<p>Since many medical expenses are incurred pre-tax, they are not included in AGI. Such expenses would include items paid via pre-tax payroll deductions such as medical and dental insurance, flexible spending healthcare contributions, etc. Should these expenses be included in medical expenses?</p>
<p>For example, a family has AGI of $150,000. $12,000 of Payroll deductions are not included in AGI such as medical and dental insurance ($7000) and healthcare flex spending contributions ($5000). They have an additional $10,000 of out-of-pocket medical expenses above and beyond that covered by insurance and flex spending. </p>
<p>Would this be considered (1) a $150,000 family that spent $10,000 or 6.7% of their income on medical expense, or (2) a $162,000 family that spent $22,000 or 13.6% of their income on medical expense.</p>
<p>Would these circumstances be considered “significant” enough to warrant a FA review?</p>
<p>The only school that mentioned they had adjusted my award package because of medical bills was Johns Hopkins, and they didn’t do much.
I’m not completely sure how much we spent though, if I can find out I’ll post an aproximite number. I do know two people in our house are classified as handicapped, and three have chronic illnesses that require medication. Plus the year in question was the year of diagnosis for two of them so all the tests added up. So it’s pretty high.</p>
<p>In general, pre-tax payroll deductions, other than retirement plans, are not reported on the FAFSA, so you look like a $150,000 family with $10,000 of out of pocket medical expenses.</p>
<p>It could be argued that pre-tax deductions should be reported on the Untaxed Income line, but I don’t think that is the purpose of the line. Some companies give Health Insurance directly as a benefit, and some give it through Flex Credits (untaxed income). In the former case, you would have no idea what untaxed income to put down. So for consistency sake, you can ignore health insurance premiums.</p>
<p>By a similar rationale, flex medical dollars can also be excluded. Some people have generous plans, and some don’t. Some companies give you the option to select (pay more for the generous plan). Which plan you have determines how much flex medical dollars (pre-tax) you deposit. For many people, the less generous plan plus flex medical dollars could be less than the cost of the more generous plan. Thus, flex medical dollars can be considered premium payments in another form, and thus not reportable.</p>
<p>If the medical expenses are recurring (or at least for one more year), you could ask for special consideration.</p>
<p>Thanks for the replies. In this case we do know the exact amount being deducted for insurance and flex spending, there are no choices to be made as to which insurance to take (employer only offers the one plan, the only choice would be to participate or not) and while the flex spending deduction is optional, but we max it out at $5000/year because we know we’ll use it and then some.</p>
<p>Does anyone know what point are medical expenses considered significant enough to bring to the attention of the FA office to ask for a review?</p>
<p>I would say, if expenses paid out of reported income (not pre-tax income that is not reported) is more than 5% of your AGI, then I would let them know.</p>