🩺 What Medicare Covers in 2026 — A Tax-Savvy Guide for Retirees and Self-Employed Americans
Medicare is more than just a health plan — it’s also a piece of your overall tax and retirement puzzle.
Knowing what Medicare actually covers can help you estimate future medical costs, plan deductions, and even decide when to start Social Security benefits.
This 2026 guide breaks down what’s covered under Parts A and B, the new preventive benefits for 2026, and how these expenses interact with your 2025 tax return.
1️⃣ Part A — Hospital, Skilled-Nursing, and Hospice Care
Part A (Hospital Insurance) pays for inpatient hospital stays, skilled-nursing-facility (SNF) care, certain home-health services, and hospice.
For most Americans who worked at least 40 quarters, Part A is premium-free because they already paid Medicare taxes through their paychecks.
- Inpatient Hospital Care: Covers semi-private room, meals, nursing, and medicines during hospital stays.
- Skilled-Nursing Facility Care: After a 3-day qualifying hospital stay, Medicare covers up to 100 days of rehab care.
- Hospice Care: For terminal illness, including pain relief drugs, nursing, and grief counseling.
Daniel H., a retired engineer in Texas, spent 12 days in a rehab center following knee surgery.
Because he had been hospitalized for 3 days prior, Medicare Part A covered most facility charges.
His 2025 inpatient deductible was $1,680 — a cost he could include later in his medical deduction.
Long-term care (daily custodial care) is not covered.
However, out-of-pocket nursing-home costs may qualify as deductible medical expenses when you itemize under Schedule A.
2️⃣ Part B — Outpatient Care, Doctors, and Durable Equipment
Part B (Medical Insurance) handles doctor visits, outpatient services, labs, imaging, durable medical equipment (DME), and certain preventive care.
The standard premium in 2025 is $185 per month; high-income taxpayers pay an IRMAA surcharge (starting at $106,000 for singles / $212,000 joint filers).
- Doctor and specialist appointments
- X-rays, MRIs, blood tests, and diagnostic labs
- Physical, occupational, and speech therapy
- Durable medical equipment — wheelchairs, oxygen supplies, CPAP machines
- Emergency and outpatient services
Angela R. from New York received outpatient therapy for a shoulder injury.
Medicare Part B paid 80% of her $1,000 bill, leaving her with $200 out of pocket.
That $200 — plus her monthly premium — counted toward her medical expense deduction on Schedule A.
Part B does not cover everything. Many retirees add a Medigap supplement plan to reduce copays and deductibles.
Those Medigap premiums may also be deductible as medical expenses.
3️⃣ Preventive Care & What’s New in 2026
Medicare has been expanding preventive services each year.
Starting in 2026, coverage adds CT colonography (virtual colonoscopy) and home blood-pressure monitoring programs.
- Annual “Wellness Visit” and initial “Welcome to Medicare” exam
- Flu, pneumonia, and COVID-19 vaccines — no copay
- Cancer screenings (breast, colorectal, cervical and prostate)
- Heart disease and diabetes counseling
- Nutrition and obesity therapy services
Linda S., age 70, opted for a CT colonoscopy in 2026 after the procedure became fully covered by Medicare.
The test detected early polyps without any out-of-pocket cost.
Because she avoided a $400 expense, her 2026 medical deduction threshold was easier to meet — fewer expenses needed to exceed 7.5% of AGI.
Preventive coverage reduces surprise bills and keeps you healthier — but it also affects how much you can claim as medical deductions.
Fewer expenses mean a lower deduction, yet that’s a good problem to have.
4️⃣ How These Expenses Affect Your Taxes
Medicare costs often double as tax planning tools — if you know where to list them.
- Schedule A Medical Expense Deduction: Premiums for Part B, Part D, and Medigap can be deducted along with copays, tests, and prescriptions if your total exceeds 7.5% of AGI.
- Self-Employed Health Insurance Deduction: If you’re self-employed and not eligible for an employer plan, you may deduct your Medicare premiums “above the line,” even if you don’t itemize.
- HSA Warning: Once you enroll in Medicare, you can’t contribute to an HSA. Stop deposits at least six months before signing up to avoid IRS penalties.
- Form 1095-B: Serves as proof of coverage — keep it for your records but don’t attach it to your return.
Jose and Maria P. run a small grocery store in Florida.
They pay Part B and Medigap premiums totaling $5,400 a year.
Because they’re self-employed, they claim these premiums as a self-employed health-insurance deduction — reducing their taxable income even without itemizing.
For detailed rules on what’s deductible, see IRS Publication 502 (Medical and Dental Expenses) or talk to an Enrolled Agent (EA) specializing in senior tax planning.
5️⃣ Key Takeaways for Tax-Smart Seniors
- Part A covers hospital and rehab stays but not long-term care.
- Part B covers outpatient care, but expect 20% coinsurance unless you add Medigap.
- New 2026 benefits include CT colonography and home BP monitoring.
- Track premiums and copays — they can reduce your taxable income.
- Stop HSA contributions before Medicare starts to avoid IRS penalties.
👉 Self-Care & Taxes 2025: How Wellness Choices Can Save You Money
👉 How to Sign Up for Medicare in 2026 — What Every Tax-Savvy Senior Should Know
핑백: 2025 Premium Tax Credit Reconciliation Guide