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For example, younger persons who are still working probably arenât on Medicare and are still paying into the system by a rate of 6.2% of their annual earnings. Elderly persons on Medicare can use the IRS tax deduction to reduce their tax burden by claiming costs associated with Medicare payments.
Medical expenses can only be deducted if they exceed 7.5% of your adjusted gross income (AGI). You are allowed to add Medicare premiums to out-of-pocket costs, which may put you over 7.5% of the AGI threshold and cause your total itemized deductions to exceed the standard deduction amount.