellness or maintenance physical therapy does not qualify as a medical expense. The therapy must be necessary to treat a specific condition or disease. Additionally, therapy covered by medical insurance is not eligible for deduction from taxes. Only therapy paid for out of pocket may be deducted, and only if the total cost exceeds 7.5% of the individual's adjusted gross income (AGI).
Therapy can be considered a valid business expense for self-employed therapists or those in similar professions. In this case, the cost of therapy may be deductible if it helps the individual stay healthy and function well in their job. However, it is recommended to consult a tax professional, as there may be differing viewpoints on whether this counts as a write-off.
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Therapy must be prescribed by a licensed health care practitioner
For therapy to be considered a medical expense, it must be prescribed by a licensed healthcare practitioner. This is because medical expenses are defined as the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body. Therapy that is necessary and deals with specific issues that negatively impact one's life is likely to be considered a deductible expense.
Therapy visits can be included as a medical expense if they are primarily to alleviate or prevent a physical or mental disability or illness. This includes therapy to treat a diagnosed mental illness, but not marital counselling. In the case of physical therapy, it must be prescribed by a licensed healthcare provider who certifies that it is medically necessary. For example, physical therapy to restore or improve physical movement after an injury, illness, or surgery would be considered a medical expense.
Additionally, therapy must be paid for out of pocket to be considered a medical expense. Therapy covered by medical insurance is not eligible. Private individuals can only deduct the cost of therapy from their taxes if the total cost exceeds 7.5% of their adjusted gross income (AGI). Self-employed therapists or therapists paying for personal therapy may deduct the cost of therapy as a business expense, but they should be aware of the differing viewpoints on whether this counts as a write-off and consult a tax professional.
Other expenses that can be deducted as medical expenses include the cost of artificial limbs, artificial teeth, eye examinations, eyeglasses and contact lenses needed for medical reasons, eye surgery to treat defective vision, and ambulance services. Medical expenses also include the cost of prescription medications and appliances such as hearing aids. The cost of special food for medical conditions such as celiac disease, obesity, or hypertension may also be deducted, but only if the food does not satisfy regular nutritional needs and is substantiated by a physician.
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Medicare Part B covers outpatient physical therapy
Original Medicare (Parts A and B) covers 80% of the Medicare-approved amount for outpatient therapy services once your care is confirmed as medically necessary. If you have Original Medicare and see a participating provider, you will pay a 20% coinsurance for Medicare-covered services after you meet your Part B deductible. For example, in 2025, you will pay a 20% coinsurance after meeting the Part B deductible of $257.
Medicare's coverage rules for outpatient therapy do not apply if you are receiving therapy as part of a Medicare-covered stay in a skilled nursing facility or if you are receiving Medicare-covered home health care. Home health care requires you to be homebound and in need of skilled care, including skilled nursing and/or skilled therapy services. If you need outpatient therapy care, be sure to obtain confirmed proof from the care provider that the therapy is medically necessary.
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Therapy must be for a specific medical condition
Outpatient physical therapy can constitute a medical expense, but only if it is deemed medically necessary. For example, physical therapy to restore or improve physical movement after an injury, illness, or surgery is considered a medical expense. However, it is important to note that the specific amount one owes may depend on various factors, and it is always recommended to consult with a tax professional.
The Internal Revenue Service (IRS) defines medical expenses as the costs of diagnosis, cure, mitigation, treatment, or prevention of a disease, or for the purpose of affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other licensed medical practitioners. They also include the costs of equipment, supplies, medications, and drugs that are prescribed by a physician.
It is important to note that medical expenses do not include expenses that are merely beneficial to general health. For example, the cost of a gym membership is typically not considered a medical expense unless it is specifically for treating a medical condition or injury. The same applies to special diets or nutritional counseling, which must be recommended by a physician and intended to treat a specific medical condition to be considered a medical expense.
In the case of therapists or individuals in therapy, the cost of therapy may be deductible as a business expense if it helps the therapist perform their job effectively. However, it should be noted that there are differing viewpoints among accountants regarding this deduction, and it is always recommended to consult with a tax professional for specific guidance.
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Therapy must be paid out-of-pocket
Outpatient physical therapy can be considered a medical expense under certain conditions. The IRS defines medical expenses as the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body. This includes the costs of equipment, supplies, and medical services rendered by physicians, surgeons, dentists, and other medical practitioners.
For physical therapy to be considered a medical expense, it must be medically necessary and prescribed by a licensed healthcare provider, such as a doctor, nurse practitioner, or physician assistant. The therapy should aim to treat a specific condition or disease, improve physical movement, or maintain and slow the decline of physical function.
It's important to note that therapy covered by medical insurance is not eligible for deduction. Only out-of-pocket expenses that exceed 7.5% of an individual's adjusted gross income (AGI) can be considered for deduction. This means that if the total cost of therapy for the year surpasses 7.5% of one's AGI, it may qualify as a deductible medical expense.
Additionally, travel expenses incurred to attend therapy sessions may also be deductible as business travel expenses. However, it is always advisable to consult with a tax professional or refer to the IRS guidelines for detailed information on what constitutes a qualified medical expense and the specific requirements for deductions.
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Frequently asked questions
Outpatient physical therapy can constitute a medical expense if it is deemed medically necessary and is prescribed by a licensed health care practitioner.
Medical expenses include the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. They also include the costs of medicines and drugs that are prescribed by a physician.
Medical expenses do not include expenses that are beneficial to general health, such as vitamins, health club memberships, or non-prescription drugs. They also do not include cosmetic procedures or funeral and burial expenses.
