M/C Premiums

[Mary A.]

A couple of years ago I attended a seminar led by Claudia Hill. She mentioned in class that Medicare would qualify as Self employed health insurance. When I got home I emailed her and asked what support she used for that. Here is her answer:

Response from Claudia Hill:

The following information was obtained using the CCH Tax Research Network:

Amounts paid or withheld from social security benefits as premiums for Medicare, Part B, which provides supplemental medical insurance for the aged, qualify as amounts paid for insurance covering medical care and are deductible as medical expenses. Code Sec. 213(d)(1)(D); Rev. Rul. 66-216, 1966-2 CB 100.


Premiums for insurance that covers medical care are deductible as medical expenses. Prepaid insurance premiums may be deductible as medical expenses. Amounts paid for Medicare, Part A coverage are not usually deductible as medical expenses. Amounts paid for Medicare, Part B coverage are deductible as medical expenses.


Medical insurance premiums qualify as medical expenses that can be claimed as an itemized deduction subject to the 7.5-percent floor on medical deductions, or 10-percent for alternative minimum tax purposes. A self-employed individual can deduct a percentage of the amount paid for medical insurance for the individual, his spouse and dependents. Code Sec. 162(l)(1); The Tax and Trade Relief Extension Act of 1998, P.L. 105-277, Act §2002 (October 21, 1998).


Claudia Hill, EA, MBA
Tax Mam, Inc.
408-446-4451 x 1153 TALK
408-973-8757 FAX

https://www.taxmam.com

I take Medicare premiums as self employed health insurance.

[S T]

Medicare Part B

Wouldn't t Medicare B qualify as a self employed health insurance deduction, as you have to specifically enroll in Part B. Part A is automatic, Part B is not. I have had some clients due to other coverages that did not enroll in Part B.
Now we have the new Prescription Drug coverage to deal with as well, which also is an option, not automatic.

Sandy

[jainen]

what it is

Nobody disputes that Medicare premiums are deductible as a medical cost, which is all Claudia Hill attests to in Mary's quote. Go back and read it. She does NOT say Medicare can be deducted as SE health premiums. She says self-employeds have an additional deduction, but she doesn't explain what qualifies. For example, she doesn't mention not being covered by an employer plan, an additional requirement which is also undisputed. She doesn't mention the income limitation. The law clearly says that not ALL health insurance carried by all self-employed taxpayers is allowed on Line 29, any more than all mileage driven can be deducted by self employeds. It must relate to the business.

None of the arguments in favor of allowing Medicare premiums meets this fundamental requirement. They are all inside-out: Medicare is NOT an employer plan, etc. Harvey never supported his "logic" with an answer to my earlier post. Maybe somebody else voting yes can state how they determine that a federally administered and subsidized insurance plan is established under a particular sole proprietorship. Not what Medicare isn't, but what it is.

[Black Bart]

He's got a point.

Nobody disputes that Medicare premiums are deductible as a medical cost, which is all Claudia Hill attests to in Mary's quote. Go back and read it. She does NOT say Medicare can be deducted as SE health premiums.

That's what I thought about the quotes when I first read them. It seems like she's supporting it, but she doesn't really nail it cold (there's plenty of wiggle-room in those statements). I'm not so sure she's not just using her MBA/EA credentials and pandering to us--saying what we want to hear (preaching to the choir, so to speak) to make money on the lecture circuit.