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dmlugin
New Member

retiree medical benefit

After retiring, my employer paid retirement pay and I kept my medical insurance at no cost to me.  The employer stopped my medical coverage, but began giving me a monthly stipend to buy (medicare supplement) insurance.  I do not get a 1099 for this medical benefit.  Do I need to report it as income?  If I purchase a medicare supplement plan can I claim that as a deduction and should I reduce that by the amount given to me by my former employer?

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2 Replies
MinhT1
Employee Tax Expert

retiree medical benefit

The amount paid to you by your former employer must be reported as Other Reportable Income.

 

In TurboTax Online, open your return and follow these steps:

  1. Click on Federal in the left-hand column, then on Wages and Income
  2. Locate the Less Common Income section and click on the arrow on the right
  3. Click Start next to Miscellaneous Income at the bottom
  4. On the next page, click Start next to Other Reportable Income.

You can't offset the Medicare insurance premiums you paid against this amount but can deduct these premiums as Medical expenses.

 

You can claim all medical and dental bills, prescription drugs, and health insurance premiums paid out-of-pocket as Medical Expenses in Schedule A - Itemized Deductions

 

For tax year 2023, Medical Expenses are subject to the 7.5% rule and you can only claim the excess over 7.5% of your Adjusted Gross Income.

 

Please note that Itemized Deductions will only benefit your taxes when they exceed your standard deduction.

 

For tax year 2023, standard deductions are:

  • $27,700 for married couples whose filing status is “married filing jointly” and surviving spouses;
  • $13,850 for singles and married couples whose filing status is “married filing separately”; and
  • $20,800 for taxpayers whose filing status is “head of household.”

 

The additional standard deduction for a blind taxpayer—i.e. a taxpayer whose vision is less than 20/200— and for a taxpayer who is age 65 or older at the end of the year is for each instance:

  • $1,500 for married individuals; and
  • $1,850 for singles and heads of household.

 

In TurboTax Online, you can enter Medical expenses by following these steps:

  1. Open your tax return
  2. Click on the down arrow on the right of Federal in the left-hand column, then on Deductions & Credits
  3. Locate the section Medical and click on the arrow on the right 
  4. Click Start next to Medical Expenses.
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retiree medical benefit

Sounds similar to my pension.  The employer reimburses me for the Medicare deduction on my Social Security checks.  It isn't added into the pension amount on my 1099R box 1 or 2.  And I can't deduct it since I'm reimbursed for it.  But most people can't deduct medical anyway. 

 

You can only deduct the amount of unreimbursed Medical Expenses you actually paid over 7.5% of your AGI.  And then all your itemized deductions have to be more than the standard deduction to get any benefit (so you would only be getting the benefit of the amount that puts you over the standard deduction).  And since the Standard Deduction is increased more people will not need to Itemize.

 

For 2023 the standard deduction amounts are:

Single 13,850 + 1,850 or 65 and over or blind

HOH 20,800 + 1,850 for 65 and over or blind

Joint 27,700+ 1,500 for each 65 and over or blind

Married filing Separate 13,850 + 1,500 for 65 and over or blind

 

 

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