Medicare Premiums Tax Deductible 2023 Update: For individuals, Medicare premiums can be tax deductible as a medical expense. This can be a significant tax savings for individuals who itemize deductions on federal income tax returns.
For Self-Employed: You may also be able to deduct your Medicare premiums even if you don’t itemize on your tax return.
Seniors With Health Savings Accounts: An HSA is another way to get a tax benefit for Medicare premiums. Individuals can withdraw money tax free from a Health Savings Account to pay Medicare premiums. If you are age 65r or older, you can do this for yourself and your spouse.
Note that the American Association for Medicare Supplement Insurance does not provide tax advice. We share this information to educate seniors. Always discuss with your CPA or tax professional.
Can I deduct Medicare premiums as a medical expense?
Yes, but first make sure that you first meet the following two (2) requirements:
- You must itemize your deductions on your tax return (not take the Standard deduction).
- Your qualifying medical expenses must add up to more than 7.5 percent of your Adjusted Gross Income.
An example: John and Mary are calculating their 2022 federal income taxes. Their Adjusted Gross Income is $80,000. They can deduct qualifying medical expenses in excess of $6,000.
When John and Mary add up all their medical expenses, it amounts to $10,300. They paid $2,200 in Medicare Supplement insurance premiums. Plus, $4,500 in expenses for dental care, eyeglasses and other qualifying health care expenses. They also have a tax-qualified long-term care insurance policy that they pay $3,600 for annually.
The total of their eligible medical expenses is $10,300. John and Mary can deduct $4,300 on their federal income tax return. By the way, they’ll have more costs which we outline below.
Do Total Deductions Exceed the Standard Deduction?
If your total deductions are less than the Standard Deduction, it won’t pay to deduct medical expenses. But, if they are higher, then it can pay.
Talk to your accountant, tax preparer because the Association does not provide tax advice. We merely provide this information to help educate more seniors.
Standard Deduction Levels
Individual (Single)
2022 $12,950
2023 $13,850
Single (65 and older)
2022 $14,700
2023 $15,700
Married couple filing jointly
2022 $25,900
2023 $27,700
Married couple both 65 and older, filing jointly
2022 $28,700
2023 $30,700
Medicare Premiums Tax Deductible: What Expenses Count?
The following can be counted towards the total for the tax year. It pays to read the IRS Publication 502, Medical and Dental Expenses. It has the most current list of eligible expenses and rules. But in general, the following should be qualifying costs that will count towards your deductible amount.
Medicare Part A premiums. Note that most people don’t have to pay Part A premiums.
Medicare Part B premiums. Part B premiums can still be tax deductible even if they are deducted even if they are automatically deducted from your Social Security monthly payment.
Those paying the Income-Related Monthly Adjustment Amount (IRMAA) , the surcharge for Medicare Part B can deduct the full amount.
Medicare Part D prescription drug plans – including the high-income surcharge.
Any premiums for Medicare Advantage (Medicare Part C) plans.
Premiums for Medicare Supplement insurance (also known as Medigap).
Less Common Medical – Health Expenses That Count
Long-term care insurance premiums paid for tax-qualified policies. There are deductible limits that are increased each year by the IRS. See the latest long-term care insurance tax deductions here.
Most dental, hearing and vision expenses. These can be small costs such as eye glasses or contact lenses. Or they can be costly. For example, dental implants or medically needed laser eye surgery.
Cosmetic surgery if it is needed because of an accident, deformity or disease.
Psychologist or psychiatrist care. This is true even if costs exceed Medicare’s coverage limits.
Medical equipment, including crutches or a wheelchair. Supplies such as bandages.
Medically necessary improvements to your home. For example, you need wheelchair ramps to get into your home. Or wider doorways. Note that if the improvement increases the value of the home, a portion of the expense will not be tax deductible.
Non-covered medical expenses. These can include chiropractor treatments or acupuncture.
Don’t overlook what they call travel expenses to receive medical care. This could be mileage or taxis. It could include parking costs (which may be incurred). Hotel or Airbnb costs may deductible but there can be daily maximum limits.
These Medical Expenses Are Not Tax Deductible
Cosmetic surgery to improve your appearance. That includes face-lifts, hair removal, hair transplants, liposuction and teeth whitening.
Medicare’s late enrollment penalties.
Nonprescription medications, except for insulin. Herbal, nutritional or vitamin supplements are generally not deductible. The exception could be made when your medical professional recommends them as treatment for a specific medical condition.
Medicare Premiums Tax Deductible: Rules For Self-Employed
Self-employed individuals can deduct some or all of paid Medicare health insurance without having to itemize or meet the 7.5 percent threshold.
The rules seem to indicate that the self-employed health insurance deduction only applies if neither you nor your spouse were eligible to participate in an employer-subsidized health plan.
There are limits too. The tax-deductible premium amounts cannot exceed the amount of money you earned from your business.
A self-employed individual can include premiums paid for Medicare Parts A, B and D. Any costs paid for Medicare Advantage (Part C) and Medigap premiums can be deducted. So can tax-eligible long-term care insurance premiums.
Using A Health Savings Account To Pay Medicare Premiums
Individuals with Health Savings Accounts (HSA) who are now 65 and on Medicare can withdraw money tax free to pay for Medicare premiums and other out-of-pocket medical expenses. This includes Medicare Parts A, B and D.
The IRS does NOT allow tax-free HSA withdrawals for Medigap premiums at any age.
Although this is true, after 65 you cannot continue to contribute. But withdrawing funds tax-free can be a benefit.
While HSAs are great, you cannot take tax-free HSA withdrawals as well as a tax deduction for the same medical expenses.
Get The Best Medicare Insurance Plan For Your Needs
Did you know that the American Association for Medicare Supplement Insurance makes available the leading free online directory. Because it’s free. And no one else offers this type of resource. Therefore use it to find Medicare insurance agents in your Zip Code. Immediately see their info. In addition, find local agents who offer both Medicare Advantage and Medicare Supplement plans. Most importantly it’s 100% private.
Click here to access the national directory listing local Medicare insurance agents
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