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Are Medicare Premiums Tax-Deductible?

Summary: Medicare Premiums are tax deductible if your total healthcare costs exceed 7.5% of your adjusted gross income for the tax filing year. You may choose to deduct these costs by filing a form 1040 itemized deduction. Estimated Read Time: 8 min

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Table of Contents:

    1. Is Medicare Tax-Deductible?
    2. What Medicare Expenses Are Applicable for Tax Deductions?
    3. The Four Major Categories of Tax Deductions
    4. Tax-Deductible Medicare Premiums for the Self-Employed
    5. What Medicare Costs are Not Tax Deductible?
    6. FAQs
    7. How to Deduct Medicare Premiums on Taxes

Each year, the Internal Revenue Service (IRS) allows American citizens to deduct personal expenses from their taxable income to help reduce the tax bill they owe.

However, the IRS Tax Code is extremely particular about what can and cannot be deducted and who is able claim these deductions. Therefore, not all regularly incurred expenses are eligible for deduction.

Medicare costs are considered health expenses which can be deducted if these expenses surpass a certain percentage of your overall income. Below, we review all of the details regarding how to deduct your Medicare premiums from your taxes.

Is Medicare Tax-Deductible?

Medicare premiums are tax deductible if they exceed 7.5% of your annual adjusted gross income for the current tax year. However, this does not only apply to Medicare premiums. You can also include any unreimbursed medical or dental costs as well.

This means, any copayment, deductible, or coinsurance you paid out of pocket throughout the year can also be added to your list of tax deductions.

Keep in mind, this does not only apply to Original Medicare. Your Medicare Supplement, Medicare Advantage, and Medicare Part D costs can be included in your list of deductions as well. However, you will need to be able to prove you paid these costs in order to be safe from an IRS audit.

If your medical expenses exceed the 7.5% threshold, you will need to complete Schedule A of Form 1040 when filing your taxes. This form allows you to itemize your deductions to maximize your refund.

The total amount you deduct on the form 1040 is then subtracted from your gross income. Your taxable income (after deductions) will ultimately determine what you owe in taxes. If the amount deducted on your form 1040 exceeds the standard deduction amount, then you should utilize the itemized deductions rather than standard deductions.

Tax Filing Status 2023 Standard Deduction 2024 Standard Deduction
Single $13,850 $14,600
Married filing jointly $27,700 $29,200
Single 65 and older $15,700 $16,550
Married couple both 65 and older, filing jointly* $30,700 $32,300

*If one spouse is under 65, the standard deduction will be reduced.

According to a research study, over 91% of Medicare beneficiaries in 2021 did not know that their premiums were tax deductible. This means, these individuals were likely paying more in taxes than what they were required to be paying by law.

Understanding exactly what is deductible and working with a licensed tax professional can help you lower your taxable income and maximize your tax refund.

What Medicare Expenses Are Applicable for Tax Deductions?

If you spend over 7.5% of your Adjusted Gross Income on medical expenses throughout the year, you can deduct your Medicare premiums, deductibles, and copayments from your tax bill.

The chart below helps break down each part of Medicare, including Medicare Supplement plans, and how you can deduct these expenses from your income.

Can You Deduct The Premium?
Medicare Part A If you are receiving social security benefits and your Medicare Part A premium is deducted from your monthly check, you will not be eligible to deduct your Medicare Part A premium on your taxes. However, if you are not receiving Social Security benefits and are paying your Medicare Part A premium manually, you can deduct these costs.
Medicare Part B If you meet the income to cost requirements of 7.5%, you can deduct your Medicare Part B premiums.
Medicare Part C Similar to Medicare Part B, as long as you meet the income requirements and spend 7.5% of your income on health care costs, you can deduct your Medicare Part C (Medicare Advantage) premiums.
Medicare Part D As long as the expenses exceed 7.5% of your income, you can deduct Medicare Part D premiums.
Medicare Supplement As long as the expenses exceed 7.5% of your income, you can deduct Medicare Supplement premiums.

In addition to the premiums mentioned above, costs such as copayments, deductibles, and coinsurance also qualify as tax deductions. To help keep track of your annual medical expenses, you should keep track of them in a medical folder either physical or on your computer.

Keeping track of your medical expenses will allow you to have an easily accessible paper trail in the event you are audited by the IRS. This paper trail should include copies of the original bill, proof of your payments, and the date of service for each instance.

The Four Major Categories of Tax Deductions

To better understand how Medicare premium tax deductions work, it’s important to be familiar with the basics of how tax deductions work in general. There are four primary categories of tax deductions. These are business deductions, standard deductions, above-the-line deductions, and below-the-line deductions. We explain in detail what each means in the chart below.

Business Tax Deduction Standard Tax Deduction Above-the-Line Tax Deduction Below-the-Line Tax Deduction
The calculation of net profit versus net loss for business owners. Business owners must include their business earnings when they file their tax returns. The amount the IRS allows as a set deduction based on the number of people in your household. This amount changes each year, and the IRS website has a tool you can use to calculate your standard deduction. The amounts deducted from your annual income to calculate your adjusted gross income. Examples include student loan interest, retirement contributions, work-related moving expenses, and alimony. Expenses you itemize on your Schedule A attachment. These costs include miscellaneous business costs, as well as medical and dental costs, which can include Medicare premiums.

Medicare deductions would fall in “below-the-line tax deductions”.

Tax-Deductible Medicare Premiums for the Self-Employed

If you earn a profit from self-employment and are on Medicare, you may deduct your entire Medicare premium cost from your taxable income without having to meet the 7.5% spending threshold. If you’re married to another Medicare beneficiary, you may also deduct their Medicare premium cost as well. Even if you were mainly retired, but profited in some way from self-employment, you can still deduct these expenses.

To qualify as self-employed by the standards of the IRS, you must be one of the following:

  • A sole proprietor or independent contractor in a trade or business
  • A member of a partnership in a trade or business
  • Otherwise in business for yourself

What Medicare Costs are Not Tax Deductible?

Although most medical expenses are tax deductible, there are some costs that cannot be deducted from your tax bill. These include:

  • Medicare late enrollment penalties
  • Costs of cosmetic procedures
  • Non-prescription medications (excluding insulin)

If you pay out-of-pocket for any of these services, you will not be eligible for tax deduction. However, if you are required to pay a Medicare late enrollment penalty, you can still deduct the standard premium with the exception of the penalty amount.

FAQs

Do Medicare premiums reduce taxable income?

Yes, your Medicare premiums can reduce your taxable income if you meet the income requirements and choose itemized deductions through form 1040.

Can You Claim Medicare Premiums on Your Taxes?

You can claim Medicare premiums on your taxes as long as your total medical expenses exceeds 7.5% of your adjusted gross income for the year.

However, if you are self-employed, you may not need to exceed 7.5%.

Can Medicare deductions be combined and claimed jointly as a couple?

Even though Medicare Supplement policies aren’t joint plans, couples can file their returns jointly and combine their premium deductions.

If my company-sponsored HRA reimburses me for my Medicare Part B premium, can I deduct it on my tax return?

No, only non-reimbursed premiums that you pay out-of-pocket may be deducted from your tax return.

Do you have to show proof of health insurance when filing taxes?

While you don’t need to send the IRS proof of health care coverage, the IRS still recommends keeping these records in case your tax file is audited.

How to Deduct Medicare Premiums on Taxes

Deducting your Medicare premiums from your taxes is not a difficult process. First, you’ll need to keep track of all your medical expenses, then you’ll need to complete a form 1040. Once your 1040 is complete, if your deductions exceed the standard deduction, you should move forward with the itemized return.

We hope you now feel better informed about tax deductions for your Medicare costs. Medicare isn’t free, so we all want to save money wherever possible.

Many beneficiaries want extra health coverage but are hesitant to enroll because of the premium price sticker. If this sounds like you, we can help work within your budget! We assist beneficiaries in finding Medicare plans that are suitable for their needs, without bias.

If your new knowledge of tax-deductible premiums makes you more comfortable shopping around, please call us at the number above. We also have an online rate form you can complete if you’d like an agent to reach out to you soon with information about your options.

Disclaimer: Please note, this article is not tax advice and should not be taken as tax advice as it is for informational purposes only. It is always recommended to consult with a licensed tax professional before filing your taxes or if you have tax-specific questions as tax rules can vary based on your location and income.

Kayla Hopkins

Kayla Hopkins

Content Editor
Kayla Hopkins is an accomplished writer and Medicare educator serving as the Editor of MedicareFAQ.com. Upon completing her Communications degree from Ohio University, Kayla dedicated her time to understanding the ever-evolving landscape of healthcare. With her extensive background as a Licensed Insurance Agent, she brings a wealth of knowledge and expertise to her writing.
Ashlee Zareczny

Ashlee Zareczny

Compliance Manager
Ashlee Zareczny is the Compliance Manager for MedicareFAQ. As a licensed Medicare agent in all 50 states, she is dedicated to educating those eligible for Medicare by providing the necessary resources and tools. Additionally, Ashlee trains new and tenured Medicare agents on CMS compliance guidelines. Ashlee is a Medicare expert who specializes in Medicare Supplement, Medicare Advantage, and Medicare Part D education.

20 thoughts on "Are Medicare Premiums Tax-Deductible?"

    1. Thank you very much! We work hard to provide the best information possible to our readers.

    1. Steve, if your Medicare premiums came directly from your Social Security benefits, you will be able to access your monthly statements on ssa.gov. From there, you can print each month’s statement that shows a deduction. If you pay quarterly, you can print your bank statements showing the quarterly withdrawals.

  1. Hi Lindsay Engle
    I had ask you question I had issues with my Medicare part a b 148 they take out my social security check 765 for mouthy not receive fully amount 913.00 Can you give me information how to fix it 0.00 I had SSDI. Benefits.

    1. Hi Sean! The amount deducted from your Social Security check is to cover the monthly premium for Part B. If your income is low enough, you may qualify for a Medicare Savings Program to help cover this cost. You can also look into a Medicare Advantage plan that comes with a give-back benefit to lower the amount that’s deducted from your check.

      1. Do you know which one? Did you get approved for Qualified Medicare Beneficiary (QMB) Program, Specified Low-Income Medicare Beneficiary (SLMB) Program, or Qualifying Individual (QI) Programs?

      2. I had my plan for Medicare Full Extra Help (you pay $0 premium, $0 deductible, and $3.70-$9.20 copay for drugs)

      3. Extra Help is only for prescription medications under Part D. QMB, SLMB, or QI Programs are the ones that help with the premium for Part B. If you’re trying to get help paying your Part B premium, you would need to enroll in one of these.

      4. The page is linked in my previous comment. It goes over each program in detail.

  2. Hi, Lindsay, In addition to a premium for my medicare supplemental policy, I also pay a second premium for drug coverage. Is that also deductible if I am self-employed? Thanks.

  3. Hi Lindsay,
    I have Medicare Supplement Insurance under Plan-F. Though you have replied to Peggy that such premium is deductible. However I would request you to please advise where can I enter this amount in my 1040-SR. I claim standard deduction in 2020. But bought Medicare Plan-F in January 2021.

    Thanks

    1. Hi Jack! According to TaxAct, you can deduct the premiums only if the S corporation reports the premiums paid or reimbursed as wages in box 1 of your Form W-2 and you also report the premium payments or reimbursements as wages on Form 1040 or 1040-SR, line 1.

    1. Hi Rich! Thank you so much! So happy to hear you found the information useful and easy to read!

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