If you have Original Medicare along with a Medigap insurance plan, your Medigap premiums are tax-deductible. They are treated as a medical expense on Form 1040, Schedule A, Itemized Deductions and subject to the same guidelines as any other medical expense in this category. As with other medical expenses, to be able to deduct your Medigap premiums, you must be itemizing deductions. Only the portion of your medical expenses that exceeds 7.5% of your adjusted gross income (AGI) is deductible.
How Do You Deduct Medigap Premiums on Your Taxes?
To deduct Medigap premiums on your taxes, simply include them as itemized medical expenses on Schedule A, Itemized Deductions for Form 1040. For example, if your AGI is $50,000, 7.5% of that is $3,750. If your itemized deductions are $5,000, you can deduct $1,250. If your medical expenses did not exceed 7.5% of your adjusted gross income, you would not be able to deduct anything for them.
Are Other Medicare-Related Expenses Tax Deductible?
A number of Medicare-related expenses can be deducted from your taxes. Unfortunately, many people are not aware of this and therefore fail to take advantage of the deductions. Generally, allowable medical expenses that can be included in your itemized deductions are expenses incurred for diagnosis and treatment of illness or injury. This includes medical supplies and equipment, preventive care, transportation costs to and from provider visits, and costs associated with modifying your home for medical reasons, such as the installation of a wheelchair ramp. You can even deduct the cost of batteries for your hearing aids.
Tax-deductible medical expenses for Medicare beneficiaries may include:
Medicare Part B premiums
Medicare Advantage plan premiums
Cost of Medicare Part D coverage (prescription drug coverage)
Out-of-pocket costs for deductibles, copays, and coinsurance for services under Medicare Parts A, B, or D
Out-of-pockets costs for medical items not covered by Medicare, such as hearing aids, glasses, contact lenses, dental care, and nursing home care
Long-term insurance premiums in some cases
What Medicare-Related Expenses Are Not Deductible?
A few health care items are not deductible on Form 1040, Schedule A, Itemized Deductions. These include:
Over-the-counter drugs, vitamins, and supplements, unless they were specifically recommended by a doctor to treat a specific condition
Premiums for group health insurance paid with pretax dollars
Late penalties on Medicare Part B or Part D
Prescription drugs bought overseas or bought online from an overseas provider
What Documents Do You Need to Deduct Medigap Premiums on Your Taxes?
If you have a privately sold Medigap plan, you will receive a separate statement from the provider. That statement should provide the documentation you need to deduct your Medigap premiums on your taxes. If you have not received a statement when it is time to file, contact your Medigap insurance company. If you are deducting Medicare Part B premiums, your SSA-1099 received every year from the Social Security Administration serves as the necessary documentation.
If you have questions about Medicare or Medigap insurance, meet with our friendly agent. We are always happy to help.