This article is reprinted by permission from NerdWallet.
If you itemize deductions on your income taxes, Medicare costs, such as premiums and copayments, may be deductible.
Your unreimbursed medical and dental expenses, including premiums, deductibles, copayments and other Medicare expenses, may be deductible to the extent that they exceed 7.5% of your adjusted gross income. Premiums for Medicare Part B and Part D generally are deductible; Part A premiums are deductible under restricted circumstances.
Other health care expenses may be deductible
Medicare recipients may incur a variety of medical expenses that their insurance does not cover, from long-term care to lodging during a trip to receive medical care. Some of these expenses may be tax deductible, within limits.
Read: How to pay for healthcare costs in retirement
There are limits on the deductibility of long-term care insurance premiums. For tax year 2020, the maximum tax deduction for long-term care premiums for people ages 61 to 70 is $4,350 per person; for age 71 and up, the limit is $5,430.
Also see: We have $1.6 million but most is locked in our 401(k) plans — how can we retire early without paying so much in taxes?
A Medicare Medical Savings Account can save on taxes
You can use a Medicare Medical Savings Account only if you have a high-deductible Medicare Advantage plan, which most people don’t. The money you deposit into an MSA (and any interest you get) isn’t taxed if you spend it on qualified medical expenses.
Even if you do have such a plan, a Medicare MSA makes sense only if you’re very healthy and you’re able to pay the full deductible and any other out-of-pocket costs if a surprise medical expense comes along.
Consider seeking professional tax advice
As with much of tax law, deductions for Medicare and other health care expenses are complicated. IRS Publication 502 offers details on medical expense deductions, but it’s a lot to digest.
Also see: Trying to find the most tax-friendly place to retire? It’s not so simple
You also need to determine whether itemizing deductibles is your best overall tax strategy. So it’s best to consult with a tax professional before claiming any deductions.
More From NerdWallet
John Rossheim writes for NerdWallet. Email: [email protected].
