Pre-taxed H & A Insurance Premiums

[dyne]

Pre-taxed Health Insurance Premiums are becoming common. This is a tremendous tax
advantage, much better than any possible medical deduction. Such premiums are NOT
deductible as medical expenses. Also WOULD this would be considered to be subsidized premiums
and as such would eliminate or affect other possible credits such as form 8885 Health
Insurance Credit and the form 1040, line 29 deduction for H & A insurance paid by a
self-employed person? There does not seem to be any way to determine from the W-2
that pre-taxed Health Insurance was provided by the employer.

[solomon]

Unless

it were shown in Box 14 which some employers do. Otherwise, one must look at the last paycheck stub - or take the word of the client.

[dyne]

On second thought, WOULD the providing of a pre-taxed Health insurance plan by an
employer cause this to be considered to be subsidized? What if the employer paid NO
portion of the Health insurance premiums? If so, would the credits mentioned be allowable?
Now am thinking that providing pre-taxed Health insurance alone would NOT disqualify the
credits. So the question boils down to: did the employer pay a portion of the premiums?
If so, the plan was subsidized. If the plan was pre-taxed ONLY and the employer did not
pay any portion of the plan, the plan was NOT subsized and credits mentioned might be
allowable. OK guys, help me out!

[Bees Knees]

What is H & A insurance?

[dyne]

I meant to refer to Health Insurance! I went back to the above post and changed the references to
health insurance. Comments?

[New York Enrolled Agent]

Dyne

Not sure if this is what you're looking for but §35(b)(1)(A)(iii) says to qualify for the credit, a taxpayer cannot have other specified coverage for the month in question.

§35(f) describes specified coverage with a 50% LIMIT on the employer (or former employer)

(f)Other specified coverage.
For purposes of this section , an individual has other specified coverage for any month if, as of the first day of such month—

(1) Subsidized coverage.

(A) In general. Such individual is covered under any insurance which constitutes medical care (except insurance substantially all of the coverage of which is of excepted benefits described in section 9832(c) ) under any health plan maintained by any employer (or former employer) of the taxpayer or the taxpayer's spouse and at least 50 percent of the cost of such coverage (determined under section 4980B ) is paid or incurred by the employer.

Maybe this answers your question but then again maybe not.

[lbbwest]

I am WAY missing something in your post.

Form 8885 is a credit for displaced workers and retirees neither of which are able to receive pre-tax health benefits.

The self-employed tax deduction on the front of the 1040 is for the self-employed and the coverage must be in the name of the self-employed or his business, so employer coverage would not qualify.

I think pretax is pretty much as good as you are going to get.

[dyne]

more Health Insurance

After reflecting upon the issue, I have come to the following conclusions:
1. Pre-taxed health insurance and subsidized health insurance are TWO separate and distinct types of
insurance.
2. A subsidized health insurance plan is ONLY one for which the employer pays at least
50% of the cost of the plan. IRC 35(f) 1 A.
3. A pre-taxed health insurance plan is NOT necessarily a subsidized plan.
Differant rules apply to both.
The main QUESTION in my mind is: Is a pre-taxed health insurance plan ALWAYS considered to be
a subsidized plan? IRC 125(g)(2)(A)(i)(ii) seems to indicate that the employer MAY pay 75% or 100% of
such a pre-taxed health insurance plan. Surely one of you experts knows the answer. I would appreciate
help in understanding this .Comments please?

[dyne]

I found a post on another website where a person stated:
My employer will help pay for health insurance but will NOT report this as pre-taxed.
This leads me to believe that a pre-tax health insurance plan is NOT necessarily
a subsidized plan. Have I reached the correct conclusion?