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How Should an LLC Pay for Its Medicare Policy?

By Ryan Himmel Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Should the sole member of the LLC pay for his Medicare supplement policy by personal check or as a company benefit?

I'm glad that you've asked this question, since it's often overlooked and tax policy has changed over the years regarding this topic. The manner in which a business owner pays for a Medicare supplemental policy can save real money in taxes.

The short answer is that the business should pay for Medicare supplemental insurance (i.e., Medicare Part B premiums), which typically ranges from $1,200 to $3,120. The premiums are deducted via line 29 of your form 1040 since you're likely a pass-through entity as a single-member LLC. This is referenced in Section 162(l) of the Internal Revenue Code. Please note that it is especially important that you follow this tax treatment since deducting self-employed insurance premiums can also actually lower your self-employment tax.

If you didn't claim this deduction in years past, you can certainly amend your tax return for those years that fall within the statute of limitations. If the Medicare supplemental policy was treated as a personal expense, it would be deductible only if it and other related expenses exceeded the 7.5% of adjusted gross income floor set by the IRS.

Related: Your Startup's Top 3 Most Trusted Accounting Allies

Ryan Himmel

Entrepreneur, CPA, Founder & CEO of BIDAWIZ

Ryan Himmel is a CPA and technology entrepreneur that has dedicated over a decade of his work toward providing solutions to help accountants and small-business owners better run their firms. He is the founder and CEO of BIDaWIZ, a professional network for small businesses and entrepreneurs to obtain trusted tax advice and services. He also oversees TaxResearchPro, an on-demand tax research support service for solo practitioners and small to mid-sized accounting firms across the U.S. Himmel regularly contributes to his tax blog.

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