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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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When I begin collecting SS will my medicare, medigap, and prescription

Customer Question

When I begin collecting SS will my medicare, medigap, and prescription drug premiums be deducated from my SS income on a pretax basis similar to the way my health insurance premiums are currantly taxed deferred from my earned income?
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.

Hello u058,


Your SS income by itself is not taxable to begin with, so the premiums you pay for medicare are simply deducted from your benefits which are already non taxable benefits.



Thank you u058



Customer: replied 7 years ago.
Your wrong, depending on your total combined income you can be liable to pay taxes on up to 85% of your SS income.
Expert:  Merlo replied 7 years ago.

Hello again U058,


Yes, I am quite aware of that fact that depending on your other income, up to 85% of your SS benefits may be taxable. That is why I stated that "SS income BY ITSELF is not taxable".


What I was trying to explain is that when SS pays you benefits, they have no way of knowing whether or not you have any other income, so none of the benefits they pay you are taxable up front. They only become taxable when you file your return at the end of the year and report all of your other income. So when they deduct medicare premiums from your benefits, there is no way to exclude those benefits from tax, since the benefits are not taxed up front to begin with.


When you file your tax return at the end of the year, it is only then that it is determined whether any of your benefits for the year become subject to tax, so there is no way for them to withhold Medicare on a "pre tax" basis, the same as they do with your paychecks, because the SS benefits are not taxed up front. They are only taxed at the time you file your return each year.


When you do file your return each year, if you itemize your deductions, then some of the premiums you paid for the medicare coverage may be deductible as a medical expense. Following are the items related to medicare which you can and cannot claim as a medical expense:


Medicare A


If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. The payroll tax paid for Medicare A is not a deductible medical expense.

Medicare B

Medicare B is a supplemental medical insurance. Premiums you pay for Medicare B are a medical expense. If you applied for it at age 65 or after you became disabled, you can include in medical expenses the monthly premiums you paid.


Medicare D


Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. You can include as a medical expense premiums you pay for Medicare D.


So you may include the premiums you pay for Medicare Part B and Part D as part of your medical deductions at the time you file your return, so they would not be subject to tax. The premiums for Part A are not deductible.



Thank you