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Are Medicare Premiums Tax Deductible?

Medicare provides truly critical health benefits to many of our nation’s senior citizens. While there is typically no premium imposed for Part A, which covers hospital visits, Parts B and D, which cover prevention and prescription drugs willcostyou. But there has to be a silver lining, right? If you’re wondering whether your Medicare costs are tax deductible, the answer is probably yes— under certain conditions.

 The conditions, and the catch

Premiums for Parts B and D are very much tax-deductible, as are any supplement premiums you may have for added insurance. Additionally, you can deduct any out-of-pocket costs under Medicare, like copayments and prescriptions. The catch is, you can only deduct expenses that exceed a certain amount of your income, meaning that if you earn too much or don’t spend enough, it won’t work in your favor.

 You can deduct any medical expenses (including premiums), provided that they exceed 10% of your adjusted gross income (AGI). In other words, if your AGI is $45,000, you would need to spend more than $4500 on Medicare premiums and expenses to be eligible for a deduction—unless you have additional qualifying medical costs that can be factored in too. Otherwise, if your AGI is $45,000 and you spend $5000 on Medicare premiums and expenses, you’re eligible to deduct $500, in other words, any amount that exceeds $4500.

Claiming medical expenses

To recap, if you’re on Medicare, you can deduct your premiums for PartsB, D, and C (Medicare Advantage), any supplemental insurance, as well as the cost of deductibles, coinsurance, and copayments under Medicare. To be absolutely sure an expense is deductible—including who might qualify as your dependent(s) for deduction purposes, see IRS Medical and Dental Expenses.

Remember, you’re also allowed to deduct the cost of medical services not covered by Medicare, such as dental, vision, and nursing home costs, along with any transportation to and from medical treatments, and even funds spentaltering your home to address a medical need.

Healthcare is by far the greatest expense seniors face. The good news is if you spend enough on Medicare and other costs, you may receive a sizable tax deduction. Visit us at (877) 829-1109 to learn more about deducting your Medicare premiums when tax season rolls around. We’re happy to help!