Can I deduct Medicare B premiums and other health insurance premiums ?

[DX-hound]

I'm a retired federal employee under the older CSRS retirement system. I did, however, pay into Medicare while I was working.  Since I don't get Social Security, I pay my Medicare B premiums quarterly. I also pay into the Federal Employee Health Benefit Program (FEHBP) for supplementary medical insurance and also pay into a long term care insurance program. I'm now working as a private engineering consultant and file a Schedule C-EZ. 

My question:
Can I deduct any/all of these out-of-pocket insurance premiums based on being self-employed? If so, where and how? A possible kicker....my wife is still working, not yet Medicare age, and I could be covered by her employee health insurance as a spouse (I currently am not and have my own FEHBP self-only plan). But maybe I can still deduct the Medicare Part B and long term care?

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[MichaelDC · Accepted solution]

Normally yes, if you are self-employed and eligible for the self-employed health insurance deduction, you can include your Medicare premiums/FEHBP in your self-employed health insurance deduction. It's a deduction on the front page of the 1040, line 29. By the way, both medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents.

Kicker: You can't deduct the costs of health insurance if you or your spouse were eligible to participate in a subsidized group health plan through an employer. This might be the case if you work a regular job and have your own business on the side, or if your spouse becomes employed and is eligible for family coverage under a group plan. If she takes the job and qualifies for the plan in December, for example, you might have paid for 12 months of health insurance coverage for yourself and your family but you can deduct only 11 months' worth of premiums from January through November because you were eligible for another plan in the last month of the year. 

[DX-hound]

Thanks.   I see this now in Worksheet 6-A on page 20 of IRS pub 535.  Can't take the deduction if you're eligible for coverage under a spouse's plan subsidized by her employer.   Doesn't matter if you're not under the spouse's plan...just have to be eligible under the spouse's plan to kill the self-employment insurance deduction.  Could still tally up the premiums as a medical expense but no chance of meeting the 10% AGI threshold to take a deduction that way.  Oh well.

[MichaelDC]

I think that's the best attitude. Oh well! Good luck! Thanks

[DX-hound]

As they say on TV, "But Wait...There's More."  Carefully reading Worksheet 6-A in IRS pub 535, it's clear in step #1 that I can't deduct my health insurance or Medicare premiums because I'm eligible for coverage under my wife's health insurance.  She's also a federal employee, still working and could include me in a "self plus one" health insurance plan.   BUT ... Step #2 of the worksheet deals with long term care insurance.  It states:

"Do not include payments for any month you were eligible to participate in a long term care insurance plan subsidized by your or your spouse’s employer...."

I have a personal LTC plan under the Federal Long Term Care Program.  This program is NOT subsidized ( I pay the full premiums).   My wife is eligible for her own plan, but it would not be subsidized either.   So it would seem I might be able to deduct my long term care insurance premiums as a self-employed consultant.   Soooo confusing.

[MichaelDC]

According to the law, if neither is subsidized, both would qualify for the Self-Employed HI deduction.

[nolansj]

I've been puzzling over this point, too. The wording in IRS Pub. 535 and elsewhere is ambiguous, but I don't think FEHB insurance premiums are deductible as a business expense even though you are retired and the Federal Government is no longer your "employer." The FEHB program is a "subsidized group health" plan since the feds are still paying about two-thirds of your premium as a retiree. The fact that the FEHB premiums you pay are subsidized rather than fully on you would seem to make them ineligible for the self-employed deduction.

Any else have any thoughts on this?

[11201]

medicare b premium was auto filled, but i paid another premium for a medicare advantage plan. this premium will not affect my standard deduction but will affect my property tax credit in michigan.

also my taxes were done for 2019 through aarp tax service. the additional health insurance premium was included for a property tax credit and also included personal protection insurance of $220 for two vehicles through my auto insurance in michigan.

where can i enter this information

[DaveF1006]

After checking in this program, the property tax credit you are referring to is the Homestead Property Tax Credit. When you prepare your Michigan State return, it will address this credit. The only entry you need to make is the amount of property tax you paid during the year.  It does not address insurance premiums either health or auto.