Medicare Premiums and SE HI Deduction

In a Chief Counsel Memorandum (CCM) dated May 1, 2012, released July 13, 2012, IRS addressed the issue of Medicare premiums and the self-employment health insurance deduction.  
For years IRS has stated in its publications that Medicare premiums do not qualify for the self-employed health insurance deduction. In early 2011 IRS stated in its publications that Medicare B premiums DO qualify for this deduction. Now IRS has expanded on this issue.   
The CCM presents four questions and provides the conclusions to such questions. The questions/conclusions are:   
1) Do all Medicare Parts qualify as medical insurance under Section 162(l)?
2) Must a self-employed individual pay Medicare premiums directly in order for the premiums to be deductible under Section 162(l)?  
ANSWER: A sole proprietor must pay the Medicare premiums directly.  
Health insurance premiums for partners can either be paid: 1) paid by the partners and reimbursed by the partnership, or 2) directly by the partnership. In either case the payments for the partners must be reported to the partners as guaranteed payments.  
Health insurance premiums for a 2-percent-shareholder-employees of an S corporation can be paid: 1) paid by the shareholder-employee and reimbursed by the S corporation, or 2) directly by the S corporation. In either case the premiums must be reported as wages on the Forms W-2.  
3) Do Medicare insurance premiums for a self-employed individual’s spouse, dependent or child (as defined in Section 152(f)(1) who as of the end of the taxable year has not attained age 27) qualify for the deduction under Section 162(l)? 
ANSWER: Yes, if all of the requirements of Section 162(l) are met. 
4) Can an individual amend open year returns to claim this deduction?
This text has been shared with you courtesy of: David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065 (fax 920-496-9111)  , , , and 
©2011 Ashwaubenon Tax Professionals. No reproduction of this article is permitted without the express consent of Ashwaubenon Tax Professionals, 2140 Holmgren Way, Suite 1040, Green Bay, WI 54304.