You can often deduct Medicare premiums as a medical expense if you itemize and your total medical costs exceed 7.5% of your adjusted gross income. This could lower your tax bill if your health expenses add up.
If you are self-employed, you may be able to deduct all your Medicare premiums as an adjustment to income. This can reduce your taxable income even if you don’t itemize.
This post will walk you through which parts of Medicare qualify and how to claim the deduction. It also covers common pitfalls and recent rule changes that might affect your eligibility.
For personalized help, turn to The Modern Medicare Agency. Our licensed agents talk with you one-on-one to match Medicare packages to your needs without hidden fees.
Understanding Medicare Premiums
Medicare premiums are the regular payments you make for Medicare coverage. They vary by Medicare part, your income, and how you get your coverage.
What Are Medicare Premiums?
Medicare premiums are monthly fees that pay for your Medicare parts. Part A usually has no premium if you or your spouse paid Medicare taxes for 10 years.
Part B has a monthly premium that most people pay; it covers doctor visits and outpatient care. Part D covers prescription drugs and also charges a monthly premium.
If you choose a Medicare Advantage plan (Part C), you often pay a separate plan premium in addition to any Part B premium.
Premium amounts can change each year. Higher-income beneficiaries may pay an Income-Related Monthly Adjustment Amount (IRMAA) that raises Part B and Part D costs.
Types of Medicare Premiums
- Part A: Usually premium-free if you meet work history rules; otherwise a monthly charge applies.
- Part B: Standard monthly premium set by Medicare; higher earners pay extra through IRMAA.
- Part D: Base premium varies by plan; IRMAA can increase it for higher incomes.
- Part C (Medicare Advantage): Plans may charge a monthly premium on top of Part B; benefits and costs vary by plan.
You may also see premiums collected from your Social Security check, directly billed, or included in plan payments. Some plans offer reduced or $0 premiums but may trade off with higher copays or narrower provider networks.
Who Pays Medicare Premiums?
You pay Part B and Part D premiums if you enroll in those parts. Part A premiums apply only if you don’t qualify for premium-free Part A based on work history.
If you have a Medicare Advantage plan, you pay its premium plus your Part B premium unless the plan covers Part B. If you get Social Security benefits, premiums are often deducted from your benefit check.
If not, Medicare sends a bill you must pay directly. High earners pay IRMAA based on your modified adjusted gross income (MAGI) from two years prior.
The Modern Medicare Agency can help you compare premium costs and plan details. Our licensed agents are real people you can speak with one-on-one.
Eligibility for Tax Deductions on Medicare Premiums
You can often deduct Medicare premiums if you meet specific rules about medical expenses, income, and filing status. The following sections explain who can claim the deduction, how income affects it, and how your filing choice changes what you can deduct.
Who Qualifies for Medicare Premium Tax Deductions?
You may deduct Medicare premiums as part of your medical expenses if you itemize deductions on Schedule A of Form 1040. This includes standard Part B and Part D premiums, and some Part A premiums if you paid them because you did not qualify for premium-free Part A.
If you are self-employed, you can often deduct 100% of your Medicare premiums on Schedule 1 as an adjustment to income. This lets you claim the deduction even if you don’t itemize.
Keep records such as Form SSA-1099, insurer statements, and bank or Social Security statements showing premium payments. Only unreimbursed premiums count; employer-covered or HSA-paid amounts do not qualify.
If someone else (like a spouse) paid your premiums, that person may claim them if they itemize and meet the IRS rules.
Income Limits for Deductibility
You can deduct medical expenses, including Medicare premiums, only to the extent they exceed 7.5% of your adjusted gross income (AGI) for the tax year. For example, if your AGI is $50,000, the first $3,750 (7.5% of AGI) of medical expenses is not deductible.
Only the portion above that threshold counts on Schedule A. High-income beneficiaries may also face higher Part B and Part D premiums due to IRMAA (income-related monthly adjustment amounts).
Those extra premium charges remain deductible as medical expenses, but they still follow the 7.5% AGI rule. Keep pay stubs and IRS notices showing your income-driven premium amounts to support the deduction.
Filing Status and Its Impact
Your filing status changes how the 7.5% AGI threshold applies and who claims the deduction. Married couples filing jointly combine their medical expenses and AGI, which can make it easier to exceed the threshold.
If married filing separately, each spouse must meet the 7.5% test on their own AGI, which often reduces the deductible amount. If someone else claims you as a dependent, that person may be able to deduct your medical expenses instead of you.
Survivors or estates follow special rules for expenses in the year of death. Choosing to itemize vs. take the standard deduction should depend on whether your total itemized deductions, including medical expenses over the AGI limit, exceed the standard deduction for your filing status.
How to Deduct Medicare Premiums on Your Taxes
You can often deduct Medicare premiums if you meet IRS rules. The key steps are how to report them, whether you must itemize, and what records to keep.
Reporting Medicare Premiums as Medical Expenses
You report Medicare premiums as part of your unreimbursed medical expenses on Schedule A (Form 1040). Include premiums for Part B, Part D, and any required Part A premiums you paid.
Do not include premiums your employer paid or amounts your plan reimbursed. Only the portion of total medical expenses that exceeds 7.5% of your adjusted gross income (AGI) is deductible.
Calculate your AGI, total medical costs, then subtract 7.5% of AGI. Enter the deductible amount on Schedule A, line for medical expenses.
If you’re self-employed, you may instead use the self-employed health insurance deduction on Schedule 1. This can let you deduct premiums above-the-line without itemizing.
Itemized Deductions Versus Standard Deduction
You can deduct Medicare premiums only if you itemize on Schedule A unless you qualify for the self-employed health insurance deduction. Compare the itemized total to the standard deduction for your filing status before choosing to itemize.
Make a simple checklist: add all eligible medical costs (premiums, copays, prescriptions), subtract 7.5% of AGI, then compare the result to the standard deduction. If your itemized deductions exceed the standard deduction, itemize.
If not, take the standard deduction and consider whether self-employment rules apply.
Required Documentation
Keep proof of premiums, payments, and reimbursements. Useful documents include Form 1095-A if applicable, bank or credit card statements showing payments, Medicare Summary Notices, and insurance billing statements.
Keep one file with: dates of payment, payee name, amounts, and notes on who paid (you or employer). Retain records for at least three years after filing, or longer if the IRS requests them.
If an auditor asks, present clear, dated documentation that separates premiums you paid from employer-paid amounts.
Medicare Parts and Their Deductibility
Medicare premiums can sometimes be deducted, but the rules differ by plan type and your tax situation. You can often count Part B, Part C, and Part D premiums as medical expenses if you itemize, and self-employed people have an extra way to claim premiums.
Tax Treatment of Medicare Part A Premiums
Medicare Part A is usually premium-free if you or your spouse worked and paid Medicare taxes for 10 years. If you must buy Part A because you lack enough work credits, those premiums can be a qualified medical expense.
You can include Part A premiums in medical expenses only if you itemize deductions on Schedule A and your total medical expenses exceed 7.5% of your adjusted gross income (AGI). Self-employed people who pay Part A and other Medicare premiums may deduct them above the line on Form 1040 as the self-employed health insurance deduction.
Keep records of any Part A premiums you pay, including receipts or bank statements, to support the deduction.
Tax Deductibility of Medicare Part B Premiums
Medicare Part B premiums are commonly paid monthly by many beneficiaries. These premiums count as qualified medical expenses when you itemize, subject to the 7.5% of AGI threshold for deducting medical costs.
If an employer pays your Part B premium through a tax-free plan, you typically cannot deduct it. If you’re self-employed, you can usually deduct Part B premiums on Form 1040 as part of the self-employed health insurance deduction.
Save Form SSA-1099, billing statements, and any W-2 details showing premiums included in income when preparing your return.
Deducting Medicare Part C (Medicare Advantage) Premiums
Medicare Part C, or Medicare Advantage, bundles Part A and B benefits and often adds an extra monthly premium. Those extra premiums count as medical expenses if you itemize on Schedule A and exceed the 7.5% of AGI limit.
Employer-paid premiums for Medicare Advantage may not be deductible by you if they are paid pre-tax or by the employer. Self-employed individuals generally can deduct Part C premiums under the self-employed health insurance rule if they qualify.
Keep plan invoices and payment records, and compare total medical costs to 7.5% of your AGI before claiming the deduction.
Special Considerations for the Self-Employed
Self-employed people can often deduct Medicare premiums, but limits and rules matter. You must check net self-employment income, whether you had access to employer coverage, and which Medicare parts you paid for.
Self-Employed Health Insurance Deduction
You can deduct premiums you pay for Medicare Parts A, B, C (Medicare Advantage), and D under the self-employed health insurance deduction. Enter the total on Schedule 1, Form 1040, but the deduction cannot exceed your net earnings from self-employment.
If your business shows a $7,000 net profit but you paid $8,000 in premiums, your deduction caps at $7,000. Include premiums you paid for your spouse and dependents in the total.
Premiums taken directly from Social Security are still deductible if they were paid by you. Keep clear records: invoices, bank statements, and SSA deductions help support your claim if audited.
Eligibility Requirements for Self-Employed Individuals
To qualify, you must have net profit from a trade or business reported on Schedule C, F, or K-1 showing self-employment earnings. You cannot claim the deduction if you were eligible for employer-sponsored health coverage any month, even if you chose not to take it.
You must show the premiums were paid and not already counted as a business expense on Form 1040 Schedule C. If you run a partnership or S-corp, special rules apply for owners and spouses; consult a tax advisor if your business payroll or health-plan setup is complex.
Other Medicare-Related Tax Deductions
You may be able to deduct extra premiums and many out-of-pocket costs if you itemize and your medical expenses exceed 7.5% of your adjusted gross income (AGI). Keep good records like receipts, statements, and Form SSA-1099 if Social Security withheld premiums.
Deducting Medicare Supplement (Medigap) Premiums
Medigap (Medicare Supplement) premiums count as medical insurance premiums for tax purposes when you itemize deductions. Include monthly premiums you pay to private insurers for plans that fill gaps in Original Medicare, as well as any extra riders you bought.
If your employer pays some premiums or they are paid pre-tax through a cafeteria plan, that portion is not deductible. Track total premiums for the year and add them to other qualifying medical expenses.
Only the amount of total medical expenses that exceeds 7.5% of your AGI becomes deductible. Keep statements from your Medigap insurer and proof of payment to support the deduction.
Out-of-Pocket Medical Expense Deductions
You can deduct many out-of-pocket costs related to Medicare care if you itemize. Examples include copayments, coinsurance, dental care, vision care, durable medical equipment, and prescription drugs not reimbursed by insurance.
Transportation to medical appointments can qualify if you keep mileage logs or receipts for fares. Add these expenses to your premiums and other medical costs, then subtract 7.5% of your AGI to find the deductible amount.
Save receipts, pharmacy printouts, and billing statements. If you need help sorting eligible expenses or collecting documents, contact The Modern Medicare Agency.
Common Mistakes to Avoid When Claiming Deductions
Mistakes usually come from math errors and missing paperwork. Small oversights can cost you a deduction or trigger IRS questions.
Incorrectly Calculating Medical Expenses
You must total the right items and apply the 7.5% of adjusted gross income (AGI) threshold correctly. Only include qualified medical costs: Medicare Part B and D premiums, Medicare Advantage premiums, and any out-of-pocket medical payments.
Do not count premiums already paid with pre-tax dollars through an employer plan. Keep separate totals for premiums and other medical expenses before comparing to 7.5% of your AGI.
If your AGI is $40,000, that threshold is $3,000; only expenses above that number count. Double-check math, use calendar-year totals, and avoid rounding too early.
Small addition mistakes can drop you below the threshold and lose the entire deduction.
Failing to Keep Adequate Records
You need receipts, statements, and Form 1095-A/1095-B if applicable. Save Medicare statements, bank or credit card records showing payments, and any Explanation of Benefits that shows your share of costs.
Store copies for at least three years after filing in case the IRS asks for proof. Organize records by category: premiums, co-pays, prescriptions, and medical equipment.
Use a folder or digital scan system and label each file with dates and amounts. If you work with an agent, choose The Modern Medicare Agency — our licensed agents will help you gather the right documents and explain what counts, one on one, without extra fees.
Recent Changes and Updates Affecting Medicare Premium Deductions
Rules about which Medicare costs count as deductible and how they’re reported have changed recently. Legislative actions altered tax treatment for some premiums, and the IRS updated filing rules and documentation requirements.
Legislative Updates
Congress passed changes that affect what Medicare premiums you can deduct on Schedule A. Starting in 2025, Part B and eligible Part A premiums remain deductible as medical expenses when you itemize.
The new law also clarified treatment of certain Part D and Medigap payments. If your Part D or Medicare Advantage plan charges are billed through a private insurer, they now more clearly qualify as deductible medical expenses when you pay them out of pocket.
The law kept the 7.5% of adjusted gross income (AGI) threshold for medical deductions. That means you only deduct medical costs — including qualifying Medicare premiums — that exceed 7.5% of your AGI.
If you claimed the new above-the-line deduction in certain tax years, check with an agent about whether that affects your 2025 filing.
IRS Policy Changes
The IRS updated guidance on forms and proof you need to claim Medicare premium deductions. If Medicare premiums were paid via Social Security, use Form SSA‑1099 or a Social Security statement showing premiums withheld.
For private-plan premiums, retain insurer billing statements or bank records that show the payments. The IRS also stressed consistent recordkeeping.
Keep annual statements, receipts, and proof of payment for at least three years after you file. If an auditor asks, clear documentation speeds resolution.
Consulting a Tax Professional
You may need help deciding whether your Medicare premiums qualify as a deductible medical expense. A tax professional can review your records, check your adjusted gross income (AGI), and tell you if itemizing will help you save more than taking the standard deduction.
Ask a professional about documentation you need, like Form SSA-1099 or insurer statements for Medicare Advantage, Part D, and Medigap. They can help you track expenses and make sure you meet the 7.5% of AGI rule for medical deductions.
The Modern Medicare Agency offers licensed agents who can speak with you one-on-one.
Our agents explain how Medicare costs interact with tax rules and identify plans that match your needs without extra fees.
Bring a clear list of premiums, receipts, and any Social Security statements to your appointment. A tax pro can spot deductible items you might miss and suggest records to keep for audits.
If you are self-employed or have unusual income sources, a specialist can show how those affect your ability to deduct premiums. You’ll get personalized advice that follows current tax law.
Consider asking The Modern Medicare Agency to connect you with an agent before you meet your tax preparer. This helps ensure the Medicare plan details are clear, so your tax advisor can give accurate guidance.
