Medicare as Self-Employed Medical

[Deborah]

Elderly couple both collect social security. She is 72 but still works part time and has a little business that makes a couple thousand a year. Their only medical insurance is Medicare. Is there any reason the Medicare premiums cannot be used as self-employed medical insurance? She files a Sch C for her business.

[erchess]

I don't know of any reason

but perhaps we can get one of the real experts to chime in. The way I read TTB it would be allowed but it would be nice to have a simple statement of the fact rather than being left to deduce the answer.On the other hand no reference manual can cover everything.

[Jiggers]

Medicare as Self-employed Health Insurance

I think this has been hashed out in the past.

You can't deduct Medicare Premiums as Self-Employed Health Insurance.

[Burke]

You are correct. MC prems cannot be used on the self-employed health insurance deduction.

[Fuzzy Faced Leader]

After reading all the previous threads on this subject, I am not convinced that the premiums are not deductible. Nothing in Pub. 535 specifically indicate that Medicare premiums are non deductible. The IRS has come out and indicated it is non-deductible, but this opinion has never been challenged, or supported by any regulation or publication. Deborah, why don't you include it in the tax return, and then when the IRS disallows it, you can take them to court, and get the issue cleared up.

[Deborah]

Medicare as Self-Employed Medical Insurance

I don't think I want to test the waters - my clients probably won't live that long - and I would hate to stress them that much - But, for those who said absolutely "no" on this subject, I would be interested in a reference to the tax law or publication they used to form that opinion. Thanks for all the input.

[S T]

Need to revisit

I think we need to revisit this dilemna.

Medicare Part B is an opt in program, it is not automatic. Only Medicare Part A is automatic and a subsidized program. So I am still leaning toward the side, that Part B could be a deduction for a self employed health insurance premium.

I came across a client that did not opt in for Medicare Part B and pay through the Social Security Administration, but rather is paying 3x the amount to his employer for Part B coverage. As a self employed that would be deductible, right?

Now we have Medicare Part D, for prescriptions, so can that also be considered. It also is an extra premium, some are being processed through Social Security payments, some are not and are private pay.

Sandy

[Bees Knees]

We have argued this in the past. If you search the message board to find the other threads, you will note I make the case that it is NOT deductible as self-employed health insurance. Every citation people use to make the case that it is deductible is a case in reference to it being deductible as a medical expense. The self-employed health insurance deduction and the medical expense deduction are two different rules. You can't use a citation allowing a medical expense deduction to support the allowing of the self-employed health insurance deduction.

[Bees Knees]

Here is one thread where we argued the rules...

http://www.thetaxbook.com/forums/showthread.php?t=242&highlight=Medicare+employed

[solomon]

I agree FSA 3042 precludes it. However, read this email I received from the IRS regarding this question. It blows my mind what is cited for authority. Read and weep.

"For privacy and security purposes, your incoming e-mail text has been deleted in this response because it either asked a tax account question, which we do not answer (we answer tax law issues only), or it contained personal identification information.

The Answer To Your Question Is:

Thank you for using our Email service. Assuming you meet all the requirements to take the self-employed health insurance deduction, you would be able to use the Medicare Part B Premiums.

The following information is from the 2007 U. S Master Tax Guide (page 356).
Health and Accident Insurance Premiums Amounts paid as self-employment tax or as employee tax for hospital insurance under the Medicare program are not medical expenses. Similarly, the basic cost of Medicare insurance (Medicare A) is not deductible unless voluntarily paid by the taxpayer for coverage. However, the cost of extra Medicare (Medicare B) is deductible.

Please contact us with any further questions."

[cathyan103]

No

Self-employed Health Insurance, in order to be deductible, must be established under the business name. Medicare is in the name of the individual who is eligible.

[Kram BergGold]

There is no definitive answer

There is an argument to be made on either side of this debate. As there has not been a court case there is no definitive answer. For every expert who says you can't take medicare premiums as SE health there is another who says you can. Each of us has to decide on the proper course of action in this circumstance.

[solomon]

Self-employed Health Insurance, in order to be deductible, must be established under the business name. Medicare is in the name of the individual who is eligible.

Not so for a SP - see CCA 200524001.

[Jiggers]

Try this IRS comment

The IRS has addressed this issue under FSA 3042: "Because Medicare Part B is a federal program available only to those who qualify under the statute, it cannot qualify as a health insurance plan established by a taxpayer under a trade or business."

However, the new statement relating to "established by a taxpayer under a trade or business" may change this.

[erchess]

The amount of money

involved is too small to make a court fight with the IRS worthwhile. Those of us who think that some Medicare Premiums should be eligible for the SE Health Insurance Deduction need to write to our members of Congress and/or to the President and need to urge our professional organizations to support the effort. But we all have to understand that the deduction cannot be taken until there is a change in the law.