Medicare Premium Deduction for Self-Employed Individuals

On July 13, 2012, the IRS Chief Counsel’s Office released Chief Counsel Advice (CCA) 201228037, which clarified that all Medicare premiums (Parts A, B, C, and D) are insurance constituting medical care and may be deducted under Sec. 162(l) as an above-the-line deduction by self-employed individuals. Self-employed individuals for the purposes of the Sec. 162(l) deduction include sole proprietors, partners, and more-than-2% shareholders of an S corporation. The CCA determined that Medicare is insurance constituting medical care under Sec. 162(l); therefore, Medicare premiums paid may be deducted on line 29 of Form 1040, U.S. Individual Income Tax Return, just like other health insurance premiums.