Paying Medicare Part B and D premiums does not reduce the taxable amount of Social Security on Form 1040 line 20b. Instead, TurboTax treats the premiums as potentially deductible on Schedule A line 1. However, when you enter the 2017 Form 1099-SA reporting your reimbursement and indicate that the entire amount was used for medical expenses, TurboTax automatically subtracts the Form 1099-SA box 1 amount from the amount that would otherwise be reported on Schedule A line 1.
If your HSA distribution was made in 2018 to reimburse yourself for 2017 premiums, things are a bit more complicated. If you end up using the standard deduction or your total medical payments end up being less than 7.5% of AGI despite the payment of Part B and Part D premiums, you won't have to do anything special since you aren't getting any deduction for the premium payments. However, if you do end up with a nonzero Schedule A line 4, you'll need to enter zeros on TurboTax's SSA-1099 form for your Medicare Part B and D premiums. If the Form SSA-1099 shows no tax withholding you can probably e-file this way. If your Form SSA-1099 does show tax withholding, you'll need to mail your tax return with copy of your SSA-1099 attached, otherwise your e-filing will include incorrect Form SSA-1099 details. Next year when you file the 2018 Form 1099-SA, if you'll end up with deductible medical expenses (less likely now with the higher standard deduction for 2018) you'll need to artificially inflate your 2018 medical expenses to offset TurboTax's automatic subtraction of the Form 1099-SA box 1 amount applied against the 2017 Part B and D premiums.
