Everyone is looking for appropriate tax deductions these days, including Medicare beneficiaries. Many patients question whether or not Medicare supplement insurance payments are tax deductible.
Medicare Supplement Insurance, also known as Medigap, is provided to help cover the healthcare costs that Medicare Part A and Medicare Part B do not reimburse. These supplemental insurance plans, listed as A through L, are governed by laws which detail the plan provisions and regulate them between policies. Each lettered Medigap policy provides its own benefits and restrictions.
The cost of Medigap premiums is legally deductible. It is considered a medical expense and falls under the normal guidelines for this type of tax deduction. Medical expenses are deductible only if the taxpayer itemizes, and not all expenses can be applied to the deduction. Only the sum of the expenses that surpass 7.5% of the taxpayer’s adjusted gross income (AGI) is applicable. However, since Medicare beneficiaries are generally retired, their AGI may be relatively low compared to that of younger taxpayers who work fulltime.
Medicare Supplement Insurance is not a family plan. It does not provide coverage for a spouse, so each married partner must have his or her own policy. However, the deducted premiums may be combined if the couple files their return jointly. Both spouses must itemize in order to claim the deduction.
Medicare Supplement Insurance can offer some amount tax relief if the beneficiary chooses to itemize medical expense deductions. The tax code now includes a variety of provisions that act to benefit taxpayers of advanced age. Tax deductions for Medicare supplement premiums are one more advantage to growing older.