It’s a good idea to organize your medical records and take care of end-of-year finances in November or December. At that time you can sift through the mountains of receipts, bills and paperwork to throw out what you don’t need and organize the rest. Here are some areas to examine.
If you have a flexible-spending account (FSA), the end of the year is the perfect time to check on remaining funds. With this type of account, you set aside a certain amount of pre-taxed money each month for eligible expenses. The downfall is that you will lose any unused money that remains in the account past the end of the year. It’s a “use it or lose it” medical plan.
Find ways to use the remaining balance before the end of the year. Most plans allow funds to be used for medical costs that are not covered by insurance: prescriptions, deductibles, co-payments and dental and vision expenses. Most over-the-counter drugs are not covered by a FSA.
Explanation of Benefits
If you save Explanation of Benefits (EOBs), you should start to sort through them during Thanksgiving. EOBs are documents sent to you by your insurance. They describe claims and can include information like:
- Type of service received
- Name of provider
- Billed charges
- Amount not covered
- Total costs
You should review all EOBs and make sure that there are no billing errors. You only need to save EOBs until all bills are paid and disputes are finished.
Your medical expenses are only tax deductible if they are over 7.5 percent of your adjusted gross income. Gross income is your total income before taxes. You can throw out your medical receipts if your expenses are under 7.5 percent. If you are close to that amount, you may want to schedule an eye or dental exam before the year ends so that you can deduct your expenses.
If you are missing receipts, you can contact your doctor’s office for a complete printout.
What to Keep
If you have any chronic medical conditions, you should keep and organize these records for future reference. Labeled file folders, manila envelopes or three-ring binders are perfect for storing test results, physician’s notes, treatment plans, Explanation of Benefits and billing information.
Regarding any remaining paperwork and receipts, a general rule is to keep supporting documents for tax returns for seven years. Furthermore, you only need to keep your most current insurance policy. You can shred and recycle any previous policies that are still lying around.
Jerry often writes articles on how to view and share medical records. He is a programmer at Brit Systems which has a free DICOM viewer available to download from their website.