Health Insurance Premium deduction Qualification

[Kevinp1964]

I am self Employed and own both an S Corporation and an LLC. My wife is employed through a large company which offers health care to its employees and family members. The cost is excessive for the family, I really mean that ($24k for the year in premiums with a very high deductible), so we have obtain a plan at about 1/3 of the cost with better coverage for the family including my wife. We received a 1095-c from the company with code 1A in box 14. does this prevent us from utilizing the Health Insurance Premiums deduction on schedule 1 line 2a? If it does am I able to deduct the cost of the Doctors, Prescriptions and Labs from the same form?

[AmeliesUncle]

I assume you mean Line 16 of Schedule 1.  🙂

If the insurance is "subsidized" by the employer (the employer pays ANY portion of the full cost, which almost every employer does), no, you don't qualify for the Self Employed Health Insurance deduction.

No, only insurance qualifies for the Self Employed Health Insurance deduction.  Other out-of-pocket medical costs go on Schedule A (and due to severe limitations, that deduction might not reduce your taxes).

[Kevinp1964]

Thank you

Just to be clear we do not have any health insurance coverage with my wife's company. However it is available to us.

[AmeliesUncle]

Just to be clear, if you are ELIGIBLE for employer-subsidized insurance, you don't qualify for the Self Employed Health Insurance deduction.

[ColeenD3]

The regulations under § 36B provide that an employee who may enroll in an eligible employer-sponsored plan and an individual who may enroll in the plan because of a relationship to the employee (a related individual) are eligible for minimum essential coverage under the employer-sponsored plan if the plan is affordable and provides minimum value.  Additionally, an employee and a related individual are not eligible for a premium tax credit for their Marketplace coverage if they could have enrolled in employer-sponsored coverage that is affordable and provides minimum value.

PTC

[Kevinp1964]

ColeenD3

Thanks for this nugget.

It appears that the affordability of the plan I mentioned earlier ($24k per year in premiums for the family) would make me eligible to deduct the health insurance premiums and medical expenses as I am self employed. 

What document is 36B in? I would like to read more on the subject.

Thanks again for your input.

[AmeliesUncle]

The comment that Colleen made has nothing to do with the Self Employed Health Insurance deduction.  The "affordable" and "minimum value" are factors to qualify for the Premium Tax Credit for insurance through the Healthcare Marketplace.  Being "affordable" and having "minimum value" are NOT factors for qualifying for the Self Employed Health Insurance deduction.

[Kevinp1964]

Thanks for that information.

I did speak with a CPA about the entire issue and he said if we did receive a 1095c with 1A in Box 14 and the price for the plan was not affordable we could take this deduction. However we do not have traditional health insurance, we have Medi-Share which qualifies for the health insurance requirement but does not qualify for the deduction. So we will be taking the standard Deduction. I thought it was called the affordable health care act.

[Critter-3]

I highly recommend the S-corp get the insurance policy and add the cost of the insurance to the W-2 you should be issuing yourself and then the SEHI deduction will count.  

[AmeliesUncle]

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@Kevinp1964 wrote:

I did speak with a CPA about the entire issue and he said if we did receive a 1095c with 1A in Box 14 and the price for the plan was not affordable we could take this deduction. 

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That is absolutely not true.  Again, that has to do with the Premium Tax Credit (and the definition of "not affordable" is very specific, not just because you don't think it is affordable) not the Self Employed Health Insurance deduction.

But if you don't have traditional health insurance, that probably does not qualify anyways.

As a side note, the Standard Deduction has nothing to do with the Self Employed Health Insurance deduction.  If you had qualified, you could use both.

[WrgAccntnt]

"I highly recommend the S-corp get the insurance policy and add the cost of the insurance to the W-2 you should be issuing yourself and then the SEHI deduction will count. " 

This is a great way to take advantage of Self employed Health insurance deduction for the whole family.
There are a couple factors to consider:
Whether the S-Corp has other employees it's paying. You can't only offer good benefits to S-Corp shareholders and not to other employees except under very specific circumstances.
The S-Corp doesn't have to get the insurance policy anymore, do a straight reimbursement and keep a paper trail.

You take the deduction on your personal tax return, but you also get the benefit of adding it to your gross on the W2 (and not paying FICA on it), so it reduces your profit on the business side.