Are Insurance Premiums Deductible if you are able to Itemize?

If you are able to itemize on a Schedule A, you may include the medical expenses insurance premiums you pay for policies that cover medical care. Medical care policies typically provide payment for treatment that include:

• Hospitalization, surgical services, x-rays
• Prescription drugs and insulin
• Dental care
• Replacement of lost or damaged contacts
• Long-term care (amount of deduction restricted by additional limitations)

If you have a policy which also provides coverage for other than medical care, you can only include the portion of the premium which covers your medical care if the medical portion is reasonable. Additionally, the cost of the medical part must be separately stated in the insurance contract or provided to you in a separate statement. If necessary you must be able to prove what portion of your premium is for medical expenses, thus the need for the separation of medical and other.

If any of your medical insurance premiums are paid by your employer or an employer sponsored health insurance plan, you cannot include these premiums on your Schedule A unless the premiums are included in box 1 of your W-2 form.

Also remember for the 2013 tax year, medical expenses itemized on a Schedule A must exceed 10% of your Adjusted Gross Income unless you or your spouse were born before January 2, 1949. If either you or your spouse meet this specification, then your medical expenses must exceed 7.5% of your Adjusted Gross Income for 2013 before they would be able to be deducted.

As indicated by the above specifications, you cannot include life insurance premiums you have paid in the medical expenses you list on your Schedule A just the medical insurance premiums. This further explains the need for the separation of premiums on your insurance policy. While medical expense insurance premiums might not be high enough to deduct on your Schedule A, when this expense is added to your other out of pocket medical expenses they might be. Until you actually list all your medical expenses you will not be able to know for sure, so it might well be worth the effort. Additionally, depending upon which state you reside in, some of the medical expenses do carry over to your state return even if they are not able to be deducted on your Federal Income Tax Return.