Final answer:
Taxpayers can deduct medical expenses for dependents, which cover a range of treatments and services. Knowing the terms 'deductible' and 'HMO' is critical in understanding medical expense deductions.
Step-by-step explanation:
Taxpayers may also deduct medical expenses incurred to treat their dependents. Such medical expenses can include prescription drugs, medical supplies, physicians' services, eyeglasses and eye care, and hospital services.
Being insured doesn't always equate to full coverage, as some individuals may be underinsured, meaning they spend at least 10% of their income on healthcare costs not covered by insurance, or for low-income adults, their medical expenses or deductibles amount to at least 5% of their income.
Moreover, an understanding of terms like deductible, which is the out-of-pocket expense before insurance coverage pays, and health maintenance organization (HMO), which is paid a fixed amount per enrolled person regardless of services provided, is crucial.
Understanding these aspects of medical care costs is important for taxpayers when considering deductions.