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Hi and welcome to Just Answer!You may itemize on your Arizona return, even if you do not itemize on your federal return.To itemize on your Arizona return, you must first complete a federal Schedule A. Use Form 140, Schedule A, to adjust the amount shown on the federal Schedule A - see forms and instructions here - http://www.azdor.gov/Forms/Individual.aspx
You need to fill lines 1-6 to determine amount of medical expenses you will actually include into AZ itemized deduction - http://www.azdor.gov/LinkClick.aspx?fileticket=m2MTqQU8imc%3d&tabid=257&mid=878
In most cases, the deduction allowed on the Arizona return will be larger than the deduction allowed on the federal return. On your Arizona return, you do not have to reduce your medical expenses by a percentage of your federal adjusted gross income.Complete lines 1 through 6 if you are deducting medical and dental expenses. In most cases, you may deduct more medical expenses on your Arizona return than you can deduct on your federal return.
Yes - medical insurance premiums are deducted as Medical expenses.Definitions of medical expenses are same for federal and for AZ state income tax purposes.See IRS publication 502 - www.irs.gov/pub/irs-pdf/p502.pdf , page 9 - Insurance Premiums.Please be aware that you may only deduct health Insurance Premiums you paid if these amount were not excluded from your income.If health Insurance Premiums were deducted out of your paycheck - it is likely - they were excluded from your income - please verify.If these payments were not excluded from your income - you may deduct them.
Let me know if you need any help or clarification.