Tax implication of not choosing employer provided health plan

ftakar Member Posts: 2 Newcomer
edited January 15 in General

If my employer's health plan choices aren't very good, and I opt to pay for my own plan, is that tax-deductible?

Best Answer

  • kiarab
    kiarab FreeTaxUSA Agent Posts: 58
    Answer ✓

    Hello again,

    Only the medical expenses in excess of 7.5% of your AGI will be deductible. So using the previous example of a 100,000 AGI, if you paid 10,000 in premiums and nothing else for medical expenses, you would be able to claim $2,500 in medical deductions. Since this is an itemized deduction, you would enter in all other possible itemized deductions (such as mortgage interest and state taxes paid) and hopefully together, it would be greater than your standard deduction, giving you a better tax benefit.


  • AlexO
    AlexO FreeTaxUSA Agent Posts: 74

    Hello, ftakar!

    That is a great question!

    Out-of-pocket premiums you pay can be claimed as an itemized deduction when you file your return. These premiums are grouped with medical expenses, such as doctor bills, hospital visits, etc.

    Medical expenses are only deductible in excess of 7.5% of your adjusted gross income (AGI). For example, if your adjusted gross income is $100,000, you will only be able to deduct medical expenses paid in excess of $7,500.

  • ftakar
    ftakar Member Posts: 2 Newcomer

    Thank you.

    I'm not clear if that means that all out-of-pocket premiums are claimable, or only out-of-pocket premiums that are in excess of 7.5% of AGI (assuming no other medical expenses)?

  • Hollyw
    Hollyw FreeTaxUSA Agent Posts: 3

    In the FreeTaxUSA software, if you enter all of your out-of-pocket premiums, it will figure what amount is over the 7.5% of your AGI for you.