J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

17.5 Premiums of Medical Care Policies

Unless you are self-employed and qualify for the 100% above-the-line deduction (discussed below), health insurance premiums are deductible only as an itemized medical expense on Schedule A (Form 1040), subject to the overall AGI floor (7.5% of AGI for 2012; see 17.1). Include premiums you paid for health insurance that covers hospital, surgical, drug costs, and other medical expenses for you, your spouse (17.6), and your dependents (17.7). Also deductible are premiums paid for contact lens replacement insurance. Deductions may be claimed for membership payments in associations furnishing cooperative or free-choice medical services, group hospitalization, or clinical care policies, including HMOs (health maintenance organizations) and medical care premiums paid to colleges as part of a tuition bill, if the amount is separately stated in the bill.

You may deduct premiums for Medicare Part B supplemental insurance and Medicare Part D prescription drug insurance. Payroll withholdings for Medicare Part A are not medical expenses, but premiums for voluntary coverage under Medicare (Part A) are deductible by those over age 65 who are not covered by Social Security.

Premiums paid before you reach age 65 for medical care insurance for protection after you reach age 65 are deductible in the year paid if they are payable on a level payment basis under the contract (1) for a period of 10 years or more or (2) until the year you reach age 65 (but in no ...