Medical Tourism

Medical tourism is the practice of traveling to another country to receive medical care. The Centers for Disease Control and Prevention uses the term as its own headword and defines it directly: "Each year, millions of US residents travel to another country for medical care which is called medical tourism." CDC reports that medical tourists from the United States most commonly travel to Mexico and Canada, and to several other countries in Central America, South America and the Caribbean, and that the most common procedures are dental care, cosmetic surgery, fertility treatments, organ and tissue transplantation, and cancer treatment.

The reason it has a financial dimension beyond the price of the procedure is that crossing a border changes what U.S. tax law recognizes and what U.S. insurance is likely to pay for afterwards. Neither of those follows from the quality of the care. They follow from rules written about where a drug was purchased, where a facility is licensed, and what a health plan agreed to cover.

The clinical risks are the part CDC actually publishes on, and they are specific rather than general. CDC lists infection as inherent to any procedure, and names wound infections, bloodstream infections, donor-derived infections in transplantation or transfusion, and hepatitis B, hepatitis C and HIV among complications seen in procedures performed in other countries. It states that "[h]ighly drug-resistant bacteria and fungi have caused disease outbreaks among medical tourists" and that facilities elsewhere may not have adequate infection-control practices. On standards, its wording is careful and worth repeating exactly: "Some countries' requirements for maintaining licensure, credentialing, and accreditation may also be less than what would be required in the United States," and counterfeit medicines and lower-quality devices may be used in some countries. It also flags communication difficulties where the patient does not speak the language fluently, and blood clots after flying, advising that delaying air travel for 10 to 14 days after major surgery, particularly chest surgery, minimizes risks from pressure changes.

Continuity of care is where the financial exposure concentrates. CDC's point is not that complications are likely but that treating them happens at home: follow-up care "might be prolonged and might not be covered by your health insurance", and travelers "should understand the potential financial costs associated with follow-up care or emergency care in the event of complications, review their health insurance policies to determine what, if anything, is covered and plan for the possibility of paying for additional care out-of-pocket." CDC's own risk-reduction advice includes obtaining international travel health insurance that covers medical evacuation back to the United States, arranging domestic follow-up before traveling, checking the clinician's qualifications and the facility's accreditation through bodies such as Joint Commission International, and getting copies of all records from the destination facility before returning. It adds a caution against reading accreditation as a guarantee: "all surgeries carry the risk of complications and accreditation does not guarantee a positive outcome."

On the tax side, the sharpest distinction is one people routinely get backwards, and Publication 502 states it in two adjacent passages. For a drug taken while abroad: "You can include the cost of a prescribed drug you purchase and consume in another country if the drug is legal in both the other country and the United States." For the same drug brought home: "In general, you can't include in your medical expenses the cost of a prescribed drug brought in (or ordered and shipped) from another country. You can only include the cost of a drug that was imported legally." The place of consumption, not the place of purchase, is what separates the two answers.

Lodging is includible, conditionally and in a small amount, and this is where the phrase "medical tourism" collides with the rule. Section 213(d)(2) of the tax code treats lodging away from home as paid for medical care only where the lodging is not lavish or extravagant, is "primarily for and essential to" medical care, the care "is provided by a physician in a licensed hospital (or in a medical care facility which is related to, or the equivalent of, a licensed hospital)", and "there is no significant element of personal pleasure, recreation, or vacation in the travel away from home". The statute then caps it: the amount "shall not exceed $50 for each night for each individual." Publication 502 restates all four conditions, adds that lodging for a person traveling with the patient counts, so a parent accompanying a sick child can reach $100 a night, and says plainly that "[m]eals aren't included." That exclusion belongs to the lodging rule. Meals at a hospital or similar institution are a separate matter, includible where a principal reason for being there is to receive medical care.

Two consequences deserve stating rather than implying. The condition about personal pleasure, recreation or vacation is the one that most directly limits a trip structured as a vacation around a procedure, and Publication 502 separately states that a taxpayer "can't include in medical expenses a trip or vacation taken merely for a change in environment, improvement of morale, or general improvement of health, even if the trip is made on the advice of a doctor." Transportation is a different line item: amounts paid "for transportation primarily for and essential to medical care" are includible, including transportation to another city where the trip is primarily for and essential to receiving medical services. And neither section 213(d)(2) nor Publication 502's lodging discussion says how the licensed-hospital requirement applies to a facility licensed under another country's law, which leaves that an open question rather than a settled yes or no.

One category is closed outright. Publication 502 provides that "[y]ou can't include in medical expenses amounts you pay for illegal operations, treatments, or controlled substances whether rendered or prescribed by licensed or unlicensed practitioners." Publication 502 does not say whose law decides that a procedure is illegal, and the only version of the question it answers is the domestic one, ruling out controlled substances "that aren't legal under federal law, even if such substances are legalized by state law". Being lawful where the care was given is therefore not by itself an answer.

Whether any of this produces a deduction is a separate question governed by the medical expense deduction's own threshold, and the rules for reimbursing costs from a health savings account or flexible spending account start from the same statutory definition of medical care but diverge from the deduction in places, which qualified medical expenses covers.

The sequence CDC describes runs: research the clinician and the facility's accreditation, get a pre-travel consultation four to six weeks ahead, obtain international travel health insurance including medical evacuation, arrange where you will stay immediately after the procedure and who will provide follow-up care at home, carry your records both ways, and delay flying after major surgery. The tax treatment is worked out afterwards, from receipts, and it applies to a narrower set of costs than most travelers expect.

A hypothetical example of the lodging cap. Marisol travels abroad for a procedure and stays six nights in a hotel near the facility at $180 a night, spending $1,080 ($180 × 6). Her husband travels with her.

Assuming all four statutory conditions are met, the includible lodging is not what she spent. It is capped at $50 per night per person, so her own lodging contributes $300 ($50 × 6) and her husband's another $300, a total of $600. The remaining $480 of the hotel bill is not a medical expense, and their restaurant meals are not medical expenses at all.

The transportation to and from the facility is treated separately, as an amount paid for transportation primarily for and essential to medical care. Whether any of the $600 and the transportation ultimately reduce Marisol's tax depends on the medical expense deduction's threshold, which most taxpayers do not clear.

Pros

• Procedures that are expensive, unavailable or subject to long waits at home may be obtainable abroad, which is why CDC lists cost, culture and access among the reasons people travel.
• Dental and cosmetic work, two of the most common categories, are often poorly covered by U.S. health coverage in any event.
• A prescribed drug bought and consumed abroad can count as a medical expense where it is legal in both countries.
• Accreditation bodies such as Joint Commission International publish standards that give a traveler something concrete to check.

Cons

• CDC documents infection, drug-resistant organisms and donor-derived infections among complications from procedures performed in other countries.
• Licensure, credentialing and accreditation requirements vary, and CDC notes counterfeit medicines and lower-quality devices as risks in some countries.
• Follow-up care for complications happens at home, may be prolonged and may not be covered by the traveler's health insurance.
• Flying too soon after major surgery raises the risk of blood clots, so the return date is a clinical decision rather than a travel one.
• The tax treatment is narrow: lodging capped at $50 a night per person, no meals outside a hospital or similar institution, nothing for a trip with a significant element of vacation, and nothing for an illegal operation or treatment.
• Bringing a drug home is a different and stricter rule from taking it abroad, and only a legally imported drug can be included.