Retiring without having to think about where to get money can take a lot of planning before retirement. You can cut some of your expenses. Unfortunately, you can’t cut the cost of your health care. As you age, your health care needs go up. You can offset the high health care cost by taking advantage of tax deductions. Are health insurance premiums tax deductible for retirees?
Can Health Insurance Premiums Help You Save Money? Are Health Insurance Premiums Tax Deductible for Retirees?
You can only deduct your medical and dental experts that go above 7.5% of your adjusted gross income. Unfortunately, if your income was low before you retired, the deduction might not be significant.
However, if you did make money during your retirement, you can reduce your tax liability through the medical deduction.
In addition to the medical expenses, you can reduce the cost of your health care insurance premiums, as well as your payments to Medicare and long-term care insurance premiums.
In other words, health insurance premiums that you pay out of pocket will be tax-deductible.
The premiums for instance that you bought through COBRA can also be deducted.
Furthermore, all medically necessary treatment costs are considered tax-deductible.
For that reason, you could deduct the cost of any medical device if your doctor prescribed it for you. You could also deduct the cost of your travel expenses if you need to go somewhere for medical treatments.
Read: Work Perks for Starbucks
Other Costs That You Could Deduct
There are a few medical costs that are tax-deductible but not covered by a health insurance plan. For instance, you can deduct your contact lenses, dentures, prosthetic lips, or extra pair of glasses.
And if you need to undergo laser vision corrective surgery, you can also deduct it.
You can also deduct the cost of home improvements if they are done to accommodate a physical illness or disability.
These improvements can be installing ramps, entrances, wheelchair lifts, and railings. However, installing an elevator isn’t necessarily tax-deductible as it adds value to the house even if it is useful for those with a disability.
Although there are medical costs that are not part of your health insurance but are still deductible, there are medical costs that you can’t deduct.
For instance, if you need to buy medical drugs that your doctor didn’t prescribe, the cost of those drugs isn’t tax-deductible. Furthermore, cosmetic treatments can’t be deducted.
Read: What is Indemnity Insurance?
How About Supplements?
If they are prescribed by your doctor, you may deduct their cost. However, it’s a rare occurrence.
Read: Health Insurance in the UK
Filing Taxes for Deductions
Itemizing your deductions is necessary before you can claim a health care deduction. Because you can’t use the standard deduction, the total amount of the itemized deductions must be greater than the standard deduction. If they are lower than that, then you may need to pay more in taxes.
To exceed the amount of standard deduction, you would have to include other costs that are not part of your health care. These would include mortgage interest.
It’s important to itemize your health care costs to help you lower your medical costs. You may opt for a flexible spending account or set up a health savings account as they provide tax advantages. In that case, they can reduce the overall cost of your healthcare.
Speak Now ... Or Forever Hold Your Peace