Many seniors pay for supplemental insurance—such as Medigap, Medicare Advantage add-ons, or standalone dental/vision plans. The good news? These premiums may be deductible as medical expenses, but only under specific conditions. This guide explains when and how you can claim them on your 2025 return.
📌 1. Must Itemize to Deduct
You can deduct supplemental insurance premiums only if you itemize deductions on Schedule A. The total of all your unreimbursed medical expenses—including premiums—must exceed 7.5% of your AGI to count toward your taxes :contentReference[oaicite:0]{index=0}.
📋 2. Which Supplemental Premiums Qualify?
- Medigap plans (Medicare Supplement)
- Medicare Advantage (Part C) premiums
- Part D prescription coverage
- Stand‑alone dental, vision, hearing plans
- Qualified long‑term care insurance, subject to annual caps
These are considered medical expenses and may be included when itemizing :contentReference[oaicite:1]{index=1}.
⚠️ 3. The 7.5% AGI Threshold Applies
You can deduct only the part of your medical expenses—including supplemental premiums—that exceeds 7.5% of your AGI :contentReference[oaicite:2]{index=2}.
Example: AGI $50,000 → threshold = $3,750. If your combined medical bills are $6,500, only $2,750 is deductible.
🛠 4. Self‑Employed Deduction Option
If you’re self-employed, you can deduct supplemental insurance premiums as an above‑the‑line deduction on Schedule 1—regardless of whether you itemize. This includes Medigap, Part C/D, dental/vision, and long‑term care premiums :contentReference[oaicite:3]{index=3}.
Key conditions: You must have net business income, and neither you nor your spouse can be eligible for an employer-subsidized plan :contentReference[oaicite:4]{index=4}.
💡 5. Deduction vs. Standard Deduction
- If you’re not self-employed, compare: Does itemizing (with supplemental premiums) exceed your standard deduction?
- If you are self-employed, take the above-the-line deduction regardless of itemizing—it lowers your AGI and avoids 7.5% limits.
📒 6. What to Report and Where
- Above-the-line (self-employed): Report on Schedule 1, Part II
- Itemized (non self-employed): Enter total medical expenses on Schedule A, then apply AGI threshold
✅ 7. Summary Table
| Scenario | Deductible? | Where to Claim |
|---|---|---|
| Self‑employed + paying premiums | ✅ Fully, up to net income | Schedule 1 (above‑the‑line) |
| Not self‑employed + itemize | ✅ Only amount above 7.5% AGI | Schedule A |
| Not self‑employed + take standard deduction | ❌ Not deductible | N/A |
🧾 8. Year‑End Checklist
- Gather all supplemental premium receipts (Medigap, Part C/D, dental, vision, LTC).
- Calculate total AGI and 7.5% threshold.
- If self-employed, ensure business income qualifies.
- Run “itemize vs standard” comparison.
- Use tax software or a professional—these nuances matter.
✅ Final Takeaway
Yes—you can deduct supplemental insurance premiums on your 2025 return, but only if you itemize and surpass 7.5% of AGI. If you’re self-employed, the better route is the above‑the‑line deduction on Schedule 1—no threshold required. Either way, keep detailed records and compare strategies each year to make the best choice.
