Is Medical Insurance Tax Deductible?

Is Medical Insurance Tax Deductible – Overview

Is medical insurance tax deductible? This is the most common question individuals ask when filing their income tax returns. Many of them do not know whether their healthcare insurance premiums are tax deductible or not. If you are wondering about the same, this guide will help you.

Well, tax deductions of healthcare insurance policies are based on various factors. There is no specific answer to your as different people have different health insurance policies.

Factors That Affect Tax Deduction of Medical Insurance

Many factors could affect the tax deduction of your healthcare insurance premiums. Some health insurance policies allow you to go for the tax deduction and some do not.

  • How do you get your coverage
  • How much insurance did you pay in the last financial year
  • How much money did you spend on medical services
  • Are you self-employed or government-employed
  • Your source of income
Is Medical Insurance Tax Deductible

Factors That Affect Tax Deduction of Medical Insurance

Tax deductibles are different for self-employed people and others. Likewise, some other factors also affect it. Let’s decode this confusion to know whether my medical insurance is tax deductible!

To give you in-depth information about the relationship between medical insurance and tax deduction, we have categorized two types of health insurance: tax-deductible and non-tax-deductible. Let’s collect some more information about both types.

Health Insurance Premiums That Are Tax Deductibles

Any expenses you pay out of your pocket for health-related policies and services and medical services are considered tax deductibles. If you pay your health insurance premiums from your pocket, these premiums are liable for a tax deduction.

You can claim a tax deduction for such expenses while filing income tax returns.

You can claim a tax deduction for such premiums for yourself, your spouse, and other dependents. If you have purchased Medical Insurance through COBRA, it is also tax deductible.

Premiums for Medicare Part B and Part D are generally considered tax-deductible as medical expenses as long as you itemize your deductions and your total medical expenses exceed 7.5% of your AGI. If you are not enrolled in the government’s Medicare Program, then the premiums you pay out of your pockets for any other health insurance policies, are considered tax-deductible premiums.

For tax years beginning after 2012, you can deduct only the portion of your medical and dental expenses that exceeds 7.5% of your adjusted gross income (AGI), regardless of whether you are self-employed. The 7.5% threshold applies to all taxpayers.

What Types of Health Insurance Premiums Are Not Tax Deductible?

As noted above, many private entities offer health insurance coverage to citizens who are not eligible for Medicare or Medicaid. Those enrolled for such policies must understand the basics of health insurance premiums and tax deductions.

Not all health insurance premiums are tax deductibles. Suppose the health insurance premiums paid by your employer before filing the taxes are not tax deductible since you didn’t pay for it.

Medicare Part A premiums can be tax-deductible if you are not covered under Social Security and pay premiums out-of-pocket. This deduction is subject to the same conditions as other medical expenses, where the total exceeds 7.5% of your AGI.

If you are paying your premiums through a subsidy from the government or any other organization, you can’t get a tax deduction for such premiums as they are not paid out of your pocket.

What Medical Expenses Are Tax Deductible?

Did you know some medical expenses are tax deductible under the federal income tax law? Many of you might not aware of the tax deduction on medical expenses directly. You can claim a tax deduction for the below-listed medical expenses besides health insurance premiums paid from your pocket.

  • Dental insurance premiums
  • Vision insurance premiums
  • Payments for doctors, psychiatrists, psychologists, chiropractors, etc.
  • Hospital care for inpatient
  • If the person is in a nursing home or taking medical treatments at home.
  • Treatments for drug or alcohol addiction.
  • Weight loss programs under certified doctors.
  • Prescribed drugs and insulins.
  • Transportation to the hospital or any other healthcare provider’s clinics.
  • Preventative dental care and other dental treatments

You can file for a tax deduction if you have paid any of the above medical or healthcare expenses out of your pocket even if you do not have a health insurance policy.

You can deduct the portion of your total medical expenses, including premiums, that exceeds 7.5% of your AGI if you itemize deductions on your federal income tax return. You can’t claim a tax deduction if the medical expenses are paid by some organization or your employer.

This type of deduction is good for those with chronic illness as they have to spend money regularly for medicines, x-rays, check-ups, transportation, and many other expenses. It is not ideal for those who visit the hospital only once a year.

Now you know what types of medical expenses are tax deductible. But which are other medical expenses that are not tax deductibles? Let’s find out the answers.

Types of Medical Expenses That Are Not Tax Deductible

You can’t claim a tax deduction if you have paid for the following treatments or surgeries:

  • Cost of cosmetic surgeries
  • Over-the-counter (OTC) drugs (except insulin) are not tax-deductible unless prescribed by a doctor
  • Cost for general health improvement programs such as yoga, gym, aerobics, etc.
  • Nicotine gum and other patches bought without doctor’s prescriptions
  • The cost of medical equipment or supplies is deductible only if prescribed by a doctor as necessary to treat a medical condition

These are some medical expenses that a person cannot claim for deduction under the income tax laws of the US government.

The Bottom Line:

Now, you know what types of health insurance policies, premiums, and medical expenses are liable for a tax deduction and what are not! The money you spend for anything from your pocket is liable for a tax deduction, but not 100% of it.

Some medical expenses are completely ignored here as you spend money on unnecessary things without a doctor’s prescription.

The law even allows you to get tax deductions on supplemental health insurance and COBRA health insurance. Contributions to a Health Savings Account (HSA) are tax-deductible. Still, the deduction is for contributions made to the HSA, not for health insurance premiums, unless those premiums are for long-term care insurance, health care continuation coverage (such as COBRA), or health care coverage while receiving unemployment compensation.

See Also

Are Medical Expenses Tax Deductible?

Are Copays Tax Deductible?

Are Medical Bills Tax Deductible?

IDA Grant Program

Root Canal Cost Without Insurance

Can You Go to Jail for Not Paying Medical Bills?

States With Highest Medical Debt

Current Version
November 10, 2022
Written By
Shubham Grover
March 17, 2024
Updated By

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