25 Apr I’m turning 65. What happens when I go on Medicare?

Q. I turn 65 in July and will switch to Medicare. But my current insurance — self-employed, Marketplace, Horizon BlueCross BlueShield Omnia Silver Plan — has full year deductible and out-of-pocket maximums. I had a procedure which has worked toward some of those. My question: I’m only on the insurance for 50% of the year, but those deductibles and maximums are for 12 months. Is there any relief, perhaps when my 2023 taxes are calculated?
— Still working

A. First, you mentioned your 2023 tax return.

It seems your coverage change will happen during the 2024 tax year, so we’re going to make that assumption.

The answer? Perhaps.

But let’s take a step back and take a broader look at medical expense deductions.

As a self-employed person, you are already able to deduct your unreimbursed healthcare premiums on Schedule 1 Line 17 subject to earnings limitations, said Michael Maye, a certified financial planner and certified public accountant with MJM Financial in Gillette.

Unreimbursed medical expenses can also potentially be taken as an itemized medical expense deduction, he said.

However, Maye said, the itemized medical expenses are subject to 7.5% of Adjusted Gross Income (AGI) hurdle.

Also, if you are taking the standard deduction, you wouldn’t get any benefit for itemized unreimbursed medical expenses even if they exceeded the 7.5% threshold, he said.

“But there might be a silver lining here. Depending on your circumstances the premiums for Medicare Part B/Medigap/Part D can be lower than your current plan on the exchange, particularly if you aren’t getting a subsidy,” he said.

In addition, he said, Medicare Part A and part B deductibles are much lower at $1,362 Part A (2024) and $240 Part B (2024) compared to many exchange plan deductibles, Maye said.

“A last bit of good news, as a self-employed person, your Medicare Part B/Medigap/Part D plans can be claimed on Schedule 1 subject to earnings limitations,” Maye said. “This will reduce your adjusted gross income rather than as an itemized medical deduction which is harder for most people to qualify for.”

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This story was originally published in April 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.