Can Medical subrogation be deducted as a medical expense?

Question

I was recently forced to pay my medical insurance provider back $188,000 for services given to my son for a spinal cord injury. The reasons were the medical plan was a qualified ERISA and my son received compensation from a third party. The funds he received were placed in a structured settlement for future payment and are far short of what his life care plan assessment projects his future medical costs to be. Bottom line is that I was forced to reimburse the insurance company for all medical expenses which in my view would classify the payment as a medical expense.

Answer 1

This one is a little tricky. Since you DID get reimbursed by the third party, you wouldn't be able to claim it. Sounds like you initially got reimbursed twice, from the two different parties, and were just paying back the duplicate reimbursement.

You could call the IRS and ask if there's anything available to you, but I don't think it's real likely.

Good luck - sounds like you've got a real full plate.

Answer 2

No, since you have received a settlement to cover his expenses, none of the costs are deductible. The repayment to the insurance company was just a refund to them of a claim that they were not liable for and has no tax consequences.