IRS Collection Financial Standards – National Standards for Out-of-Pocket Health Care
Please note that the IRS Collection Financial Standards are designed for the purpose of calculating repayment of overdue taxes and are effective only for federal tax administration on and after April 25, 2022. For information regarding expenses related to bankruptcy calculations, kindly visit the website of the U.S. Trustee Program.
The allowable out-of-pocket costs for health care for 2023 is $75 for under age 65 and $153 for over age 65. It is important to note that the standard amounts may change, and thus, it is advisable to check back periodically to ensure that you have the latest version.
The table for health care expenses has been established based on data from the Medical Expenditure Panel Survey and is intended to provide minimum allowances for out-of-pocket health care expenses. These expenses include medical services, prescription drugs, and medical supplies (such as eyeglasses, contact lenses, etc.). This is most items that are bought as part of a prescription from a licensed health care professional. However, elective procedures such as plastic surgery or elective dental work are generally not allowed.
Taxpayers and their dependents are allowed the standard amount monthly on a per-person basis, without being questioned about the amounts they actually spend. In the event that the claimed amount is greater than the total allowed by the health care standards, the taxpayer must provide documentation to substantiate that the expenses are necessary living expenses. Generally, the number of individuals allowed should be the same as the number of dependents claimed on the taxpayer’s most recent year income tax return.
Furthermore, the out-of-pocket health care standard amount is allowed in addition to the amount taxpayers pay for health insurance.