Cross-Border Medical Expenses: Tax Deductions for Healthcare Costs Paid in the Other Country

Medical expenses do not stop at the border, and neither does the tax deduction. A Canadian snowbird who has a medical emergency in Florida, a US citizen in Canada who pays out of pocket for a specialist, or a cross-border family with health insurance in one country and medical bills in the other can deduct those costs on their tax return, subject to each country’s rules. The US and Canada both allow deductions (or credits) for medical expenses, but the thresholds, eligible expenses, and mechanics differ.

How does the US medical expense deduction work?

Under IRC 213, a taxpayer can deduct unreimbursed medical expenses that exceed 7.5% of adjusted gross income (AGI). This is an itemized deduction on Schedule A, which means the taxpayer must itemize instead of taking the standard deduction ($15,750 for single filers, $31,500 for married filing jointly in 2025).

The 7.5% floor is substantial. A taxpayer with $100,000 AGI can deduct only medical expenses exceeding $7,500. If they paid $10,000 in medical expenses, the deduction is $2,500.

What qualifies: Payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any structure or function of the body. This includes hospital stays, surgery, doctor visits, dentist visits, prescription medications, medical equipment (wheelchairs, hearing aids, prosthetics), and health insurance premiums (including Medicare premiums).

What does not qualify: Cosmetic surgery (unless it corrects a deformity arising from a congenital abnormality, personal injury, or disfiguring disease), general health expenses (gym memberships, vitamins), and over-the-counter medications (unless prescribed by a physician).

Expenses paid in Canada: A US person who pays for medical care in Canada can deduct those expenses on Schedule A, subject to the 7.5% floor. The expenses are converted to USD at the exchange rate on the date of payment. The Canadian provider does not need to be a US-licensed practitioner; the test is whether the service would qualify as medical care under IRC 213 if provided in the US.

How does the Canadian medical expense credit work?

Canada’s medical expense claim is a non-refundable tax credit, not a deduction. Eligible medical expenses exceeding the lesser of 3% of net income or $2,759 (2025, indexed) generate a credit at the lowest personal tax rate (15% federal). Provincial credits add additional savings at the provincial rate.

The structure is more generous than the US system for most taxpayers. The 3% threshold is lower than the US 7.5%, and the credit applies to a broader range of expenses.

What qualifies: Canada’s list of eligible medical expenses (ITA 118.2(2)) is extensive: medical practitioners (including naturopaths, chiropractors, physiotherapists, psychologists, and others recognized by the province), prescription drugs and medications, dental services, vision care (glasses, contact lenses, laser eye surgery), medical devices, ambulance service, private health insurance premiums, travel expenses to obtain medical care (if the care is not available within 40 km of the patient’s home, the patient can claim the cost of transportation, meals at a flat rate, and accommodation up to the prescribed amount), and attendant care or nursing home care.

What does not qualify: Cosmetic procedures (unless medically necessary), non-prescription drugs (unless listed in the regulations), and gym or fitness club memberships.

Expenses paid in the US: A Canadian resident who pays for medical care in the US can claim those expenses for the medical expense credit. The expenses are converted to CAD at the exchange rate on the date of payment. The US provider must be a “medical practitioner” as defined by the applicable law (the law of the jurisdiction where the services are performed counts, so a licensed US physician qualifies).

12-month claim period: Canada allows the taxpayer to choose any 12-month period ending in the tax year for the medical expense claim. This means a taxpayer can combine expenses from two calendar years into a single claim if it produces a better result (for example, claiming December 2024 through November 2025 expenses on the 2025 return).

What about health insurance premiums?

US: Health insurance premiums are deductible as medical expenses on Schedule A (subject to the 7.5% floor), with some exceptions. Self-employed individuals can deduct health insurance premiums “above the line” on Schedule 1 (not subject to the 7.5% floor and available even without itemizing). This above-the-line deduction covers the taxpayer, spouse, and dependents.

A US person living in Canada who purchases private Canadian health insurance can deduct the premiums as a medical expense. Provincial health insurance premiums (OHIP, MSP) are not deductible as medical expenses on the US return, because they are essentially a tax, not an insurance premium.

Canada: Health insurance premiums (private plans, dental plans, vision plans, travel health insurance) are eligible medical expenses for the credit. Canadian provincial health insurance premiums (in provinces that charge them, like BC and Ontario) are not eligible for the medical expense credit, because they are a tax or levy, not an insurance premium.

Employer-paid health insurance premiums in Canada are a non-taxable benefit (the employee does not include the employer’s portion in income, and the employer cannot claim the medical expense credit for the employee’s share). In the US, employer-paid premiums are excluded from the employee’s income under IRC 106.

What about cross-border travel for medical care?

Canada: Travel expenses to obtain medical care are eligible for the medical expense credit if the equivalent medical services are not available within 40 km of the patient’s home and the patient travels at least 40 km to obtain them. If the distance is at least 80 km, the patient can also claim meals and accommodation.

A Canadian who travels to the US for medical care (for example, a specialized surgery available at the Mayo Clinic but not in their home city) can claim the travel costs: airfare or mileage, hotel, and meals (at the flat-rate amount). The medical services themselves also qualify for the credit.

US: The US allows deduction of travel expenses for medical care, including transportation (actual costs or the standard mileage rate, which is $0.22 per mile for 2025), parking, tolls, and lodging (up to $50 per night, per person). Meals while traveling for medical care are not deductible on the US return.

What about the self-employed health insurance deduction?

A self-employed individual (including a sole proprietor, a partner, or a more-than-2% S-Corp shareholder) can deduct health insurance premiums “above the line” under IRC 162(l). This deduction is not subject to the 7.5% AGI floor and is available even if the taxpayer takes the standard deduction.

For a cross-border self-employed individual, the deduction applies to premiums for a health plan that covers the taxpayer, spouse, and dependents. A self-employed US citizen in Canada who purchases private health insurance in Canada can claim this deduction on the US return.

The deduction is limited to the net profit from self-employment (you cannot create a loss with the health insurance deduction). It is also not available if the taxpayer is eligible to participate in a subsidized health plan through an employer (their own or their spouse’s).

What about HSAs and the Canadian equivalent?

Health Savings Accounts (HSAs): A US taxpayer enrolled in a high-deductible health plan (HDHP) can contribute to an HSA under IRC 223. Contributions are deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. The 2025 contribution limit is $4,300 for self-only coverage and $8,550 for family coverage.

Canada does not recognize HSAs. A US citizen living in Canada who maintains an HSA faces Canadian tax on the HSA earnings (Canada treats the HSA as a regular investment account). The practical advice: if you move to Canada, stop contributing to the HSA, but you can still use the existing balance for qualified medical expenses tax-free on the US return (the Canadian tax treatment of the withdrawal depends on whether it is a return of contributions or investment earnings).

Health Spending Accounts (HSAs) in Canada: Canada has a different concept called a Health Spending Account, which is an employer-funded account that reimburses employees for medical expenses. This is a plan benefit, not a personal savings account, and it does not have the same tax characteristics as a US HSA.

Which country should I claim each expense in?

For a taxpayer who files in both countries, whether that’s a US citizen living in Canada or a Canadian with US-source income, the same medical expense can often qualify under both countries’ rules. Insurance reimbursements reduce the eligible amount on both sides first. The practical approach: claim each expense in the country where it produces the greater benefit, rather than claiming the identical dollar on both returns.

In most cases that means Canada. The METC threshold (the lesser of 3% of net income or $2,759 for 2025) is lower than the US floor (7.5% of AGI), and the credit does not require itemizing. For a US citizen living in Canada, the common strategy is to claim medical expenses on the Canadian return and take the US standard deduction, unless the taxpayer already has enough other itemized deductions (state tax, mortgage interest, charitable giving) to make itemizing worthwhile on the US side.

The exception: a taxpayer with high US-source income (pushing the US marginal rate up) and low Canadian income (making the METC credit small) may come out ahead claiming on the US return instead. Run the numbers both ways before deciding.

Snowbird-specific scenarios

Canadian resident wintering in the US: medical expenses incurred in the US (doctor visits, emergency room, prescriptions) qualify for the Canadian METC. Convert the US-dollar amounts to CAD at the Bank of Canada rate on the date of payment. Travel medical insurance premiums (the snowbird policy) also qualify.

US resident visiting Canada: medical expenses incurred in Canada qualify for the US medical deduction, if the taxpayer itemizes. Convert the CAD amounts to USD at the exchange rate on the date of payment.

Emergency care while traveling: an unexpected hospitalization in the other country can create a large medical expense in a single year, enough on its own to push the taxpayer over the METC or US deduction threshold for that year. Check whether the expense was reimbursed by the provincial health plan, travel insurance, or US insurance before claiming the unreimbursed portion.

What about the year I move?

The year of a cross-border move is typically the most expensive one for medical costs, because coverage gaps open up during the transition. Canadian provincial health insurance may end on the departure date, or up to three months later depending on the province, and US coverage may not start until an employer’s waiting period ends. During the gap, medical expenses are entirely out of pocket, which increases the eligible amount on whichever return picks up the claim.

The Canadian return for the move year covers the period of Canadian residency, and the medical expense credit applies to expenses incurred during any 12-month period ending in that year. The US return covers the period of US residency (or the full year, if a full-year election is made), and the deduction applies to expenses paid during the tax year.

What should I do next?

Collect medical receipts from both countries, noting the currency and date of payment. Separate expenses by who paid, you or insurance, and check each expense against both countries’ eligible lists before deciding where to claim it. If you are a snowbird, keep track of travel medical insurance premiums and any out-of-pocket costs from care received in the other country. If you are mid-move, budget for the coverage gap.

• I’m a US citizen living in Canada: what do I file?, the baseline filing obligations including health plan interactions
• Should I retire in Canada or the US?, the healthcare cost comparison
• HSA and moving to Canada, what happens to a US HSA after a move
• Leaving Canada permanently: tax checklist, the departure-year timeline including health coverage
• Standard deduction for cross-border filers, when itemizing, required for the US medical deduction, beats the standard deduction

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.