If you’re over the age of 65 and you have basic Medicare insurance, you might be required to pay additional premiums to get the level of coverage you need. These premiums can be expensive, especially for married couples with both spouses paying them. With that said, you might have one advantage: You may qualify for a tax break for paying the premiums.
Premiums count as medical expenses
For the intention of claiming an itemized deduction for healthcare costs on your tax return, you have the option to combine premiums for Medicare health insurance with other eligible medical expenditures. These include:
- Amounts for “Medigap” insurance
- Amounts for Medicare Advantage plans
Certain people purchase “Medigap” policies because Medicare Parts A and B don’t cover all their healthcare costs. Coverage gaps can include co-payments, coinsurance, deductibles, and other medical costs. Medigap is private supplementary insurance that is designed to cover a portion or the entirety of these gaps.
You must itemize
It can be difficult to qualify for a medical expense deduction for a few different reasons. For 2023, you’re allowed to deduct medical expenses only if you itemize deductions and only to the extent that total qualifying expenses are higher than 7.5% of your adjusted gross income.
The Tax Cuts and Jobs Act almost doubled the standard deduction amounts for 2018 through 2025. For 2023, the standard deduction amounts are:
- $13,850 for single filers
- $27,700 for married couples filing jointly
- $20,800 for heads of household.
For 2022, these amounts were $12,950, $25,900, and $19,400, respectively.
This means that many people claim the standard deduction because their itemized deductions are less than their standard deduction amount.
It’s important to note that self-employed individuals and shareholder-employees of S-Corporations can typically claim an above-the-line deduction for their healthcare coverage premiums, including Medicare premiums. Because of this, they don’t need to itemize to receive the tax savings from their premiums.
Other expenses that qualify
Alongside Medicare premiums, you can deduct various medical expenses, including:
- Dental treatments
- Ambulance services
- Dentures
- Eyeglasses and contacts
- Hospital services
- Lab tests
- Qualified long-term care services
- Prescription medicines
Along with these deductibles, there are plenty of other items not covered by Medicare that can be deducted for tax purposes if you’re eligible.
You can deduct transportation costs from going to and from medical appointments. If you travel by car, you can deduct a flat rate of 22 cents per mile for 2023, or you can log all of your out-of-pocket costs for gas, oil, maintenance, and repairs.
Have questions? Smolin can help.
If you have any questions about what you can and can’t deduct for your Medicare premiums when tax season rolls around, contact the team at Smolin. We can answer any questions you may have about this process and help you make the best choice for your financial future.