COSMETIC surgery or procedures generally may not be claimed as itemized medical expense deductions. However, a new private ruling says that radial keratotomy is not a cosmetic procedure.
Radial keratotomy has received much attention as a way to improve vision without the need for eyeglasses. It is a surgical procedure to correct nearsightedness, during which incisions are made in the cornea to change the angle of refraction, resulting in increased visual acuity. A taxpayer planning to undergo this procedure asked IRS whether unreimbursed radial keratotomy costs were medical expenses under Code Sec. 213.
Code Sec. 213(d)(9)(B) defines cosmetic surgery as any procedure whose objective is the improvement of the patient’s appearance without also meaningfully promoting the proper function of the body or preventing or treating illness or disease. Regs under Code Sec. 213 state that medical care includes operations or treatments, including surgery, that affect a portion of the body and that are for the purpose of affecting any structure or function of the body. However, deductions are confined to expenses incurred primarily for prevention or alleviation of a physical or mental defect or illness. IRS ruled that radial keratotomy meets the general definition of medical care in that it affects a structure or function of the body and corrects a physical defect. Therefore, it is not considered to be a cosmetic procedure whose cost could not qualify as a medical expense.
CBS observation: Although a private letter ruling is directed only to the taxpayer who requested it, and can’t be used or cited as precedent by others, there were no special circumstances given in this ruling that would lead others contemplating radial keratotomy to conclude that their surgical expenses would not similarly qualify as medical expenses.
CBS observation: Amounts paid for insurance coverage of cosmetic surgery are not medical expenses, and reimbursements for cosmetic procedures through an employer health plan, including a flexible spending arrangement, are not excludable from income. The new ruling, if broadly applied, would mean that premiums for health insurance that covers radial keratotomy costs would be medical expenses, and that insurance and health flex plan reimbursements of those expenses would be excludable from income.
CBS caution: Unreimbursed expenditures that qualify as medical expenses can be claimed as itemized deductions for regular income tax purposes only to the extent that they exceed 7.5% of AGI for the year the expenditures are paid.