Are Medicare premiums tax deductible?

Whether you pay your Medicare premiums manually, have them deducted from your Social Security benefits automatically, or you have a private Medicare plan, such as Medicare Advantage, you may be asking:

• Are Medicare premiums tax deductible in 2022?
• Are Medicare premiums pre-tax?
• Are Medicare Advantage premiums tax deductible?

Taxes can be confusing, and there are some rules that must be followed if you plan on entering your medical expenses as a deduction. However, once you understand the basics, it becomes easier.

In general, Medicare premiums are tax deductible, but keep reading below to make sure you’re adding them up correctly, using the right forms, and listing them on your taxes the right way.

You can also enter your ZIP code into our free quote comparison tool above to find affordable Medicare Advantage plans from health insurance companies near you.

Are Medicare premiums tax deductible?

Many health insurance premiums are tax deductible, including Medicare premiums. However, they differ slightly from health insurance premiums that you pay for through your employer since they are not considered pre-tax deductions.

Employer-sponsored health insurance premiums are automatically deducted from your paycheck before other taxes, while Medicare premiums are not. For example, if you pay a $75 premium through your employer and you have a pre-tax paycheck for $875, the $75 would be taken out for your insurance, and you would pay taxes on the remaining $800.

However, Medicare premiums are not taken out pre-tax. Therefore, you have to deduct them when you file taxes. This rule applies to people who pay their Medicare premiums manually and people who have their Medicare premiums automatically deducted from their Social Security benefits checks.

With that being said, the rules for premium deductions may vary based on your income and situation. However, there are general rules for each type of Medicare:

• Medicare Part A. You can deduct Part A premiums. However, most people don’t pay a premium for Medicare Part A.
• Medicare Part B. You must meet income rules to deduct your Part B premiums.
• Medicare Part C. You must meet income rules to deduct your Part C premiums.
• Medicare Part D. You must meet income rules to deduct your Part D premiums.
• Medigap. You can deduct Medigap premiums.

Keep reading for more of the specifics.

What documents should I keep for Medicare tax purposes?

If your Medicare premiums are automatically deducted from your Social Security benefits, you should receive an SSA-1099 form each year. The form will show how much you paid for your Medicare Part B premiums.

In addition, Medicare should send you a Medicare summary notice every three months, which includes the services you received, how much of those costs Medicare covered, and the remaining amount that you were responsible for paying. You can also access this report at any time online with your MyMedicare account.

You can use these two forms to calculate how much you can deduct from your taxes. In addition to your premiums, you can also deduct any costs that Original Medicare doesn’t cover, such as prescriptions, dental services, vision services, and more. You should keep any receipts for the payment of these services.

If you have a private Medicare plan, such as Medicare Part C, Part D, or Medigap, your insurance company will send you a notice.

Are there deduction limits?

The IRS will allow you to deduct any healthcare expenses that exceed 7.5% of your adjusted gross income (AGI). Your AGI is the amount that you make in one year after your taxes are subtracted, including health insurance deductibles.

You should first calculate your deduction minimum. For example, if you have an AGI of $25,000, you can only deduct medical expenses that are over $1,875.

To figure out how much you’ve spent on tax deductible medical expenses, add up the expenses from your SSA-1099, Medicare summary notice, and receipts. You can include expenses such as deductibles, copays, coinsurance, and non-covered healthcare services.

Following the example above, if you spent $3,000 on your medical expenses throughout the year, you can list $1,125 (the amount over $1,875) as an itemized Schedule A deduction.

How do Medicare tax deductions work for self-employed people?

People who are self-employed can list their healthcare premiums differently. Instead of an itemized deduction, self-employed individuals can deduct their premiums as an above-the-line deduction before their taxes are taken out. This reduces your AGI, which means that you can deduct more medical expenses.

However, you may want to compare the difference between listing your premiums as a pre-tax deduction or an itemized deduction. Depending on your situation, an itemized deduction may still be the better scenario for a self-employed person.

If you need help finding affordable Medicare premiums, enter your ZIP code into our free quote comparison tool below to compare private Medicare insurance.

Case Studies: Are Medicare Premiums Tax Deductible?

Case Study 1: John’s Medical Expenses

John, a retired individual, paid $2,500 in Medicare Part B premiums and incurred $3,000 in other eligible medical expenses during the tax year. He wonders if he can deduct his Medicare premiums along with his other medical expenses on his tax return.

Case Study 2: Sarah’s Self-Employment

Sarah is a self-employed individual who pays for her own health insurance, including Medicare Part B premiums. She wants to know if she can deduct her Medicare premiums as a business expense on her tax return.

Case Study 3: Mary’s Health Savings Account (HSA)

Mary contributes to a Health Savings Account (HSA) and uses the funds to pay for her Medicare Part B premiums. She wonders if she can claim a tax deduction for both her HSA contributions and Medicare premiums.

Case Study 4: Robert’s High-Income Bracket

Robert, a high-income earner, is subject to the Medicare high-income surcharge. He wants to know if he can deduct the additional amount he pays for Medicare Part B premiums due to his income level.

Case Study 5: Susan’s Part A Premiums

Susan is retired and enrolled in Medicare Part A, for which she pays premiums. She is curious if her Medicare Part A premiums are tax deductible.