Insurance Changes. Tom Copeland

[Heidi]

Hello again, Tom!

So, my husband's (employer sponsored) health insurance company just "got smart". Since the federal law changes now say children can be on their parent;s insurance until age 26, they are changing how they bill. Instead of a single plan or a family plan, they are going to charge PER PERSON in a family.

So, my 24 year old and my 22 year old (and my 17 year old next year) will cost us each a certain amount (to be determined yet) over what we would pay for just my husband, myself, and my youngest.

I've never hired my spouse and opened an HRA, but now I'm wondering if I should? Would the tax savings possibly offset the extra cost of keeping my oldest 3 on the insurance (I know without numbers, it's a guess).

CAN we consider that? Since the bill is now broken down, how can it be an employee benefit if DH is the employee? I can't hire either son; one lives out of state, one is in college an hour away.

DH is their step-father. He doesn't "mind" covering their insurance when it doesn't cost (him) extra, but if it does, he's going to balk.

Edited to add: DH does have a cafeteria plan at work, which we maxed out in September. There are another $2000 in medical expenses after that time that were not covered. If there is anything we can do about that for this year as far as writing it off, that'd be great. Also, his portion of his health insurance premiums is about $7500 per year. Lastly, he helps me with the dc kids before going to work each morning, plus does projects for me. I can also put him on book-keeping.

[TomCopeland]

medical expenses

Hello again, Tom!

So, my husband's (employer sponsored) health insurance company just "got smart". Since the federal law changes now say children can be on their parent;s insurance until age 26, they are changing how they bill. Instead of a single plan or a family plan, they are going to charge PER PERSON in a family.

So, my 24 year old and my 22 year old (and my 17 year old next year) will cost us each a certain amount (to be determined yet) over what we would pay for just my husband, myself, and my youngest.

I've never hired my spouse and opened an HRA, but now I'm wondering if I should? Would the tax savings possibly offset the extra cost of keeping my oldest 3 on the insurance (I know without numbers, it's a guess).

CAN we consider that? Since the bill is now broken down, how can it be an employee benefit if DH is the employee? I can't hire either son; one lives out of state, one is in college an hour away.

DH is their step-father. He doesn't "mind" covering their insurance when it doesn't cost (him) extra, but if it does, he's going to balk.

Edited to add: DH does have a cafeteria plan at work, which we maxed out in September. There are another $2000 in medical expenses after that time that were not covered. If there is anything we can do about that for this year as far as writing it off, that'd be great. Also, his portion of his health insurance premiums is about $7500 per year. Lastly, he helps me with the dc kids before going to work each morning, plus does projects for me. I can also put him on book-keeping.

You will benefit even more by setting up an HRA when your out of pocket medical expenses go up. To set up an HRA you need to hire your husband to do work for your business. See my article on this: http://www.tomcopelandblog.com/2014/...deduction.html

If you set up an HRA you can only count expenses incurred after you set it up (exception: medical insurance premiums).

[Heidi]

Thanks, Tom...

I just want to clarify; Even if the "itemize" by person the employee portion of the insurance premium, I can claim it for my husband as an employee? Not sure I'm being clear.

As far as medical expenses: Is it those incurred after setting up the account or those PAID afterwards? In other words, if it takes me a couple weeks to set it up, should I hold off on paying a bill (with an ok from the payee)?

[TomCopeland]

Thanks, Tom...

I just want to clarify; Even if the "itemize" by person the employee portion of the insurance premium, I can claim it for my husband as an employee? Not sure I'm being clear.

As far as medical expenses: Is it those incurred after setting up the account or those PAID afterwards? In other words, if it takes me a couple weeks to set it up, should I hold off on paying a bill (with an ok from the payee)?

If you set up an HRA that covers your family's insurance premiums (including your husband, you and your children). You can't start including out of pocket medical expenses until after you set up the HRA.

[Heidi]

Thanks again.

ONE MORE!

If my husband's premiums are covered under his cafeteria plan (so he is taxed after the premiums are taken out), can I still do this?

[TomCopeland]

Hra

Thanks again.

ONE MORE!

If my husband's premiums are covered under his cafeteria plan (so he is taxed after the premiums are taken out), can I still do this?

The amount covered under his cafeteria plan would still get a better tax benefit if flowed through an HRA, but just not as much of a tax benefit.