confused about self-employment insurance deduction (SEHID)

Background: I am retired but with a little self-employment income from consulting. I am on a Medicare Advantage plan sponsored by my former employer (for its retirees). I pay the premium for the MA plan, as well as the premium for Medicare part B (which is required by the MA plan). In March I married an employed woman whose employer provides her with a good health-insurance plan

My questions:

  1. Is my Medicare Advantage plan considered a "subsidized group health plan through an employer"(which is disqualifying for SEHID), or simply a group-discounted individual Medicare Advantage policy. I'm guessing the former, since the chart of premiums reads "The Retirement Systems share for Retiree subscribers is 3.06". I assume this would mean I can't deduct the MA premiums.

  1. Are my Medicare B premiums considered to be for a "subsidized group health plan through employer", since they are required as part of the MA plan ? I'm guessing no, since the instructions explicitly state that Medicare premiums are deductible.

  2. To the extent I'm able to deduct the Medicare B (and possibly the Medicare Advantage) premiums, can I deduct them for the months after I became married to my spouse, who had a "subsidized group health plan through employer" ? I believe this depends on whether I was eligible to join her plan. I'm not sure if that's the case, since I was already on Medicare; perhaps this is a question for her employee health insurance provider..

P.S. I understand that I could take all these expenses on Schedule A (if the standard deduction were not now so high), and that if I qualify for SEHID, the deduction cannot exceed my net self-employment income (minus some things such as the deduction for 1/2 the self-employment tax).

Reply to
JGE
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What is SEHID? If it's what I think it is, the instructions state the health care payments have to be made in a plan set up by the self-employment business. I don't think you qualify, there. This is disputed, and I'm not sure of the current legal position.

However, Medicare B and Medicare C (Medicare Advantage) are deductible as health care expenses on Schedule A, line 1. As you note, this may not do you any good.

I'm sure that being _eligible_ for Medicare A *or* B disqualifies you from the individual ACA subsidies. (An insurance broker informed me that she thought even being over 65 disqualified you from ACA plans, but that appears mistaken.) I'm not sure whether it disqualifies you from group plans or subsidies. You're right, you had better ask the health insurance provider.

I believe you are allowed to discontinue, without penalty, Medicare B (and C and D) if covered by an employer plan as current employee or spouse. This isn't exactly a tax question, though, so you might seek help elsewhere.

Reply to
Arthur Rubin

What you are describing is not a deduction, but an adjustment to income.

Secondly, if your spouse's employer would offer you a health-insurance benefit during any month of the tax year, that disqualifies you from using this adjustment to income for that month. You may wish to check that you're not provided with such a benefit if you are entitled to Medicare.

Your assumption is probably good. To use the adjustment to income the self-employed TP should have the insurance plan in their name or their business's name. It you are in a larger group plan that was not established as part of your business, then you probably can't use the premium payments as an adjustment to income.

I think that's fair.

I agree

You are correct.

Good luck. Again I'm not an authority.

S.

Reply to
spope384

Sorry, yes SEHID is "self-employed health insurance deduction".

I think I'm ok there. In the instructions:

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... it says "For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual". And later "Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. "

I asked them (wife's health insurance) and they said I could've gone on their plan, but they have no idea if I'd have to quit Medicare. So I guess that rules me out for March-December. If they required me to keep paying Medicare premiums (the way my current Medicare Advantage plan does) I could probably deduct those even for those months when I could've been on wife's plan. But I don't think that's the case (that they required me to stay on Medicare B) or they would've known it (my Medicare Advantage people were very emphatic about that).

Reply to
JGE

Ok, I called spouse's health insurance company; they say I can (and could've in 2018) have joined her policy and they had no requirement that I stay on Medicare. Called Medicare and they say I could suspend for as long as I'm on spouse's policy (and not pay the premiums).

So I believe I'm SOL from month of marriage (March 2018). And for Jan & Feb, can only deduct Medicare, since it seems clear that my Medicare Advantage is "employer subsidized".

A poor result, only 2 * $134 deduction. Better than a sharp poke in the eye, I suppose. Thanks for helping me figure this out.

Reply to
JGE

IRS guidance allows for including any medicare premium you pay for health insurance for the SE health insurance deduction (the deduction is taken above the line as an adjustment to gross income) if you are a sole proprietor. Any retiree health insurance benefit you receive or may be eligible for does not disqualify you from taking a deduction. The law (Sec. 162(l) and its regulation) very explicitly states that only an employee & employer relationship disqualifies you for any month of eligibility. That said, if your spouse is still working and her employer makes available to you a subsidized health insurance plan, then you would be disqualified and no AGI deduction would be allowed for any month you were eligible. It does not matter whether you accept the offer.

Reply to
Alan

So it seems clear that since I married in March and became eligible for spouse's health insurance policy, that I am ineligible to take the deduction (for both Medicare B and Medicare Advantage premiums) for March and thereafter.

As far as January and February, you say "Any retiree health insurance benefit you receive or may be eligible for does not disqualify you from taking a deduction". I can't find that in Pub 535, but if true, it sounds like I can take both my Medicare B *and* my Medicare Advantage premiums for January and February, since the MA is a retiree benefit. That's mildly good news, increasing my deduction from $268 to $400. Do I have that right ?

Reply to
JGE

The above is true if the policy was subsidized by the employer (which is typical).

As I stated previously, once you cease being an employee, a subsidized retiree health plan does not disqualify you from the SEHI deduction.

Reply to
Alan

Sure, it's a good policy and she pays little or nothing; she'd have to pay a good bit more if she added me, but I doubt it'd be the entire add'l cost of the policy.

I guess I over-thought your statement. Yes, I understand that it (my subsidized retiree health plan, that is, my Medicare Advantage plan) didn't disqualify me from SEHID. My question was whether I could include the Medicare Advantage premiums in addition to the Medicare B premiums. But the regs are pretty clear that Medicare premiums can be taken, and I don't believe they distinguish between Medicare B and Medicare Advantage (or Part D, for that matter).

Thanks much for helping with this !

Reply to
JGE

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