Can a retiree with a civil service retirement (CSR not FERS) pension take a medical expense deduction for FEHB health insurance premiums deducted from the monthly benefit? FEHB means Federal Employee Health Benefits but retirees can also have FEHB policies subsidized but not fully paid for by the government.
I m not tax expert. My explanation should not be relied on unless you find an expert who agrees.,
CSA 1099-R is definitely confusing. The language of Box 5 suggests it is related to calculating the taxable amount in Box 2a. That is not correct. This long-winded answer It is based primarily on the information sheet from OPM that comes with the CSA 1099-R.
The taxable amount in Box 2a is determined by subtracting from the gross distribution (Box 2) a portion of the basis shown in Box 9b.
For almost all employees who retired after November 18, 1996, OPM uses the simplified method to calculate an amount of non-taxable basis that is subtracted from the gross distribution (Box 2) to produce the taxable amount (Box 2a). (I don't know for sure whether the payroll deductions were income-taxed originally, but the subtraction suggests they were.)
For other retirees, the taxable amount box will usually show "Unknown."
The upshot is that Box 5 shows things other than the amount of basis subtracted from the gross distribution (Box 2) to produce the taxable amount in Box 2a.
"Employee contributions" in Box 5 are voluntary contributions made in addition to required deductions or payments. If you do not have those voluntary contributions or Designated ROTH contributions, then the amount in Box 5 is insurance premiums paid from your annuity. FEHB health insurance premiums are not deducted from your annuity to reduce your taxable amount.
I think this means they are taxed and should be available as a medical expense deduction. If I remember correctly, the question or statement in TurboTax says you cannot deduct pre-tax premium payments. In this regard, other rules also confuse the issue. FEHB health insurance premiums paid from your salary while still employed by the federal government are pre-tax payments. That rule does not apply after retirement except for a few categories of federal retirees.
