I’m self-employed. Can we deduct my husband’s Medicare premiums?

Q. I am self-employed and my husband is on Medicare. I deduct my health care premiums on my income tax. I recently heard that I also can deduct his Medicare Part A, Part B, Part C and Part D premiums. Is this really true?

A. Yes. In 2012, the IRS ruled that Medicare insurance premiums can be counted. Under the ruling, Medicare premiums covering the self-employed individual – as well as his or her spouse, dependents, and under-age-27 children – are deductible.

Prior to 2010, no Medicare premiums were deductible under the self-employment health insurance deduction. From 2010 to 2012, only Part B premiums were deductible. But starting in 2012, premiums for Medicare A, B, C, and D became deductible under the self-employment health insurance deduction.

The IRS rules for the self-employed health insurance deduction clarify that

Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer can’t be used to figure the deduction.

The deduction cannot exceed the self-employed person’s earned income – after expenses. For example, if you have net Schedule E income of only $10,000, your deduction cannot exceed $10,000. And the self-employed health insurance deduction is not allowed at all if employer-subsidized coverage is available (see Worksheet 6-A in Publication 535).

Read more FAQs about self-employed health insurance.

This information is provided as background only. As with any issue related to your taxes, you should seek advice from a tax professional if you have questions about your specific circumstances.

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I was told I could not deduct my spouse’s Medicare Premiums under the self employed health deduction because the policy is not in my name or the name of my business.

We recommend that you reach out to a tax adviser or the IRS for advice with your specific situation. But just in case your business is established as an S-Corp: In order to deduct premiums (Medicare or otherwise), the S-Corp either has to pay them directly or reimburse you for them and add the amount to your W2. If that’s how your business is set up, it’s possible that’s causing the confusion. Here are the specifics from the IRS: https://www.irs.gov/pub/irs-wd/1228037.pdf