Okay, I currently have a high deductible plan with an HSA attached to it. I just got a letter in the mail saying that I can sign back up with my COBRA plan for 35% of the payment. It sounds like a good deal. Questions:
Are the payments of the COBRA premium tax deductible?
What can/must I do with my HSA? When I started it, I had to be enrolled in a high deductible plan. If I am no longer enrolled in such a plan, what do I do with the money in there?
Thanks in advance.
You can deduct your health insurance premiums from your taxes if your un-reimbursed medical expenses for the year exceed 7.5% of your adjusted gross income. In that event, you may only deduct the amount that exceeded the threshold.
Your HSA will be okay. Canceling the plan means you can no longer put money into it, but that money will remain there and you can still take it out for eligible medical expenses. The tax and 10% penalty will still apply if you remove the funds for non-medical expenses. The money will continue to accrue interest, incidentally.
You say you’re currently on a health insurance plan. You can’t get the COBRA subsidy unless you aren’t eligible for another plan.
I’m on an individual plan. The way I read the law, I have to be eligible for a GROUP plan to not get the COBRA subsidy…
From IFEBP.org:
Eligibility for the subsidy is identical to eligibility for COBRA, with the addition of income requirements. Just like always with COBRA, if you become eligible for a new group plan and turn it down, then you’re eliminated from eligibility from your current COBRA plan. Eligibility for individual or family major medical insurance, or for limited-benefit, mini-med, accident plan, CI plans, GAP plans, or anything else has no bearing on COBRA eligibility.
In other words: eligibility for an individual plan, or currently holding an individual plan, does not disqualify you from electing COBRA. Since you have just been notified of your eligibility, your electability period has been extended and you can freely elect COBRA.
OK, so your COBRA plan costs less. You do realize COBRA is temporary, correct? When it ends (and it will) will you be able to get back onto your individual plan without a problem?
Yes, I realize that. I hope that in the next year I will get into a group plan somewhere. Hell, I almost have to. This individual plan nonsense is either prohibitively expensive or doesn’t cover much of anything because of the high deductible.
I know nothing of the Florida market, but I do know an agent in Tampa who I’m sure would be happy to help you find an individual plan that you might be happier with. (Note: he and I do not have a “referral fee” or commission split between one another. I benefit in no way from your transaction, if any, with him. Just offering.)
Okay, I just called to get more info on the COBRA subsidy, and was told that if I do elect this coverage, I must pay premiums retroactive to March 1st. WTF?!?
Even though I can submit medical expenses retroactive (I don’t have any) why should I have to pay for something that I wasn’t aware I had and therefore didn’t use as I normally would?
The rep said that it was part of the government package and mandatory.
And Soul, thanks for the offer, but my wife has pre-existing conditions and I’ve searched up and down for insurance quotes. It’s either low premium, high deductible, or high premium low deductible. I’m not necessarily unhappy with what I have now, it’s just that the savings would take a huge hit if something tragic happened.
I can either not be able to afford monthly expenses, or wipe out the savings if something bad happens. At least in the second option, there is an “if” involved.
This is a separate question, really- but yes, assuming you’re obese, rather than simply overweight, then yes. It’s a pre-existing medical condition. Obese people are commonly refused life and health insurance.
You will be able to submit claims for reimbursement from the COBRA plan rtetroactively to matrch 1st as well. It is to prevent what they call a gap in coverage. The group insurance plan has to treat you like you never left the plan in order to be eligible for it and to show continuous coverage.
You have to pay because that’s just how it works. There is no way around that.