What to know about Medicare and Taxes

All, Medicare

Tax Day, April 15, falls on a Monday this year. While that sounds especially unpleasant, when it comes to Medicare, we can help you figure how to make filing your taxes as painless as possible. The information below is courtesy of www.aarp.org

Your Medicare premiums can be tax deductible as a medical expense if you itemize deductions on your federal income tax return. You can only deduct medical expenses after they add up to more than 7.5 percent of your adjusted gross income (AGI). 

This means if your AGI is $50,000, you can deduct medical expenses in excess of $3,750. If you had $5,000 in eligible medical expenses, you could deduct $1,250 on your income tax return. 

If you’re self-employed, you may be able to deduct premiums for Medicare or other eligible health insurance from your income without having to itemize or meet the 7.5 percent threshold.

Your Medicare premiums can be tax deductible as a medical expense if you itemize deductions on your federal income tax return. You can only deduct medical expenses after they add up to more than 7.5 percent of your adjusted gross income (AGI). 

This means if your AGI is $50,000, you can deduct medical expenses in excess of $3,750. If you had $5,000 in eligible medical expenses, you could deduct $1,250 on your income tax return. 

If you’re self-employed, you may be able to deduct premiums for Medicare or other eligible health insurance from your income without having to itemize or meet the 7.5 percent threshold.

What Medicare expenses are tax deductible?

If you qualify, you can deduct Medicare and other related insurance premiums when you itemize, including:

Medicare Part A, although most people don’t have to pay Part A premiums.

Medicare Part B, which was $164.90 a month for most people in 2023 and $174.70 per month in 2024. The premiums can still be tax deductible even if they’re deducted automatically from your Social Security benefits. If you have to pay a high-income surcharge for Part B premiums — also called the Income-Related Monthly Adjustment Amount (IRMAA) — your full premiums can still be tax deductible.

Medicare Part D prescription drug plans, including the high-income surcharge.

Medicare Advantage, the private alternative to original Medicare.

Medicare supplement insurance, the private plans also known as Medigap.

Additional out-of-pocket medical expenses can be tax deductible if other insurance, such as Medigap, Medicare Advantage or retiree coverage doesn’t cover the full costs. Some of these eligible costs may include:

Deductibles and copayments

Most dental, hearing and vision expenses, such as contact lenses, eyeglasses, routine eye exams, dental procedures, dentures, routine dental exams, hearing aids and hearing exams. You can also include the cost of eye surgery to treat defective vision, such as laser eye surgery or refractive surgery to correct myopia or nearsightedness.

Medical equipment,including crutches or a wheelchair, that may not be covered in full. Medical supplies such as bandages are also tax deductible.

Certain home improvements to accommodate a disability. For example, you can deduct the cost of constructing wheelchair ramps, installing bathroom grab bars and handrails, and widening doorways and hallways. If the improvement increases the value of the home, a portion of the expense will not be tax deductible.

Certain psychologist or psychiatrist care costs, even if they exceed Medicare’s coverage limits for mental health benefits.

Services Medicare doesn’t cover, such as acupuncture or chiropractor visits beyond the limited definition of Medicare coverage.

Many travel expenses to receive medical care. But lodging costs may have a daily maximum.

See IRS Publication 502, Medical and Dental Expenses, for a full list of eligible expenses and rules.

What Medicare expenses are not tax deductible?

You can’t deduct the following Medicare-related expenses.

Cosmetic surgery to improve your appearance unless the surgery addresses problems resulting from an accident, deformity or disease.

Late enrollment penalties added to Part B or Part D premiums.

Nonprescription medications, except for insulin. That includes herbal, nutritional or vitamin supplements, unless a medical provider recommends them as treatment for a specific medical condition a physician has diagnosed.

Diane “Dee” Lee Insurance is an experienced, licensed insurance broker and representative providing Medicare (parts A and B), supplemental Medicare, Medicare Advantage (part C) and Medicare Prescription Drug (part D) plans. Diane Dee Lee Insurance also provides healthcare plans to cover dental, vision, hospital stays, home health care and more. She also serves the under 65 population. Serving as an Insurance Broker in Anthem, Scottsdale, Cave Creek, Deer Valley, Peoria, Glendale, the Phoenix-metro area, Queen Creek, as well as the counties of Pima, Pinal, Coconino, Gila, Mohave, Apache, Navajo, Maricopa and Yavapai. Licensed in eleven states and appointed with multiple insurance carriers, Dee is available to meet in person (with necessary social distancing guidelines) or virtually. Please call (623) 251-6612 or email dleeski@reagan.com