Are Medicare Advantage Premiums Tax Deductible?

Medicare Premiums

I am often asked by my clients if Medicare Advantage Premiums are tax deductible. The short answer to this question is: maybe.  


Around 90 percent of taxpayers claim the standard deduction, according to The Urban-Brookings Tax Policy Center. However, according to the IRS, you may be able to deduct your Medicare Advantage Premiums under certain circumstances. If the total of your Medicare Advantage Premiums and other medical costs exceeds 7.5 percent of your adjusted gross income (AGI), then you would qualify for an itemized deduction. 


As an example, if your annual AGI is $50,000 your medical expenses would need to exceed $3,750 for the year for you to qualify for itemized deductions. However, it’s important to note that you may only deduct the amount of your total medical expenses that exceed 7.5 percent of your AGI. Another scenario might be that your Medicare Advantage Premiums are $72 per month and you had only a few other small expenses throughout the year. In that case it would not be worth it to itemize your deductions. However, if you have premiums of $72 per month but you also hit your $5,600 maximum for out-of-pocket expenses and had other costs such as a medically necessary stairlift, then it might be wise to look into deducting all of those expenses. 


Here’s a great interactive tool from the Internal Revenue Service to find out if your deductions qualify. 


Keep in mind that even if you do have expenses exceeding 7.5 percent of your AGI or more in itemized medical deductions that would leave you eligible to itemize, the average standardized deduction without itemizing for 2022 was $12,950 for a single person and $25,900 for a married couple filing jointly. Unless your other deductions put you over that threshold it may not be worth it to itemize. 


If you had a higher-than-average medical expense year then it’s always worth talking to a CPA to determine what course of action would bring you the greater benefit. If you need a recommendation on a good CPA, I know several professionals who can work with clients across the country and absolutely love helping people. I am very picky about who I refer my clients to because I want you to have a great experience and be treated with respect.