The more you can deduct on your taxes, the less you have to pay. With this in mind, everyone wants to know if they can deduct Medicare premiums and other medical expenses on their tax returns.

Premiums That Qualify for Tax Deductions

You will be happy to know that you can deduct Medicare premiums on your taxes. The catch is that they and other qualifying medical expenses must add up to 7.5% or more of your adjusted gross income.

• Medicare Part A premiums (but only if you are not collecting Social Security benefits)
• Medicare Part B premiums
• Medicare Part C (Medicare Advantage) premiums
• Medicare Part D premiums
• Medicare Supplement (Medigap) premiums

Other types of insurance premiums may qualify too. If you have an employer-sponsored health plan, those premiums count. So will long-term care insurance or cancer insurance premiums.

Premiums that don’t count include those for life insurance, medical coverage through a car insurance policy, policies that provide payments for lost wages, policies for loss of life/limb/sight etc., and policies that pay a fixed amount each week you are hospitalized for an illness or injury.

Other Qualifying Medical Expenses

The following list is not all-inclusive but does address some of the more common medical expenses people deduct on their taxes. Please refer to the IRS document for the complete list.

• Contact lenses and eyeglasses
• Dental care
• Hearing aids
• Hospital care and surgeries
• Imaging studies
• Laboratory studies
• Nursing care
• Nursing home stays
• Physical examinations
• Prescription medications
• Psychiatric care
• Wheelchairs

Keep in mind that cosmetic procedures, medications you purchase from a foreign country, non-prescription drugs, and nutritional supplements do not qualify for a deduction.

Health Savings Accounts

You cannot deduct any money you put into a Health Savings Account (HSA). You also cannot contribute to an HSA while you are on Medicare. That said, if you already had an HSA, you could still use that money tax-free to pay your Medicare premiums and other qualifying expenses. Any premiums paid for this way do not qualify for a tax deduction.

Preparing Your Taxes

Most people will deduct Medicare premiums and other qualifying medical expenses on Schedule A of their Form 1040. Because this is a “below-the-line” deduction, it will not change your adjusted gross income.

If you are self-employed, you could deduct these expenses on Schedule 1 on Form 1040 instead. The catch is you can only do so if your business is profitable and you cannot deduct more than what your business earned that year. Also, you cannot use this deduction if you are eligible for an employer-sponsored plan through your own employer or through your spouse’s. Because this is an “above-the-line” deduction, it will actually decrease your adjusted gross income.

If you are self-employed, you cannot deduct from both Schedule A and Schedule 1. Your best bet is to try them both out and see which one saves you the most.

 

About Form 1040, U.S. Individual Income Tax Return. IRS.gov. https://www.irs.gov/forms-pubs/about-form-1040

About Schedule A (Form 1040), Itemized Deductions. IRS.gov. https://www.irs.gov/forms-pubs/about-schedule-a-form-1040

Publication 502 (2021), Medical and Dental Expenses. IRS.gov. https://www.irs.gov/publications/p502#en_US_2021_publink1000178957

Publication 969 (2021), Health Savings Accounts and Other Tax-Favored Health Plans. IRS.gov. https://www.irs.gov/publications/p969