1. Jenna and Jesse Blue (both age 66) are married and together have AGI of $105,000in 2022. They have two dependents and file a joint return. During the year, they paid $8,000 for medical insurance, $15,000 in doctor bills and hospital expenses, and $1,000 for prescribed medicine and drugs.

1. In December 2022, the Blues received an insurance reimbursement of $3,500 for hospitalization expenses. Determine the deduction allowable for medical expenses paid during the year.
2. Assume instead that the Blues received the $3,500 insurance reimbursement in February 2023. Determine the deduction allowable for medical expenses incurred in 2022.
3. Assume that the Blues received the $3,500 insurance reimbursement in February 2023. Discuss whether the reimbursement will be included in their gross income for 2023.