Answer the following questions to determine if you qualify for the Health Care Insurance Premium deduction.
- Are you or your spouse eligible to participate in a health care insurance plan in which a current employer or former employer pays any portion of the health care insurance premiums, even if you elect not to participate in the plan?
- If the answer is Yes, STOP you do not qualify for the deduction.
- If the answer is Yes and the employer's plan only covers employees and does not allow the employee to purchase coverage through the company plan for his/or her family members, go to question 2.
- If the answer is No, go to question 2
- Do you have a health care insurance policy that covers you and/or your family? (This includes a policy for members of your family that are not eligible to participate in an employer's plan.)
- If the answer is No, STOP you do not qualify for the deduction.
- If the answer is Yes and you or your spouse are retired, go to question 3.
- If the answer is Yes and you and your spouse are not retired, go to item 4.
- Does the employer from whom you or your spouse retired, fund in whole or part any medical insurance program for you or your spouse?
- This includes federal retirees who did not opt out of their Federal Employee Health Benefits, or military retirees.
- This includes state, county and city retirees using unused sick leave to extend medical coverage, or other medical coverage provided by your former employer.
- If the answer is Yes, STOP you cannot claim a deduction.
- If the answer is No, go to item 4.
- Review the following information, examples and common errors, then complete the health care insurance premium calculator below.
Additional Information and Examples
These additional examples and explanations are to help you determine if you qualify for claiming the health care insurance premium deduction. The examples are representative of the most common problems that have been identified. Consequently, they may not cover your specific situation. If you are still uncertain if you qualify, you may contact a technical research agent at:
800-662-4335 extension 7705, if you are outside the Salt Lake area
Common errors made by taxpayers who claim the Health Insurance Premium Deduction Credit
- You cannot claim payments for medications, doctor visits, hospitals or health care facilities, and nursing care.
- Accidental death and dismemberment, and long-term care insurance premiums do not qualify for this deduction.
- Dental and optical/vision insurance premiums do not qualify for this deduction.
- Retired persons eligible to participate in a health care insurance plan, which is wholly or partially funded through their former employer, even if they elect not to participate, cannot claim the health care insurance premium deduction.
- The deduction only applies to health care insurance premiums.
Example 1: Retired Federal Employee
John is a federal employee who retired at the age of 60. The Office of Personnel Management (OPM) continues to fund/subsidize a portion of the retiree's health insurance. His health worsened and he had to purchase an additional health insurance policy at a cost of $300 a month to help offset his deductibles and medications. Since OPM is still funding part of John's health insurance premiums, he cannot claim any deduction.
Example 2: Retired State Employee
A taxpayer retired from the State of Utah at the age of 62 due to his poor health. His spouse is age 63 and still working. The retiree had enough annual sick leave to continue the state medical benefits for himself and his spouse until they reach the age of 65, when they will be eligible for Medicare coverage. The spouse's employer does not offer health care benefits. They pay an additional $250 a month for a supplemental health care insurance policy to cover deductibles and co-payments not covered by the state's coverage. The retiree's former employer pays a portion of the premiums for the extended coverage so they cannot claim any deduction.
Example 3: Retired Individual Participates in Former Employer's Insurance Program
An individual retires at age 62. The former employer provides a limited health program for retirees and the retiree obtains a separate supplemental health insurance policy. At age 65, he also qualifies for Medicare and the previous employer's health program becomes a secondary benefits payer. The individual may not claim the health care insurance premium deduction.
Example 4: Self-employed Individual
A taxpayer is self-employed and paid health care insurance premiums for himself. His spouse works and is covered under her employer's health plan. Her employer's plan only provides coverage for her. (Caution: This will rarely happen because most health plans allow an employee to pay an additional portion of the premium for a spouse and dependents.) The taxpayer paid $5,400 in health care insurance premiums for the year. The taxpayer claims 100% of his health care insurance premiums as self-employed health insurance deduction on line 29 of his federal 1040 form. There are no remaining health care insurance premiums to be deducted for the Utah health care insurance premium deduction.
Example 5: Company Plan Covers Spouse and Children but Employee Elects to not Participate
A taxpayer is eligible to participate in an employer-funded plan. The plan provides coverage for the taxpayer's family, but only if the taxpayer pays an additional premium. The taxpayer elects not to have his/her family covered by the plan, choosing instead to purchase a separate, less expensive plan for his/her spouse and children. Since the taxpayer, taxpayer's spouse and children were eligible and could have been included in the employer plan, a deduction for any premiums paid is not allowed.
Example 6: Retired Taxpayer and Family Covered under Former Employer's Plan
A taxpayer is retired and is eligible to participate in a plan that is funded and maintained by the employer from which he/she retired. The plan provides coverage for the taxpayer's family, but only if the taxpayer pays an additional premium. The taxpayer cannot deduct any premiums paid, including supplemental insurance or Medicare part B, on his/her state return.
Example 7: Taxpayer Age 65 is Retired and His/Her Spouse is Still Working
A retired taxpayer is 65, is on Medicare and pays the premiums for a Medicare B supplemental insurance plan and Medicare D prescription drug plan. The taxpayer's spouse is 55 and is still working. The spouse's employer offers a plan that will cover the employee and the taxpayer's spouse. The employer plan pays 80 percent of the premium costs and the employee must pay the other 20 percent. The couple elects to only cover the employed spouse under the company's plan. Since the taxpayer and spouse are both eligible under the employer plan, they cannot deduct any of the premiums paid for the company plan, Medicare B or D, or any supplemental plan.
Example 8: Taxpayer and Spouse are Both 65 and Covered by Medicare
A taxpayer and his/her spouse are both 65 and are covered by Medicare. They pay premiums for a Medicare B supplemental insurance policy and Medicare D prescription drug plan and the premiums are deducted from their social security. They can deduct the full amount of premiums paid for Medicare B, Medicare D and their supplemental policy if these premiums were not deducted on their federal return.
Example 9: Taxpayer and Spouse are Both 65 and Participate in the Medicare Part D Drug Plan
A taxpayer and his/her spouse are both 65 and participate in a Medicare Part D drug plan. They have three options for paying the premiums:
- They can give permission to the company offering the plan to automatically deduct their premiums from their bank account, or
- They can have the premiums deducted every month from their Social Security benefits, similar to their premiums for Medicare Part B, or
- They can pay their premiums by mailing a check or money order each month.
Regardless of the method they choose to pay the premiums, they can deduct the full amount of premiums paid for their Medicare drug plans if these premiums were not deducted on their federal return.