Employer health plan: are out of pocket monthly premium deductible


R

Robert Nelson

I work for an employer that pays for my basic health care
plan, yet now I've had to pay out of pocket ($25 a month)
for the plan as well. Can I deduct that $25 times 12 on my
taxes? And what form and line would I enter that info if I
can?

Can Long Term Disability insurance premiums be deducted as well?

Thanks
 
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J

Jonathan Kamens

Health insurance premiums you pay can be added to your
medical expenses on Schedule A. Only the portion of your
medical expenses above 7.5% of your adjusted gross income is
deductible.

Disability insurance premiums are not deductible.
 
P

Phil Marti

Robert Nelson said:
I work for an employer that pays for my basic health care
plan, yet now I've had to pay out of pocket ($25 a month)
for the plan as well. Can I deduct that $25 times 12 on my
taxes? And what form and line would I enter that info if I
can?
This is a Schedule A itemized deduction.
Can Long Term Disability insurance premiums be deducted as well?
No. The upside is that if you ever have to draw benefits
they won't be taxable.

Phil Marti
Topeka, KS
 
R

Rich Carreiro

Robert Nelson said:
I work for an employer that pays for my basic health care
plan, yet now I've had to pay out of pocket ($25 a month)
for the plan as well. Can I deduct that $25 times 12 on my
taxes?
Is the $25 being paid pre-tax or not? In other words,
when you get your W-2, does the taxable wages number
on Box 1 already have that $25/month subtracted out
of it?

If it's being paid pre-tax, you can't deduct it on
your return because you're already getting a deductionm
for it. Double-dipping isn't allowed.

If it's not being paid pre-tax you can deduct it
However...
And what form and line would I enter that info if I can?
It would go in the Medical Deductions section of Schedule A.
However, note that you can only deduct medical expenses that
are in excess of 7.5% of your adjusted gross income (the last
number on the front of form 1040). Unless you have very low
income or very high medical expenses, that threshold will
probably make the insurance expense non-deductible.

And even if some of it is deductible, if your total itemized
deductions don't exceed your standard deduction, you still
get no tax benefit from deducting the premiums.
 
A

Andy Green

Robert Nelson said:
I work for an employer that pays for my basic health care
plan, yet now I've had to pay out of pocket ($25 a month)
for the plan as well. Can I deduct that $25 times 12 on my
taxes? And what form and line would I enter that info if I
can?

Can Long Term Disability insurance premiums be deducted as well?
that 25.00 isn't it pre-tax?, if so then you would be double
dipping. Check your paystub. If it were taxed, You can only
deduct anything over 7.5% of your AGI, so depending on your
income, I'd guess you wouldn't be able to.
 
R

rick++

Robert Nelson said:
I work for an employer that pays for my basic health care
plan, yet now I've had to pay out of pocket ($25 a month)
for the plan as well. Can I deduct that $25 times 12 on my
taxes? And what form and line would I enter that info if I
can?

Can Long Term Disability insurance premiums be deducted as well?
Read your paystub closely. Typically these are paid with
pre-tax money, i.e. no federal or state income tax (but with
Social Security tax). This is equivalent of a deduction,
even better because there is no 7.5% minimum.

LTD is a special case. Deductability of premiums affects
taxability of the payout. If the premium is tax free, then
you pay tax when collect disability; if you pay the premium
with taxable money, then the disability is tax-free.
 
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M

Missy Doyle

Robert Nelson said:
I work for an employer that pays for my basic health care
plan, yet now I've had to pay out of pocket ($25 a month)
for the plan as well. Can I deduct that $25 times 12 on my
taxes? And what form and line would I enter that info if I
can?

Can Long Term Disability insurance premiums be deducted as well?
Yes to both questions. Schedule A under medical, subject to
7.5% deduction of the AGI.

Missy Doyle
 
R

rlsusenet

Jonathan said:
Health insurance premiums you pay can be added to your
medical expenses on Schedule A. Only the portion of your
medical expenses above 7.5% of your adjusted gross income is
deductible.
However, you might want to check to see whether you are
covered by a "125 plan". This is sometimes also referred to
as a "cafeteria plan", wherein you get to designate some
fixed amount of your income, per paycheck, to a fund that
you can apply towards co-payments, transportation costs for
medical purposes, and in general, most or all other items
that would otherwise be classified as a medical expense.

If your employer does have such a plan, (most employers who
charge employees a portion of their health insurance
premiums DO), chances are that your contribution to your
health insurance premium was NEVER TAXED, and is therefore
not deductible anyway.

If that's the case, don't feel badly -- you already got the
deduction you were looking for. If you weren't covered by
the 125 plan, unless you had outrageous medical expenses (or
very little income), you wouldn't have reached the 7.5%
floor required to take a deduction!
 
J

Jonathan Kamens

Can Long Term Disability insurance premiums be deducted as well?
Yes to both questions. Schedule A under medical, subject to
7.5% deduction of the AGI.
You're right about health-insurance premiums (assuming, as
others have pointed out, that they weren't treated as
pre-tax deductions), but I don't think you're correct about
long-term disability premiums. Publication 502 seems to say
that they are not deductible.

However, as others have pointed out, an employer may choose
to deduct them from your paycheck pre-tax rather than
post-tax, in which case you have to pay taxes on the
disability benefit if it is ever paid out. Not a very good
trade-off, I think, considering that disability premiums
(or, at least, the portion that the employee pays) are
usually quite low -- I think the employee is better off in
most cases having them deducted post-tax so that the benefit
won't be taxable.
 
A

Arthur L. Rubin

Robert said:
I work for an employer that pays for my basic health care
plan, yet now I've had to pay out of pocket ($25 a month)
for the plan as well. Can I deduct that $25 times 12 on my
taxes? And what form and line would I enter that info if I
can?
That's been answered.
Can Long Term Disability insurance premiums be deducted as well?
This question, IMHO, has not been answered correctly. LTD
insurance premiums can be deducted as medical expenses (up
to a limit depending on your age -- see the current
publication 502 for the limits.)

As long term disability expenses are also considered medical
expenses, payments made from the policy reduce the
deductable expenses, rather than being taxable.
 
P

Phoebe Roberts, EA

Arthur said:
Robert Nelson wrote:
This question, IMHO, has not been answered correctly. LTD
insurance premiums can be deducted as medical expenses (up
to a limit depending on your age -- see the current
publication 502 for the limits.)
You're thinking of long-term *care* premiums, I believe. A
different animal.

LTD pays young people when they're unable to work for more
than 6 months. LTC pays old people in nursing homes.

Phoebe :)
 
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J

Jonathan Kamens

This question, IMHO, has not been answered correctly. LTD
insurance premiums can be deducted as medical expenses (up
to a limit depending on your age -- see the current
publication 502 for the limits.)
I believe you are confusing long-term disability insurance
with long-term care insurance. The latter can be deducted
as you've described; the former cannot.

I believe the original poster was talking about long-term
disability insurance, i.e., a policy which pays lost income
when you become unable to work because of a disability, not
long-term care insurance.
 
B

Bob Sandler

This question, IMHO, has not been answered correctly. LTD
insurance premiums can be deducted as medical expenses (up
to a limit depending on your age -- see the current
publication 502 for the limits.)
You are confusing long term disability insurance with long
term CARE insurance, which is what Pub. 502 is talking
about. Disability insurance replaces lost income; long term
care insurance pays for medical and personal services. They
are two different kinds of insurance. Premiums for long term
disability insurance are not deductible. Premiums for long
term care insurance are deductible as medical expenses,
subject to the limits you referred to.
 
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A

Arthur L. Rubin

Can Long Term Disability insurance premiums be deducted as well?
This question, IMHO, has not been answered correctly. LTD
insurance premiums can be deducted as medical expenses (up
to a limit depending on your age -- see the current
publication 502 for the limits.)

As long term disability expenses are also considered medical
expenses, payments made from the policy reduce the
deductable expenses, rather than being taxable.
The (three, as I see it now) posters who noted I was
confusing long term disability with long term care
are correct. LTD insurance premiums CAN be pre-tax
in a cafeteria plan, but any payments would then
be taxable, which is probably not a good idea.
 

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