Today’s Tax Tip of the Day – Due to the Affordable Care Act mandate, you will have to prove you had health insurance throughout 2016 on your 2016 tax return. You should receive Form 1095-A, 1095-B, Form 1095-C, or another document from either your employer or insurance plan that will be proof of insurance coverage for 2016. Whether this form will have to be submitted to the IRS with your tax return and how this will be handled when e‐filing returns is still undetermined.
Employees who rely on employer‐offered plans for their health insurance coverage should not automatically select the same coverage or plan they had in 2016, and instead should take time to compare plans since their 2016 choice may no longer be the most cost effective. Many companies are using spousal surcharges to increase premiums. More commonly, they are creating different rates for different family situations (employee and spouse, employee plus children, etc.).
If your spouse's employer also offers insurance coverage and the premiums plus the deductibles for each of you going with your own employer add up to less than the premiums and deductibles for both of you on any single plan, you should probably consider splitting up your coverage.
Families with children should compare the cost of covering them on each spouse's plan, then with full coverage on each plan. You should consider setting‐up a Health Savings Account (HSA) where in 2017 you can contribute up to $3,350 (single) and $6,750 (families), and those over 55 can contribute an additional $1,000. Amounts contributed to HSAs are deductible in computing adjusted gross income (AGI) on your tax return, which means these contributions are deductible even if you don't itemize deductions.
Lastly, if you are self‐employed, 100% of your self‐employed health insurance premiums paid for yourself, spouse, and dependents are deductible in determining your Adjusted Gross Income (but not in determining net income from self‐employment on Schedule C). This includes dental insurance premiums and certain long‐term care premiums. It also includes premiums paid for coverage for any child of yours who was under age 26 by the end of the year, even if the child was not your dependent.
NOTE - In light of the new Trump administration, much of this is likely to change in 2018.
Employees who rely on employer‐offered plans for their health insurance coverage should not automatically select the same coverage or plan they had in 2016, and instead should take time to compare plans since their 2016 choice may no longer be the most cost effective. Many companies are using spousal surcharges to increase premiums. More commonly, they are creating different rates for different family situations (employee and spouse, employee plus children, etc.).
If your spouse's employer also offers insurance coverage and the premiums plus the deductibles for each of you going with your own employer add up to less than the premiums and deductibles for both of you on any single plan, you should probably consider splitting up your coverage.
Families with children should compare the cost of covering them on each spouse's plan, then with full coverage on each plan. You should consider setting‐up a Health Savings Account (HSA) where in 2017 you can contribute up to $3,350 (single) and $6,750 (families), and those over 55 can contribute an additional $1,000. Amounts contributed to HSAs are deductible in computing adjusted gross income (AGI) on your tax return, which means these contributions are deductible even if you don't itemize deductions.
Lastly, if you are self‐employed, 100% of your self‐employed health insurance premiums paid for yourself, spouse, and dependents are deductible in determining your Adjusted Gross Income (but not in determining net income from self‐employment on Schedule C). This includes dental insurance premiums and certain long‐term care premiums. It also includes premiums paid for coverage for any child of yours who was under age 26 by the end of the year, even if the child was not your dependent.
NOTE - In light of the new Trump administration, much of this is likely to change in 2018.