Use your health insurance to save money on taxes

Proper planning with respect to how you structure and use your health insurance can really pay off when the tax man comes. I’m not a registered tax planner, CPA, etc., but the next few items should be discussed with your tax preparer.

H.S.A Plans: A prior blog post from August 19^th described what they are and how they work. Amounts (up to certain limits) contributed to your H.S.A account can be deducted dollar for dollar from your top line income on form 1040. In 2008 it came out on the first page on line 25. That’s right, the money is yours to keep (it’s not use it or lose it) and spend on any qualifying health expenses you or your family incur now or in the future, and it is tax free. If you know you are going to have health expenses, you might as well pay for them with your tax free dollars. Keep in mind that you must contribute to your H.S.A account BEFORE you incur a qualifying health related expense however.

Self-employed deduction: This is a no brainer for self-employed people or people with a small business. Health insurance premiums for you and your family can be taken as a business expense. In 2008 on form 1040 it came out on line 29. In addition, if you have an H.S.A plan, not only can you take the top line deduction from your income for amounts contributed to your H.S.A account, but your monthly H.S.A health insurance premiums can also be taken as a business expense.

Health Expenses greater than 7.5% of your AGI: If your total health insurance expenses for you and your family are greater than 7.5% of your Adjusted Gross Income, amounts spent OVER that 7.5% can be taken as a deduction. What qualifies? Much more than you think! Please refer to the IRS site http://www.irs.gov/publications/p502/ar02.html for the full list. Many people just don’t keep receipts, and don’t know that money spent on a whole host of qualifying health expenses could have been taken as a legitimate deduction. If you had a major health event, had a new baby, or other combined health expenses which could put you over the 7.5% threshold, make sure you look into this.

What my two year old daughter Sonja tells me to do about health care "Reform"

1. Stop eating when you are full.
2. Fruits and veggies taste better than fast food once you start eating.
3. Go outside and run around if you start to get cranky.
4. Get more sleep. And take a nap now and then.
5. Hug people. It makes everyone feel good. Isn’t that the point?
6. Find some friends and laugh with them.
7. Have someone put sunscreen and a hat on you when you go outside.
8. Kentucky Fried Chicken doesn’t taste like chicken, and makes your tummy hurt.
9. Candy is only for when you’ve been REALLY good.
10. You find more food in your mouth when you floss! Ewwww!

Bonus! The doctor is more fun to see before you get sick!

Two days in the hospital is how much!!? I thought I had insurance!

Today I have been battling the great faceless Corporate Insurance Giant.

Here is the story. My Client, let’s call him Billy Bob, starts developing pain, real pain, the bend you over until a grown man cries pain. Now, a regular guy would have taken several hundred Advil chased with a beer. Not this guy, he’s intelligent, and decides to go to the Hospital Emergency Room. However, despite the searing pain, Billy Bob has the foresight to actually make sure the Hospital he goes to is in his Health Insurance Plan’s Network. Luckily, the insurance company website lists the Hospital as being In-Network! He goes to emergency, gets admitted immediately, and after two days of quality medical care, is discharged.

Billy Bob isn’t worried though, because the Hospital was in his network and therefore most bills should be covered or discounted, right? Then the bills start showing up, big bills, multiple bills, bills the size of small SUVs. Billy Bob is stunned, how could it have been so much? Remember when I said Billy Bob was pretty smart? Looking the bills over he discovers something no one usually would; the Hospital was indeed in his network, but many of the doctors (who belong to their own separate doctor networks) working at the Hospital were not! Thus he gets billed super high rates for out of network doctors at an in network hospital! Not just a few out of network doctors mind you, he was in for two whole days and thus he gets billed from multitudes of specialists all billing from their separate networks!

This is why there is so much anger focused on insurance companies. It’s not the level of care he received, it was excellent and he made a full recovery, but rather the coordination of benefits and billing issues that are dumbfounding.

Needless to say we are arguing that all his services should be covered at the less expensive in network coverage level. How will this turn out? My guess is the great Corporate Insurance Giant will throw us a bone on some charges. That would be nice, but it doesn’t solve the problem.

10 years, "just" over 1 TRILLION, only 30 Million more covered....

The first Health Care Reform Bill is now out of the House. What does it do?

1. Creates a new Government Sponsored Health Plan to compete with Private Insurance Plans.
2. Reduces the ranks of the uninsured by 30 Million.
3. Costs "just" over 1 TRILLION dollars over 10 years. (That's the House's own estimate)
4. Increases Taxes on the wealthy and medium-large businesses.
5. Will reduce the amount doctors receive for treating medicare/medicaid Patients.
6. Closes the "donught hole" in the Medicare prescription drug program. (Finally)


So, let's get this straight, it spends 1 TRILLION over 10 years to cover only 30 Million more People? If you do the math that's a terrible deal!

Once again it does not address the most pressing need, which is holding down the expense of medical care in our country. Just because you pay doctors less who see Medicare-Medicaid patients, that does not mean you have reduced the root cause of the expense crisis.

Our terrible wars in Iraq and Afghanistan will look like a trip to the "dollar store" compared with this plan's "Tiffany's" type shopping spree! If Obama wants to leave a lasting legacy, this will end up being the opposite of the reputation he desires.

I really hope our elected leadership takes a deep breath and a step back to consider the ramifications of this Plan before ramming it through like the Stimulus