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Healthcare and Taxes
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Archer Medical Savings Account (MSA) Contributions
Tax-deductible contributions and tax-free earnings, but must be associated with high deductible health plans (HDHPs).
Health Coverage Tax Credit (HCTC)
A federal tax credit that covers 72.5% of qualified health insurance premiums for eligible individuals and their families.
Employer-Provided Health Insurance Exclusion
Employer-paid premiums for employees' health insurance are exempt from income and payroll taxes.
HSA Contributions
Contributions made pre-tax and reduce taxable income. Funds can grow tax-free and be used for qualified medical expenses tax-free.
Health Reimbursement Arrangement (HRA) Contributions
Employer-funded plan that reimburses employees for medical expenses and, sometimes, insurance premiums, up to a certain amount per year.
Premium Tax Credit Repayment
If you received more Premium Tax Credit than you’re eligible for, you must repay the excess amount, which adds to your tax liability.
Medical Expense Deduction
Taxpayers can deduct unreimbursed medical expenses that exceed 7.5% of their adjusted gross income (AGI).
Itemized Deduction for Health Insurance Premiums
Some taxpayers may itemize deductions and include health insurance premiums as a medical expense if expenses exceed 7.5% of their AGI.
Medicare Tax
A payroll tax of 1.45% for employees and employers each, on all earned income. Additional 0.9% applies to high-income earners above certain thresholds.
Cafeteria Plans (Section 125 Plans)
Employees can pay for certain health care expenses with pre-tax dollars, which lowers their taxable income.
Self-Employed Health Insurance Deduction
Self-employed individuals can deduct 100% of their health insurance premiums for themselves, their spouses, and dependents.
Flexible Spending Account (FSA)
Funds contributed are pre-tax, reducing taxable income. Used to pay for out-of-pocket healthcare costs, but usually must be used within the plan year.
Health Insurance Premium Tax Credit
A refundable credit to help with the cost of health insurance purchased through the Marketplace, based on income level and family size.
Individual Mandate Penalty (Prior to 2019)
If you did not have health insurance that counted as minimum essential coverage, you may have had to pay a penalty for each month without coverage.
Long-term Care Insurance Deductions
Premiums paid for qualified long-term care insurance can be deductible within certain limits based on age and are adjusted for inflation.
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