The deductible you pay on your health insurance policy may be tax-deductible if you meet certain conditions. However, whether this deduction is more advantageous than taking the standard deduction varies from person to person.

What Is a Deductible?

An insurance deductible is simply the amount of money you, the insured, must pay before the insurance company pays costs. Depending on the type of insurance and specific plan provisions, deductibles may apply to the policy annually or per claim.

When Are Medical Expenses Tax-Deductible?

For many people, medical expenses can eat up a substantial portion of annual income. To help ease this burden, the Internal Revenue Service, or IRS, allows taxpayers to deduct the cost of medical expenses that exceed 10% of their adjusted gross income, or AGI, for the year.

For example, if you are under 65 and your AGI is $50,000, then any medical expenses exceeding $5,000 are tax deductible. Medical expenses can include your deductible, out-of-pocket payments, premiums, testing costs and medical equipment purchases.


Only those expenses not reimbursed by your insurance company are eligible. If you participate in an employer-sponsored health insurance plan, your contributions to the plan premium made through payroll deduction are most likely made with pretax dollars, reducing your total taxable income. This means you have already received a tax benefit for this premium expense, so deducting your premium payments is double-dipping. In addition, some types of medical expenses are excluded, such as cosmetic surgery.

Claiming Your Deduction

To claim a medical expense deduction, including deductible and premium costs, you must itemize your tax deductions instead of taking the standard deduction. Whether this is the most beneficial depends on your expenses.

For example, the standard deduction for single persons in 2015 is $6,200. Using the above example and assuming no other possible deductions, this means you need to have unreimbursed medical expenses of at least $11,200 for the year to reap the benefits of this deduction.

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