As 2017 draws near, many South Carolina residents are receiving notice that their health insurance plans are changing and their premiums are rising! As a broker helping South Carolina families for over 13 years, we have developed many strategies to help clients maximize their healthcare dollars.
One particular strategy we employ with many clients is the use of tax advantaged savings accounts to maximize tax credits to reduce premiums. Sound complicated? It’s really not, and many people can take advantage of this simple tax code to maximize their healthcare dollars – and best of all, it’s an easy and effective way to save money! Tax credits are available for any plan (except Catastrophic) for those with a household income under 400 percent of the FPL. However, choosing the CORRECT plan, may give you additional tax benefits and savings! Scroll down to read more….
Let’s take a look at a couple of examples:
The first is a longtime client family of 5 – let’s call them the Smith’s for the sake of discussion. Mr. and Mrs. Smith are both 39 years old, with three children ages 10, 7, and 5. For 2016, the Smith’s estimated their household income to be just a bit above $120,000, and want to spend as little as possible on health insurance premiums. If you were to go to the health insurance marketplace (CLICK HERE for our marketplace quote engine), you would see that in 2016, a family of 5 making $120,000 would not qualify for premium tax credits. The least expensive plan for the Smith’s (who live in Charleston county) would be a Blue Option Bronze 6500 – at a cost of about $949 per month!
By helping the Smith’s select a Tax Qualified High Deductible Health Plan (HDHP), however, we cut the monthly premium cost down to $861 per month, an approximate annual savings of $1,080! How did we do this? By max funding a Qualified Health Savings Account, the Smith’s were able to reduce their household income to $113,250 which qualified them for a tax credit of approximately $90 per month or $1,080 per year!
Think this strategy won’t work for you? Check out a few other examples:
Age 40, single, living in Charleston County earning $36,000 can save $300 in premium by funding a Qualified Health Savings Account!
The savings are even bigger for South Carolina residents over 50! A 60 year earning $48,000 in 2016 would not qualify for tax credits, HOWEVER, a simple contribution of just $1000 into a Health Savings account could result in a $2,820 annual savings!
Sound too good to be true? It’s not! Check out the chart above to see income thresholds for tax credits.
Contributions to Health Savings Accounts reduce taxable income – and your taxable income (Modified Adjusted Gross Income, to be exact) is what the health insurance marketplace uses to determine your tax credit eligibility. This article from Forbes from 2011 discusses the basics of how people use HSA contributions to reduce taxable income.
With premiums increasing sharply for 2017, even more South Carolina residents will be eligible for tax credits – be sure you are saving as much money as possible – and be an educated consumer!
Have questions or want to schedule a consultation? Call us today at 843-882-7062, mention the SChealthconnector article and request an appointment with Josh. I will personally spend up to an hour per appointment, via screenshare, to explain your options and help complete your 2017 health insurance enrollment. And of course, as brokers, we are paid directly by the health insurer so our services are always free. You CANNOT be charged more for working with a broker!