That specifies “You cannot deduct insurance premiums paid with pretax dollars because the premiums are not included in box 1 of Form W-2.” Pretax dollars is the key here (I think. IANAAccountant). That would be, I think, insurance coming from an employer somehow. If you’re paying for it (or part of it) and it comes out of your gross paycheck, then no. If you pay for it yourself-in other words, you take the money you get after taxes and buy HI, then yes, you can deduct it. At least that’s how it seems to me. Do you read that differently?
I don’t believe this will change a thing about the business side of it. Business expenses are pretty much universally “deductible” from corporate taxes. I put deductible in quotes because it’s not so much a deduction as one of the key data points for determining the amount the tax percentage is applied to. Simply, you take your gross revenues, subtract your costs (including things like office supplies salaries and health insurance), whatever is left over is your Net Income, and that is what your taxes are based on. Whether or not HI is considered taxable for the employee is irrelevant.
If HI is currently deductible, it’s only when you exceed 7.5% and you can only deduct the premium amount. The Bush plan lets you deduct $15,000 per family, regardless of the premium amount. From the example I provided, that $60,000 income family who buys a $5,200 policy would get to deduct the $5,200 (8.7% of income) for a tax savings of $1,560. Bush’s plan gives them a $15,000 deduction for a tax savings of $4,500. The net cost of the plan goes from $3,640 to $700 per year.
I can understand the position that this does not fix the problem for many people, that much is clear. I’m having trouble understanding vehement opposition to the plan. I think this plan clearly makes coverage more affordable, in some cases, remarkably more affordable. People can get thousands of dollars back to fund insurance. It offers pretty much zero benefit to the wealthy, is likely to impact the wealthy much more than the middle class and poor down the road.
What’s the downside to this plan?
No, that’s not how it works. If you purchase your own insurance (and are not self-employed), you cannot deduct your insurance premiums.
No, I was right. The people I work for have a department of accountants that deals specifically with health insurance deductions. I just called them and they confirmed what I said in my last post. Even if you work for a corporation, if you are paying for your health insurance out of your net income (after taxes have been withheld), then you can write off the premiums.
If this is so, I would like to see some evidence of it. Everything I have read said that it’s not the case. I’m not trying to be pedantic, but I’d really like to see some citation for this. If the situation is as you say, then it affects me professionally.
Right. I pay some pretax dollars to mine, such as mh HSA, and even if I went over 7.5% I’d still not be able to deduct them. I was considering the case of private insurance, which is post tax. You clearly can’t deduct income you’re not paying tax on, so this rule makes sense.
Most of the text is not very clear about the case of private premiums - only the table I mentioned seemed to consider them.
I was considering small businesses. My wife is a freelance writer. Since she’s covered by my insurance, this is no problem, but when I retire if she does the right magical tricks to make it more of a business, she can deduct the premiums, which would be very much like deducting them from income. (We haven’t officially investigated this yet.) I assume that if HI premiums are deductible for employees, they would be no longer deductible for businesses.
For you and me, none. But it does cost money, and increases the deficit. If you consider the healthcare crisis to be lack of care for those who cannot afford it today, not our situation, then the plan doesn’t do anything to address the real problem. In fact, by paying the likes of you and me off, it reduces the chances that there will be political will to actually fix our broken system.
Could this be a special case of employer paid premiums being deductible? My company has a complicated cafeteria benefits system . As far as I can tell, all health insurance payments beyond what they give us are pretax, except in the specific case of domestic partner benefits which are post tax (I assume because they are not allowed federally.) I think we’re talking of the case where a private, unemployed person, purchases insurance. I can’t find any cite that says this is deductible, except when in excess of the 7.5% limit.