Call 619-395-4899 to speak with a licensed insurance agent.

Call 619-395-4899 to speak with a licensed insurance agent.

This Medical Tax Break Could Bring Relief to Retirees

Posted by Dhina Valencia, February 17, 2021

For many retirees, medical bills and related costs are one of the largest, if not the largest expense in their budgets. That’s why the tax deduction for medical expenses is often so important to those who spend over a certain threshold of their income on doctor bills, medications, insurance premiums, and other related costs.

For several years now, that threshold has held steady at 7.5 percent. If you spent more than 7.5 percent of your adjusted gross income (AGI) on medical expenses, you could deduct the balance of those expenses on your federal income tax return. But for 2021, that threshold was set (under the Affordable Care Act) to increase to 10 percent. Fortunately, Congress decided in December to keep the threshold steady rather than allowing it to increase.

What does this mean? For a retiree living on an AGI of $50,000, medical expenses above $3,750 each year were deductible. So, if your medical expenses were $5,750, you could deduct $2,000 of those when filing your taxes.

If the threshold had increased to 10 percent, then you would only have been able to deduct any medical expenses that exceeded $5,000. In this case, your deduction would have been limited to $750. Holding the threshold at 7.5 percent of AGI means that tax filers can claim a larger medical expense deduction.

This is good news for anyone who experiences considerable medical spending in any given year. But because retirees are usually more impacted by these types of bills, making the deduction threshold permanent will benefit you to a greater extent.

Please contact a tax professional to get advice on your specific situation, and if you need assistance with Medicare or Medicare Advantage Plans, give us a call and we can discuss your options.

Need more information on your insurance options?

Contact us online to learn more

Contact Us

Close Accessibility Tools
Accessibility Controls Reset
Content Adjustments
Font Size

Default

Line Height

Default

Content Scaling

Default

Highlight Titles
Highlight Links
Highlight Forms
Align Left
Align Center
Align Right
Focus Mode
Color Adjustments
Desaturate
Monochrome
Contrast

Default

Saturation

Default

Accessibility Statement

Despite our attempts to make this website accessible for everyone, there may still be some pages or sections that are not completely accessible, are in the process of becoming accessible, or do not have a suitable technological solution to make them accessible. Nevertheless, we are always striving to enhance our accessibility by adding, updating, improving its options and features, and incorporating new technologies.

We want to provide our users with the best experience possible, so we strive to support as many browsers and assistive technologies as possible.

If you wish to contact this website's owner, please use the contact form on the website.

Our User Interface Adjustment Options

Font adjustments - With this tool, users can modify font size, style, letter spacing, and line height for improved alignment and readability.

Color adjustments - Users can customize their color contrast profiles to light, dark, desaturated, and monochrome.

Content highlighting - Users can prioritize key elements such as links, forms, and titles.

Content focus - Users can enable focus mode to highlight the current page information based on their mouse movement.

Close