Key takeaways:
Medicare expenses that exceed 7.5% of your adjusted gross income may be tax deductible.
Only expenses that are considered allowable by the IRS, such as Medicare premiums and annual physical exams, can be deducted.
Keep your receipts and plan ahead to maximize your tax deductions.
Many Americans are eager to identify deductions that could potentially lower their tax bill. If you’re a Medicare enrollee who meets certain conditions, you may be eligible to deduct some of your expenses — including Medicare premiums — for the year.
Keep track of your medical receipts to increase your chances of claiming a tax deduction. You’ll need proof to verify every eligible expense that you report on your tax return.
To get a headstart on tax planning, here are tips to keep in mind about deducting Medicare expenses.
What Medicare tax deductions can you take each year?
Surprisingly, the IRS’ list of Medicare expenses that are allowable for deductions is fairly comprehensive. For example, many of the costs associated with the diagnosis or treatment of an illness or injury are considered “allowable.” This includes everything from preventative care and medical equipment to transportation to obtain healthcare services. That’s right: You can deduct your mileage, taxi fare, or Uber ride to your healthcare appointments.
You can find a long list of eligible expenses on the IRS website. Here are just a few popular services that are considered allowable expenses as a Medicare enrollee:
Acupuncture
Ambulance services
Annual physical exam
Artificial teeth
Chiropractic services
Contact lenses
Dental services
Eye exams and eyeglasses
Guide dogs and other service animals
Hearing aids
Home care and nursing services
Laboratory fees
Eligible long-term care health insurance premiums
Oxygen
Psychiatric care, psychoanalysis, and psychological care
Personal protective equipment, such as hand sanitizer and sanitizing wipes
Therapy
Vasectomy
Wheelchairs
Wig, if it’s medically necessary
X-ray services
Long-term care insurance premiums may be deducted — up to an annual limit — based on the insured person’s age. For example, if you are 40 and under, you can take a maximum deduction of $480 as a medical expense for the 2023 tax year. But if you’re 71 or older, you can deduct a maximum of $5,960 on your tax return if you itemize deductions. It’s also important to confirm that you have a “qualified” long-term care insurance policy before claiming the deduction.
So, does that mean Medicare premiums are tax deductible?
Yes. Any deductibles or copayments you pay to receive Medicare-covered services are considered allowable. Out-of-pocket costs you pay for prescription drugs while in the Part D donut hole are also eligible for deduction. Additionally, you may deduct any expenses that you pay out of pocket to get care not covered under Medicare. This includes the costs for routine checkups, dental care, nursing home treatment, and equipment deemed “medically necessary.”
Generally, premiums you pay for Medicare Part B, Part D, and Medicare supplement plans are considered “allowable.” Most Medicare enrollees do not pay a premium for Medicare Part A if they paid Medicare taxes for 40 qualifying quarters (10 years) during their working years. But for those who do pay Medicare Part A premiums, you can add these costs to your deduction amounts.
Are Medicare Part B premiums taken from Social Security tax deductible?
Typically, Medicare Part B premiums are automatically deducted from your monthly Social Security benefits. These premiums can cover outpatient hospital services, doctor visits, and certain types of medical equipment.
Health insurance premiums such as the Part B premiums deducted from your Social Security benefits are considered “allowable” expenses and can help you reduce your tax liability. To qualify for the Medicare Part B premium tax deduction, you must itemize your expenses on your tax return.
How do you qualify for Medicare tax deductions?
To qualify for a Medicare tax deduction, most people must itemize instead of taking the standard deduction. Qualified medical expenses (including premiums) that exceed 7.5% of your adjusted gross income (AGI) will be eligible for the tax deduction. If you’re self-employed, you may qualify to deduct Medicare insurance premiums even if you don’t itemize deductions.
How do income limits work for Medicare tax deductions?
The IRS establishes guidelines to determine if you are eligible to deduct your Medicare expenses. First, your qualified medical expenses must exceed 7.5% of your AGI. Tally up the costs of all your unreimbursed Medicare and other health or dental expenses to determine if you’ve spent enough money to qualify for the deduction.
For example: Let’s say your AGI is $40,000, and your total out-of-pocket Medicare expenses during the year are $4,500. Because of the 7.5% threshold, you’ll be able to deduct expenses beyond the first $3,000. Your total deduction on your tax return would be $1,500.
To claim the medical expense deduction, you have to itemize deductions on Schedule A of your tax return. It makes sense to itemize if your total expenses exceed the standard deduction amount you would claim for the year.
What expenses are not eligible for a Medicare tax deduction?
The IRS provides an exhaustive list of medical expenses that are considered tax deductible. However, you should be aware of costs that aren’t deductible. For example, Medicare expenses that are reimbursable are not eligible for a tax deduction.
Late penalties on Part B or Part D premiums are not eligible to be deducted, either. Generally, you also can't deduct prescription medications purchased and consumed abroad unless the medication is legal in the other country and the U.S.
Nonprescription medications — like supplements or vitamins — are not usually considered allowable unless specifically recommended to you by your doctor to treat a particular medical condition.
Other expenses that are not considered allowable for tax deduction:
Babysitting or childcare
Cosmetic surgery
Electrolysis, or hair removal
Funeral expenses
Gym membership
Health spa expenses
Hair transplants
Life insurance premiums (unless you qualify for an exception)
Personal use items (toothbrushes, floss, toilet paper, etc.)
Teeth whitening
Veterinary fees
Does having supplemental insurance affect which Medicare tax deductions you can make?
Medicare supplemental insurance — also known as Medigap — comes in handy when you have high out-of-pocket costs. This extra coverage can pay for the cost of deductibles, coinsurance, and copays that original Medicare (Parts A and B) doesn’t cover. All eligible supplemental insurance deductions must exceed 7.5% of your AGI to qualify as a Medicare deduction on your tax return.
What records should you keep for your Medicare tax deductions?
Keep track of your receipts if you want to maximize your deductions. Make note of what every medical or dental expense is for to determine if it’s a qualified expense.
Also, maintain records for all of your Medicare premiums so you can identify the appropriate deductions to take. The more organized you are during the year, the easier it will be to calculate eligible expenses on your tax return. For further guidance, consult with a tax professional.
The bottom line
Deducting Medicare expenses on your tax return can help you save money. Make sure you keep track of your expenses and maintain your receipts throughout the year. This will help you determine if it makes sense to itemize deductions or take the standard deduction. Medicare expenses can rack up, so it’s important to plan ahead and maximize every savings opportunity that comes your way.
Why trust our experts?
Written by:
Charlene Rhinehart, CPA
Charlene Rhinehart, CPA, is a personal finance editor at GoodRx. She has been a certified public accountant for over a decade.
Our editorial standards
Meet our experts
References
Internal Revenue ServiceSchedule A
Internal Revenue Service. (2023). Definition of adjusted gross income.
View All References (1)
expand_more
GoodRx Health has strict sourcing policies and relies on primary sources such as medical organizations, governmental agencies, academic institutions, and peer-reviewed scientific journals. Learn more about how we ensure our content is accurate, thorough, and unbiased by reading our editorial guidelines.
Was this page helpful?
Subscribe and save.
Get prescription saving tips and more from GoodRx Health. Enter your email to sign up.
