If your health insurance is tax deductible, you can get some relief on what you are paying the government in taxes based on your medical insurance premiums. To enjoy tax benefits on health insurance there are some simple rules you need to understand to know more about tax deductions. Here is an introduction to claiming medical insurance on taxes.
When you are not paying the premium
You have to be the one paying the premium. That goes to say, that your health insurance claim will only be tax deductible if it’s not your employer or the government that pays your health insurance premium. For example, if you pay half and your employer pays the other half, you will get tax benefits on only the half you pay.
No tax benefits on advanced-payment subsidy money
If you have purchased family medical insurance by taking advantage of the Affordable Care Act then the advanced-payment subsidy money which has reduced the cost of your health insurance can’t be claimed as a deduction. Though the advanced-payment subsidy money can’t be claimed, you can claim tax benefits on premium money that you are paying.
No tax deductions for premiums paid with pre-tax money
This usually applies to job-based health insurance schemes. The premiums for these are paid before the income taxes are calculated so your income will have a significant chunk off and look smaller.
Now the catch is that these premiums were paid with pre-tax money, which means they have not been taxed before; therefore, you cannot file them under claims.
If you run your own business, your health insurance premium is tax deductible
If you don’t have an employer-sponsored health plan through your parent or spouse, you are eligible to write off your health insurance premiums. However, you will only be able to write off health insurance premiums less than or equal to your earnings. This is primarily because health insurance premiums are take to be adjustment to your income and added to Page 1 of Form 1040. This will result in the reduction of your total income.