Medicare mails benefit tax statements between December and January each year. The statements show Medicare Part A as qualifying health insurance under the Affordable Care Act.
The Affordable Care Act requires every person to have a qualified health insurance plan, and Medicare meets this requirement.
The Medicare tax statement is sent to individuals to confirm that their health plan with Medicare is qualifying should the Internal Revenue Service (IRS) ask for evidence of coverage.
Glossary of Medicare terms
- Out-of-pocket cost: This is the amount a person must pay for care when Medicare does not pay the total amount or offer coverage. Costs can include deductibles, coinsurance, copayments, and premiums.
- Premium: This is the amount of money someone pays each month for Medicare coverage.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before Medicare starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, coinsurance is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
At the end of each tax year, Medicare sends a 1095-B statement. This statement shows the IRS a person had qualifying health insurance throughout that year.
Individuals may receive more than one statement if they have a secondary insurance policy.
Other plans that may count as qualifying health insurance include:
- employer insurance
- most Medicaid plans
- Children’s Health Insurance Program (CHIP)
- children covered under their parents
- many student health plans
- health coverage for Peace Corps
- most TRICARE plans and plans for veterans’ health through the Department of Veterans Affairs
- refugee medical assistance
Only people with Medicare Part A will receive a 1095-B, but the statement does not need to be filed along with other taxes.
Medicare does not require a copy of the statement, and a person should keep it with other tax documents.
Those who do not receive a statement may check their coverage through their account at MyMedicare.gov.
The Affordable Care Act requires all people to have qualifying health coverage.
Until 2018, people without qualifying insurance could have been charged a fee. However, beginning in 2019, a fee is no longer charged but the IRS continues to ask people to have qualifying health coverage.
If the IRS has a question about qualifying health insurance, a person needs a 1095-B to prove they had coverage.
If a person’s Medicare 1095-B statement is lost or damaged, Medicare can provide a free replacement by calling 800-633-4227.
Any health insurance plan purchased through the marketplace is qualified health coverage.
Individuals who had health insurance plans in place before the Affordable Care Act came into effect also have qualifying health coverage.
Medicare Part A and Medicare Advantage, sometimes called Part C, are qualifying plans.
Non-qualifying coverage
There are plans that are not qualifying health coverage.
These can include:
- Medicare Part B when a person has this plan alone
- plans that cover only vision or dental care
- workers’ compensation
- plans that cover only specific diseases or health conditions
- plans that give only discounts on health services
Even though Medicare may not cover some medical treatments and services, they may still be classed as qualified medical expenses.
Examples may include services like dental, hearing, and vision care. Although not generally covered by Medicare, these are services that a person can deduct as medical expenses.
Some qualified medical expenses can also count toward a Medicare Medical Savings Account (MSA) — a type of Medicare Advantage plan. Expenses qualify when they are covered by Medicare Part A or Part B.
The Social Security Administration (SSA) can also send a tax statement. This statement indicates the number of benefits paid to a person during that year.
The Social Security tax statement is different from the statement sent from Medicare.
A person may also receive a Medicare Summary Notice (MSN). The MSN is sent every 3 months to people enrolled in Medicare and lists all benefits and services paid in the last 3 months.
Most working people have a program to pay their insurance premiums with pretax dollars. This does not happen with Medicare, and in some instances, a person may deduct their Medicare premiums.
Employees can deduct Medicare premiums as they count as medical expenses when itemizing deductions.
Self-employed people can deduct health premiums, which lower their adjusted gross income (AGI). This includes premiums paid to Medicare, Medicare Advantage, Part D, and Medigap plans.
Medical expense deductions must be over 7.5% of a person’s AGI.
Eligible expenses that can be deducted include:
- Medicare and Medicare product premiums
- coinsurance
- copayments
- deductibles
- dental care
- vision care
- hearing care
- long-term care
A person may like to consider seeking advice from a tax professional, as this could help to avoid penalties from the IRS.
Medicare sends a tax statement to beneficiaries between December and January of each year. The document shows a person had Medicare Part A during the tax year.
Medicare Part A and Medicare Advantage are classed as qualifying health coverage, under the Affordable Care Act.
After enrolling in Medicare, a self-employed person may deduct many Medicare expenses, but it is not automatic.
Deductions can lower the adjusted gross income and can include out-of-pocket expenses like premiums, deductibles, coinsurance, and copayments.