If you are using the long form, and not 1040EZ, I believe there is either a line or a mention for a form re medical insurance on Schedule A.
Here's a paste on the topic;
"But you can deduct only premiums that you pay with after-tax money from your own pocket. For example:
If your health insurance premiums are paid entirely by your employer or the government, you cannot deduct the cost.
If you have health insurance through your employer and your share of the premium is deducted from your paycheck pre-tax, you cannot deduct the cost because the premiums were tax-free already. If you don’t know whether you pay pre-tax or after-tax, ask your human resources department.
If you buy health insurance through the state- or federally run health insurance marketplaces, you can deduct only the portion of the premium you pay out of your own pocket. You cannot deduct the amount of any subsidy.
If you buy an individual or family health insurance plan, either on the open market or through a marketplace, and you pay all of the cost out of pocket, then the whole amount is deductible."
The problem with this route is that it still increases her overall taxes. Since you can only deduct medical bills to the extent they surpass 10% AGI. As such, that is 10% of her AGI that she cannot get back. What she is asking is if she can simply deduct those portions that are listed as income because they're not really income.
To put it in perspective, lets say that Sleepface has $50,000 in income, a 60/40 medical plan (without copay, to keep it simple), and $20,000 in medical bills. As such, she is reimbursed $12,000 from her insurer and her total income is listed as $62,000. So, she can only deduct the remaining $8,000 to the extent that it surpasses $6,200. Under this guise, she would only be able to deduct $1,800, for which (assuming an income of $62,000, and a flat rate of 25% to keep it simple), she would only reduce her taxes by $450.
In contrast, if Sleepface could exclude the money as a non-ascension to wealth (therefore not income under AGI), then that would reduce her AGI by $12,000 (instead of $1,800) and would reduce her taxes by $3,000.
So, the difference between the two approaches can mean a difference of a lot of money... I should become a tax lawyer.
ETA: and if she had 80/20 plan, then under the first approach, she would get a $0 deduction because it does not exceed 10% AGI ($4,00 spent after reimbursement) while under the second she would reduce her AGI by $16,000 and her taxes by $4,000. So the first approach would need a lot of luck to even save her a few hundred, while the latter would easily save hundreds, if not thousands, of dollars