Self-Employed Health Insurance Premiums Usually 100% Deductible
Self Employed Health Insurance? You might look at the price, shake your head, and say, “No way I can afford that.” But take a second look. Even with the belt-tightening that comes with owning a small business, getting health insurance may be more affordable than you think.
That’s because self-employment health insurance premiums are usually 100-percent deductible from your gross income. What’s more, you might qualify for a premium tax credit under the Affordable Care Act (ACA) to lower your costs.
If you want to compare health insurance plans, you can contact an insurance broker. You can also access the Washington Health Plan Finder. That’s a government website that can help you decide on an ACA-eligible insurance plan.
Using the Washington Health Plan Finder
In addition to proving coverage choices, the Washington Health Plan Finder has tools to help you figure out how much help you can expect to pay. The website uses your expected income for the year to estimate the premium tax credit you’ll receive. When your income changes – decreases or increases – it’s important to log in to the Health Plan Finder website and update it. If you keep taking a bigger premium credit than your income allows, you’ll have to pay it back come tax time.
If you do receive too large a premium credit and have to pay it back, it’s not all bad news. The amount you pay back still counts as self-employed health insurance payments. That means you get to deduct the amount paid back from your income. You’ll still owe, though, since a deduction against your income won’t save you as much as a credit that pays your taxes.
One easy way to avoid having to pay back premium credits is to pay the full cost of the insurance premiums yourself. Then when you file your return the following year, you can figure out exactly how much premium credit you earned. That credit then pays your taxes, and can even give you a refund.
The Enrollment Period Is Happening Now
The Affordable Care Act’s open enrollment period runs from November 1 through December 15. There is help available if you’re in Whatcom County and you need help navigating all the choices. Rice Insurance in Bellingham serves as an official affiliated enrollment center.
The Washington Health Plan Finder will help you compare plans and find prices.
Use this link to contact Rice Insurance.
Check out our recent blog post on medical savings plans about using tax-free savings to bridge gaps in insurance coverage.
Lastly, you can learn more about our services here!