Rev. Rul. 68-433

A taxpayer paid premiums during 1967 for an insurance policy that provided only for reimbursement of the cost of prescription drugs.

Effective for taxable years beginning after December 31, 1966, section 213(a)(2) of the Internal Revenue Code of 1954 provides that a deduction shall be allowed, without regard to the three percent limitation provided by section 213(a)(1) of the Code, for an amount (not in excess of $150) equal to one-half of the expenses paid during the taxable year for insurance which constitutes medical care for the taxpayer, his spouse, and dependents.

Held, these premiums are expenses paid for insurance that is medical care within the meaning of section 213(a)(2) of the Code. Therefore, 50 percent for the premiums paid by the taxpayer during 1967 for the insurance policy that provided only for reimbursement of the cost of prescription drugs (but not in excess of $150 for all premiums paid for medical care insurance) is deductible under section 213(a)(2) of the Code, without regard to the three percent limitation provided by section 213(a)(1) of the Code. Furthermore, the balance of such premiums is deductible subject to the three percent limitation provided by section 213(a)(1) of the Code.