Deduct Montana 2021–2023 medical and long-term care insurance premiums in full (Itemized Deductions Schedule lines 2–3) #9930

What is wrong

For TY2021–2023, Montana's Itemized Deductions Schedule (Form 2 page 7) deducts medical insurance premiums in full on line 2 ("Medical insurance premiums not deducted elsewhere on your return"), and long-term care premiums on line 3. Only line 1's other medical and dental expenses are reduced by 7.5% of Montana AGI. PolicyEngine's mt_medical_expense_deduction_joint and mt_medical_expense_deduction_indiv take itemized_medical_expenses, which adds medical_expense_health_insurance_premiums (including modeled Medicare Part B premiums) to other_medical_expenses, and floor the total. So premiums are under the floor.

Sources

• Former MCA § 15-30-2131(1)(a)(iii)–(iv) (MCA 2021, mca.legmt.gov) excludes from the (1)(a) items "premium payments for medical care as provided in subsection (1)(g)(i)" and long-term care premiums.
• Subsection (1)(g) allows "the entire amount of premium payments made by the taxpayer, except premiums deducted in determining Montana adjusted gross income … for: (i) insurance for medical care, as defined in 26 U.S.C. 213(d) …; and (ii) long-term care insurance policies …".
• 2022 Form 2 instructions (PDF pp. 32–33):
  • Line 1 excludes premiums claimed on lines 2 and 3, employer-paid premiums excluded from federal AGI, and expenses paid from a Montana MSA.
  • Line 2 lists the conditions for deducting 100% of medical insurance premiums: not paid through an HSA, an MSA or a pre-tax cafeteria plan, and not taken as the self-employed health insurance deduction.
  • Line 3 covers long-term care premiums.

Fix

From 2021 to 2023:

• Floor only the non-premium expenses on line 1.
• Deduct eligible medical insurance premiums in full on line 2, excluding premiums already deducted in Montana AGI (for example self_employed_health_insurance_ald) and pre-tax premiums.
• Deduct long-term care premiums in full on line 3.

Apply this to both the joint and separate (_indiv) variants. From 2024 Montana uses federal itemized deductions, so the federal treatment (premiums under the floor) is correct.

Found while working on #9903.