Minneapolis, MN, Feb. 26, 2025 (GLOBE NEWSWIRE) -- As the April 15 tax return filing deadline approaches, many taxpayers focus on maximizing deductions and minimizing taxes owed. But are they factoring in their health-related expenses? Understanding how medical expenses impact taxes can mean the difference between a bigger refund and an unexpected bill. This tax season, healthinsurance.org is informing consumers about key considerations, forms and deductions.
“Many taxpayers don’t realize how much their health coverage and medical expenses can impact their tax return,” said Louise Norris, health policy analyst for healthinsurance.org. “Understanding deductions and filing requirements could mean more money in your pocket and help you avoid costly mistakes.”
Key considerations for anyone getting ready to file:
Tax forms related to health coverage
For the more than 19 million consumers who had Marketplace coverage in 2024 and received a premium subsidy — as well as those who paid full price for Marketplace coverage but want to claim the subsidy on their tax return — they will need Form 1095-A. This form, along with Form 8962, helps the Internal Revenue Service (IRS) reconcile your subsidy with the income you actually earned in 2024.
If you earned more than you projected when you first applied for a subsidy (known as an advance premium tax credit or APTC), you could be responsible for repaying any excess APTC you received as your income grew. Or, if you earned less than you initially projected, you may be owed additional premium tax credit, which the IRS will add to your refund or subtract from the amount you owe.
“One of the most common questions I get this time of year is: ‘How do I find my 1095 form?’” Norris said. “Consumers who haven’t received the form by email or snail mail by mid-February should be able to find it online through their Marketplace account.”
Tax forms for health savings accounts
Consumers also should be aware of tax forms related to health savings accounts (HSAs) they may have. HSAs are tax-advantaged savings accounts that allow consumers to save pre-tax money to pay for qualified medical expenses. Be on the lookout for Forms 1099-SA and/or 5498-SA, relating to distributions from or contributions to your HSA. You’ll attach Form 8889 to report the details on your tax return.
“HSAs allow you to save money, but the IRS imposes strict limits on how much you can contribute to an HSA, and how the money in the HSA can be spent without incurring taxes and penalties,” explains Norris. “The tax forms related to HSA utilization help the IRS determine whether you’ve followed the rules. If not, you might be penalized.”
For 2024, the HSA contribution limits are $4,150 for individuals and $8,300 for families with an HSA-qualified high-deductible health plan (HDHP). You have until the April 15 tax filing deadline to make HSA contributions for 2024. There are no limits on how much you can withdraw from your HSA, but if the money isn’t being used to pay qualified medical expenses, the withdrawals could be subject to taxes and penalties.
Self-employed deductions
Self-employed individuals may be able to deduct 100% of the health insurance premiums they pay. This also includes Medicare recipients who are sole proprietors, partners, LLC members, or certain S-corp shareholders.
“This deduction isn’t always flagged by tax software or tax preparers, so be proactive to claim the deduction if you qualify,” said Norris.
However, there are some limits:
- If you had subsidized Marketplace coverage, you can only deduct the after-subsidy portion of your premiums.
- The deduction must be tied to one business and not exceed the income you earned from that business.
- You won’t be eligible for the deduction if you qualify for employer-sponsored group insurance.
Medical costs
Consumers who itemize deductions can deduct out-of-pocket medical expenses exceeding 7.5% of their adjusted gross income (AGI). Those expenses can include premiums, deductibles, coinsurance, copayments, dental, vision, hearing and long-term care.
“Like health insurance plans, there’s rarely a one-size-fits-all approach when it comes to taxes. It’s important to be an informed consumer and taxpayer, and it’s also important to recognize when you need additional support or assistance to make sure you get your desired results,” said Norris.
Healthinsurance.org provides online resources for consumers about individual and family health insurance. Healthinsurance.org, owned by HealthInsurance.org, LLC, has been providing consumer information about health insurance and health reform for over 25 years.
*DISCLAIMER: Neither Healthinsurance.org, LLC nor its analysts are tax professionals. This press release has been prepared for general informational purposes only. You should consult a tax advisor for assistance with your own circumstances.
healthinsurance.org hiomedia@afmcommunications.com
