By Daniel Petkevich
Dec 28, 2022
Healthcare can be expensive. Luckily, if you have Medicare, there are several ways to reduce your costs.
Certain Medicare costs qualify as tax deductions. Claiming these medical expenses on your tax return can lower your taxable income (i.e., reduce your taxes).
Let's dive deeper into the types of Medicare expenses that qualify for tax deductions and discuss how to claim them on your tax return.
Yes. You can deduct your Medicare expenses from your tax returns if you meet the eligibility requirements.
If you claim the standard deduction, check the current amount before filing your tax return. (Standard deductions change periodically).
Here's a list of standard deductions for 2022 and 2023:
Standard Deductions for 2022 & 2023
Note: To maximize your tax benefits, you might want to itemize your deductions rather than claim the standard deduction. However, this is possible only when the total of your itemized deductions, including charitable donations, medical expenses, and state and local taxes, is higher than your standard deduction.
The amount of tax-deductible Medicare expenses depends on your:
Adjusted Gross Income (AGI)
In order to qualify for a tax deduction, your Medicare expenses must exceed 7.5% of your AGI (adjusted gross income). You can only claim a deduction for costs above this threshold.
For example, you have $5,000 in medical expenses, and your AGI is $40,000. You can claim a deduction for any amount over $3,000 (i.e., 7.5% of $40,000)
$40,000 x 7.5% = $3,000
$5,000 - $3,000 = $2,000
You can claim a tax deduction for medical expenses you paid for yourself, your spouse, or a qualifying dependent.
Here are some examples of tax-deductible Medicare expenses:
Medicare Part A premium
Most people are not required to pay the Medicare Part A premium because they or their spouse have paid Medicare taxes while working. However, if you're required to pay the Part A premium and are not yet collecting Social Security benefits, you may be able to claim a tax deduction for these premiums
Medicare Part B premium
Medicare Part D premium
Medicare Advantage (Part C) premium
Long-term care insurance premium
You may be able to deduct a portion of your long-term care insurance premiums on your taxes based on your age. The amount varies depending on age and ranges from $450 for those 40 or younger to $5,640 for those 71 or older
Co-pays, deductibles and coinsurance for Part A, B or D services
In addition, you can also deduct taxes for the following medical expenses:
Annual Physical Examination
Vehicle modification costs for a disabled driver
Costs incurred to modify a car for wheelchair users, including interior and exterior changes
Transportation costs for medical appointments, such as the cost of gas and oil
Eye exams & eyeglasses
Some medical costs don't qualify for tax deductions. Examples of non-tax-deductible expenses include the following.
Except for insulin, nonprescription drugs (e.g., over-the-counter medications and nutritional supplements) generally don't qualify for tax deductions
Late enrollment penalties
Electrolysis, or hair removal
Babysitting or childcare
Health Club Dues
Personal use items (toothbrushes, floss, toilet paper, etc.)
Weight loss program
Keep track of all your out-of-pocket costs, including receipts, bills, and statements from your healthcare provider. You will need to provide this documentation if you are audited by the Internal Revenue Service (IRS).
Calculate your total out-of-pocket costs. Then, compare them to the applicable threshold (7.5% of your AGI).
Itemize your deductions on your tax return using Form 1040, Schedule A.
Complete the appropriate tax form and enter the total amount of your deduction. Attach any supporting documentation to your tax return. File your tax return by the deadline.
Tax deductions can help offset Medicare expenses, lower your taxable income, and potentially increase your tax refunds. Some qualifying Medicare expenses include premiums, out-of-pocket costs, and more.
To claim your tax deductions, follow these steps:
Keep track of your Medicare expenses
Calculate your deduction
Itemize if you're eligible
Claim the deduction on your tax return
If you're not sure about your deduction eligiblity or have questions about the process, give us a call at 1-888-376-2028. At Fair Square Medicare, we'll help you identify tax-deductible expenses that will bring you financial relief.
What Is the Medicare Birthday Rule in Nevada?
Mar 28, 2023
Does Medicare Cover Ozempic?
Mar 28, 2023
Can Medicare Advantage Plans Deny Coverage for Pre-Existing Conditions?
Mar 28, 2023
What People Don't Realize About Medicare
Mar 27, 2023
Medicare Advantage Plans for Disabled People Under 65
Mar 24, 2023
Medicare Supplement Plans for Low-Income Seniors
Mar 23, 2023
Medicare Savings Programs in Kansas
Mar 22, 2023
How Much Does a Medicare Coach Cost?
Mar 20, 2023
20 Questions to Ask Your Medicare Agent
Mar 17, 2023
14 Best Ways for Seniors to Stay Active in Washington, D.C.
Mar 11, 2023
14 Best Ways for Seniors to Stay Active in Nashville
Mar 10, 2023
14 Best Ways for Seniors to Stay Active in Seattle
Mar 10, 2023
15 Best Ways for Seniors to Stay Active in Denver
Mar 9, 2023
13 Best Ways for Seniors to Stay Active in Indianapolis
Mar 9, 2023
14 Best Ways to Stay Active in Charlotte
Mar 9, 2023
13 Best Ways for Seniors to Stay Active in Columbus
Mar 8, 2023
13 Best Ways for Seniors to Stay Active in Philadelphia
Mar 7, 2023
13 Best Ways for Seniors to Stay Active in Phoenix
Mar 6, 2023
Virgil Insurance Agency, LLC (DBA Fair Square Medicare) and www.fairsquaremedicare.com are privately owned and operated by Help Button Inc. Medicare supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. This is a solicitation of insurance. A licensed agent/producer may contact you. Medicare Supplement insurance is available to those age 65 and older enrolled in Medicare Parts A and B and, in some states, to those under age 65 eligible for Medicare due to disability or End-Stage Renal disease. Virgil Insurance Agency is a licensed and certified representative of Medicare Advantage HMO, HMO SNP, PPO, PPO SNP and PFFS organizations and stand-alone PDP prescription drug plans. Each of the organizations we represent has a Medicare contract. Enrollment in any plan depends on contract renewal. The plans we represent do not discriminate on the basis of race, color, national origin, age, disability, or sex. Plan availability varies by region and state. For a complete list of available plans please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov. © 2022 Help Button Inc
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.