Can I deduct my health insurance premiums on my taxes?
Yes, in certain circumstances, you can deduct your health insurance premiums as part of your overall medical expenses. Your total medical expenses, including premiums, must surpass 7.5 percent of your adjusted gross income to be deductible.
The IRS allows you to deduct qualified medical expenses that exceed 7.5% of your adjusted gross income for 2017 and 2018. Beginning Jan. 1, 2019, all taxpayers may deduct only the amount of the total unreimbursed allowable medical care expenses for the year that exceeds 10% of their adjusted gross income.
- The IRS allows you to deduct preventative care, treatment, surgeries and dental and vision care as qualifying medical expenses. You can also deduct visits to psychologists and psychiatrists. Prescription medications and appliances such as glasses, contacts, false teeth and hearing aids are also deductible.
- If you do itemize, only the portion of your total medical expenses that exceed 7.5% of your adjusted gross income are deductible. Meals are not deductible as a medical expense deduction. even when travelling. There is no additional provision to deduct meals when travelling for medical care outside of a hospital.
- If the resident is in the assisted living facility for custodial and not medical care, the costs are deductible only to a limited extent. Residents who are not chronically ill may still deduct the portion of their expenses that are attributable to medical care, including entrance or initiation fees.
Most premiums are paid with pre-tax dollars, which means they are deducted from your wages before taxes are applied. Deducting them again as a medical expense would be "double-dipping." You can only deduct the premiums if your employer included them in Box 1 (Gross Wages) of your W-2.
- However, the money you paid out of your own pocket for your premiums might be tax deductible. You can't take a deduction for health insurance you paid for with pre-tax money. If you have insurance through your employer, the premiums you pay are usually taken out of your paycheck before your income taxes are calculated.
- Self-employed people who qualify are allowed to deduct 100% of their health insurance premiums (including dental and long-term care coverage) for themselves, their spouses, and their dependents. This deduction applies only to your federal, state, and local income taxes, not to your self-employment taxes.
- Pretax Insurance Premiums. Many employers offer group insurance plans to employees at reduced rates. The majority of these plans are set-up as pretax deductions. If you elect coverage under your employer's plan, your premium is deducted from your gross pay before tax is calculated on your earnings.
However, the money you paid out of your own pocket for your premiums might be tax deductible. You can't take a deduction for health insurance you paid for with pre-tax money. Also note, you cannot deduct health insurance unless you itemize your tax deductions or you are self-employed.
- If you're able to claim your health insurance as a medical expense deduction, you can only deduct medical expenses that exceed 10% of your adjusted gross income.
- If you file a claim and it is covered, the deductible is subtracted from the amount claimed. For example, say you have a $500 deductible and you file a claim for $10,000. Your insurance company would pay you $9,500 for that claim.
- Losses resulting from disasters such as hurricanes, floods, blizzards, tornadoes and earthquakes (but not accidents or deterioration) are deductible if they are not reimbursed by insurance. However, if the property is insured and you don't file a claim, you can't take a deduction.
Updated: 28th November 2019