Indemnity Ins/Self Employed Health Insurance Deduction

[geekgirldany]

I have a client that purchased what I would call a Indemnity Insurance Policy... example:

https://www.ushealthgroup.com/PremierChoice.aspx

They purchased hospital and accident insurance through a similar company. Client thought it would take the place of "ACA" insurance from the marketplace and of course was cheaper. They are now owing a penalty for not having coverage for half of the year.

Anyways can these type of policies be considered as a deduction for self employed health insurance? I looked at Pub 536.... does not specifically say indemnity insurance but since it does reimburse for health care costs I am thinking it might qualify.

Would appreciate any input.

[FEDUKE404]

Likely NOT "medical insurance" ?

I have a client that purchased what I would call a Indemnity Insurance Policy... example:

https://www.ushealthgroup.com/PremierChoice.aspx

They purchased hospital and accident insurance through a similar company. Client thought it would take the place of "ACA" insurance from the marketplace and of course was cheaper. They are now owing a penalty for not having coverage for half of the year.

Anyways can these type of policies be considered as a deduction for self employed health insurance? I looked at Pub 536.... does not specifically say indemnity insurance but since it does reimburse for health care costs I am thinking it might qualify.

Would appreciate any input.

My "April 5th and I'm tired" guess is that such could not be included, and would be the same answer for a Schedule A medical deduction.

The devil is in the details for how IRS defines "medical insurance" - - -

Insurance Premiums

You can include in medical expenses insurance premiums you pay for policies that cover medical care. You can't include in medical expenses insurance premiums that were paid and for which you are claiming a credit or deduction. Medical care policies can provide payment for treatment that includes:

Hospitalization, surgical services, X-rays,

Prescription drugs and insulin,

Dental care,

Replacement of lost or damaged contact lenses, and

Long-term care (subject to additional limitations). See Qualified Long-Term Care Insurance Contracts under Long-Term Care, later.

If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement.

FE

[geekgirldany]

Thank you so much for answering. That was my thinking as well. I hate it... I believe some people are being tricked into buying these policies since premiums are so high.

[S T]

Dany

Just had a similar experience - it cost the taxpayer $ 1,390 in ACA penalty. Taxpayer for husband/wife thought they were purchasing a ACA compliant coverage and turns out it was either "Indemnity" or "Discount" program. Both the client and I phoned the company, the company were very rude and said "not compliant" as it was not a "major medical plan" --Client was paying more the $ 300 per month and now for what I still do not know!

Not much we can do now - but I am going to suggest that the client make a complaint to the Insurance Commissioner for misrepresentation either/or broker and company.

Sandy