Can You Deduct a Medicare Premium as Self-Employed Health Insurance on a 1040?
The IRS allows self-employed individuals certain deductions for their health care costs. If you are a self-employed individual eligible for Medicare, you may wonder whether your premiums qualify for a deduction.
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Two Types of Deductions
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All taxpayers may take deductions for medical expenses totaling more than 7.5 percent of their adjusted gross income. In addition, self-employed individuals may take a deduction for basic health insurance premiums without itemizing other deductions.
Eligible Insurance Plans
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The IRS only allows self-employed people to deduct insurance premiums on plans that are completely independent of any subsidy, that is, partial financing by either the government or an employer. Since Medicare is subsidized by the federal government, the premiums are not deductible for you as a self-employed person.
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Itemized Medical Deductions
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Individuals who choose to itemize rather than take the standard deduction on their 1040 can include Medicare Part B and D premiums along with other eligible medical expenses to reach the 7.5 percent of AGI threshold. Other qualified medical expenses include vision and dental care; hospital stays and various forms of therapy, including smoking cessation programs and weight loss programs. IRS Publication 502 lists these eligible expenses in detail.
State Deductions
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Some states do allow self-employed individuals to deduct Medicare premiums as part of their health insurance under certain circumstances. Check with your local tax agency or speak to an accountant or professional tax preparer for more information about state-based options.
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