Even though Medicare is fairly comprehensive and subsidized by the federal government, you could still end up paying hundreds if not thousands of dollars in out-of-pocket expenses every year.

So you may be wondering if Medicare premiums are tax-deductible.

Can I Claim Medicare Premiums As A Tax Deduction?

The good news is you can deduct many of your Medicare premium expenses from your taxes in order to alleviate your overall tax burden.

You could be reducing your overall tax debt by a significant margin — or possibly even getting a refund you weren’t expecting if you deduct your Medicare expenses correctly. Keep reading to find out the exact details of this subject.

The Four Types of Tax Deductions

Before we get into Medicare tax deductions, it’s important to understand a few basic principles of tax deductions in general. There are four specific types of deductions you can file each year, which are called:

Business Tax Deduction

Obviously, you have to be a business owner in order to file a business tax deduction. These deductions are based on the calculation of net profit vs. net loss. And you will be required to submit specific documentation in order to prove and justify business tax deductions.

Standard Tax Deduction

This number depends on the number of people in your household. It also changes frequently. Each year, the IRS will let you claim the standard tax deduction in order to alleviate some of your tax burdens.

You should check the IRS website every year in order to find out how much the deduction is and whether or not you are eligible to claim it.

Above-the-Line Tax Deduction

There are certain dollar amounts that you can deduct from your annual income in order to calculate your adjusted gross income (AGI). The adjusted gross income is what ends up getting taxed, not your total income.

Some of these deductions include work-related moving expenses, alimony, student loan interest, or retirement contributions, among others.

Below-the-Line Tax Deduction

If you have to file a Schedule A attachment with your taxes, this form will contain any below-the-line tax deductions you are eligible for. Some of these include miscellaneous business costs, but they can also include out-of-pocket costs such as dental care or your Medicare premiums.

Determining Whether Your Medicare Premiums Are Tax-Deductible

Figuring out whether or not your Medicare expenses are tax-deductible is a fairly simple process. First, you have to calculate your AGI.

Next, you have to gather documents and calculate the total amount of money you have paid out of pocket for Medicare, Medicare Part D, any Medicare supplement insurance (Medigap) that you may have, or any expenses from a Medicare Advantage plan if you have that instead of Original Medicare.

If the total amount of money you have spent on your healthcare exceeds 7.5% of your AGI, then congratulations! You are free to deduct those expenses from your AGI, thus alleviating your overall tax burden.

Tax-Deductible Medicare Premiums for Self-Employed Beneficiaries

In order to figure out whether or not your specific type of self-employment allows you to deduct Medicare expenses from your taxes, one of the following scenarios must apply to you if you are:

  1. A member of a partnership in a business or trade
  2. An independent contractor or sole proprietor in a business or trade
  3. In business for yourself in some way, shape, or form that can be documented and submitted to the IRS

Once you meet at least one of these qualifications, you are then eligible to deduct your Medicare expenses from your taxable income. Additionally, if you are married and filing jointly with your spouse, you can also deduct their qualifying Medicare expenses from your AGI.

What Qualifies as a Tax-Deductible Medicare Expense?

Unfortunately, not all of your health care spending in any given year is deductible from your AGI. But many of these expenses can, and you should try your best to accumulate as many deductions as possible. Qualifying tax-deductible medical expenses include:

  • Your Medicare premiums (whether you have Original Medicare or Medicare Advantage)
  • The costs incurred with the diagnosis or treatment of qualifying medical conditions and/or injuries
  • Costs associated with medically necessary preventative care
  • Costs associated with medically necessary medical equipment and/or supplies
  • Home renovation costs for the installation of necessary medical equipment
  • Any transportation costs incurred in order to get medically necessary care
  • And more

So far, this is just a cursory list. For the full list of applicable Medicare expenses which you can deduct from your taxes, be sure to visit the IRS website. There, you can find a comprehensive list of anything and everything you can deduct in order to alleviate your tax burden.

FAQs

How will medicare deductions reduce my tax burden?

Tax-deductible medical expenses help reduce your overall tax burden by reducing the amount of untaxed income that is your legal requirement to pay taxes on. The less income you owe taxes on, the less you have to pay.

How Do Medicare Tax Deductions Work if You Are Filing Jointly With Your Spouse?

The good thing about filing your taxes jointly with your spouse is that the two of you can combine all of your Medicare expenses and get the maximum possible deduction for yourselves as a couple. It’s more difficult to do this if you are filing separately.

Do I Need To Submit Documentation Proving I Was a Medicare Recipient When I File My Taxes?

While it is always smart to hold on to such documents, they are not requirements in order to get Medicare deductions when you file your taxes.

Does My Employer-Sponsored HRA Qualify as a Tax-Deductible Medicare Expense?

Unfortunately, no. Only those expenses which you pay directly out of pocket are claimable as deductions if they meet all of the prerequisite qualifications.

Looking For Help With Medicare Supplemental Plans?

If you’re still not sure what does and doesn’t qualify as a tax-deductible Medicare expense, our licensed insurance agents can help you figure it out. Our agents can also quickly and easily assist you should you decide you’d benefit from a Medicare Advantage or Medicare Supplemental plan.

Their unmatched knowledge of all things Medicare and desire are to fit you with health care plans to match your exact needs. Their services are free of charge to potential customers and they can find plans to also fit your budget.

So give our agents a call today! Or simply complete our online rate form to be connected with the best plans and prices in your area.

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by Lindsay Malzone, Lindsay Malzone is the Medicare expert for Medigap.com. She's been contributing to many well-known publications as an industry expert since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.