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Individuals are also allowed to count the premium paid for a Medicare Supplement insurance policy – often referred to as Medigap insurance – as a medical expense on their taxes. These plans are also sold by private insurers, and therefore the amount of the premium may vary. While the premium paid for Medicare and Medicare Supplement coverage may be counted as a medical expense on one's tax return, it is important to note that the entire amount of the premium is not deductible. In the past, taxpayers have only been allowed to deduct medical expenses that exceeded 7. 5 percent of annual AGI (adjusted gross income). Starting in 2013, the rules for deducting medical and dental expenses changed. For those taxpayers who were under the age of 65, the 7. 5 percent threshold was increased to 10 percent. This means that only medical and dental expenses that exceeded 10 percent of the taxpayer's AGI would be deductible. It also meant that taxpayers were no longer allowed to deduct as much of their medical expenses as they were able to deduct in past years.
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