You're not allowed to claim a tax deduction for the health insurance premiums paid by your employer -- even though you might see those amounts mentioned on your paycheck stub -- because that money is not included in your taxable income begin with. Essentially, there's nothing for you to deduct. You may, however, be eligible to deduct certain medical expenses.
Not Included in Income
The tax code permits you to exclude the medical insurance premiums paid for by your employer from your taxable income, so you're essentially already getting a tax deduction for the costs. For example, say that your employer pays you $30,000 and pays $6,000 in medical insurance premiums. On your tax return, you only report $30,000 of income. If, on the other hand, your employer were to give you $36,000, you would have to pay taxes on $36,000.
If you have additional medical costs on top of your insurance premiums, you may qualify to claim the medical expenses deduction. That deduction encompasses medical, dental and vision costs that you pay out of pocket for preventive care and treatment. For example, annual checkups, prescription drugs and surgeries all count. However, you can't include cosmetic work or general health expenses, like a gym membership, even if your doctor tells you its a good idea.
No Reimbursed Costs
When figuring your deduction for medical expenses, you can't count any costs that are covered by your health insurance. This includes both costs that your insurance pays for up front as well as costs you might pay at the doctor's office, but then you get reimbursed for later on. But, co-pays or other out-of-pocket costs do count. For example, if a trip to the doctor costs you $150, but you get reimbursed $130, you can only count $20 toward your deduction.
Even if you have out-of-pocket costs, you still might not qualify for a tax deduction. That's because only the portion of your medical expenses in excess of 10 percent of your adjusted gross income -- your total taxable income minus certain deductions -- counts as a deduction. For example, if you have $25,000 in adjusted gross income, your first $2,500 of medical expenses aren't deductible. So, if you paid $2,600 out-of-pocket, you would get only a $100 deduction.
Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."