If you receive Social Security or railroad retirement benefits and are over age 65, or you qualify for Medicaid Part A due to having a disability, end-stage renal disease or amyotrophic lateral sclerosis, you automatically qualify to receive Medicare Part B medical insurance. Medicare Part B is an insurance plan that helps pay for doctor and medical service in exchange for a monthly premium.
The Internal Revenue Service allows you to deduct your Medicare Part B premiums if you choose to itemize your deductions. Keep in mind, however, that in order to claim your medical expenses your total bill must be valued at more than 7.5 percent of your adjusted gross income.
Are Medicare Premiums Tax Deductible?
The IRS offers two deductions: the standard deduction and itemized deductions, both of which reduce your taxable income. When you itemize your taxes, you opt to claim various actual deductible expenses, instead of just choosing the one-size-fits-all standard deduction. Only certain expenses, such as home mortgage interest, charitable contributions and medical expenses, qualify as itemized deductions. When you itemize, you enter all of your qualifying expenses in Schedule A on your Form 1040.
In addition to Medicare Part B, you might also pay monthly premiums for Medicare Part C, also known as Medicare Advantage, and Part D for prescription drug coverage. The IRS allows you to deduct any of your out-of-pocket medical expenses, including the premiums you paid for Part C and Part D. These are relatively common tax deductions for seniors in particular. Include these premiums, along with your Part B premiums, in Schedule A.
Medical expenses are not limited to just your Medicare premiums. You can also claim copayments, prescription costs, mileage, dental expenses and expenses for a new pair of glasses. The amount of medical expenses you can deduct on your taxes, however, depends on your adjusted gross income. Any medical expense you pay for out of pocket because it's not covered by Medicare or falls under your Medicare annual deductible is included.
Claiming Medical Expenses
To claim any medical expenses at all, your expenses must exceed 7.5 percent of your adjusted gross income. For example, suppose you had an AGI of $50,000. The first step is to gather up all your medical receipts, insurance statements and summary notices, and add those together. Let's imagine your expenses come to $6,000.
Now, 7.5 percent of $50,000 is $3,750 and your total medical bill for the year exceeds that. You can deduct the amount you paid that’s more than 7.5 percent of your AGI so here, you could deduct $6,000 minus $3,750, which is $2,250.
2020 Tax Year Changes
As of 2020, the standard deduction is $12,400 for single people and $24,800 for married couples filing jointly. This may mean that it no longer makes sense for some people to claim Medicare Part B premiums and other medical expenses on their taxes, since they'll save more simply taking the standard deduction.
- Internal Revenue Service: Should I Itemize?
- Internal Revenue Service: Publication 554
- Priority Health: What Is Medicare Part C and D?
- Nolo: Top Seven Tax Deductions for Seniors and Retirees
- Congress.gov. "H.R.3301 – Taxpayer Certainty and Disaster Tax Relief Act of 2019." Accessed Jan. 4, 2020.
- Internal Revenue Service. "IRS Provides Tax Inflation Adjustments for Tax Year 2020." Accessed Jan. 4, 2020.
- Internal Revenue Service. "Itemize or Choose the Standard Deduction." Accessed Jan. 4, 2020.
- Internal Revenue Service. "Schedule A Itemized Deductions." Accessed Jan. 6, 2020.
- Internal Revenue Service. "2019 Instructions for Schedule A (2019)." Accessed Jan. 4, 2019.
- Internal Revenue Service. "Publication 502 (2018) Medical and Dental Expenses." Accessed Jan. 6, 2020.
- Internal Revenue Service. "IRS Issues Standard Mileage Rates for 2020." Accessed Jan. 4, 2020.
Angela M. Wheeland specializes in topics related to taxation, technology, gaming and criminal law. She has contributed to several websites and serves as the lead content editor for a construction-related website. Wheeland holds an Associate of Arts in accounting and criminal justice. She has owned and operated her own income tax-preparation business since 2006.