There are several deductions for you and your spouse, if filing jointly:
- Unreimbursed premiums for subsidized and unsubsidized long-term care insurance plans and unreimbursed premiums for unsubsidized health care insurance plans; AND
- Excess medical expenses; AND
- Accident and health insurance premiums paid for certain dependent relatives.
Unreimbursed Health Care Expenses.
Some examples of qualifying health care expenses include unreimbursed costs for the following:
- Prescription medicine or insulin
- Hospital costs and nursing care
- Medical, dental and vision examinations and treatment by a
certified health professional
- Eyeglasses, hearing aids, braces, crutches and wheelchairs
- Insurance premiums for health care insurance plans (including
both unsubsidized and subsidized plans, Medicare premiums and supplemental Medicare insurance)
- Premiums for long-term care insurance
Note: You must reduce the health care insurance premiums amount you enter by the amount of the self-employed health insurance deduction that you claimed on line 29 on your IRS form 1040.
Example 1: Sue has a health care insurance plan through her employer. She has $50 deducted from her paycheck each month to pay for her portion of her health care insurance premium costs. Her employer contributes $450 each month toward the health care insurance premium costs that total $500 each month. This is a subsidized plan, so Sue is not participating in an unsubsidized health care insurance plan. However, Sue may deduct her $50 monthly payment in the second part of the I-File Insurance and Medical Cost worksheet as unreimbursed premiums she paid for dental, vision and health insurance.
Note: If you are eligible for Medicare coverage, you cannot use the first part of the I-File Insurance and Medical Cost worksheet to report any unsubsidized health care insurance plan premiums paid while you were eligible for Medicare coverage.
Example 2: Sue is retired and qualifies for Medicare for the entire year. She pays $50 each month for supplemental health insurance and $20 each month for Medicare B premiums. However, Sue may deduct her $50 and $20 monthly payments in the second part of the I-File Insurance and Medical Cost worksheet as unreimbursed premiums she paid for dental, vision and health insurance.
|Accident and Health Insurance Premiums for Certain Relatives and Qualifications
Ohio House Bill 1, effective beginning in taxable year 2010, allows the deduction from federal adjusted gross income (FAGI) of amounts used to pay for accident and health insurance premiums for the taxpayer and his/her dependents. This deduction is only available for taxpayers who are not eligible to participate in any subsidized medical care insurance plan offered by their employer and who are not eligible for Medicare or Medicaid. A subsidized health insurance plan is a plan where your employer, your spouse’s employer, a retirement plan or Medicare pays any portion of the total premium for health insurance coverage. The deduction is not available to self-employed taxpayers because such taxpayers deduct all of their family accident and health insurance premiums on IRS form 1040 before arriving at FAGI.
House Bill 1 expands the definition of “dependent," for this provision only, to include those who would be a dependent under the Internal Revenue Code definition, without regard to the gross income test or the support test.
For purposes of this deduction only, “dependent” includes any of the following relationships to the taxpayer:
• A child or a descendent of a child.
• A brother, sister, stepbrother or stepsister.
• The father or mother, or an ancestor of either.
• A stepfather or stepmother.
• A son or daughter of a brother or sister of the taxpayer.
• A brother or sister of the father or mother of the taxpayer.
• A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
• An individual (other than an individual who at any time during the taxable year was the spouse of the taxpayer) who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household.
“Dependent,” for purposes of this deduction, does not include an individual who is not a citizen or national of the United States unless such individual is a resident of the United States or Mexico or Canada.
Below are examples of taxpayers who can take from this deduction:
Example 1: A husband and wife are both employed but neither of their employers offers a subsidized health insurance plan. Neither the husband nor wife is eligible for Medicare or Medicaid. They pay $8,000 per year in premiums for accident and health insurance. They did not deduct any portion of the $8,000 premium as an itemized deduction on their federal tax return. If their federal adjusted gross income is $50,000, they can include the $8,000 of premiums on the worksheet. The taxpayer will enter the eligible amount on Schedule A. As noted above, Ohio House Bill 1 expands the definition of “dependent” for this provision only.
Example 2: A taxpayer purchases an accident and health insurance plan for herself and her 30-year-old sister. Neither the taxpayer nor her sister is eligible for Medicare or Medicaid, and neither is employed by an employer that offers a subsidized health insurance plan. The taxpayer earns $65,000 per year and pays accident and health insurance premiums of $8,000 per year. The taxpayer did not deduct any portion of the $8,000 premium as an itemized deduction on her federal tax return. Her sister earns $20,000 per year, lives in her own home and pays for her own support. Although her sister is not a dependent for any other purpose, she is a dependent in determining the deductibility of premiums paid for an accident and health insurance plan. This is because the income test and support test in the definition of “qualifying relative” (Internal Revenue Code section 152) are disregarded for this purpose. Therefore, the taxpayer can include the $8,000 on the worksheet.
Separate from the Ohio tax provisions, but having an impact in the same area, are recent changes to Ohio and federal insurance laws that have been amended to raise the age of adult children who can be covered by the parents’ accident and health policies. Ohio House Bill 1 requires accident and health insurance companies to offer coverage for adult children of policyholders up to age 28. The federal Patient Protection and Affordable Care Act, 111 PL 148, allows exclusion from FAGI of amounts paid for accident and health insurance premiums for the taxpayer, spouse, dependents and adult children who have not attained the age of 27.
In the following examples, the taxpayer cannot take the deduction:
Example 1: A taxpayer has a health care insurance plan through her employer. She also has coverage for her 24-year-old son, which the insurance company provides pursuant to the provisions of Ohio House Bill 1. The health care insurance premium for this coverage is $265 every two weeks, of which $100 is deducted from the taxpayer’s pay and $165 is paid by her employer. The taxpayer cannot include the insurance premiums payments on the worksheet because amounts paid by the taxpayer for an employer-subsidized accident and health plan are not deductible.
Example 2: A taxpayer, who is a self-employed independent contractor, purchases an accident and health insurance plan for himself, his wife and his 25-year-old daughter. The taxpayer is a sole proprietor and earns a net profit of $100,000. He pays accident and health insurance premiums of $10,000 a year. The company does not offer health insurance coverage for his employees. His daughter works with him and is paid an annual salary of $25,000, lives in her own home and is self-supporting. The taxpayer cannot include the $10,000 on the worksheet of the instructions because the taxpayer took the deduction on line 25 of the IRS return for health insurance premiums paid by self-employed individuals.
For additional information, visit the Ohio Department of Insurance’s Web site at insurance.ohio.gov.
|Accident and Health Insurance Premiums for Certain Relatives
You may be able to take a deduction for accident and health insurance premiums that you paid for yourself, your spouse and your "dependents," as defined above. If you answer "yes" to any of the three questions below, you are not eligible to take this deduction:
1. During the year, were you eligible to participate in any subsidized health insurance plan: Yes ? No ?
2. Did you claim the self-employed health insurance deduction on line 29 of IRS form 1040: Yes ? No ?
3. During the year, were you eligible for medical care coverage through Medicare or Medicaid: Yes ? No ?
If you answered "No" to all three of the above questions, you will need to answer the following question: Did you claim an itemized deduction on your federal income tax return for any portion of the accident and health insurance premiums paid? Yes ? No ?
If "Yes," enter the amount, if any, of the accident and health insurance premiums for which you did not take an itemized deduction on your federal income tax return. This is the maximum amount of your accident and health insurance premium deduction. Enter this amount on the worksheet. If "No," you may be able to deduct the full amount of unreimbursed accident and health insurance premiums that you paid. Enter this amount on the worksheet.