Open season is the annual opportunity for federal employees and retirees to change health and dental coverage without needing a qualifying life event, and premiums are usually a major factor in choosing a plan. Whether those premiums can also lower a tax bill is a separate question, and the answer turns on a detail most open season guides skip: whether the premium comes out of pay before taxes or out of a retirement annuity after taxes.
The short answer is that most active federal employees cannot deduct their premiums, and many federal retirees can count them but still will not benefit. A few situations are worth checking before filing, though.
Why most active employees cannot deduct their premiums
Active Executive Branch employees generally pay their Federal Employees Health Benefits (FEHB) Program premiums through premium conversion, which removes the premium from pay before federal income tax is figured. Dental and vision premiums under the Federal Employees Dental and Vision Insurance Program (FEDVIP) work the same way, and employees cannot opt out of premium conversion for FEDVIP. Because the tax break has already been taken up front, the Internal Revenue Service (IRS) does not allow the same premium to be deducted a second time.
Employees can waive premium conversion for FEHB, which makes the premium an after-tax expense that may count toward the medical deduction. For most employees, the payroll tax savings from premium conversion outweigh anything a waiver could produce on a tax return.
Retirees pay premiums with after-tax dollars
Premium conversion is generally not available to annuitants. The Office of Personnel Management (OPM) states in a benefits administration letter that the benefit is generally not available to federal annuitants, and OPM’s FEDVIP guidance says the same for dental and vision premiums. A retiree’s FEHB, Postal Service Health Benefits (PSHB) and FEDVIP premiums therefore generally come out of the annuity after tax, which makes them eligible to be counted as medical expenses. The loss of premium conversion is also one reason the same plan can cost more on an after-tax basis in retirement than it did during a federal career.
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Reemployed annuitants in positions that normally carry FEHB eligibility are an exception. They may be able to move their enrollment to the employing agency and pay through premium conversion again.
The 7.5 percent hurdle
Medical and dental expenses are deductible only on Schedule A, only for taxpayers who itemize, and only to the extent they exceed 7.5 percent of adjusted gross income (AGI). IRS Publication 502 lists the qualifying expenses. Premiums for health, dental and vision coverage count when paid with after-tax dollars, and so do copayments, coinsurance and other unreimbursed costs.
For retirees, the list can include FEHB or PSHB premiums, FEDVIP premiums, Medicare Part B and Part D premiums, and Medigap premiums. The standard Part B premium is $202.90 a month in 2026, and higher-income retirees pay more under the income-related surcharge (see the Medicare premiums page).
AGI includes taxable annuity income and traditional Thrift Savings Plan (TSP) withdrawals, which raises the 7.5 percent floor. Qualified Roth TSP withdrawals are not part of AGI. The floor at several income levels:
| Adjusted gross income | Medical expenses must exceed |
|---|---|
| $60,000 | $4,500 |
| $80,000 | $6,000 |
| $100,000 | $7,500 |
| $120,000 | $9,000 |
A worked example for a retired couple
Consider a married couple filing jointly with $90,000 of AGI, so the floor is $6,750. Over the year, they pay about $7,200 in FEHB premiums, $2,435 in Medicare Part B premiums for one spouse (12 months at $202.90), $900 in FEDVIP premiums and $1,500 in out-of-pocket costs. The total is about $12,035, and the amount above the floor is about $5,285.
That $5,285 is not a $5,285 tax savings. It is added to the couple’s other itemized deductions, and the total has to beat the 2026 standard deduction of $32,200 for married couples filing jointly ($16,100 for single filers, per IRS Revenue Procedure 2025-32) before itemizing saves anything. A retired couple with a paid-off home and modest state taxes may have little else to itemize, so the standard deduction usually wins. Taxpayers 65 and older also qualify for an additional standard deduction, which raises the bar for itemizing.
Separately from that comparison, the IRS offers an enhanced deduction for seniors of up to $6,000 per eligible person age 65 or older for tax years 2025 through 2028. It phases out above $75,000 of modified AGI ($150,000 for joint filers) and is available whether or not the taxpayer itemizes, so it does not change the math above.
When the deduction can work
The medical deduction is most likely to pay off in a year with unusually high costs, such as surgery or qualifying long-term care expenses, or in a year when income is lower than normal. It can also help to concentrate elective expenses into one tax year rather than spreading them across two, since the 7.5 percent floor applies to each year separately.
Retirees with a side business
Self-employed taxpayers follow different rules. Qualifying health insurance premiums can be deducted above the line, without itemizing, but the deduction is limited to the business’s net profit, after subtracting the deductible half of self-employment tax and any retirement plan contributions for that business. The instructions for IRS Form 7206 also bar the deduction for any month the taxpayer was eligible to participate in a health plan subsidized by an employer, including a spouse’s employer.
FEHB coverage kept in retirement is government-subsidized but no longer tied to current employment, and the IRS instructions do not say how the employer-subsidized plan restriction applies to it. A retiree with consulting or other self-employment income should get an answer from a qualified tax professional before claiming the deduction.
Retired public safety officers
A separate rule applies to some retired law enforcement officers, firefighters and other public safety personnel. Eligible retirees can exclude up to $3,000 a year from taxable retirement plan distributions used to pay health or long-term care insurance premiums. The distributions may be paid directly to the insurance provider or to the retiree, who then pays the premiums. OPM has determined that the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) are eligible retirement plans, and qualifying retirees claim the exclusion on their tax returns. The same premiums cannot also be deducted as medical expenses. Eligibility depends on the type of public safety service and the circumstances of retirement, so IRS Publication 575 should be checked before claiming the exclusion.
What to check before open season ends
- Active employees: confirm premium conversion is in place, since a waiver changes how premiums are treated at tax time.
- Retirees: total the year’s FEHB or PSHB, FEDVIP, Medicare and Medigap premiums plus out-of-pocket costs, then compare the total to 7.5 percent of AGI.
- If the total clears the floor, add the excess to other itemized deductions and compare against the standard deduction.
- Retirees with business income: get an answer on the employer-subsidized plan rule before claiming the self-employed deduction.
- Retired public safety officers: review the $3,000 exclusion in Publication 575.
The open season dates and the FEDVIP dental and vision options are on the site, and the Medicare Part B decision for federal retirees affects how large the premium total becomes.