Health Insurance Premiums and Total Household Resources

Some qualified paid health insurance premiums may be deducted from income when calculating the homestead property tax and other credits allowed on the Michigan income tax return.

Definitions:

Pre-Tax Deduction — An amount excluded from income tax. Pre-tax deductions reduce your taxable income. They are deducted from your income before taxes, so you are not taxed on that money.

Post-Tax Deduction — An amount deducted after the tax is deducted. Post-tax deductions do not reduce your federal, State and Medicare tax liability. They are deducted from your income after taxes, so you are taxed on that money.

Total Household Resources — Total household resources includes all income received by all household members during the year, including income that might be exempt from adjusted gross income. Net losses from business activity may not be used to reduce total household resources. For a listing of income sources to include in total household resources, view Income and Deductible Items.

POST TAX HEALTH INSURANCE PLANS

Post-tax premiums paid for any of the following types of health insurance plans may be deducted to compute applicable credits:

1. Medical Insurance (including self-employed)
2. Dental Insurance
3. Vision Insurance
4. Prescription Drug
5. Automobile Insurance Premiums for medical coverage

POST TAX MEDICARE PREMIUMS

Post-tax Medicare premiums that are paid out of your pocket (not deducted from your Social Security or pension) may be deducted to compute applicable credits. This applies to the following types of coverage:

1. Medicare Part A — Hospital Insurance
2. Medicare Part B — Medical Insurance
3. Medicare Part C — Medicare Advantage Program
4. Medicare Part D — Prescription Drug coverage

PREMIUMS NOT DEDUCTIBLE FROM TOTAL HOUSEHOLD RESOURCES

Premiums paid for the following types of plans may not be deducted except to the extent deducted to arrive at adjusted gross income:

1. Premiums for long-term care
2. Premiums for income replacement coverage, such as long-term disability plans
3. Premiums for disability insurance policies
4. Premiums for policies for loss of life, limb, sight, etc.
5. Premiums paid by an employer with pre-tax contributions

OTHER HELPFUL INFORMATION

Internal Policy Directive 2009-1 Income Tax Health Insurance Premiums

How to Report Your Social Security Benefits
Enter the “Amount paid by check or Direct Deposit” on Line 21 of the 2024 MI-1040CR to calculate your income on the Homestead Property Tax Credit MI-1040CR and Line 26 on your Home Heating Credit MI-1040CR-7.