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ACA premiums tax deductible?
03-31-2015, 12:22 PM
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#1
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gone traveling
Join Date: Mar 2015
Location: Greenville
Posts: 653
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ACA premiums tax deductible?
For those that are ER'd and using ACA Health Care, are the premiums that you pay (either after your subsidy, or if you don't get a subsidy) tax deductible?
Just curious, as my premiums with my employer sponsored plan is taken out "pre-tax".
Trying to determine my required withdrawal amount for ER, and looking at tax implications....
Thanks!
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03-31-2015, 12:34 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
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Not tax deductible. This is a fundamental inequity in the way we pay for health care.
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03-31-2015, 12:39 PM
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#3
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,726
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Well, the portion of health insurance premiums that exceed 10% of adjusted gross income are eligible for tax deduction.
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03-31-2015, 12:40 PM
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#4
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gone traveling
Join Date: Mar 2015
Location: Greenville
Posts: 653
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Wow. I was kind of thinking it might be considered "Self Employed" Health Insurance, which i think is deductible. That sucks.
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03-31-2015, 01:14 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,375
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If you are self-employed they are deductible as a business expense. See Don’t Miss the Health Insurance Deduction if You’re Self-Employed
As travelover notes, there are inequities in the tax treatment of those who get their health insurance through work where it is a non-taxed benefit, those who are self-employed where it is deductible to the extent of profits and individuals where it is deductible only if all you qualified medical expenses exceed 10% of income. Another good reason for ultimately divorcing health insurance from employment.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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03-31-2015, 01:22 PM
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#6
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,130
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Quote:
Originally Posted by Pilot2013
For those that are ER'd and using ACA Health Care, are the premiums that you pay (either after your subsidy, or if you don't get a subsidy) tax deductible?
Just curious, as my premiums with my employer sponsored plan is taken out "pre-tax".
Trying to determine my required withdrawal amount for ER, and looking at tax implications....
Thanks!
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I'm still on the exact plan with my previous employer and am very thankful that they still have it available for their retirees. However the premiums are now deducted after tax rather than pre-tax.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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Deductibility of ACA premiums
04-03-2015, 09:05 AM
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#7
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Confused about dryer sheets
Join Date: Mar 2014
Location: Gig Harbor
Posts: 7
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Deductibility of ACA premiums
I am self-employed and have an ACA plan, but my understanding is that premiums are not deductible as a business expense unless you have a plan actually established under the business itself. I'm assuming I can't deduct my ACA premiums as a business expense because I opened it on the Marketplace as an individual. If this is not correct, I'd like to know!
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04-03-2015, 09:17 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,153
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Only if you are self-employed. Aaargh!
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Retired since summer 1999.
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04-03-2015, 09:19 AM
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#9
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,726
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I think it depends on how you are organized.
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04-03-2015, 09:22 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,375
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__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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04-03-2015, 09:27 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 2,223
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I'm self employed as a Stand-up Philosopher (like Mel Brooks in the movie "History of the World") Does that qualify to deduct ACA premiums ?
__________________
" A person is smart, but People are dumb, dangerous, panicky animals, and you know it " Agent "K", Men in Black
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04-03-2015, 09:42 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,375
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Sounds like a hobby to me.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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04-03-2015, 09:45 AM
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#13
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Full time employment: Posting here.
Join Date: May 2008
Posts: 599
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Yes. Medical insurance is deductible as a medical expense. You can only deduct the premium you paid not the amount that was paid on your behalf (the subsidy)
Tax Topics - Topic 502 Medical and Dental Expenses
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04-03-2015, 09:49 AM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,375
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__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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04-03-2015, 09:50 AM
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#15
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Recycles dryer sheets
Join Date: Mar 2014
Posts: 197
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Quote:
Originally Posted by Pilot2013
For those that are ER'd and using ACA Health Care, are the premiums that you pay (either after your subsidy, or if you don't get a subsidy) tax deductible?
Just curious, as my premiums with my employer sponsored plan is taken out "pre-tax".
Trying to determine my required withdrawal amount for ER, and looking at tax implications....
Thanks!
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It is unclear if you are asking about insurance premiums paid with pre-tax or after tax dollars. You ask about ACA Health Care premiums in retirement then say your employer sponsored plan (before retirement?) premiums are pre-tax.
If the premiums are paid with pre-tax dollars they are not deductible. If paid with after tax dollars, they are medical expenses and deductible subject to limits (such as more than 10% of AGI or 7.5% if you or your spouse born before 1/2/1950). See 1040 Schedule A Instructions and Publication 502.
If you RE, 10% of AGI can be much smaller than health insurance premiums.
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04-03-2015, 10:52 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Aug 2011
Posts: 3,609
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Quote:
Originally Posted by MichaelB
Well, the portion of health insurance premiums that exceed 10% of adjusted gross income are eligible for tax deduction.
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As user5027 correctly points above, it is the total of all medical expenses paid that are in excess of the appropriate percentage (10% or 7.5%) of AGI that are deductible on Schedule A.
Publication 502 (2014), Medical and Dental Expenses contains the list and rules for everything that is considered under this category.
Slides 7 through 14 at the following training site gives an overview of this.
Be sure not to overlook big hitter items like LTC premiums etc. Also medical transportation costs (ie mileage in your personal vehicle using the medical mileage rate/parking fees) also qualify.
-gauss
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04-03-2015, 10:59 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,153
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Quote:
Originally Posted by Lakewood90712
I'm self employed as a Stand-up Philosopher (like Mel Brooks in the movie "History of the World") Does that qualify to deduct ACA premiums ?
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You just need enough income to cover your premiums!
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Retired since summer 1999.
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04-03-2015, 11:11 AM
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#18
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,726
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Quote:
Originally Posted by gauss
As user5027 correctly points above, it is the total of all medical expenses paid that are in excess of the appropriate percentage (10% or 7.5%) of AGI that are deductible on Schedule A.
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Yes, you and user5027 are correct.
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04-03-2015, 03:04 PM
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#19
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gone traveling
Join Date: Mar 2015
Location: Greenville
Posts: 653
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What I was trying to say:
CURRENTLY, my employer deducts my health insurance premium from my pay check PRE-TAX.
My question is:
When ER'd, is the Insurance Premium I would pay through ACA (of course, not the subsidy) allowed to come out of taxable income (like the Pre-Tax payment of my insurance premiums now). Or only that above the Schedule A limits (10%/7.5%)
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04-03-2015, 03:56 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,375
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The latter. Your ACA premium will be included with other medical costs on Schedule A and will be deductible only to the extent that your total medical costs exceed 10% of your AGI.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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