Using HSA Funds to Pay LTC Premiums and Other Tax Considerations

[Justin Bilyj]

I am aware you can use HSA funds to pay for Ltc premiums, and that as you age you can have tax deductions for contributing premiums to long term care policies.

Can someone explain to me the ins and outs regarding HSA income deductibility of contributions to ltc premiums combined with the tax deductions of just having an ltc plan?

Under 40 = $370
Under 50 = $700
Under 60 = $1,400
Under 70 = $3,720
Over 70 = $4,660

What if both spouses have a plan, are these doubled?

How do you explain this to consumers/clients within your presentation/conversation?

I have a couple of clients who have HSA's with me and they want to have a conversation about ltc and I would like to bring this to their attention in order to soften the price of ltc.

Appreciate any assistance!

 

[Mr_Ed]

I am aware you can use HSA funds to pay for Ltc premiums, and that as you age you can have tax deductions for contributing premiums to long term care policies.

Can someone explain to me the ins and outs regarding HSA income deductibility of contributions to ltc premiums combined with the tax deductions of just having an ltc plan?

Under 40 = $370
Under 50 = $700
Under 60 = $1,400
Under 70 = $3,720
Over 70 = $4,660

What if both spouses have a plan, are these doubled?

How do you explain this to consumers/clients within your presentation/conversation?

I have a couple of clients who have HSA's with me and they want to have a conversation about ltc and I would like to bring this to their attention in order to soften the price of ltc.

Appreciate any assistance!

I am aware you can use HSA funds to pay for Ltc premiums, and that as you age you can have tax deductions for contributing premiums to long term care policies.

Can someone explain to me the ins and outs regarding HSA income deductibility of contributions to ltc premiums combined with the tax deductions of just having an ltc plan?

THE SELF EMPLOYED HEALTH INSURANCE DEDUCTION IS THE BEST WAY TO DEDUCT LTCI PREMIUMS (UNLESS THEY OWN A C CORP).

THE NEXT BEST IS USING HSA



Under 40 = $370
Under 50 = $700
Under 60 = $1,400
Under 70 = $3,720
Over 70 = $4,660

What if both spouses have a plan, are these doubled?

THEY ARE NOT DOUBLED. THE LIMITS APPLY SEPARATELY TO EACH SPOUSE DEPENDING UPON HIS/HER AGE IN THAT TAX YEAR.

How do you explain this to consumers/clients within your presentation/conversation?

WRITE A CHECK FOR EACH SPOUSE FROM THE HSA FOR THE MAXIMUM AMOUNT ALLOWABLE BASED UPON THEIR AGE IN THAT TAX YEAR.

WRITE A CHECK FROM YOUR NORMAL CHECKING ACCOUNT FOR THE REMAINING PORTION OF THE PREMIUM.


I have a couple of clients who have HSA's with me and they want to have a conversation about ltc and I would like to bring this to their attention in order to soften the price of ltc.

Appreciate any assistance!

NO PROBLEMO.

 

[Justin Bilyj]

Can you explain the self employed health insurance deduction a bit more?

 

[Mr_Ed]

Can you explain the self employed health insurance deduction a bit more?

self employed people can deduct health insurance premiums off the top of their incomes on the front of form 1040.

LTC insurance is included in the self-employed health insurance deduction but they can only include in the SEHID the premium amounts your eferenced above which are limited by age:

Under 40 = $370
Under 50 = $700
Under 60 = $1,400
Under 70 = $3,720
Over 70 = $4,660

 

[Justin Bilyj]

So if a 62 year old sbo had a $2,500 deductible hsa, and contributed $2,500 for the year (just put it into the hsa, didn't have to use any funds towards healthcare), and then takes out $1,400 to buy ltc premiums. What are his total deductions for the year?
Just trying to wrap my head around this, and I appreciate the explanations.

 

[Mr_Ed]

So if a 62 year old sbo had a $2,500 deductible hsa, and contributed $2,500 for the year (just put it into the hsa, didn't have to use any funds towards healthcare), and then takes out $1,400 to buy ltc premiums. What are his total deductions for the year?
Just trying to wrap my head around this, and I appreciate the explanations.

I assume that sbo means "small business owner".

right?

if he's a small business owner he should NOT use the HSA to pay for his LTCi premium.

if he's a small business owner, he can pay the LTCi premium with pre-tax dollars through the self-employed health insurance deduction.

 

[billberry12]

And if he is not a small business owner, and pays his LTCI premium out of his HSA, he cannot deduct it again as a medical expense. IRS frowns on deducting something twice, can you believe it?