1. What are the tax implications of the eComm PPO Plan and HMO?
HMOs include Kaiser CA eComm, Kaiser OR eComm, and BlueCares East/SE eComm
Qualified medical expenses, including health insurance premiums, in excess of 10% of adjusted gross income may be deducted on your federal and possibly state income tax return if you itemize your deductions.*
EXAMPLE
Assumptions
Bob is single and younger than 65
Bob has enrolled in the eCommerce PPO Plan with annual premiums of $832 a year
Bob’s total annual taxable income from all sources is $100,000
Bob’s itemized deductions do not exceed $6,350
Bob had some qualified medical expenses of $3,000 including medical premiums
Comments
Bob’s itemized deductions are less than the standard deductions, so he is better off taking the standard deduction
Bob cannot deduct any medical expenses, including the expenses, because his expenses are less than $10,000 (10% of AGI)
The federal and state (CA) tax impact to Bob related to paying post tax premiums is $285.
BOB’S TAXES
Income (AGI)
$100,000
Personal Exemption
-$4,050
Standard 2017 Deduction
-$6,350
Taxable Income
$89,600
Additional Federal Tax attributed
to Medical Premiums
$208 (25% TAX BRACKET)
Additional CA Tax attributed to Medical Premiums
$77 (9.3% TAX BRACKET)
The eComm PPO plan and eComm HMO plans, which include Kaiser CA eComm, Kaiser OR eComm, and BlueCares East/Southeast eComm, premiums are paid after tax due to IRS regulations. This means federal and state taxes are deducted before their medical premiums are deducted.
To give you an understanding of the impact, let’s take a look at Bob. Bob is single and under 65. He has total annual taxable income of $100,000 and paie $832 for the year in eCommerce PPO Plan premiums. His itemized deductions do not exceed $6350 and he had some qualified medical expenses of $3,000.
Bob’s itemized deductions are less than the standard deductions, so he is better off taking the standard deduction. He cannot deduct his medical expenses of $3,000 because they are less than 10% of his taxable income or $10,000.
Take all this into account and Bob will have a tax impact of $285 due to having to pay his eCommerce PPO Plan premiums after tax.
We suggest you reach out to your tax advisor to learn more about tax implications for your specific situation.
EXAMPLE BASED ON 2017 TAX RATES
* Please reach out to your tax advisor to learn more about tax implications for your specific situation.