Can I deduct my FEHB health insurance as a self-employed federal retiree on Line 29 of Form 1040? Can I deduct my Medicare Part B premiums?

[maine379]

I retired from the federal government in 2010 but retained by federal health insurance benefits.

[MichaelDC]

Yes. If you are self-employed and eligible for the self-employed health insurance deduction, you can include your Medicare premiums in your self-employed health insurance deduction. It's a deduction on the front page of the 1040, line 29.  

If you want these premiums to be part of the self-employed health insurance deduction, do not enter your Medicare premiums when entering the information from your SSA-1099 (Social Security Benefits). When you go through the questions for your business expenses, enter those premium expenses for self-employed health insurance premiums.

To add the self-employed health insurance to your return:

·         Type self-employed health insurance deduction in the search bar.

·         Click Jump to self-employed health insurance deduction. See the screenshot below.

·         Continue the onscreen interview until you get to the Enter Your Business Expenses, choose Self-Employed Health Insurance Premiums. See the screenshot below.

(See the attached screenshot below. Click to enlarge.)

 Some extra info:

If you or your spouse could participate (even if you declined coverage) in an employer's health plan at any time during a given month, you can't take the deduction for that month. However, payments for those months are deductible on Schedule A if you itemize deductions.

If you don't have a profit on your Schedule C, you won't get the self-employed health insurance deduction.  Remove your Medicare premiums from your Schedule C and enter them with your Social Security information. TurboTax will transfer the amounts to your Schedule A, medical expenses. 

Unfortunately, you can't include any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included on your 1099-R (retirement Benefits) or Form W-2, Wage and Tax Statement as taxable income. 

Example.

You are a federal employee or retiree participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Your share of the FEHB premium is paid by making a pre-tax reduction in your income. Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you can't claim the premiums paid with that money. 

[maine379]

Thanks for this.  Just to be sure I understand, I am currently getting health insurance through my former employer, the federal government, although the policy is in my name.  Does that make me ineligible to  deduct the premiums from that policy, and my Medicare premiums, on Line 29?  Or doesn't it count as an employer-based health plan, because I am no longer employed by the federal government?  Thanks!

[MichaelDC]

Thanks for clarifying. If the FEHB premiums are paid with after-tax dollars for retirees (which I believe is the case), you premiums will be deductible. The above example sites the case for presently employed workers who have the premiums paid pre-tax.
Regarding the Medicare premiums:
Medicare A
If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. The payroll tax paid for Medicare A is not a medical expense.

If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. In this situation you can include the premiums you paid for Medicare A as a medical expense.

Medicare B
Medicare B is a supplemental medical insurance. Premiums you pay for Medicare B are a medical expense. Check the information you received from the Social Security Administration to find out your premium.

Medicare D
Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. You can include as a medical expense premiums you pay for Medicare

[dpfromva]

I am not sure about this, as FEHB is somewhat analogous to COBRA.  My understanding is that because COBRA continues an employee's existing coverage under a previous employer's plan, someone making COBRA premiums can't deduct them on the front of the tax return as an adjustment to income (line 29 self-employed health insurance deduction), it's restricted to Schedule A as a medical deduction. Any other opinions out there?

[dougreas]

I still have a question about FEHB premiums for fully retired Federal Employee. Do I dare deduct them?

[MaryK4]

Yes, if you paid the premiums with after tax funds, you are entitled to deduct as Medical Expenses if you itemize on Schedule A.  

For more information, please see Topic no. 502, Medical and dental expenses.

@dougreas