? About deducting healthcare expenses

[Yarnstormer]

Hi all,

Sadly, I am not retired, but have left my full time work to homeschool my daughter and work at home. I expect earnings the first year will not be large. I do however have survivor ss and rental income to sustain us. I also have income from brokerage and inherited IRA. I currently reinvest the brokerage income and would consider the inherited rmd as funds for most of my over 50 roth contribution for the year. It is my goal to continue this practice, if I am unable to contribute more.

I *think* that if I cobra (957/mo) that my healthcare expenses just for premiums and deductible not including meds and copays would be at least $5000 over 10% of my income. Probably more. Also we travel 4 hours twice a month to see a provider that is out of network. That may also be considered as a health expense.

The cobra plan has a $750 deduct, $4000 oop each, so if both of us had events it costs more OOP than aca. However, the emergency room has a $300 copay that is NOT subject to deductible. So an emergency would be better had on the cobra plan. For example, a couple of years ago I had diverticulitis - the ER deduct was $100 then, the whole event including scans cost me $80 because I paid at the time and got 20% discount for doing so. Still wasn't fun. And def a looming possibility of reoccurrence.

I had an ambulance ride to the hospital year before last. I never got a hospital bill. I guess it hit my oop so fast I was covered. Still don't know what was wrong but it was def not my heart. Prob anxiety.

I take a couple of inexpensive generics and use a daily expensive asthma med that is not covered on aca tho I could prob get a prescription card.
On aca I would prob pay $300/mo for silver plan. This is rough - in reality I bet it would be a lot less at tax time. So it is much less out of pocket.

All of our docs are out of network in aca. I would survive tho I hate to switch asthma meds but it took a long time to find someone willing to even see my kid much less help or prescribe. I could continue to take her there and pay that practice out of pocket about $100/mo maybe will eventually be a every other month thing (local practice not the out of town one) copay at same practice with cobra is $25

Sooo I'm wondering if I can justify the cobra based on the deductibility? I would also have my home mortgage interest, and business expenses mostly software that must be leased monthly (damn autocad blood suckers) so I think I could itemize. My bracket is low.

Stupid question - I want to keep my social security earned income as high as possible as I am short on years and have never been a high earner. Will all these deductions affect my income afa ss is concerned? Or just federal and state income taxes?

Thinking a xmas retail job would be a good idea to boost earnings for as long as I am able.

My heart says cobra it's just SO expensive kinda freaks me out. It is still not as expensive as my insurance for just me back in the day - healthy and young. I tried to get cheaper coverage and was denied for history of acne and back pain (computer neck) people don't remember how things used to be. Neither one of us could get insurance now if pre existing conditions were considered.

So yeah... Leaning towards cobra want to understand how deducting works in this situation..

Thanks!

 

[Yarnstormer]

Hmm just got the cobra package. I could cobra just myself for 466/mo, put her on aca for 169/mo with no subsidy due to my conservative estimates, possibly put her on medicaid next year when income estimate is clearer.

I would only be paying out of pocket for one provider (other than the one that is in no network) and I bet I could get them to see her every two possibly three months. I think it's $96/cash.

 

[Yarnstormer]

Some of the Aca plans are called "multi state" plans. Does that mean no coverage in other states on plans that are not multi state? Other than deemed emergency situations which is kinda sketchy to me

Edit: googled - see that is pointless as there is only one insurer in my marketplace. Bcbs

Wish I knew what mr trump was gonna do. Surely they can't yank the aca out from under people mid year?!?

 

[Sunset]

I know nothing about cobra
However for your medical stuff:
deductions are allowed for normal taxpayers:

1. monthly plan cost,
2. co-pays,
3. prescriptions,
4. a per mileage amount to visit and return home (IRS sets the rate I don't know it off hand per mile)
5. medical devices
6. dental is medical

 

[marko]

Fascinated by these low HC premiums every time the subject comes up here.

We pay $1800 a month for a HD family plan. When I get Medicare in June DW goes to $900. Boston area so more money for everything, but still.....

 

[EastWest Gal]

If you are self-employed, health insurance premiums are a line item expense on the 1040, up to the amount that you earn. Not subject to the 10% rule. Another benefit of the ACA. I guess they could take that away too. This is explained here:

http://www.nolo.com/legal-encyclope...-deduction-a-valuable-personal-deduction.html

 

[Yarnstormer]

If you are self-employed, health insurance premiums are a line item expense on the 1040, up to the amount that you earn. Not subject to the 10% rule. Another benefit of the ACA. I guess they could take that away too. This is explained here:

http://www.nolo.com/legal-encyclope...-deduction-a-valuable-personal-deduction.html

This deduction did not exist before the aca?

that clears up the "does the insurance deduction affect self employment taxes" question.
Of course my aca premiums would be pretty low but still...Thanks!

I wonder if the health expenses over 10% deduction affects your self employment taxes

 

[Yarnstormer]

Fascinated by these low HC premiums every time the subject comes up here.

We pay $1800 a month for a HD family plan. When I get Medicare in June DW goes to $900. Boston area so more money for everything, but still.....

Really?
The prices for the aca I was quoting were my subsidized prices so they are really more. Also my price was for a 54 yr old woman and a 14 year old. I bet two adults would be a lot more but not that much.!

 

[Sarah S]

Fascinated by these low HC premiums every time the subject comes up here.

We pay $1800 a month for a HD family plan. When I get Medicare in June DW goes to $900. Boston area so more money for everything, but still.....

Surprised. If you live in MA you must be in a pocket with significantly higher than average premiums for the state.

I currently pay 687 a month ( unsubsidized) for Tufts silver with the full provider panel not the cheaper limited plan - blue cross and HCHP are more but none were that much. I have played with a couple of different locations as I plan to move and also with older age. The highest cost I found for my plan was 715 ETA this is for one person but 900 for an HD plan in MA for your wife?

 

[kimcdougc]

Surprised. If you live in MA you must be in a pocket with significantly higher than average premiums for the state.

I currently pay 687 a month ( unsubsidized) for Tufts silver with the full provider panel not the cheaper limited plan - blue cross and HCHP are more but none were that much. I have played with a couple of different locations as I plan to move and also with older age. The highest cost I found for my plan was 715

DH 59, me 56. We pay $1,280 per month for a silver plan. $2,500 deductible each with $6000 out of pocket per year.

Don't like it, but what is a person to do?

We did Cobra for 18 months after DH retired. Our income is low now so we don't have enough income to file long form.

 

[sakowitzm]

Similar here. Our COBRA Aetna Bronze Plus plan is $1,750/month to cover my wife and I and college age daughter. Includes dental and vision. Yikes.

 

[athena53]

I wonder if the health expenses over 10% deduction affects your self employment taxes

No. Self-employment taxes (I assume that's mostly Social Security) are a % of your gross, with no deductions that I know of.

 

[Ian S]

No. Self-employment taxes (I assume that's mostly Social Security) are a % of your gross, with no deductions that I know of.

Actually, someone who's self-employed will generally get to deduct many business-related expenses from gross business income prior to self-employment (SS and medicare) taxes being calculated. For example, a self-employed designer/draftsman who pays fees for CAD software would get to deduct those fees from total business income on Sch.C to arrive at net income or profit on which self-employment taxes would then be levied. Someone who is self-employed should not use Sch. A (itemized deductions) for their business related deductions.

 

[athena53]

Ok, Ian sounds like he's more familiar with this than I am! Please don't tell my brother the tax CPA I'm pontificating on the subject again. ;-)

 

[COcheesehead]

I know nothing about cobra
However for your medical stuff:
deductions are allowed for normal taxpayers:

1. monthly plan cost,
2. co-pays,
3. prescriptions,
4. a per mileage amount to visit and return home (IRS sets the rate I don't know it off hand per mile)
5. medical devices
6. dental is medical

I thought only if they are greater than 5% - 7% (depends on your income) of your AGI. If not, no deduction.

 

[Bestwifeever]

Actually, someone who's self-employed will generally get to deduct many business-related expenses from gross business income prior to self-employment (SS and medicare) taxes being calculated. For example, a self-employed designer/draftsman who pays fees for CAD software would get to deduct those fees from total business income on Sch.C to arrive at net income or profit on which self-employment taxes would then be levied. Someone who is self-employed should not use Sch. A (itemized deductions) for their business related deductions.

Yes. TurboTax and other tax software will walk you through these.

 

[Yarnstormer]

To followup - I went with the ACA plan - estimated price after subsidy $340/mo

To help with my decision I took my daughter to the doctor, to see what a cash price would be as we don't want to change. It was not bad but I did learn that they would only allow cash pay for established patients. So, that's something to consider.

I priced all of our meds, which is not much and all generic. My inhaler can be switched to a lower dosage and be covered. So it would have been kinda crazy to cobra.

I am relieved to have that decision over!

and omgosh the days are long and I feel 10 times better because I walk and ride my bike every day. Even just a *little* retirement is a good thing!

 

[Tandemlovers]

Under ACA last year, we paid an astonishingly low monthly premium of $78 for ourselves (54 and 63) and 24 year old daughter. It was for a Bronze HSA with a $13k family deductible/$6.5k individual deductible. This year, that same plan has a monthly premium of $378 for just ourselves. We did meet the individual deductible last year when I had cataract surgery.
By next January, hubby will start medicare, and I am anticipating a higher premium for myself.

 

[Yarnstormer]

That was a great deal! But really, if I could continue with this rate indefinitely I would be thrilled because I remember what it was like in the old days. Over 1k month for me at age 45 with no real issues.
I know it can't last so I will try to save for the future.

I wonder what medicare with all the bells and whistles costs for a single woman in my area? I'm in Georgia...10 years away from medicare age unless they move it!

 

[Sunset]

I thought only if they are greater than 5% - 7% (depends on your income) of your AGI. If not, no deduction.

Right, I was only listing what a person would add up to deduct, but of course there is the limitation or cap of some % (depending upon age?) for a person.

I did it as years ago I didn't know, driving to the doctor was an expense.

What I need to do is find a doctor in Europe within my plan

 

[Yarnstormer]

I thought only if they are greater than 5% - 7% (depends on your income) of your AGI. If not, no deduction.

I believe it is medical expenses in excess of 10% of your gross income are deductible.

I doubt I would be able to take the self employed premium deduction and also the total health expenses deduction. In the end I think for me if I make enough to itemize the total expenses will be a better deduction due to the every other week not covered 2 hours away appt. I will let accountant figure that one out.