Self Employment Health Insurance Deduction

[SecondCor521]

Quote:

Originally Posted by DrBrisket That sounds correct to my understanding except the 7.5% limitation is 10% starting in 2019. From the Draft 2019 1040 instructions on page A-1:

Except the spending bill passed about a week ago extended the 7.5% floor to 2019 and 2020. See here, among others:

https://www.forbes.com/sites/kellyph...nt-plan-tweaks

I'm sure the IRS will update the 2019 draft instructions before releasing them.

[Luck_Club]

Quote:

Originally Posted by Rianne Appreciate the info. In 2019 our monthly premium for HDHP is $8.28 with a family deductible of $13,600. In 2020 our MP is $7 something/month. We have been lucky our 2018-2019 health costs average < $2000/yr. The HSA contributions will hopefully build to a safe level-we max those contributions. Good health is our ticket to success and I cannot be more grateful we've been fortunate so far.

WOW $7 a month for health insurance premium?

How is that even possible?

[DrBrisket]

Quote:

Originally Posted by SecondCor521 Except the spending bill passed about a week ago extended the 7.5% floor to 2019 and 2020. See here, among others: https://www.forbes.com/sites/kellyph...nt-plan-tweaks I'm sure the IRS will update the 2019 draft instructions before releasing them.

Thanks for pointing that out!

Strangely enough, we had COBRA coverage in 2019 and this is just enough of a difference to allow me to use Schedule A and save a few bucks on my 2019 taxes, but does not impact how much Roth conversions as I was already up against the AGI limits for AOTC.

[DrBrisket]

Quote:

Originally Posted by Luck_Club WOW $7 a month for health insurance premium? How is that even possible?

The short answer is ACA premium tax credits (PTC).

The in-depth answer is a straight-forward, but leads to a bit of a headscratcher for me.

From irs.gov

Quote:

The amount of the premium tax credit is generally equal to the premium for the second lowest cost silver plan available through the Marketplace that applies to the members of your coverage family, minus a certain percentage of your household income.

Plans available on the marketplace are determined by the county you reside in.

In our case, we are targeting income to be just below 400% FPL for 2020 as we are in a multi-year Roth conversion process. This income level substantially reduces the PTC. However, the PTC is available on any ACA plan offered in my county, so we chose a Bronze plan for 2020 that has a net cost of around $500/month for my family.

The headscratcher for me is: if I were to move 7 miles west to the next county over, the EXACT SAME plan we chose for 2020 would be under $100/month for my family. This is because the second lowest price silver plan in the adjacent county has a much higher cost than second lowest cost silver plan in my county. We are not willing to move for a variety of reasons, but this is an interesting form of "geo-arbitrage".

[Luck_Club]

Quote:

Originally Posted by DrBrisket The short answer is ACA premium tax credits (PTC). The in-depth answer is a straight-forward, but leads to a bit of a headscratcher for me. From irs.gov .

I know it is ACA tax credits but according to Rianne, her family has a $70,000 spend per year. That money must be coming from somewhere. If you ask me this is no different then Medicare asset protection, which is so frowned upon.

Meanwhile my 74 year old father, who never made more than $30K per year, and lives on a small pension and SS amounting to a bit under 30K per year pays $257 per month in medicare health insurance, for a single person.

[lem1955]

I'm the OP. Thanks all for the research. I filed amended returns - Federal and two states claiming the Line 29 deduction. I should see a tax refund of about $3,500 total for 2018. I'm not so worried about having filed fraudulently now! Thanks again.