Medicare health insurance premiums can add up, but by planning ahead at tax filing time can save you money in the long run!
Premiums for Medicare Part B coverage
Medicare Part B coverage is often referred to as Medicare medical insurance. Part B covers doctor’s visits, preventative care, outpatient services, and diagnostic testing for those 65 years or older. Part B may also be available earlier for some people with disabilities, those with end-stage renal disease, and ALS. Eligible individuals pay monthly premiums for the benefit.
The monthly premiums for Medicare Part B are determined by your modified adjusted gross income (MAGI) that was reported on your Form 1040 for two years earlier. MAGI can be found on your Form 1040 by taking the adjusted gross income (AGI) number plus any tax-exempt interest income.
For 2025, most individuals will pay the base monthly Part B premium of $185 per covered individual.
In addition to the premium base fee, individuals with higher income are subject to pay a surcharge as well. For 2025, this is applicable to those who filed in 2023 as unmarried individuals who reported MAGI above $106,000. Those who filed jointly in 2023 are subject to the surcharge if they reported MAGI above $212,000.
Part B premiums, including any surcharges, are withheld from your Social Security benefit payments and are shown on the annual Form SSA-1099 sent to you by the Social Security Administration (SSA).
Premiums for Medicare Part D drug coverage
Medicare Part D is private prescription drug coverage. The Base premiums for this coverage vary based on the plan chosen. Like Medicare Part B, higher-income individuals must pay a surcharge on top of the base premium.
Individuals will pay the base Part D premium, which depends on the private insurance company plan you select, to the insurance company. Any surcharge will be withheld from your Social Security benefit payments and reflected on the annual Form SSA-1099 sent to you by the SSA.
Part B and Part D monthly premiums for 2025, including surcharges if applicable, for each covered individual can be found on the Centers for Medicare and Medicaid Services website.
Deducting Medicare premiums on your tax return
Premiums for Medicare insurance may be combined with other qualifying health care expenses to claim an itemized medical expense deduction. Your deduction would equal the total qualifying expenses to the extent they exceed 7.5% of your adjusted gross income (AGI).
Your 2024 tax return and 2026 Medicare premiums
Decisions reflected on your 2024 Form 1040 can affect your 2024 MAGI and thus your 2026 Medicare health insurance premiums. If you are self-employed or an owner of a pass-through business entity (LLC, partnership or S corporation), this is especially relevant because you have more opportunities to manage your 2024 MAGI at tax return time. For instance, you may choose to make bigger or smaller deductible contributions to a self-employed retirement plan, and to maximize or minimize depreciation deductions for business assets.
Planning for the Future
How you file your 2024 tax return can impact your 2026 premiums. We can help you navigate your choices and guide you to make the right decisions for your situation.
