As a taxpayer, one of the most overlooked areas when it comes to tax deductions is medical insurance. Many people miss out on significant savings by not taking full advantage of the medical deductions available to them. By understanding which medical insurance premiums can be deducted, you can significantly reduce your taxable income and ensure that you are getting the most out of your tax filing.
In this blog post, we’ll guide you through the key medical insurance deductions that could be overlooked, helping you keep more of your hard-earned money. Whether you’re paying for long-term care, dental, or travel medical insurance, these premiums may qualify for deductions. Let’s dive into the potential savings!
1. Long-Term Care Insurance Premiums
If you’re paying for long-term care insurance, you may be eligible to deduct your premiums from your taxable income. The IRS allows deductions for long-term care insurance premiums, but the amount you can deduct depends on your age. The deduction is based on an age-based maximum, which increases as you get older. If you haven’t been factoring this into your deductions, it’s time to start.
Tip: Keep in mind that premiums for policies covering long-term care costs (such as nursing home care or home health care) are considered eligible deductions if they meet certain criteria.
2. Affordable Care Act (ACA) Marketplace Premiums
For those who purchase insurance through the ACA marketplace, the premiums you pay may be deductible. However, you’ll need to account for the advance premium tax credit (APTC) received. You can only deduct the amount you paid for premiums after the APTC is subtracted.
Additionally, if you had to pay back any portion of the APTC in the year of repayment, that amount can also be deducted from your taxable income.
Tip: Keep accurate records of your marketplace premiums and any payback to ensure you are claiming the full benefit.
3. Employee-Paid Costs for Employer Group Coverage
If you are part of a group health insurance plan through your employer, the portion of premiums you pay out of your own pocket may qualify for a tax deduction. Many employees overlook this benefit, but it’s an important deduction that can help lower your tax liability.
Even if your employer covers part of the premium, the portion you pay—whether through payroll deductions or directly—can often be deducted from your taxable income.
4. Medicare Premiums
For retirees and individuals over 65, Medicare premiums are another area where you could save on taxes. Medicare has several parts: Part B (medical insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage). The premiums for each of these plans are generally deductible, including those paid through automatic deductions from Social Security benefits.
Additionally, if you have a Medicare supplemental plan (often called Medigap), the premiums for this type of insurance are also eligible for a deduction.
Tip: Be sure to track all your Medicare-related premiums, as they can add up to significant savings come tax time.
5. Dental Insurance Premiums
While most people are aware of health insurance deductions, many overlook dental insurance premiums. If you’re paying for a separate dental insurance policy, those premiums may also qualify for a tax deduction. Whether you’re paying for routine cleanings, fillings, or other dental work, the premiums you pay to cover these costs can help reduce your taxable income.
Tip: If you pay for both health and dental coverage separately, you can claim deductions for both types of premiums.
6. Vision Insurance Premiums
Similar to dental insurance, vision insurance premiums are also often forgotten when tax season rolls around. If you have a vision insurance policy, the premiums you pay for eye exams, glasses, contact lenses, and other related services could be eligible for deductions.
For many people, these premiums can add up to a considerable amount, and claiming them as deductions can help reduce your tax bill.
7. Lost or Damaged Contact Lenses Coverage Premiums
Did you know that coverage for lost or damaged contact lenses could be deductible? If your insurance covers the replacement of contact lenses that were lost or damaged, this could qualify as an eligible deduction. While it’s not a common consideration, every little bit counts when it comes to reducing taxable income.
8. Travel Medical Insurance Premiums
If you’ve traveled abroad and paid for travel medical insurance, those premiums may also be deductible. Travel medical insurance is particularly helpful for international travelers who want coverage for unexpected medical issues. While these premiums may not be something you think of right away, they are eligible deductions if you meet the necessary criteria.
How to Claim These Deductions
To claim medical insurance deductions, you’ll need to itemize your deductions on your tax return. This means you’ll have to fill out Schedule A (Form 1040) to list your deductions. It’s important to keep accurate records of all premiums paid, as you’ll need to provide documentation in case of an audit.
Tip: Only the portion of medical expenses that exceed 7.5% of your adjusted gross income (AGI) for 2024 can be deducted, so be sure to check your AGI before filing.
Watch Our Video on Medical Insurance Deductions
To make sure you don’t miss any of these valuable deductions, check out our video below. It breaks down the different types of medical insurance premiums you may be able to deduct, and offers some tips on how to maximize your savings. [Insert video here]
Conclusion
Medical insurance deductions can have a significant impact on your tax savings, but many people overlook them. By taking advantage of the various premiums you’re paying for long-term care, Medicare, dental, vision, and other medical-related insurance, you can reduce your taxable income and lower your tax bill.
Make sure you review your medical insurance premiums carefully this tax season and consult with a tax professional to ensure you’re claiming every deduction you’re entitled to. Don’t leave money on the table—maximize your tax savings by taking advantage of these medical insurance deductions.
If you have any questions or need assistance with your taxes, feel free to reach out to our office. We’re here to help!
