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Are Medicare Supplement Premiums Tax Deductible?

Medicare Supplement Premiums Tax Deductible

For those who are on Medicare, paying for monthly premiums and medical procedures can be financially taxing. Costs go up on an annual basis, and many people look for ways to save money. Monthly premiums for Medicare can be high. However, there may be relief. 

Medicare Supplement premiums are tax deductible, and this may come as a relief to those who struggle to pay monthly premiums and other medical costs that arise. According to the AARP, if you keep an itemized list of deductions on your income tax return, your Medicare premiums can be deemed a medical expense. 

Those who are self-employed may deduct Medicare premiums, if they keep an itemized list of their deductions. You may also withdraw B, D & C funds tax free from a Health Savings Account or HSA. You can use this money to pay for premiums for yourself or for “you and your spouse.” You can do this if you are aged 65 or older. But bear in mind that you cannot use your HAS to reimburse yourself for supplement insurance premiums.

If you want to deduct your Medicare premiums as a medical expense, you must make sure all deductions are itemized on your tax return. You cannot deduct medical expenses until they account for 7.5 percent of your total adjusted gross income or AGI. If you want to claim premiums as a tax deduction, it is important to keep records and receipts to document what you have paid. 

Be sure to itemize deductions, as opposed to making standard deductions. Itemized deductions can include medical expenses that cost up to $10,000 in state and regional income. Interest on tax deductible mortgage and sales tax also count as itemized deductions. If you’d like, you can claim insurance premiums and Medicare as deductions.

You can deduct Medicare Part A, even though few people pay premiums on Medicare Part A. In 2022, the monthly premium for Medicare Part B was $170.10 per month. However, this amount decreased to $164.90 this year. Premiums are eligible to be tax deductions, even if they are taken out of your monthly Social Security payment. 

If you pay the high-income surcharge called Income-Related Monthly Adjustment Amount (IRMAA), your entire premium can be a tax deduction. Medicare Part D Prescription Plans are also tax deductible. However, a high-income surcharge may apply. Medicare Advantage and supplement Medigap plans are also tax-deductible. 

If you have long-term care insurance, you may deduct part of your premiums for policies. However, this will depend upon your age, and premiums go up as you move into a higher age bracket. Surprisingly, many out-of-pocket medical expenses can be claimed as a tax deduction if your supplement insurance company does not give you a reimbursement. Vision, hearing, and dental equipment and procedures may be tax deductible.

The cost of eye surgery and corrective procedures are also tax deductible as well. Medical equipment, such as wheelchairs and crutches, can be fully covered. Other supplies, including bandages, are covered as well. Some psychiatric care costs, such as psychiatrist visits and psychology costs, are covered.
Mental health care like these may be covered, even if the cost of treatment exceeds the amount allotted for psychological care.

There may be cases where individuals with disabilities need to make changes to their home to accommodate their disability. You can deduct the cost of installing wheelchair ramps and grab bars in showers. The cost of making hallways and doorways wider can be quite steep, so claiming these as deductions makes life more comfortable and affordable for individuals with disabilities.

But what expenses does Medicare not cover? According to experts, Medicare does not cover chiropractic care or acupuncture. Cosmetic surgery, such as hair transplants, teeth whitening, and liposuction are excluded from coverage and are not tax deductible. Late enrollment penalties that are added to Medicare Part B and Part D are not tax deductible, so you must pay for these fees out-of-pocket.

Except for insulin, nonprescription medications are not tax deductible. However, travel expenses to get medical care for emergencies are covered. You cannot be reimbursed for late enrollment fees.

Under Schedule A, Itemized Deductions for Form 1040, your supplement insurance is tax deductible as a medical expense. You can deduct the amount that goes over a specific percentage of your AGI, experts say. The amount, however, will vary depending on how old you are at different times of the year.

The vast majority of those who pay taxes do not know that premiums on Medicare supplement plans can be claimed as a deduction and that they count as a medical expense. You can include batteries for hearing aids and mileage to see your provider as deductions. In 2014, the rate for mileage was 23 and a half cents per mile.

That cost went down to 23 cents in 2015. Parking and tolls are also factored into that rate. If you are required to pay deductibles for Medicare Parts A, B, and D, Medigap plans, and Medicare Advantage, you may be able to deduct these premiums. These can be claimed as an adjustment to your income under Schedule 1 on “your Form 1040.”

According to Forbes Advisor, supplemental insurance premiums are typically deductible, but they are only deductible for medical expenses. Some people may wonder if other types of insurance, such as COBRA, are tax deductible. You can deduct the costs associated with your COBRA insurance. If you have a high deductible plan, you may not have to count HSA contributions as part of your income, but this will depend on your situation and filing status.

According to experts, the contribution amount is $7,300 for families and $3,650 for individuals. It may be wise to take an itemized deduction if you had many medical and dental expenses that were not reimbursed. The standard deduction for a single taxpayer is $12,950 and $25,900 for those filing jointly. 

Only qualifying medical expenses should be deducted. If you spend thousands of dollars on medical costs, and they don’t meet the criteria, you may be out of luck. Because of this, it may be a good idea to stick with the “standard option,” experts say.

If you itemize your deductions, you can deduct expenses that go beyond a percentage of your income. However, be aware that you can only deduct the cost of medical expenses that go beyond 7.5 percent of your AGI. Other expenses that may be itemized include skilled nursing, hospice, and hospital care. Ambulance rides, doctor visits, and diagnostic tests can also count as deductions. 

Medicare enrollees pay for roughly 15 percent of their medical expenses through their monthly Medicare premiums. This adds up to a lot of money over the years, but some Medicare beneficiaries decide to deduct their premiums when they file taxes each year. 

Self-employment can be a benefit for seniors who want to save money on their premiums. An increasing number of seniors are working for themselves, because of changing norms and financial shifts. Those who are self-employed and receiving Medicare or a supplement policy can benefit from using their premiums as a tax deduction. 

Self-employed individuals can run any type of business, whether they sell their services or run a restaurant chain. As of 2012, the Internal Revenue Service began allowing the self-employed to deduct their Medicare premiums from “their federal taxes.” This applies to Medicare Parts A and B, Medicare Advantage Plans, and Medigap policies.    

The Federal government has given all individuals the ability to deduct all premiums, including those of their spouse. But what else qualifies as self-employment? According to experts, you are self-employed if you are a “sole proprietor” under Schedule C. You use a Schedule C form to report how much money you lost or made from your business. 

You are also considered self-employed if you are a partner under Schedule E, an “S corporation shareholder with a minimum of two percent in company stock, or a limited liability member of the company. Regardless of the type of business you own, you are required to report your profits from your income if you would like to claim your supplement premiums as a deduction. To do this, you must fill out a self-employed health insurance deduction on Schedule 1 of a 1040 form.  

You must earn an income from your business to claim premiums as a deduction. If you make no money off your business, there is no point in trying to claim premiums as deductions. 

If you have the eligibility to enroll in an employer-subsidized health plan, you are unable to use a self-employed health insurance deduction. While you can deduct supplement premiums, there are also several items that are not tax deductible. These include dues for health clubs, toothpaste, unnecessary nicotine items, vitamins, and diet food.  

For Part A premiums to be deductible, you must meet specific criteria. Most Part A beneficiaries do not pay premiums. Because of this, they may not qualify to claim premiums as a deduction.   

8 Sources 

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Table of Contents


  • Best overall Medicare supplement for new enrollees: Plan G.
  • Best overall Medicare supplement before 2020: Plan F.
  • Best low cost Medicare supplement: Plan K.
  • Best alternative to Plan G Medicare supplement: Plan N.

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Medicare Supplement policies are private health insurance designed to cover gaps in Original Medicare. They are also known as Medigap plans. These take care of costs such as copays, coinsurance, and deductibles which can become expensive if you need regular care from a doctor or hospital. If you need medical care while traveling outside the U.S., you can buy Medigap policies to help cover those costs. As a supplement to Original Medicare, you’re required to have Part A and Part B before you canget a Medigap policy. This way, Medicare is responsible for the Medicare-approved costs of the covered care, and the remainder is covered by your Medigap plan.

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Optimal coverage comes with higher costs, making Plan F the most expensive Medigap plan. Plan F is known as “first-dollar coverage” and it takes care of everything provided during a doctor or hospital visit. Your only responsibility is for dental, vision, medications, and equipment, such as hearing aids.

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The Federal government ended the Plan F option for new enrollees last year to keep the healthcare system from being overused by patients who had their deductibles covered. The next best coverage after Plan F is Plan G.

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Medigap Plan G offers every advantage of Plan F except for the deductible, which you have to cover. Because it isn’t as comprehensive as Plan F, Plan G is more affordable.

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For people who don’t go to the doctor often, Plan K is worth considering. It is the most affordable because it provides just 50% of Medicare Part B coinsurance, the Part A deductible, blood, skilled nursing, and Part A hospice costs. For comparison, Plan G and others offer full coverage of these expenses, and more.

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It’s hard to argue against plans which cut your traditional Medicare costs. For most people, having the extra coverage these supplemental plans provide is common sense, unless they want the specific features of a Medicare Advantage plan.

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Most people would benefit from not having to pay out-of-pocket to stay healthy. Medicare supplement insurance or a Medicare Advantage plan offer vital savings now, but are indispensable should a catastrophic health issue occur.

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Of the 10 Medicare-approved Medigap plans, Plan G and Plan N are the most popular. Plan F is no longer available to new Medicare enrollees as of 2020, but it is still popular among people who bought this plan prior to 2020.

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  • Plan F$128–$342
  • Plan F (high deductible)$22–$88
  • Plan G$106–$325
  • Plan G (high deductible)$29–$58

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Before getting a Medicare supplement plan, you need to be enrolled in Medicare Part A (hospital insurance) and Part B (medical insurance). People with Medicare Advantage Plans who want to go back to Original Medicare can buy a Medigap policy prior to switching.

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The security of having lower or no out-of-pocket healthcare costs can offset the premiums you’ll have to pay for whichever Medigap plan you choose, which vary depending on the benefits offered.

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The national average cost for Medicare Supplement Plan F is $1,824 annually, which is $152/month; Medigap Plan G will cost you around $143 per month.

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Since Plan F was discontinued for new enrollees as of 2020, Plan G offers the most coverage for people 65 and older. It has a lower premium than Plan F and duplicates its benefits, except for the Part B deductible.

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It depends on your specific needs, but for most people a Medigap plan is very useful in supplementing the coverage of Medicare Part A and Part B. A Medicare Advantage plan is an affordable way to get healthcare coverage not offered by Original Medicare.

Historically, Plan F has been the most popular because it covers all the out-of-pocket costs Medicare does’t pay for. This includes the 15% extra charge billed by providers who do not take Medicare as full payment.

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Since January 1, 2006, no Medigap policy came with prescription drug coverage. You have two options to get covered, enrolling in either a Medicare Prescription Drug Plan (Part D) or a Medicare Advantage plan.

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