If you choose to receive your premium tax credit in advance, be sure to notify the Marketplace of any changes in income that occur during the year that may affect your eligibility for receiving the credit. The final credit for the current year will be calculated on your tax return, and if the advance credit you received was higher than the actual credit, you may have a balance due on your tax return.
If you get health insurance through the government Marketplace, you may be eligible for the Premium Tax Credit, depending on your income level. In order to be eligible for the credit, you must buy health insurance through the government Marketplace, be ineligible for insurance coverage through your employer or a government plan (such as Medicaid), your income must fall below certain limits, and you cannot be claimed as a dependent on another's return. Also, if you are married, you must file jointly. If you are eligible, you can either receive this credit on your tax return, or you may apply to have some or all of the credit paid in advance directly to your insurance company to lower what you pay out of pocket for your monthly premiums.
You can potentially reduce your health insurance costs by establishing an HSA. A high deductible health insurance plan is required. The maximum annual tax-deductible HSA contribution changes annually. To find this year’s contribution limits, please see the list provided on our website under Resources titled “Annual Updated Tax Numbers” for this and other limits, thresholds, and rates that change annually. An individual (and their covered spouse) who has attained age 55 before the close of the tax year may make an additional $1,000 "catch-up" contribution. This plan allows you to pay into a trust account an amount up to the deductible. This amount is deductible on your tax return on page 1 of Form 1040, in arriving at Adjusted Gross Income, which may be helpful for planning for other tax benefits. Any deductibles, co-pays, and out of pocket medical expenses can then be paid from the HSA account. To assist in funding your HSA, a one-time transfer from your IRA, FSA or HRA is allowed. Keep in mind if you enroll in an HSA you cannot be enrolled in a Flexible Spending Account (FSA) at the same time. You should contact your health insurance provider if you are interested.
If your company has a "cafeteria plan" that allows employees to designate a portion of their wages for qualifying medical expenses (Medical FSA), we suggest you consider participating. However, keep in mind you cannot also be enrolled in a Health Savings Account (HSA). Benefit: The amounts spent on qualifying medical expenses are treated as nontaxable for Federal and State income tax and for Social Security and Medicare tax purposes. Each year you must elect how much to contribute to the plan. Since any unused amounts are forfeited it is important to reasonably estimate your uninsured medical expenses prior to making the election. Medical expenses to consider: co-pays and deductibles on doctor visits and prescriptions, medical aids such as contacts, eyeglasses, hearing aids, etc., and uninsured costs such as vision, dental, etc. that your current insurance does not cover. You should review your plan for a summary of qualifying medical expenses.
Disability insurance replaces your income should you become unable to work. According to the Council for Disability Awareness there is just over a 1 in 4 chance that today's 20 year olds will become disabled before they retire. If you have a company policy you should pay special attention to the definition of disability, the coverage term, and other important features. If the company policy is not adequate you should consider obtaining a personal policy.
Consider buying the best long-term care insurance you can afford while you are in your 50's because premiums increase with age. Long-term care in a nursing home can ruin a family financially. Consider contacting your financial advisor to help you determine if this insurance is right for you.
When a new baby arrives you will receive offers for life insurance. Life insurance for children should be considered if you don't have enough assets to easily cover funeral costs for your child(ren). Should an unfortunate event occur, you may wish to purchase small amounts of coverage for them.
You and your family must either have health care coverage, have an exemption from coverage, or make a Shared Responsibility Payment with your tax return. The provision applies to all individuals including dependents. If you would like more information about exemptions or how much the payment will be for your family, please contact our office.
You may carry life insurance, but you might not have enough to care for your survivors. Remember your survivors will need the insurance proceeds to pay for recurring expenses, (i.e. house payment) and for nonrecurring expenses (i.e. college education, medical costs, etc.) Therefore, it is better to be over-insured than under-insured. So, review the amount of life insurance you carry and consider increasing if necessary. On the other hand, the purpose of life insurance is to protect against the loss of an earner's income that would be needed to cover family costs such as the mortgage and children's education expenses. If those cost are no longer a concern, you should reevaluate your insurance needs and possibly reduce your coverage.