The Affordable Care Act (ACA) introduced premium tax credits to help individuals pay for health insurance. It also created state-based exchanges and provided subsidies to small businesses for coverage needs.
Are you self-employed and wondering if your affordable care act health insurance counts towards the self employed health insurance deduction? Keep reading to find out!
Premiums
Premiums are the monthly fees you pay for health insurance, including deductibles and coinsurance. In many cases, these expenses can be deducted from your taxable income.
The Affordable Care Act (ACA) introduced a tax credit for health insurance premiums you pay. These credits, or subsidies, are refundable and make purchasing health coverage more accessible.
These credits provide much-needed assistance for self-employed individuals who may struggle to afford health insurance on their own. Thanks to the American Rescue Plan and Inflation Reduction Act, these increases have been extended until 2025 – more generous than before 2014.
Self-employed individuals who pay health insurance premiums for themselves, their spouse or dependents can claim a deduction on Schedule SE for all of their premium payments. To be eligible, they must meet certain criteria.
Deductibles
The Affordable Care Act (ACA) has made it simpler for self-employed people to secure health insurance, by providing tax credits, premium subsidies and Medicaid expansion.
However, it also comes with a price tag that some may find difficult to stomach – including deductibles.
Deductibles are the amounts you pay upfront for medical services and therapies until your plan begins covering them. After meeting the deductible, you may be responsible for copays or coinsurance depending on the policy.
Under the Affordable Care Act (ACA), self-employed individuals can deduct up to 100% of their deductibles for qualified individual health insurance plans. You can claim this deduction on Line 17 of Schedule 1. Even if you don’t itemize your taxes, taking this deduction could still save you money in the long run.
Tax credits
The Affordable Care Act offers several tax credits to reduce the cost of health insurance for many Americans. These are known as premium tax credits and they’re available to individuals and families earning less than 400% of the federal poverty line.
Subsidies are available for ACA-compliant plans sold on the Health Insurance Marketplace, such as Bronze, Silver, Gold and Platinum plans. Unfortunately, they are not available for catastrophic coverage plans, short-term health insurance policies, standalone prescription drug plans or insurance supplements such as dental and vision coverage.
Subsidies were originally set to expire at the end of 2020, but President Biden recently signed a bill into law that extends them until 2025. Without the extension, many Americans could have seen their premiums go up by as much as 15 to 70 percent; the extension helps millions avoid this risk.
Exclusions
The Affordable Care Act introduces significant modifications to how health insurance is provided, such as banning preexisting condition exclusions. Unfortunately, these exclusions can make it difficult for those with serious medical problems to secure coverage.
Under the Affordable Care Act (ACA), health insurance plans must cover everyone. This includes women, children, and older individuals alike. Furthermore, insurers cannot charge people with pre-existing conditions more or deny them coverage due to cost concerns.
Insurers must abide by this regulation when offering non-grandfathered individual market health plans as well as group market plans.
The Affordable Care Act (ACA) offers many tax breaks for self-employed individuals, such as a 100% deduction on health insurance premiums for you, your spouse and any dependent children who will be 26 or younger at year’s end. This is an immense advantage to those working for themselves.
