Is Health Insurance Tax Deductible?

When tax season rolls around, you only want to pay what is absolutely necessary. While you’re trying to figure out what you can deduct from your taxes, there’s a lot that can be considered. Premiums on health insurance are one of them. Which brings us to an important question: Is health insurance tax deductible.

Like all things related to insurance and taxes, the answer is: “it depends”. In some cases, health insurance premiums are tax deductible, and in others, they aren’t. It comes down to what type of coverage you have.

Before you file your taxes, let’s take a look to find out if your health insurance can help you get more money back.

When is Health Insurance Tax Deductible?

health insurance tax deductibleAs mentioned, there are cases when you can deduct your health insurance premiums from your taxes; but when are they tax deductible? – When you pay for them on your own, without anyone else’s assistance.

Below, we outline the three most common situations that would permit you to claim the premiums on your health insurance as a tax deduction:

  1. When you’re self-employed. Individuals who are self-employed may be able to deduct the cost of their health insurance premiums from their taxes, for themselves, their spouses, and their children. However, there is a caveat: your adjusted income can’t exceed the amount that you earned. If you are self-employed and you are going to deduct your health insurance premiums, you can do so on Form 1040.
  2. When you paid for premiums with post-tax money. If you paid for all of your health insurance yourself or you paid for a portion of it, then you might be able to deduct your premiums. Why? – Because the money you used to pay for your coverage is included in your adjusted gross income. In this situation, you would have to include your health care premiums on the Wage and Tax Statement, form W-2.
  3. You are covered by Medicare. If you are covered by Medicare part A, B, or C, your healthcare coverage may be tax deductible, if any of the following situations apply to you:
    • Medicare Part A. Under Medicare Part A, premiums can be considered a tax deductible medical expense if you if you did not pay a Medicare tax as an employee of the government, or you are not covered by Social Security.
    • Medicare Part B. Premiums are considered a medical expense under Medicare Part B. to find out what your premiums are, check with the Social Security Administration.
    • Medicare Part C. If you are covered by Medicare Part D, than premiums are considered a medical expense and are tax deductible.

When is Health Insurance Not Tax Deductible?

If any of the following apply to you, your health insurance premiums are not tax deductible:

  • Your premiums are paid for entirely by the government or your employer.
  • You are covered by your employer and the portion of the premiums you pay are deducted from your pay.
  • You have purchased health insurance through an insurance marketplace that is either state- or federally-run; only the portion of your premiums that you pay out of your own pocked are tax deductible, not the entire amount.
  • The total cost of your medical expenses, including your premiums, do not exceed 7.5 percent of your adjusted gross income.

Are Any Other Medical Expenses Tax Deductible?

Besides health insurance premiums, a lot of medical expenses are tax deductible; however, those things that can be deducted do change, so make sure you find out what items can and cannot be deducted before you file each year.

In 2017, medical expenses that qualify as tax deductions include:

  • Bandages
  • Breast pumps and the supplies that are associated with them
  • Acupuncture
  • Crutches
  • Eye exams
  • Contact lenses
  • Hearing aids
  • Lab fees
  • Medical conferences
  • Long-term care
  • Meals that are purchased or served while receiving medical care (during a hospital stay, for example)
  • Nursing services
  • Nursing home care
  • Surgery
  • Therapy
  • Vasectomy
  • Wheelchairs
  • X-rays
  • Weight-loss programs
  • Wigs
  • Medical transportation

These are just some of the items that are tax deductible for the 2017 calendar year. To find out more items that qualify, and to learn more about the rules and regulations regarding tax deductions for medical expenses, speak to a reputable tax professional.

The Bottom Line

Health care can be a very big expense. In some situations, the premiums you pay for coverage, as well as many other medical expenses, are tax deductible. If your health insurance premiums and other medical expenses are tax deductible, you could end up saving a notable amount of money on your taxes. Do make sure to speak to a tax professional to learn more.

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