Should my calculated refund value be increasing as I enter in medical expenses if I haven't reached the 3% threshold yet? Is this an error?

The Medical deductible is  the lesser 3% of Net Income or $2109'in 2018, 

So if 3% of your line 236 Net Income of exceeds $2109, and your Medical total exceeds $2109, you will see credit being increased, even though you Medical claim is lees than the 3%.

Example. You have Net Income of  $100,000, 3% is $3000. So for you the lower amount of deductible applies. As soon as your expense is greater than $2109, you begin to receive credit

FYI turns out it was the provincial tax deduction that had a different threshold.

Thank you for sharing this information with us. We value your input and are happy to see the question answered.

Thank you for using TurboTax.