Over the last two decades Congress has placed a special importance on using tax deductions and credits to help individuals afford health insurance and pay for health care related costs. While the basic deduction for medical expenses only helps taxpayers who itemize and have healthcare costs exceeding 10 percent of their adjusted gross income, there are two other deductions that offer better tax benefits and are available for a larger share of taxpayers. This is the deduction for contributions to a Health Savings Account and the self-employed health insurance deduction.
- For the 2015 tax year, single taxpayers with high-deductible health plan can contribute up to $3,350 ($6,650 for married individuals with family coverage) to a health savings account and get an above-the-line deduction for those contributions. An above-the-line deduction means that even taxpayers who do not itemize can take advantage of the deduction. Additionally, taxpayers who are self-employed can take an above-the-line deduction for insurance premiums paid through their businesses. This is commonly referred to as the self-employed health insurance deductions.
- The self-employed health insurance deduction has several qualifications and the definition of high-deductible health plan for purposes of the HSA contribution deduction changes every year. Give Lurie a call before the end of the year to see if you qualify for either (or both) of these excellent deductions.
Talk to your Lurie advisor before the end of the year and see which option might be right for you.