Can You Deduct Medicare Advantage Premiums From Your Taxes?

There are several components that establish whether a Medicare beneficiary is allowed to include their Medicare Advantage premiums as a tax deduction when filing their taxes. Seniors aren’t automatically eligible to do so. It’s very important to consult with a tax professional prior to filing each year.

When can you deduct Medicare premiums? If you’re self-employed, you may be eligible to deduct all of your Medicare Advantage Insurance premiums. As authorized by the IRS, Medicare beneficiaries with self-employment income may be able to deduct Medicare Advantage premiums just like any other health insurance premium.

Medicare members that itemize their deductions on their tax returns may qualify to deduct copayments, premiums and deductibles when they won’t be reimbursed. These deductible expenses may also include dental bills. There’s a stipulation requiring that all medical expenses exceed 7.5 % of the AGI, which is also predicated by age. Referred to as a below-the line-deduction, Medicare Advantage premiums may be deducted when filing tax returns.

Medicare Part B Premiums are tax-deductible. Medicare beneficiaries have the option to apply for Part B coverage that covers doctors’ appointments, lab tests, and more. It isn’t required that members have part B Medicare. However, beneficiaries that choose so, are eligible for a bonus when they deduct the Part B premium from their taxes. Medicare part D premiums are also tax-deductible.

Exclusive expenses that are considered acceptable by the IRS include Medicare premiums and annual physical exams are allowable as tax deductions.

• Acupuncture
• Ambulance services
• Dentures
• Contacts
• Eyeglasses and eye exams
• Yearly physical exams
• Service animals
• Long-term care
• Oxygen
• Psychological care
• Laboratory cost
• Wheelchairs
• X-ray services
• Vasectomy
• Hearing aids
• Chiropractor services

Medical and dental expenses that cannot be reimbursed, which also encompasses Medicare premiums and copayments, may be allowed as deductions. These deductions are allowed when the Medicare beneficiary itemizes. As a general rule, premiums for Part B and D are deductible for the most part, although premiums for Part A are only deductible under prohibitory circumstances.

There is no limit as it relates to traditional Medicare on any out -of-pocket cost. However as far as Medicare Advantage plans are concerned, out-of-pocket limits exist but they fluctuate based on the specific Medicare carrier involved.

In most cases, members aren’t obligated to pay a premium for Part A because they’ll have already paid Medicare taxes when employed for at least 40 quarters, which is equivalent to 10 working years.

Typically, Medicare premiums are based on a beneficiary’s modified AGI. For example, if the MAGI for 2019 was less than or even equal to the “higher-income” threshold, the member pays the “standard” Medicare Part B rate for 2021.

A Medicare member’s income can affect how their AGI is calculated. Higher income beneficiaries as determined by the United States Social Security Administration (SSA) normally incur higher premium cost for Part B which covers any health-related apportionment of Medicare.

Medicare premiums are based on the member’s MAGI. The MAGI is the total adjusted income and tax-exempt interest income. If, for some reason, a life-changing event should occur ― such as a change in marital status or reduction of income due to job loss, pension, or variation of income-producing property ― members can request from the SSA an adjustment to their premium.

For Medicare members who are self-employed, the MAGI is your total AGI and tax-exempt interest income. If you file your taxes as “married, filing jointly” and your MAGI is greater than $176,000, you’ll pay higher premiums for your Part B and Medicare prescription drug coverage.

The primary step in calculating the AGI when on Medicare and self-employed is to determine your income for the year. Medicare premiums are based on your MAGI. Self-employed people who earn a profit from their self-employment are allowed on Schedule 1 of the 1040, as an above-the-line deduction which means it lowers their AGI.

Because Medicare recipients may accrue medical expenses that aren’t covered by the insurance, which may include long-term care to lodging during a trip to receive medical care, some of the cost could very well be tax-deductible but within limits. Medicare Advantage premiums can be deducted from your taxes as a below-the-line deduction:

• Your Medicare Advantage premiums can be deducted from your taxes as a below-the-line deduction. This requires you to itemize the premiums. If they, along with your other medical costs, exceed 7.5% of your AGI, you qualify for the deduction.
• If Medicare members itemize deductions on their income taxes, Medicare costs, such as premiums and copayments, may be deductible.

Unreimbursed medical and dental expenses, including premiums, deductibles, copayments, and other Medicare costs, may be deductible to the degree that they surpass 7.5% of the adjusted gross income. Premiums for Medicare Part B and Part D usually are deductible. Part A premiums are deductible if the member is required to pay a Part A premium.