# How much does my health insurance really cost me? **URL:** \ **Category:** Factual Questions\ **Created:** [February 5, 2009, 4:44pm UTC](https://boards.straightdope.com/t/how-much-does-my-health-insurance-really-cost-me/484581 "2009-02-05T16:44:22Z")\ **Posts on this page:** 3\ **Page:** 2
**Author:** ![Baracus](https://avatars.discourse-cdn.com/v4/letter/b/2bfe46/32.png) [@Baracus](https://boards.straightdope.com/u/Baracus)\ **Post date:** [February 6, 2009, 7:00pm UTC](https://boards.straightdope.com/t/how-much-does-my-health-insurance-really-cost-me/484581/21 "2009-02-06T19:00:05Z")
> [@lilflower](#): > > Also, I was expecting my after-tax dollars to be less than my pre-tax. In the example above, wouldn’t the answer be $9500 \* (1 - tax rate)? Assuming a 25% tax bracket, had I brought home those premium dollars rather than contribute to my employer plan, I would have had an additional $7125 in my pocket, right? That is correct. [QUOTE=SP2263] It’s true that you can deduct health care expenses over and including 8% of your income but you cannot include the actual health care premiums in that number. [/QUOTE] You cannot deduct employer paid or pre-tax premiums, but [per the IRS](http://www.irs.gov/taxtopics/tc502.html)individual plan premiums are deductible subject to the 7.5% floor. ---
**Author:** ![Zulema](https://avatars.discourse-cdn.com/v4/letter/z/db5fbb/32.png) [@Zulema](https://boards.straightdope.com/u/Zulema)\ **Post date:** [February 6, 2009, 8:47pm UTC](https://boards.straightdope.com/t/how-much-does-my-health-insurance-really-cost-me/484581/22 "2009-02-06T20:47:24Z")
You cannot deduct employer paid or pre-tax premiums, but [per the IRS](http://www.irs.gov/taxtopics/tc502.html)individual plan premiums are deductible subject to the 7.5% floor. [/QUOTE] Thank you for looking that up. ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [February 7, 2009, 7:22pm UTC](https://boards.straightdope.com/t/how-much-does-my-health-insurance-really-cost-me/484581/23 "2009-02-07T19:22:05Z")
> [@lilflower](#): > > Actually, I think I misspoke about the HSA. It’s not that I lose the money, it’s that I have to use any money in my HSA for a qualified medical expense. The money can roll over and accumulate over the years. And I am recalling a discussion I had with my boss about this and I remember him saying “Imagine, you could have $25,000 saved to pay for medical expenses in your retirement years.” I think that’s what did it for me - saving to pay for medical care related to my old lady diseases isn’t nearly as exciting as saving for a vacation. > > Also, I was expecting my after-tax dollars to be less than my pre-tax. In the example above, wouldn’t the answer be $9500 \* (1 - tax rate)? Assuming a 25% tax bracket, had I brought home those premium dollars rather than contribute to my employer plan, I would have had an additional $7125 in my pocket, right? The equation I gave will tell you how much a certain amount of pre-tax money is equivalent to if you paid for it post-tax. You’re right that if you want to go the other way, you’d multiply instead of divide. As for HSAs, that is the correct understanding. An FSA is the kind of account that you lose at the end of the year if you don’t spend it. Don’t think that HSAs are just about saving up for retirement. I’m doing a tax return for a client right now. They had $9,000 in out of pocket medical expenses (even after insurance paid for most of it), but their tax deduction? A measly $50. They make too much money, so the 7.5% floor kills most of their deduction. On the other hand, if they had put $6000 into an HSA, then taken it right back out to pay the costs, their deduction would be $6000. (And, since you can wait as long as you want to be reimbursed, they could put $3000 more in next year and then take that right back out too). The tax savings on $6000 in extra deductions (about $1800 for them) would buy you that extra vacation you’re hoping for. (But, as always, you should consult a tax pro and maybe an insurance expert, to see how the facts affect your individual situation). [Previous page](https://boards.straightdope.com/t/how-much-does-my-health-insurance-really-cost-me/484581.md?page=1)