Are Medicare Premiums Tax Deductible?

Are Medicare Premiums Tax Deductible?
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The Basics on Deductible Medicals

Medical expenses over a certain threshold, including insurance premiums, are deductible for anyone who itemizes expenses on Schedule A, Form 1040. Most insurance premiums qualify for this deduction, including some Medicare premiums. As of tax year 2014, however, the tax rules only allow the deduction of medical expenses over and above 10 percent of adjusted gross income. If you or your spouse are 65 or above, the IRS kept the old threshold of 7.5 percent through tax year 2016.

The Deductible Medicare Premiums

A schedule of various Medicare premiums covers different medical services. Part B (non-hospital supplemental insurance), Part C (Advantage or HMO policies) and Part D (prescriptions) are all deductible as itemized medical expenses. Part A, the basic hospitalization insurance, is not deductible unless you don't qualify for it through Social Security and purchase it voluntarily on your own. Premiums for private supplemental insurance -- "Medigap" -- also are deductible.

Social Security Statements and the Self-Employed

Medicare beneficiaries normally pay their premiums through withholding by the Social Security Administration. If you're retired, for example, your premiums will come out of your monthly benefits. Social Security keeps track of these payments and will issue a form 1099-SSA in January to itemize the amount of your Medicare premiums over the last year. If you're self-employed, and filing a Schedule C for your business, premiums you pay for health insurance are deductible as an "above the line" write-off on Line 29 of Form 1040.

Paying Health Insurance Premiums Pre-Tax

If you contribute to a health savings account or other qualified medical account through your employer, you may be contributing to these expenses on a pre-tax basis. That means no taxes are due on the money before it goes toward your health costs, including any kind of insurance. It's a useful benefit, but it means these contributions are not also deductible as itemized expenses. The annual W-2 statement provided by your employer will tell the tale: any expenses that don't show up in Box 1 of the form are pre-tax.