[su_box title=”Keep in mind…” style”=”default”]
- Self-employed individuals may face many challenges when looking for affordable health insurance
- The Small Business Jobs and Credit Act allows for self-employed individuals to deduct health insurance premiums on their federal tax returns.
- Some states allow deductions for health insurance premiums and health-related expenses on state income tax returns
Self-employed individuals often find it difficult to find affordable health insurance. They face steep expenses on monthly premiums for insurance policies without the advantage of being part of a labor pool.
Coupled with penalties for having no current insurance policy, health insurance plans for individuals can often be prohibitively expensive.
Take the first step towards finding affordable health insurance today by entering your zip code above!
Healthcare Savings for the Self-Employed
There avenues the self-employed can take to obtain an affordable health plan. For these resourceful individuals, finding health insurance coverage can be just another exercise in practicality.
Finding an agent who specializes in policies for small businesses or the self-employed can be a wise place to start.
An agent familiar with health plans for individuals can help you make sense of the many policies on the market.
For someone who works for himself, a well-informed and attentive insurance agent can be a godsend when looking for affordable healthcare.
Learn about Income Tax Deductions
Self-employed individuals can also save money on healthcare costs with income tax deduction. In the past, people who were self-employed were allowed to deduct payments for insurance premiums up to the amount of profit their business accumulated for the year.
Determining how much of your income can be considered as profit is complicated, so a professional tax preparer can help to determine the proper amount.
The Small Business Jobs and Credit Act, signed into law by President Obama in September 2010, allowed self-employed individuals to fully deduct health insurance premiums on their federal tax returns.
However, that law provided only a temporary credit for health care costs on tax returns for the year 2010.
A number of special interest groups are currently lobbying Congress to extend this credit. Tax relief for self-employed individuals will be a topic to follow in the coming years.
Some states allow deductions for health insurance premiums and health-related expenses on state income tax returns.
Americans in all but nine states have to pay state income tax, so check with your state’s Department of Revenue for current information about health insurance allowances.
Since rules regarding taxes can change from year to year, so it’s a good idea to get more than one opinion on any tax questions that may arise.
Accountants licensed in each state will be familiar with the local tax codes, so hiring a professional may be worth the expense.
Check with Local Groups or Organizations
If you work for yourself, there are a number of organizations that give their members access to group health insurance policies.
Some of these associations offer administrative services for their members and function as a resource and support group for free agents of the workforce.
The National Association for the Self-Employed (NASE) is a non-profit lobbying group that has been a resource for entrepreneurs since 1981.
They help their members save money and time by assisting small business owners with the operations of a successful company.
Many employer group plans offer only discount dental services as part of their company’s health coverage for workers. For example, NASE offers their members a full dental insurance plan available through MetLife.
Consider a Health Reimbursement Account
Health Reimbursement Accounts (HRAs) are designed to allow businesses to set pre-tax dollars aside for reimbursement of medical expenses for participating employees.
Self-employed individuals are technically not eligible to open these accounts, but a simple accounting trick will allow some of them to take advantage of the tax savings of an HRA.
If anyone in the household performs a tasks that helps a sole proprietorship, that person can be paid and considered as an employee.
A W-2 form will have to be established to report the employee’s income to the federal government. This way, an entire household can save money on medical expenses by setting tax-free money aside for future services using an HRA.
The Internal Revenue Service’s Publication 502 informs tax filers how to claim healthcare expenses on their income tax returns.
Even if you do not operate your business with a tax identification number, health insurance premiums and medical services can be deducted within the guidelines set by the IRS.
Dental bills and insurance premiums are deductible just as other healthcare services are, so every dollar spent equates to savings in the form of an income tax cut.
The self-employed have to be creative and resourceful to stay afloat in today’s challenging marketplace.
With a little research and imagination, they can find ways to afford healthcare policies for themselves and their families.
Compare affordable health insurance quotes online with our FREE online tool!
[su_spoiler title=”References:” icon=”caret-square” style=”fancy” open=”yes”]