IT 2000-02 - Medical Care Expense Deduction - - ORC section
5747.01(A)(11) - March 8, 2000
We have received several inquiries pertaining to the medical
care expense deduction under Ohio Revised Code ("ORC")
section 5747.01(A)(11) in connection with medical care
insurance premiums. Set forth below are those inquiries and
the Department’s response to each inquiry.
Inquiry
#1
May a "more than 2% shareholder of an S corporation" whose
corporation provides medical care insurance for the
shareholder (since the shareholder is also an employee of the
S corporation) claim the ORC section 5747.01(A)(11)(a)
deduction (the medical care insurance premium deduction on
line 1 of the worksheet on the left hand side of page 18 of
the 1999 Ohio form IT-1040 instructions) with respect to
premiums paid by the S corporation-employer where such
amounts are included in "total wages/compensation" on the
1999 IRS form W-2?
Response to
Inquiry #1
Yes. If a "more than 2% shareholder of an S corporation"
whose corporation provides health insurance for the
shareholder-employee is eligible to claim the deduction for
60% of such amount on line 28 on the front page of the 1999
IRS form IT-1040 (commonly referred to as the "self-employed
health insurance deduction"), then such individual will
not be
considered an "employee" for purposes of the Ohio medical
care insurance premium deduction and can claim the Ohio
deduction (on line 1 of the worksheet) to the extent such
amounts have not already been deducted in computing federal
adjusted gross income or Ohio adjusted gross income.
Inquiry
#2
Is the portion of the medical insurance premium which a
retired teacher, retired state employee, retired private
sector employee or other retiree pays deductible (or line 1
of the worksheet) under ORC section 5747.01(A)(11)(a)? The
retirement plan is also paying a portion of the premium or is
providing the health care coverage.
Response to
Inquiry #2
No. The portion of the medical care insurance premium which
the STRS, PERS, privatesector plan, or other retiree pays is
not
deductible as a health insurance premium on line 1
of the worksheet since the retiree’s employer is subsidizing
(or has subsidized) the health plan covering the retiree.
However, such amounts would qualify for the ORC section
5747.01(A)(11)(b) net excess medical care deduction and would
be part of the amount shown on line 2 of the worksheet.
Inquiry
#3
A former employee is paying health insurance premiums under
the "continuation coverage" rules required by the
Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA").
The former employer is incurring only those costs, if any,
required by COBRA. Can the
individual claim the payment as a deduction under ORC section
5747.01(A)(11)(a)?
Response to
Inquiry #3
Yes. The individual is not considered an
"employee" for purposes of this deduction and can claim the
Ohio deduction on line 1 of the worksheet.Reproduced below is
ORC section 5747.01(A)(11):
- Deduct to the extent not otherwise allowable as a
deduction or exclusion in computing federal or Ohio adjusted
gross income for the taxable year, the amount the taxpayer
paid during the taxable year for medical care insurance and
qualified long-term care insurance for the taxpayer, the
taxpayer's spouse, and dependents. No deduction for medical
care insurance under division (A)(11) of this section shall
be allowed either to any taxpayer who is eligible to
participate in any subsidized health plan maintained by any
employer of the taxpayer or of the taxpayer's spouse, or to
any taxpayer who is entitled to, or on application would be
entitled to, benefits under part a of Title xviii of the
"Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. 301, as
amended. For the purposes of division (A)(11)(a) of this
section, "subsidized health plan" means a health plan for
which the employer pays any portion of the plan's cost. The
deduction allowed under division (A)(11)(a) of this section
shall be the net of any related premium refunds, related
premium reimbursements, or related insurance premium
dividends received during the taxable year.
- Deduct, to the extent not otherwise deducted or excluded
in computing federal or Ohio adjusted gross income during the
taxable year, the amount the taxpayer paid during the taxable
year, not compensated for by any insurance or otherwise, for
medical care of the taxpayer, the taxpayer's spouse, and
dependents, to the extent the expenses exceed seven and
one-half per cent of the taxpayer's federal adjusted gross
income.
* * * * *
If you have any questions, please call 614-433-7603 (TDY:
1-800-750-0750).