§ 93.101. Medical expenses and insurance.
(a) Scope and application. The purpose of this section is to establish rules relating to the deduction of unpaid medical expenses of a decedent in cases where the expenses are paid by proceeds of medical insurance and to establish rules relating to the taxation of transfers of medical insurance proceeds. This ruling shall take effect immediately.
(b) Deduction of medical expenses. Deduction of medical expenses shall comply with the following:
(1) Medical expenses of a decedent which are unpaid at his date of death are deductible liabilities of the decedent under section 631 of the act (72 P. S. § 2485-631)(Repealed) whether or not the expenses are later paid by Medicare Part A or Part B, Blue Cross, Blue Shield or other medical payment insurance.
(2) When inheritance tax is imposed upon a transfer described by sections 221—241 of the act (72 P. S. § § 2485-221—2485-241)(Repealed) the medical expenses shall be deductible only to the extent that the transferee has actually paid the expenses and he is legally obligated to pay them or the estate subject to administration by a personal representative is insufficient to pay them.
(c) Taxability of medical insurance proceeds. Taxability of medical insurance proceeds shall comply with the following:
(1) The payment of proceeds from medical insurance, including Medicare Part A or Part B, Blue Cross, Blue Shield, directly to the provider of medical services by an insurer in payment of the decedent’s medical expenses is not a taxable transfer from the decedent.
(2) To the extent that medical insurance proceeds are paid or payable to the decedent’s estate or personal representative, the proceeds are property of the decedent, the transfer of which is taxable.
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