Are COBRA Payments Deductible for Income Tax Filing?

by Jane Meggitt
Whether  you can deduct your COBRA payments depends on the percentage of your income paid for medical expenses.

If you've been through a tough life event -- such as job loss or divorce -- and lost your employer-sponsored health insurance, you might pay for COBRA coverage until you can find new health care. Named for the federal Consolidated Omnibus Budget Reconciliation Act of 1986, COBRA allows those eligible to continue purchasing health insurance at group rates. Depending on your adjusted gross income, your COBRA payments might be tax-deductible.

COBRA Premiums

The Internal Revenue Service does allow you to deduct your COBRA premiums as part of your medical expenses, but there's an important caveat. You can deduct medical expenses only to the extent they exceed 10 percent of your adjusted gross income. You are still absorbing the cost for that 10 percent. Still, COBRA premiums usually aren't cheap, and if your income isn't particularly high, those costs and other allowable medical expenses could hit the 10 percent threshold.

Other Medical Expenses

If your COBRA premiums don't add up to at least 10 percent of your adjusted gross income, but other medical expenses might put you over the top, find out what the IRS does and doesn't allow for deductible medical expenses. Doctor and dentist visits, hospital treatment, addiction rehabilitation, and the transportation to get there, are among the expenses you can deduct. You can't include any cosmetic procedures or products used primarily for cosmetic purposes, health club dues, vitamins or nutritional supplements or over the counter medications. Unless a doctor prescribed a weight-loss program specifically for health reasons, such expenses aren't deductible.

Itemized Deductions

While you can deduct your medical expenses that exceed 10 percent of your adjusted gross income, you must also itemize your deductions to receive the benefit. For 2013, the standard deduction for an individual taxpayer is $6,100, while for a married couple filing jointly the amount is $12,200. If the total of your deductible expenses -- including mortgage interest or state and local taxes, along with medical costs -- is less than the standard deduction, you're better off not itemizing.

Non-Beneficiary Payments

In most cases, the beneficiary bears the responsibility for paying all of the COBRA premium payments. However, there could be instances in which an employer pays part of the premium, or an ex-spouse might agree to pay part of a COBRA payment as part of a divorce agreement. Only the COBRA premium you pay yourself counts as potentially deductible.

About the Author

Jane Meggitt has been a writer for more than 20 years. In addition to reporting for a major newspaper chain, she has been published in "Horse News," "Suburban Classic," "Hoof Beats," "Equine Journal" and other publications. She has a Bachelor of Arts in English from New York University and an Associate of Arts from the American Academy of Dramatics Arts, New York City.

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