Thompson Medicare Brokerage
How Medicare Affects Your Taxes: What to Know Before April 15th
🧾 What to Know Before April 15th
As tax season ramps up in March, many Medicare beneficiaries start asking the same question:
“Does my Medicare coverage affect my taxes?”
The short answer is: yes, it can — especially when it comes to premiums, income-related surcharges (IRMAA), and retirement income planning. Whether you’re newly enrolled or have been on Medicare for years, now is a smart time to review how your coverage fits into your overall financial picture.
Here are the key things to understand before filing your taxes this year.
💰 Are Medicare Premiums Tax Deductible?
Too many Medicare beneficiaries assume that if they didn’t actively switch pIn many cases, yes — Medicare premiums can be tax-deductible as medical expenses if you itemize deductions.
This can include:
- Medicare Part B premiums
- Medicare Part D premiums
- MAPD (Advantage Plans) (Part C) premiums
- Medicare Supplement (Medigap) premiums
However, they only count toward deductions if your total medical expenses exceed the IRS threshold based on your adjusted gross income (AGI). This means not everyone will benefit, but it’s still worth reviewing with your tax preparer.
For retirees with higher medical costs, this deduction can be meaningful.
📊 IRMAA: Why Your Income Matters
If your income rises above certain thresholds, you may pay Income-Related Monthly Adjustment Amounts (IRMAA) — higher premiums for Part B and Part D.
Here’s what surprises many people:
IRMAA is based on income from two years prior, not your current income.
So your 2026 Medicare premiums are tied to your 2024 tax return.
Common triggers for IRMAA include:
- Large IRA withdrawals
- Capital gains from selling investments or property
- Required Minimum Distributions (RMDs)
- Pension or annuity changes
If your income recently dropped due to retirement or life events, you may be able to request an IRMAA reconsideration — something many beneficiaries don’t realize is possible.
🧑💼📈 Self-Employed or Business Owners on Medicare
Every fall, plans file a new formulary (drug list) with Medicare.If you’re self-employed or running a small business in retirement, your Medicare premiums may be deductible as a business expense (not just a medical deduction), depending on your structure and income situation.
This is an area where coordination between your tax advisor and Medicare strategy becomes especially important.
🔍 Spring Is the Perfect Time for a Coverage & Income Review
March is an ideal checkpoint because:
- You’re already gathering tax documents
- You can see how last year’s income affected your Medicare costs
- It’s early enough to adjust strategies for the current year
Even small income decisions — like timing withdrawals or recognizing gains — can influence future Medicare premiums.
⏳ Don’t Wait Until AEP to Think About Costs
Many people only think about Medicare during Annual Enrollment in the fall. But your true costs are often determined by financial decisions made throughout the year.
A proactive review now can help:
Avoid surprises when new premium notices arrive
Prevent unexpected IRMAA surcharges later
Align coverage with your retirement income strategy
🧠📌 Final Thoughts
Medicare isn’t just a health decision — it’s also a financial one. As tax season comes to a close, it’s a great opportunity to step back and make sure your coverage, income, and long-term plan are all working together.
A short review today can prevent costly surprises down the road.
🤝 Need Help Reviewing Your Medicare & Income Situation?
If you’re in Missouri or Illinois and want to understand how your Medicare plan fits into your broader financial picture, I’m happy to help.
Benjamin Thompson
Thompson Medicare Brokerage
Schedule a no-pressure review to make sure your coverage and costs still make sense for the year ahead.
¹ClearSpring, Molina & BCBS IL plan options are listed separately.