Need to Know Tax › Retirement and seniors
Medical expenses
Medical expenses: what counts, the 7.5% floor, Medicare and long-term care premiums
For anyone with a big medical year, a nursing-home bill, or long-term care premiums. Most people never clear the floor; the ones who do are usually retirees, and the item they most often leave off is the one deducted from every Social Security check.
Medical expenses are one of the four main itemized deductions, alongside mortgage interest, state and local taxes, and charitable gifts. They come with a floor: only the part of your medical costs above 7.5% of adjusted gross income counts, and even that only helps if your itemized deductions together beat the standard deduction, which for 2026 is $16,100 single, $24,150 head of household and $32,200 joint, plus $2,050 single or $1,650 per spouse at 65. The arithmetic rules most people out. The people who clear it are usually retirees with a nursing-home year, a long hospital stay, or large long-term care premiums.
| Adjusted gross income | 7.5% floor: the first dollars that don’t count |
|---|---|
| $40,000 | $3,000 |
| $60,000 | $4,500 |
| $80,000 | $6,000 |
| $120,000 | $9,000 |
A couple with $80,000 of AGI has a floor of $6,000; the first $6,000 of medical bills does nothing, and what is left has to combine with their other deductions to pass $35,500.
What counts
Premiums are the item retirees overlook. Medicare Part B and Part D premiums, including any IRMAA surcharge, count, whether deducted from the Social Security check or paid directly. So do Medicare supplement (Medigap) and Medicare Advantage premiums, dental and vision premiums, and health insurance you pay for yourself with after-tax money. Premiums taken out of a paycheck before tax do not; they were never taxed in the first place. Neither do Marketplace premiums to the extent the premium tax credit paid them.
Long-term care insurance premiums count, up to a limit that depends on your age at year end and rises each year; for 2026 the limits run from several hundred dollars under 40 to around $6,000 at 71 and older (verify the 2026 limits by age from Rev. Proc. 2025-32). The policy has to be a qualified one; most sold since 1997 are.
Nursing-home and assisted-living costs count in full, including meals and lodging, when the stay is primarily for medical care, which generally means the resident is chronically ill and the care follows a plan prescribed by a licensed practitioner. When the stay is primarily custodial, only the medical portion counts (verify). The facility usually knows which it is and will state the medical percentage on request. Memory care almost always qualifies in full.
Beyond premiums: doctors, dentists, hospitals, prescriptions, eyeglasses, hearing aids and their batteries, and equipment such as wheelchairs, walkers and lift chairs with a prescription. Home modifications for medical reasons (a ramp, a walk-in shower, grab bars) count to the extent they do not add value to the home. Medical mileage counts at 20.5 cents for January through June 2026 and 23.5 cents from July, plus parking and tolls. Expenses for a spouse and for dependents count on your return, and expenses for a parent you support can count even if you cannot claim the parent as a dependent because of the parent’s income (verify).
What does not
Anything reimbursed by insurance. Anything paid from an HSA, since that money was already tax-free. Cosmetic procedures, health club dues, vitamins and over-the-counter drugs without a prescription (verify), funeral costs, and the Medicare tax withheld from a paycheck, which is a tax, not a premium. An expense counts in the year it was paid, not the year of the bill, so a December hospital stay billed in January belongs to the year the check clears. Paying a large bill by credit card in December counts in December.
Worked example: a nursing-home year
Married, both 80, $70,000 of AGI. In 2026 one spouse moves into memory care at $8,500 a month for nine months.
| Amount | |
|---|---|
| Memory care, nine months (primarily medical) | $76,500 |
| Medicare Part B, two people, from the SSA-1099s | $4,870 |
| Part D and Medigap premiums, two people | $6,200 |
| Long-term care premium, one spouse (within the age limit) | $4,100 |
| Prescriptions, dental, hearing aids, mileage | $3,900 |
| Total medical | $95,570 |
| Less 7.5% of $70,000 | −$5,250 |
| Deductible medical | $90,320 |
| Plus state and local taxes and charitable gifts | $6,000 |
| Itemized deductions | $96,320, against a $35,500 standard deduction |
| Taxable income | $0 ($70,000 − $96,320 − $12,000 senior deduction) |
| Federal tax | $0, against about $2,250 on the standard deduction |
The memory-care bill does the work, but the $11,070 of premiums are what people forget, and in a smaller year they are what tips the total over the standard deduction. The unused $26,000 of deductions is simply lost; it cannot be carried forward, which is one reason to time a large IRA withdrawal or Roth conversion into a nursing-home year, where it is absorbed by deductions that would otherwise go to waste.
Self-employed retirees
Someone with self-employment income, even a small consulting practice, may deduct health, dental, Medicare and long-term care premiums above the line instead, on Schedule 1, without itemizing and without the 7.5% floor, up to the net profit of the business (verify). Medicare premiums qualify. That is often worth more than the itemized route: a retired consultant netting $20,000 a year can deduct $8,000 of Medicare and supplement premiums in full, where on Schedule A the same premiums would likely vanish under the floor.
Behind the scenes
The Medicare premium is the one medical expense nearly every retiree pays and nearly nobody writes down, because it never produced a bill. A preparer reads it off Form SSA-1099, where the year’s Part B and Part D deductions are printed, and adds it to the medical total before deciding whether itemizing is worth it. In a nursing-home year, that entry, plus supplement premiums paid by bank draft, is often what lifts the total over the standard deduction. The second question in a nursing-home year is whether the stay is primarily medical; a one-line letter from the facility settles it, and it is far easier to get in the year of the stay than three years later when the IRS asks.
The Colorado side
Colorado starts from federal taxable income, so an itemized medical deduction that reduces federal taxable income reduces Colorado tax too, at 4.40%, to the extent the retirement subtractions had not already taken the state tax to zero. Colorado adds back part of the federal deduction only for filers with AGI of $300,000 or more. The old Colorado medical savings account subtraction and the long-term care insurance credit are gone; there is no separate Colorado medical deduction. For a low-income senior, the PTC rebate (property tax, rent and heat) is separate and is covered in Colorado for retirees.
What to bring your preparer
- Form SSA-1099 for each spouse (Part B and Part D premiums are printed on it)
- Statements for Medigap, Medicare Advantage, dental and vision premiums paid directly
- The long-term care policy’s annual premium statement, and each insured’s date of birth
- Facility invoices for nursing-home, assisted-living or memory-care stays, and the facility’s statement of the medical portion or that the stay is primarily medical
- Pharmacy and provider year-end summaries, and insurance explanations showing what was not reimbursed
- A log of medical miles with dates (two rates apply in 2026)
- Receipts for medical equipment and home modifications, with the prescription
- If self-employed: net profit for the year and all health and Medicare premiums paid
Questions people ask
I pay $7,000 a year in Medicare and supplement premiums. Is that deductible?
It counts toward the medical total, but only the part of the total above 7.5% of AGI is deductible, and only if itemizing beats the standard deduction. For most retirees without a large medical year, the honest answer is no. With a self-employment income, yes, in full.
My mother is in assisted living and I pay most of it. Can I deduct it?
If you pay more than half her support, her medical costs can count on your return even when her Social Security keeps her from being your dependent (verify). The stay counts in full only if it is primarily for medical care; otherwise the medical portion.
Does a long-term care policy count?
The premium counts up to an age-based limit, and benefits paid out under a qualified policy are generally not taxable income. Hybrid life/long-term care policies count only for the long-term care portion the insurer states.
Can I deduct the cost of a hot tub my doctor recommended?
Only if its primary purpose is medical treatment of a specific condition and it does not add value to the home; recommendation is not enough. The IRS looks hard at these.
I paid a big bill in January for a December hospital stay. Which year?
January’s. Medical expenses count when paid. If a year is going to be a big one, paying what you can by December 31 keeps it together.
Read the premiums off the SSA-1099
The year’s Part B and Part D deductions are printed on the form Social Security sends every January. Add them, the supplement premium paid by bank draft, and any long-term care premium before deciding whether itemizing is worth it. In a nursing-home year it usually is.