Release date- 15032017 - With the future of Obamacare in doubt, eHealth helps consumers understand how their health coverage may impact their federal taxes.
Today eHealth, Inc. (NASDAQ: EHTH), which operates eHealth.com, the nation's first and largest private online health insurance exchange, released its top health insurance-related tax tips for the 2016 tax year.
The uncertain future of the Affordable Care Act (Obamacare) raises questions and concerns for many people who want to know how their health insurance coverage will affect their 2016 income taxes.
eHealth is providing healthcare-related tax tips to help customers and others who buy their own health insurance better understand their options. Note that these tips do not constitute personal tax advice and eHealth recommends that consumers consult with a certified public accountant or tax professional when completing their federal income taxes.
6 Health Insurance Tax Tips for the 2016 Tax Year
1. Fund your Health Savings Account (HSA) for 2016 - An HSA is a tax-advantaged savings account used in conjunction with an HSA-eligible health insurance plan. Account contributions, qualified distributions, and earnings on the balance in the account are all tax-exempt.
An HSA allows you to deposit a portion of your income into a savings account on a pre-tax or tax-deductible basis and use those funds to pay for qualified medical expenses. Unused money can accrue from year to year. If you have an HSA, be sure to deduct your contributions up to federally prescribed limits.
Contributions designated for 2016 and made before April 15, 2017 can be counted toward your 2016 federal taxes. HSA contributions for the 2016 tax year are capped at $3,350 for individuals and $6,750 for families. If you're over age 55, you may qualify to make an additional $1,000 contribution.
2. Know that the tax penalty for going uninsured is still effective, for now - If you did not have qualifying health insurance for more than two consecutive months during 2016, under current law you may be subject to a tax penalty (officially known as a 'shared responsibility payment') on your federal return. For 2016, the penalty is either 2.5% of your taxable household income or $695 per adult ($347.50 per child), whichever is greater. That's a significant increase from last year.
It is possible that the tax penalty may be retroactively repealed for 2016. The American Health Care Act (AHCA), the health reform bill recently introduced by the Republican leadership in the House of Representatives, would do so, meaning that persons otherwise subject to the penalty in 2016 may be off the hook. However, it's not clear yet if the AHCA will become law or, if it does become law, whether this provision will appear in the final form of the bill.
3. Be aware of the 2016 'claw-back penalty' - If you received government subsidies (advanced premium tax credits) for your 2016 health insurance coverage, you should be aware that the tax credit is dependent on your actual income for 2016.
If you earned more money than you'd anticipated, you could be asked to pay some portion of your subsidies back to the IRS, or have that amount deducted from your tax refund.
On the other hand, if you earned less than expected, you may be due additional assistance, which could potentially decrease your taxes.
Talk to your tax adviser about last-minute HSA contributions. If it turns out that you did earn more than expected in 2016 and you want to avoid having to repay your advanced premium tax credits to the IRS, then you may be able to make a contribution to your HSA account as late as April 15, 2017 that could potentially lower your taxable income for the year and help you avoid the claw-back penalty.
4. Check the mail for your 1095 form - You may remember these from last year, which was the first year they were issued. The 1095 form comes in a few variations (1095-A, 1095-B, 1095-C), depending on whether you got your coverage through an employer or purchased it on your own. The form is official proof that you had health insurance meeting the Affordable Care Act's coverage requirements. It also confirms how much subsidy assistance (if any) you have received in 2016. This information will help you complete your 2016 federal tax return.
5. Be aware of medical expense deductions - Did you know that you can itemize and deduct qualifying medical expenses from your 2016 taxes? It's true, but there's a hitch: You can only deduct qualifying expenses that exceed 10% of your adjusted gross income.
Refer to IRS Publication 502 for more information about qualifying medical expenses, but these may include monthly premiums you pay for some kinds of coverage (including some Medicare premiums), copayments, deductibles, dental expenses, and costs for some services not covered by your insurance plan.
You may even be able to deduct mileage accrued while driving to and from regular medical appointments.
6. See if you can deduct Medicare premiums and medical home improvements - If you're a retired senior, you may have an easier time meeting the 10% adjusted gross income threshold to deduct itemized medical expenses on your federal return.
In addition to your out-of-pocket expenses for medical, dental or vision care, you may also be able to include capital expenses for the installation of home medical equipment or improvements to your property for wheel-chair access.
People on Medicare should be aware that premiums taken from your Social Security check to pay for Medicare Part B may qualify as a tax deduction, as well as premiums you paid for Medicare Part D (prescription drug coverage) or a Medicare Supplemental plan.
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eHealth, Inc. (NASDAQ: EHTH) owns eHealth.com, the nation's first and largest private online health insurance exchange where individuals, families and small businesses can compare health insurance products from leading insurers side by side and purchase and enroll in coverage online. eHealth offers thousands of individual, family and small business health plans underwritten by many of the nation's leading health insurance companies. eHealth (through its subsidiaries) is licensed to sell health insurance in all 50 states and the District of Columbia. eHealth also offers educational resources and powerful online and pharmacy-based tools to help Medicare beneficiaries navigate Medicare health insurance options, choose the right plan and enroll in select plans online through Medicare.com (www.Medicare.com), eHealthMedicare.com (www.eHealthMedicare.com) and PlanPrescriber.com (www.PlanPrescriber.com).