Unreimbursed Medical (URM)

Most people incur out of pocket medical expenses during the year. Out-of-pocket expenses are those expenses that are not covered by insurance or any other third party.

They include:

  • Deductibles
  • Co-Pays
  • Vision Care
  • Dental/Orthodontia
  • Medical

Unfortunately, very few can deduct them from their taxes at the end of the year.  When filing your taxes you can only deduct those expenses that exceed 10% of your adjusted gross income.  Therefore, the majority of taxpayers would not qualify.  Through an Unreimbursed Medical account you are allowed to set aside tax free dollars to cover your out-of-pocket expenses.

How Does It Work?

First, you must estimate you and your family members (spouse and dependents) out of pocket expenses that will be incurred during the plan year.  Your estimate should be conservative.  Monies not claimed by the end of the plan year would be forfeited. (refer to your summary plan description for your plan design)

You may set aside any amount up to your plan design limit.  The amount you elect is divided by the number of deductions in the plan year.   However, your election is available to you at any time during the plan year.  For instance:  If you elected $600.00 for the plan year and were paid monthly, (12 times) $50 a month would be deducted before taxes.  If you had an eligible expense of $600.00 the first month, you could claim entire amount even though it has not been deducted.

Your plan design may offer one or more of the following:

  • 2 1/2 month extension – plans offering this extension have 14 1/2 months to incur the expenses for the plan year. Example: if your plan year is January 1 – December 31,  you would have until March 15th of the following year to incur the expense. This offers relief, should you still have unspent funds at the end of the plan year.
  • Rollover – plans offering a rollover, allow participants (with left over funds at the end of the plan year) to roll over an amount specified by the plan, not to exceed 20% of the annual maximum for the plan year.  Monies left over the amount specified by the plan, will be forfeited.  If you incur an expense during your plans run out period (that is the period your plan allows you submit receipts that incurred during the plan year, usually 30 or 60 days after the plan year ends), the money will be deducted from the new plan year first. Only after the new plan year funds have been exhausted, will the plan use any of your prior year money. After the run period has ended, the left over funds, up to the amount allowed by the plan, will rollover to the new plan year.
  • Final pay deduction – plans with this feature, require 12 months participation. If you terminate during the plan year, your employer will deduct from your salary (pre-taxed) any unpaid election for the plan year. You will continue to be a participant, and have until the end of the coverage period to incur the expense and (30) days after the coverage period to submit your receipts. This applies to Unreimbursed Medical participants only.
  • Term Plan – if you terminate during the plan year, you will have 30 days after your date of termination to submit receipts that incurred prior to your date of termination. If you have a positive balance when you terminate, your employer will offer you the option to elect COBRA and continue in the plan on a self pay basis, with after tax dollars.

Under the use-t-or-lose it rule, any funds left over after the coverage period, or funds that exceed the rollover amount (for those plans offering a roll-over) will be forfeited.


When you have incurred an eligible expense simply submit proof along with a Request for Reimbursement form. (Claim Procedures)

Click here for (Eligible Medical Expenses)

Click here for information on weight loss,  prescribed over-the-counter drugs and medical care/procedures performed outside of the U.S.


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