Are 2024 Medicare costs tax deductible?

Some Medicare costs are tax deductible; however, they must exceed a certain percentage of your adjusted gross income (AGI) and meet Internal Revenue Service (IRS) guidelines. Tax-deductible Medicare costs may include premiums, deductibles, co-insurance, co-payments, and other qualifying out-of-pocket medical costs.

In most cases, both Medicare and Medicare Supplement insurance premiums qualify as medical expenses under IRS guidelines.

Nothing contained in this article should be considered tax or legal advice. You are strongly encouraged to obtain such advice from your personal tax or legal advisor.

How medical expense deductions work

Qualifying expenses

In order to include a medical expense on your taxes, it must meet all of the following criteria:

• You paid for it in the past calendar year.
• It was for you, your spouse, or a dependent.
• It qualifies as a medical expense according to IRS guidelines.
• It was not paid for by a third party (e.g., an employer or an insurance company).

How much you can deduct

You can only deduct medical expenses that exceed a certain percentage of your adjusted gross income (AGI), according to the IRS. The percentage depends on when you and your spouse were born:

• If you or your spouse were born before January 2, 1950: You can deduct medical expenses that amount to more than 7.5% of your AGI.
• If you and your spouse were born after January 2, 1950: You can deduct medical expenses that amount to more than 10% of your AGI.

“You only get to claim the amount over that threshold,” says Jayson Mullin, CEO of Top Tax Defenders.

Here is an example of how the threshold works: If you are unmarried, born before January 2, 1950, and have an AGI of $50,000, you can deduct only qualifying medical expenses that exceed $3,750 (7.5% of your AGI). So if you had $5,000 in medical expenses, you could deduct only $1,250 of them. If you had less than $3,750 in medical expenses, you would not qualify for the deduction.

Neil Johnson, CPA and partner of The Dolins Group, says most of his clients do not meet the threshold and cannot deduct their medical expenses.

The place to tally your medical expenses for federal taxes is on Schedule A of Form 1040.

You may be able to include medical deductions on your state income tax return, depending on your state’s ruling on itemized deductions, according to Johnson.

Which Medicare costs are deductible?

The IRS says the following premiums and costs may qualify as medical expenses:

• Medicare Part A premiums (in limited situations)
• Medicare Part B premiums
• Medicare Part C premiums (Medicare Advantage)
• Medicare Part D premiums (prescription drug coverage)
• Medicare Supplement insurance premiums
• Other qualifying out-of-pocket medical costs
• Prescribed medicine and drug costs

If your employer, an insurance company, or another third party paid for any of these expenses, you cannot count them as medical expenses for tax purposes.

If you plan on including your Medicare-related costs in your upcoming tax return, Johnson advises that you keep proof of these expenses. You may not have to submit the receipts, but you should keep the receipts for 3 years in case the IRS questions your tax return.

Visit IRS.gov for a full list of qualifying medical expenses.

Medicare premiums

Your Medicare premiums may be included as a medical expense as long as you paid for them yourself. This may include premiums for Medicare Parts A, B, C, and/or D.

You can deduct your Medicare Part A premiums if you voluntarily enrolled in Medicare Part A and you are not covered under Social Security, according to the IRS. Most people do not pay the Medicare Part A premium because they paid the Medicare payroll tax during their working years.

You cannot include the Medicare payroll tax or any premiums paid for by an employer, insurance provider, or other third party.

Medicare Supplement insurance premiums

Medicare Supplement insurance (Medigap) is a private form of medical insurance that helps cover Medicare out-of-pocket costs.

If you are enrolled in an optional Medigap policy, your premiums may qualify as a medical expense, unless your employer or another third party paid for them.

Other out-of-pocket costs

You can include many additional out-of-pocket costs as medical expenses, including medical deductibles, co-payments, and co-insurance, according to Johnson.

IRS guidelines also state that you can include costs for uncovered medical services such as long-term care, dental, and vision. For example, if you see a dentist without dental insurance for a qualifying medical expense, you can include this on your taxes.

Johnson said senior citizens who need daily nursing home care or those without health insurance coverage tend to have more of this type of qualifying medical expense.

Prescribed medicine and drug costs

You can include the cost of insulin and medication prescribed by a doctor in your medical expenses, according to the IRS.

Medicare costs you cannot include

The following are some Medicare-related costs you cannot claim on your tax returns:

• Medicare premiums or services that were paid by an employer, insurance company, or other third party
• Prescription drugs purchased in another country
• Nonprescription medication

The IRS provides a full list of expenses that you cannot include as a medical expense for tax purposes. For more information about tax-deductible Medicare costs, please visit Medicare.gov and IRS.gov.