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Cord Blood Banking Costs Deductible Your umbilical cord blood banking costs may be tax deductible if used in treatment of a medical condition. The amount not covered by health insurance will be a deductible expense. Most child health insurance plans may not cover this cost - unless there is an existing health condition, and treatment is expected to improve your child's health, and the protocol is not deemed experimental.
Many growing families choose to pay for umbilical cord blood collection and storage when their infant is perfectly healthy. The costs associated with banking your infant's umbilical cord blood is like buying an insurance policy against future health risks. In these cases the expenses are not deductible as there is no underlying medical condition. Where an existing medical condition is present, tax deductible expenses will fall into one of three categories:
Cut these costs by 1/3 or more using a Flexible Spending Account (FSA). Read below to find cost estimates, and learn why an FSA may save more than taking a medical deduction using Schedule A.
Banking Cord Blood Costs and Tax DeductionsThe cost of collection, transplantation, freezing, and storage of embryonic stem cells will be eligible for a tax deduction as long as a medical condition is present. There are usually two fees associated with cord blood banking. The initial fee includes enrollment, collection and storage for the first year. The second is an annual storage charge. Initial costs will range from $900 to $2100. Annual fees beyond the initial storage charge are approximately $100.
You have two options for your deductible umbilical cord blood banking costs. Paying these charges using your flexible spending account will work best for most couples because of first dollar tax savings, the predictable expenses, and the additional saving that comes only from pre tax deductions. First, using an FSA to pay for cord blood banking makes the most sense because of first dollar tax savings. Deducting these charges using Schedule A requires you to meet a deductible expense hurdle of 7.5% of Adjusted Gross Income (AGI).
Second, the costs are very predictable. You know exactly what needs to be paid and when. Many families are put off by the FSA use it or lose it rule. The predictable expenses minimize this concern.
Third, an FSA and pre-tax payroll deductions save you money in a variety of ways: FICA tax savings, and hidden tax savings associated with a lower reported W2 income can make a big difference. Always consult your tax adviser to determine the best approach for your family. Cord Blood Storage and Other Medical Expense DeductionsWhat if your employer does not offer a flexible spending account, and your cord blood costs don't tip your deductible expenses above your AGI threshold? Your family may not see any tax savings unless you can identify enough other qualified medical expenses.
Your collection, banking and storage costs are only deductible if there is an underlying medical condition: either for your infant or another family member. Chances are there will be other un-reimbursed medical expenses from insurance deductibles, co pays, co insurance, experimental treatments, out of network charges, etc. Find out about more qualifying expenses associated with growing families to improve your odds of tax savings.
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