Come spring, taxpayers are squinting at every little thing to try and determine its worth as a deduction. What about health insurance premiums? Might they be deductible?
Per IRS Publication 502 (2021), “Don't include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included on your Form W-2, Wage and Tax Statement. Also, don't include any other medical and dental expenses paid by the plan unless the amount paid is included on your Form W-2.”1
The IRS specifically lists the following as ineligible for deduction:1
- Life insurance policies;
- Policies providing payment for loss of earnings;
- Policies for loss of life, limb, sight, etc.;
- Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury;
- The part of your car insurance that provides medical insurance coverage for all persons injured in or by your car because the part of the premium providing insurance for you, your spouse, and your dependents isn't stated separately from the part of the premium providing insurance for medical care for others; or
- Health or long-term care insurance if you elected to pay these premiums with tax-free distributions from a retirement plan made directly to the insurance provider and these distributions would otherwise have been included in income.
If your health insurance policy is separate from what your employer provides, you may – may -- have better luck. If it covers medical care -- hospitalization, surgical services, X-rays; prescription drugs and insulin; dental care; replacement of lost or damaged contact lenses; or long-term care – then the premiums may (and again let us stress the may) qualify for a deduction.1
All of this comes with the caveat that the tax code is a living, evolving document, so change is frequent. Please consult with your tax advisor for the latest deductions and other tax information.
1. Internal Revenue Service, Publication 502: Medical and Dental Expenses (Including the Health Coverage Tax Credit) For use in preparing 2020 Returns (Cat. No. 15002Q), 2021