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Rehab/Is Rehab Tax Deductible? (DrugRehab Blog)

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Our rehab centers help men and women who are struggling with addictions, substance abuse and mental health disorders. We also provide treatment exclusively to International Association of Fire Fighters (IAFF) members at our Maryland facility, the IAFF Center of Excellence for Behavioral Health Treatment and Recovery.

For many people grappling with an addiction to prescription medications, illicit drugs, or alcohol, the perceived cost of treatment is a barrier.

With 40 million U.S. adults diagnosed with substance use disorders and fewer than 10% engaging with addiction treatment, there remains a significant treatment gap.

Fortunately, most of the best treatment centers will accept health insurance for payment if you are unable to pay for rehab out of pocket. Health insurance plans will typically cover from 50% to 80% of addiction treatment costs after tax deductibles.

Today’s guide highlights how you can include addiction treatment as a tax-deductible, potentially lowering the amount of money you owe in taxes.

Take the first step. Start addiction treatment today.

Get effective treatment for substance use and mental health disorders at our insurance-covered programs. Call now to get started.

Is Addiction Treatment Tax Deductible?

Tax deductions allow you to get reimbursed for out-of-pocket costs associated with things such as healthcare. While there is no universal answer to this question, you may be able to deduct the costs of drug and alcohol rehab services, potentially lowering your tax burden.

IRS reports that you may deduct medical expenses from your taxable income. Rehab for drug addiction or alcoholism is defined as a medical expense.

All of the following are considered valid deductible medical expenses related to substance abuse:

  • X-rays and other diagnostic tests.
  • Payments to doctors, psychologists, and psychiatrists.
  • Payments for inpatient drug or alcohol rehab.
  • Cost of transportation to a medical facility.

IRS states that deductible medical expenses can include the costs of diagnosis, prevention, treatment, and other medical services.

You may deduct the costs of treatment for substance abuse for yourself or for a dependent like a child or spouse.

For guidance on finding treatment that is tax-deductable, call our friendly recovery experts at 866-330-9449.

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When Are Costs for Rehab Tax Deductible?

Before you can deduct any expenses that you incur for addiction treatment, there is one essential stipulation:

The total cost of medical expenses related to drug or alcohol rehab must be greater than 7.5% of your AGI (adjusted gross income). Additionally, you can only deduct amounts over that threshold. For example, if you make $75,000 a year then your medical expenses must exceed $5,625 to qualify as tax deductible. You can deduct the amount in excess of $5,625. If you pay $15,000 for addiction treatment, you can deduct $9,375 – this is the amount over $5,625.

Consider tracking all your expenses and deductions throughout the year. You could also create a spreadsheet that itemizes your deductions.

When it’s time to take care of your income taxes, you will use Schedule A 1040, completing the proper amount on the first line of the form.

If you have a substance use disorder (drug addiction) or alcohol use disorder (alcoholism), these conditions are incurable but treatable. Without treatment, addiction tends to get worse due to the progressive nature of the chronic brain condition. There is no need to allow the perceived cost of treatment to stand in your way, though. Kickstart your recovery today here at Renaissance.

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Get Insurance-Covered Addiction Treatment

Our world-class addiction treatment program offers insurance coverage up to 100% for most PPO policies. Click below to get a quote. 

Get Insurance-Covered Rehab at Renaissance Recovery

If you choose to initiate your recovery at Renaissance Recovery, you can use health insurance as payment for addiction treatment. Your treatment team will provide you with a list of itemized charges for therapy which should streamline your tax preparation.

Many health insurance providers only cover the costs of outpatient treatment for alcoholism and drug addiction. At Renaissance, we specialize in the intensive outpatient treatment of substance use disorder, alcohol use disorder, and co-occurring disorders.

Regardless of the intensity of treatment that makes the best fit, you can connect with a variety of evidence-based and holistic therapies at our rehabs in Florida and California, including:

  • Medication-assisted treatment
  • Psychotherapy (CBT or DBT)
  • Individual counseling
  • Group counseling
  • Family therapy
  • Experiential adventure therapy

Whether you step down to a program with less time commitment or transition straight back into daily living, your treatment team will equip you with an aftercare plan that includes relapse management strategies and access to our alumni program.

Begin your journey to recovery today by calling Renaissance at 866-330-9449.

Sources

  1. https://www.samhsa.gov/data/release/2020-national-survey-drug-use-and-health-nsduh-releases
  2. https://www.irs.gov/publications/p502#en_US_2020_publink1000178851
  3. https://www.irs.gov/taxtopics/tc502
  4. https://www.irs.gov/pub/irs-pdf/i1040sca.pdf
  5. https://nida.nih.gov/publications/drugs-brains-behavior-science-addiction/drug-misuse-addiction

Related Pages

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