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Health Insurance

Deducting Health Insurance Premiums When You’re Self-Employed

In this day and age, health insurance is something that we all need to have but have different ways of getting it. Health insurance is expensive. If you work for a company that offers insurance, you won’t have to worry about deducting it from your taxes, but if you have been paying out-of-pocket for your health insurance and living on a self-employed income, you might be able to deduct the total dollar amount from your taxes. There are specific criteria you will have to meet in order to be able to make this deduction. In this article, we will discuss what the self-employed health insurance is and how you can deduct your monthly health insurance premiums. 

What is the self-employed health insurance deduction?

Because it doesn’t require itemizing, the self-employed health insurance deduction is considered an “above the line” deduction. If you are able to claim it, doing so lowers your adjusted gross income (AGI). 

This tax deduction gives self-employed people an opportunity to deduct the following medical expenses:

  • Medical insurance.
  • Dental insurance.
  • Qualified long-term care insurance. 

One benefit of this tax deduction is that it’s not only useful for your own health insurance expenses. If you are paying for health insurance for dependents, children or your spouse, you may also deduct these premiums at the end of the tax year. 

How to claim the deduction if you are self-employed

If you are self-employed such as a freelancer or an independent contractor, you can deduct any health insurance premiums that you paid for yourself, your dependents, and your spouse. If you are a farmer, you would report your income on Schedule F and if you are another kind of sole proprietor, you would report on Schedule C. You may also be able to take this deduction if you are an active member of an LLC that is treated as a partnership, as long as you are taking in self-employed income. This same rule of thumb goes for those who are employed by S-corporations and own 2% or more of the company’s stock. Self-employed people who also pay supplemental Medicare premiums, such as those for Part B coverage can also deduct these. 

You won’t be able to take the deduction if:

  • You or your spouse were eligible for health insurance coverage through an employer and declined benefits. If you have a full-time job and are running your own business on the side, this could be a situation you face. Alternatively, perhaps your spouse works a regular full-time employer and had the option to add you to a health insurance plan through their job. 
  • Your self-employment income cannot be less than your insurance premiums. In other words, you must have earned an amount of taxable income that is equal to or greater than the amount you spent in healthcare premiums. For example, if your business was to earn $15,000 last year, but you spent $20,000 in health insurance premiums, you would only be able to deduct $15,000. If your business lost money, then you won’t be able to deduct at all. 

One of the major differences between the health insurance tax deduction and other tax deductions for self-employed people is that it’s not taken on a business return or a Schedule C. It is considered an income adjustment, in which case, you must claim it on Schedule 1 that is attached to your Form 1040 federal income tax return. 

Final Thoughts

Self-employed people, such as freelancers, independent contractors and small-business owners, might have the opportunity to deduct their health insurance premiums from their taxes. As long as your business made a profit for the previous tax year and you were not eligible for a group health insurance plan, you should be able to take this deduction. If you’re not sure whether or not you meet the criteria, you may seek advice from a tax professional. You will need to fill out all of the necessary forms to qualify for a deduction. To make this process as seamless as possible, it’s important to keep track of all your business records.

Deducting Health Insurance Premiums When You’re Self-Employed is a post from Pocket Your Dollars.

Source: pocketyourdollars.com



A Guide to Coinsurance and Copays

You often pay your copay when you check in for a visit.

Having health insurance makes it possible to receive medical care while only paying a fraction of that care’s true cost. Insurance doesn’t cover everything, however. Some of the cost of your care is still up to you to pay, and that cost comes in two primary forms: copays and coinsurance.

What Is a Copay?

A copay is a flat amount of money that you’re responsible for paying for a health care service. Copays typically apply for things like a doctor’s appointment, prescription drug or medical test. The amount of your copay is dependent on your specific health insurance plan.

You can typically expect to pay your copay when you check in for your service, be it an annual physical, dental cleaning or blood test. Copays are typically lower amounts ranging from $10 for something like a generic drug prescription to around $65 for a visit to a medical specialist.

Depending on your insurance plan, copays may not take effect until after you reach your deductible. Your deductible is the amount of money you must pay out-of-pocket before your insurance provider starts to pitch in. Deductibles reset at the beginning of every year.

When you are reviewing your plan information and you see the phrase “after deductible” or “deductible applies” in reference to your copays, that’s an indication that the copay is only in place once you meet your deductible. On the other hand, if you see “deductible waived,” that’s a sign that your copay is in place from the beginning. It may go without saying, but the latter situation is vastly preferable to you.

What Is Coinsurance?

Coinsurance is another method of splitting the cost of medical coverage with your insurance plan. A coinsurance is a percentage of the cost of services. You pay the percentage, and your insurance company foots the rest of the bill. So, if you have a $8,000 medical bill and a 20% coinsurance, you would be on the hook for $1,600.

Coinsurance typically only comes into play after you hit your deductible. Further, you may have differing coinsurance percentages for the same services depending on your provider network. If you have a preferred provider organization (PPO) plan, your coinsurance could be a higher percentage for providers outside your network than it is for providers in your network.

Similarly, your coinsurance may not apply to providers outside your network if you have a health maintenance organization (HMO) plan or an exclusive provider organization (EPO) plan. That’s because these plans typically don’t provide any out-of-network coverage.

Copay vs. Coinsurance

You likely pay a copay when you visit the doctor.

Copay and coinsurance are very similar terms. They both have to do with portions of the cost of your health care that’s under your responsibility. Because of that, and their similar names, it’s easy to confuse the two. There are a couple of important distinctions to keep in mind, however.

The most notable difference between copays and coinsurance is that copays are always a flat amount and coinsurance is always a percentage of the cost of the service. Another difference is that some copays can be in place before you hit your deductible, depending on the specifics of your plan. With coinsurance, you have to hit your deductible first.

Bottom Line

copays are fixed amounts, while coinsurance is a percentage.

If you’re choosing between health insurance plans, make sure to examine the provided copays and coinsurance for each option. While they may not be the most important factor to consider, a high copay can be quite a pain, especially over the course of years of appointments and procedures.

Tips for Staying on Top of Medical Expenses

  • One of the best ways to stay ahead of surprise medical expenses is to have an emergency fund in place for just such a situation. If you can manage it, have three to six months worth of expenses stashed away in a high-yield savings account. That way, if you’re dealing with medical bills or have to step away from work, you’ll have a bit of a cushion.
  • If you’re not sure how an unexpected medical expenses would fit into your finances, consider working with a financial advisor to develop a financial plan. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.

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The post A Guide to Coinsurance and Copays appeared first on SmartAsset Blog.

Source: smartasset.com



What Health Insurance Doesn’t Cover: Your Guide

Insurance of any kind can be confusing, but when it comes to medical insurance, it’s really tricky to tell what’s covered and what isn’t. Whether you’re shopping around for a new plan or recently just got on a new health insurance plan, it’s good to know the ins and outs of your health insurance coverage before you end up with a large stack of medical bills that you can’t afford. In this article, we’ll discuss the things that medical insurance surprisingly doesn’t cover so that you can make better decisions about your medical expenses. 

What health insurance does cover

In accordance with the Affordable Care Act (ACA), the Health Insurance Marketplace must now cover a specific set of services at little or no out-of-pocket expense to you. They are also required to cover at least 10 essential health benefits. These essential health benefits (EHBs) include:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization and surgery
  • Maternity and newborn healthcare
  • Mental health treatment and substance abuse disorders including counseling and psychiatric treatment
  • Pharmaceutical drugs
  • Rehabilitation services that provide care for those suffering from disabilities and injuries. 
  • Laboratory services (blood and urine testing, etc.)
  • Preventative and wellness services
  • Pediatric services

In short, a lot of the basic care that you will get on a regular basis should be covered by your health plan. Most of the time your doctor won’t suggest treatments that are not covered by your insurance. In a lot of cases, they will try to familiarize themselves with your health insurance plan so that they can lead you in the right direction. However, don’t leave the all the responsibility in the hands of your doctor. It’s important that you make time to read through your health insurance policy and look for any holes before getting services. 

What health insurance doesn’t cover

If you have a good insurance plan, most of your basic medical needs will be covered, but you might be surprised to know the services that generally are. Here is a list of services that health insurance does not cover:

  • Nursing home services: Most nursing home services are not covered by standard health insurance or even Medicare. However, nursing home care is covered by Medicaid. Many people are confused about this, because they confuse short-term care from a skilled nursing facility with long-term nursing home care. These two things are very different. For example, if you were to suffer from a fall or some other type of injury that required you to get surgery, you would need short-term care in a rehabilitative facility to help you get back on your feet. That kind of care is covered. Full-fledge nursing home care on the other hand, wouldn’t be covered because most health insurance providers place time limits on how long they will cover nursing home services. That being said, Medicare will only cover skilled nursing if the patient stayed for at least three days before staying in the skilled nursing facility. Additionally, the patient must be admitted to the facility for the purpose of seeking treatment for a short-term illness or injury as opposed to a chronic one. 
  • The shots you get before traveling abroad: At some point, health insurance companies decided that they would only cover services and procedures considered to be medically necessary, and travel vaccines didn’t make the cut. Now, we’re not talking about your standard health vaccines like the tetanus or flu shot; those are covered. But for those of you who like to travel, the cost of your Typhoid or Yellow Fever vaccine is coming out of your own pocket. This rule of thumb goes for the vast majority of health insurance policies, including Medicare.
  • Cosmetic surgery: Once again, health insurance policies will usually only cover what is “medically necessary.” It’s safe to say that Botox and lip injections will not be covered by your health insurance policy. However, there are certain surgeries that dance on the line between medically necessary and cosmetic. For example, if you wanted plastic surgery on your nose because you thought it was too big, that’s considered cosmetic. But if you had to get work done on your nose due to issues with your sinuses, then that’s probably going to be considered medically necessary. 
  • Acupuncture & alternative therapies: The rules surrounding acupuncture and other types of alternative therapies such as chiropractic care aren’t as black and white. Coverage for such services like massage therapy, acupuncture, and chiropractic care aren’t part of the requirements for most individual health care plans. However, depending on what state you live in, your health insurance plan might cover chiropractic costs. Say you are involved in a car accident that caused you to suffer from back injuries as a result. There is a good chance that your health insurance plan will cover these services. However, if you are a regular at the chiropractor just because you enjoy it, then it probably won’t be. While the standard Medicare plan does not cover acupuncture, there are some Medicare Advantage cans that can. Keep in mind that with most plans who do cover these types of services, there is usually a limit on how many visits you get. 
  • Dental, Vision & Hearing: If you are shopping around for health insurance plans with your employer, note that dental, vision and hearing services are not covered under a regular health insurance policy. If you want to get insured for these services, you will have to buy separate insurance plans for each one. Keep in mind that a lot of times, these insurance policies don’t have any limits on how much they can charge you in out-of-pocket expenses, so research different dental offices before receiving services. Some people choose to not include a dental plan at all. If you wear glasses or contacts, however, it’s probably worth looking into your options for vision insurance.
  • Weight loss surgery: If you’re considering having weight loss surgery, you might be in luck if you have Medicare or Medicaid. While there is currently not a requirement at the federal level for health insurance plans to cover bariatric surgery, Medicare and many Medicaid plans do cover it. Aside from those two plans, more than half of the states in the U.S. do require there to be at least partial coverage for bariatric survey as an essential health benefit (EHB). Remember that even if the state you live in mandates coverage for this procedure, you may still be responsible for some of the medical bills related to your weight loss surgery. 
  • Preventative screenings: Before we go any further, there are A LOT of preventative tests that are covered by your health insurance policy, but there are some that aren’t. This is where things get confusing for a lot of people. For example, mammograms, cholesterol screenings, and colonoscopies will be covered. But if you need to get Prostate Specific Antigen (PSA) screening, it most likely will not be covered.

  • Certain medications: Once again, there are a ton of prescription medications that are covered by most health insurance plans, since pharmaceutical services are one of the essential health benefits (EHBs). However, health insurers get to choose what to cover and what not to cover. Most healthcare insurance plans will choose to cover the minimum. This means that they will pick a drug from each class to cover, and not cover the rest. Many times, the generic version of the drug you are prescribed will be covered by your health insurance, while the name brand will not.

What Health Insurance Doesn’t Cover: Your Guide is a post from Pocket Your Dollars.

Source: pocketyourdollars.com




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