Should I choose Medicare over my employer’s health plan?

How do Medicare Advantage Plans work?I’m at full retirement age but under 70. I’m still working and get health insurance through my employer, but I have the hospitalization part of Medicare. Maximum Medicare premiums are slightly less than my share of the employer insurance premium. Are Medicare premiums tax deductible? If they are, it may be worthwhile to switch.

— Keeping it going

A. It’s nice that you have options for your health

And it’s smart to pay attention to the costs.

Medicare premiums are indeed included as a component of medical expenses, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.

For federal purposes, total medical expenses exceeding 7.5% of adjusted gross income (AGI) are deductible, he said.

“Even if your total medical expenses exceed this threshold, you may not end up deriving any federal tax benefit if the standard deduction exceeds your itemized deductions,” he said. “For 2021, the standard deduction for a single taxpayer over age 65 is $14,250.”

For New Jersey, medical expenses only need to exceed 2% of New Jersey gross income to generate a deduction, Becourtney said.

“New Jersey follows the federal definition of medical expenses,” he said. “So, since Medicare premiums are treated as a medical expense for federal purposes, it too counts when it comes to calculating a medical expense deduction for New Jersey purposes.”

Before you make a decision, be sure to calculate how your anticipated out-of-pocket expenses through the year, such as co-pays and deductibles, will add up so you can look a the total cost for your health care

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