Medicare and Federal Taxes
How Medicare Affects Your Taxes
Medicare premiums may qualify as medical expenses, while income reported on a tax return can affect future Part B and Part D premiums.
Does Medicare Affect Your Tax Return?
Medicare coverage itself does not normally create an additional federal income tax. However, Medicare and federal taxes interact in several important ways.
The short answer: Medicare premiums and other unreimbursed medical costs may contribute toward an itemized medical-expense deduction. Separately, income reported on your tax return may cause Medicare to charge higher Part B and Part D premiums two years later.
Medical Deductions
Certain Medicare premiums and unreimbursed medical expenses may be deductible if you itemize and meet the IRS threshold.
IRMAA Surcharges
Higher modified adjusted gross income can increase future Part B and Part D premiums.
HSA Rules
Medicare enrollment ends your eligibility to contribute to an HSA, although existing HSA funds remain available.
Are Medicare Premiums Tax Deductible?
Medicare premiums can generally count as qualified medical expenses for federal tax purposes. That does not mean every beneficiary will receive a deduction.
Premiums That May Qualify
- Medicare Part B premiums
- Medicare Part D premiums
- Medicare Advantage plan premiums
- Medicare Supplement insurance premiums
- Medicare Part A premiums in certain situations where the beneficiary pays for Part A
What Must Happen First?
For the regular medical-expense deduction, you must itemize deductions on Schedule A rather than claim only the standard deduction.
You may deduct only the portion of eligible unreimbursed medical and dental expenses that exceeds 7.5% of adjusted gross income.
Other Expenses That May Count
In addition to eligible premiums, qualified medical expenses may include certain deductibles, copayments, coinsurance, dental care, hearing aids, eyeglasses, prescription costs and medically necessary transportation. IRS rules determine which expenses qualify.
Avoid Double Deductions
- Do not deduct expenses reimbursed by insurance.
- Do not deduct expenses paid tax-free from an HSA.
- Do not claim the same premium under two different deductions.
- Do not deduct premiums already paid with untaxed funds.
How Your Tax Return Affects Medicare IRMAA
The Income-Related Monthly Adjustment Amount, or IRMAA, is an additional Medicare premium charged to some higher-income beneficiaries. It is not technically an income tax, but it is determined using information from your federal tax return.
IRMAA can increase what you pay for:
- Medicare Part B
- Medicare Part D, including drug coverage included in a Medicare Advantage plan
Social Security generally uses modified adjusted gross income from two years before the Medicare premium year. For Medicare premiums charged in 2026, Social Security generally uses your 2024 federal tax return.
2026 IRMAA Brackets
The amounts below apply to 2026 Medicare premiums and are based primarily on 2024 tax information.
| 2024 MAGI: Individual Return | 2024 MAGI: Married Filing Jointly | Total 2026 Part B Premium | Part D IRMAA Added to Plan Premium |
|---|---|---|---|
| $109,000 or less | $218,000 or less | $202.90 | $0 |
| Above $109,000 through $137,000 | Above $218,000 through $274,000 | $284.10 | $14.50 |
| Above $137,000 through $171,000 | Above $274,000 through $342,000 | $405.80 | $37.50 |
| Above $171,000 through $205,000 | Above $342,000 through $410,000 | $527.50 | $60.40 |
| Above $205,000 and below $500,000 | Above $410,000 and below $750,000 | $649.20 | $83.30 |
| $500,000 or more | $750,000 or more | $689.90 | $91.00 |
Married beneficiaries who filed separately and lived with their spouse during part of the tax year have different brackets. IRMAA amounts and thresholds are updated annually.
Part D IRMAA is paid in addition to the prescription plan’s premium. The surcharge is owed to Medicare even when the beneficiary has drug coverage through a Medicare Advantage plan.
Income Decisions That Can Affect Future Medicare Premiums
IRMAA is based on annual income rather than monthly cash flow. A single large transaction may increase Medicare premiums two years later.
Retirement Withdrawals
Taxable traditional IRA and retirement-plan distributions, including required minimum distributions, can increase MAGI.
Roth Conversions
The taxable amount of a Roth conversion generally increases income in the conversion year and may affect later IRMAA.
Capital Gains
Selling investments, real estate or other appreciated property may create capital gains that increase MAGI.
Employment or Business Income
Wages, self-employment income and other taxable business income may affect the IRMAA calculation.
Tax-Exempt Interest
Tax-exempt interest is generally added back when calculating Medicare’s version of MAGI.
Pensions and Social Security
Taxable pension income and the taxable portion of Social Security benefits can contribute to adjusted gross income.
Can You Appeal an IRMAA Decision?
You may be able to ask Social Security to use more recent income information if your income decreased because of a qualifying life-changing event.
Recognized Life-Changing Events
- Marriage
- Divorce or annulment
- Death of a spouse
- Work stoppage
- Work reduction
- Loss of income-producing property beyond your control
- Loss of certain pension income
- Certain employer settlement payments
Form SSA-44
Form SSA-44 allows you to request a new IRMAA determination after an eligible event reduces your income.
Social Security may require evidence of the event and proof or a reasonable estimate of your more recent MAGI.
Medicare and Health Savings Accounts
HSA rules are one of the most frequently missed tax issues for people enrolling in Medicare.
Contributions Must Stop
Once you are enrolled in any part of Medicare, you are no longer eligible to contribute to an HSA. This includes premium-free Medicare Part A.
Medicare Part A may be retroactive for as many as six months when someone enrolls after age 65, but not earlier than their first month of Medicare eligibility. Contributions covering retroactive Medicare months may become excess HSA contributions.
Existing HSA Money Remains Yours
You can continue using existing HSA funds after Medicare begins. Qualified tax-free withdrawals may include:
- Medicare Part B premiums
- Medicare Part D premiums
- Medicare Advantage premiums
- Deductibles, copayments and coinsurance
- Other qualified medical expenses
If you are working past 65 and contributing to an HSA, coordinate your Medicare effective date with your employer benefits department and tax adviser before applying. Our Turning 65 Medicare guide explains the broader enrollment questions.
Self-Employed Beneficiaries
A qualifying self-employed person may be able to claim a self-employed health-insurance deduction for eligible Medicare premiums without itemizing deductions.
Premiums May Include
- Medicare Part B
- Medicare Part D
- Medicare Advantage
- Medicare Supplement insurance
- Eligible coverage for a spouse or dependent
Important Limitations
- The deduction is generally limited by eligible earned income from the business.
- Eligibility for subsidized employer coverage can prevent the deduction for certain months.
- The same premiums cannot be deducted twice.
- The deduction is generally calculated using IRS Form 7206, not simply entered as an ordinary Schedule C expense.
Medicare Premiums Withheld From Social Security
Many beneficiaries have Medicare Part B and IRMAA premiums deducted directly from Social Security benefits. That payment method does not prevent an otherwise eligible premium from being considered as a medical expense.
Your SSA-1099 generally shows your Social Security benefits and may also provide information about Medicare premiums deducted during the year. Keep the form with your tax records.
A Practical Medicare and Tax Review
Gather Your Records
Collect your SSA-1099, Medicare premium notices, insurance premium statements, medical receipts and HSA records.
Review Income Changes
Identify retirement, large withdrawals, property sales, Roth conversions or other events that may affect future IRMAA.
Coordinate Your Advisers
Let your tax professional handle deductions and income strategy, while your Medicare broker reviews coverage and plan costs.
Frequently Asked Questions
Is Medicare taxable income?
No. Medicare health coverage is not ordinarily treated as taxable income to the beneficiary. Social Security benefits, retirement distributions and other income may be taxable under separate rules.
Is IRMAA a tax?
No. IRMAA is an additional Medicare premium for Part B and Part D. It is determined using modified adjusted gross income from a federal tax return.
Does Medicare Advantage prevent IRMAA?
No. A person enrolled in Medicare Advantage still pays the applicable Part B premium and Part B IRMAA. If the plan includes Part D, any applicable Part D IRMAA is also owed directly to Medicare.
Can Medicare premiums be deducted if I take the standard deduction?
Medicare premiums do not produce a regular Schedule A medical deduction when you take only the standard deduction. A qualifying self-employed person may have a separate self-employed health-insurance deduction.
Can I deduct my Medicare copayments?
Eligible unreimbursed copayments and other qualified medical expenses may count toward the Schedule A medical-expense calculation. Only the amount above 7.5% of AGI is deductible, and you must itemize.
Does a tax-free municipal bond affect IRMAA?
It can. Tax-exempt interest is generally added to adjusted gross income when calculating Medicare’s version of MAGI.
Will a Roth conversion affect Medicare premiums?
The taxable amount of a Roth conversion generally increases MAGI in the conversion year and may increase IRMAA two years later. Discuss conversion timing and tax consequences with a qualified tax or financial adviser.
Can I appeal IRMAA because the stock market went down?
Investment losses by themselves are not necessarily one of Social Security’s recognized life-changing events. Other correction or appeal rights may apply if the tax information used was wrong. Contact Social Security for an individual determination.
Can a Medicare broker prepare my taxes?
Not unless the broker separately holds appropriate tax qualifications. Thompson Medicare Brokerage can explain Medicare premiums and coverage but does not provide tax, investment, accounting or legal advice.
Official Tax and Medicare Resources
- IRS Publication 502: Medical and Dental Expenses
- IRS Publication 969: Health Savings Accounts
- Social Security Form SSA-44: IRMAA Life-Changing Event
- Medicare.gov: Current Medicare Costs
Tax rules and Medicare premiums can change. This page is educational and does not provide tax, investment, accounting or legal advice. Consult an appropriately qualified professional about your individual tax return and financial decisions. Page reviewed July 2026.
Need Help Understanding Your Medicare Costs?
I can help explain Part B, Part D, Medicare Advantage, Medigap and IRMAA as they relate to your Medicare coverage. For tax-return or income-planning decisions, I will encourage you to coordinate with your tax or financial professional.
Thompson Medicare Brokerage is not connected with or endorsed by the U.S. government or the federal Medicare program.