How To Lower Taxes With An HSA + HRA — Real Health Care Reform Healthshare

How To Lower Taxes With An HSA + HRA

tax deductionsWith taxes increasing this year, it’s time to get the most in tax deductions and two simple things can help you do that: Health Savings Accounts and Health Reimbursement Arrangements.


New Tax Increases


The Medicare payroll tax has gone up 0.9 percent on wages over $200,000 for individuals and on wages over $250,000 for joint filers. If you’re in a high-income bracket, you also have an additional 3.8 percent net investment income tax on interest, dividends, and capital gains.


In addition, there’s a 2.3 percent medical device excise tax now and next year, health insurance plans will carry an annual $63-per-person fee. That’s meant to cushion the cost of covering pre-existing health conditions when insurance companies are required to cover people who need lots of health care, but it is going to drive costs up on everyone.


Increase in Income Threshold for Medical Expense Deductions


Last year, it was possible to get a tax deduction for medical costs that exceed 7.5 percent of adjusted gross income.  That threshold is higher now.  You will only be allowed to claim 2013 medical expenses as tax deductions if the total amount exceeds ten percent of your adjusted gross income.  But, there is a way around that.


How People Are Fighting Back


One way to fight back is with plans that have low-end premiums and high-end tax deductions.  The policies with the lowest premiums have high annual deductibles.  And, some of these plans are known as Health Savings Account (HSA) qualified. It’s the HSA plans that allow you to claim tax deductions for saving money or for paying medical bills.


Surveys have found that most employees could have saved if they had a high-deductible plan instead of a traditional PPO plan.  That’s from a new white paper by Change Healthcare, a health care cost transparency company. They say employees could have saved an average of $55 per month, while families could have saved $140 per month. The savings are on premiums, co-pays, and co-insurance.


How Small Business Owners Can Fight Back


Over the past two years, the number of employers offering high-deductible plans has increased from 17 to 22 percent. It’s estimated that employers can average saving 20 percent every year with this option.  And, setting up a health reimbursement arrangement adds on significant tax advantages.  And, yes, you can combine HSA-qualified health insurance plans with an HRA to get the maximum savings possible.  Go here to read more information about HRAs.


Leave a Reply

Your email address will not be published. Required fields are marked *