The IRS Deductions Blog

Posts Tagged ‘insurance’

Question: An auto insurance policy has a deductible of 4 with a maximum claim payment of 5. Auto loss amounts follow an

An auto insurance policy has a deductible of 4 with a maximum claim payment of 5. Auto loss amounts follow an exponential distribution of 8. Given the occurrence of an auto loss, calculate the expected claim payment made by this policy.

Answer: Hi there!…Ok, I researched this for you…

It’s kinda long, so you better check it out yourself…

click here: http://www.myautoinsurancetips.com

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Consumers shopping for individual insurance can trim premiums with coverage concessions

Skyrocketing premiums have stunned some consumers who buy their own health insurance policies. People in several corners of the country are facing increases of 20 percent or more from some insurers.

Roof Insurance deductible

Question: Are inventory donations to a 501 (c)3 organization tax deductible? Or only monetary donations?

I’m located in Wisconsin and have a small side business in antiques and collectibles. I belong to a non-profit club and donated 15-20 pieces of vintage/depression glass to a charity auction benefiting the club. Would these items be tax deductible? My cost or the sale price at auction? I have records to back up the donation. Thanks in advance for your help.

Answer: Most “non-profit clubs” are not 501(c)3 organizations, so that’s the first thing to find out.

Non-cash donations to a 501(c)3 organization are deductible. The determination of the deduction, and the requirements for recordkeeping, are tricky, and if the value is significant, you might want to talk to a CPA about it (NOT Block or Liberty or Hewitt). There are different rules depending on whether the contribution is under $250, over $500, or in between.

Read publication 561 (download at irs.gov) for info on valuation.

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Lower your 2009 tax bill before new year starts

Though good tax planning can take weeks and even months, there are some last-minute things you can do now to lower your 2009 tax bill.

2009 Open Enrollment High Deductible Health Plan Prescription Benefits

Question: I am considering an HSA / HDHP versus an HMO / PPO plan. Would this be expensive if I have small children?

If I will use my HSA / HDHP benefits to cover my wife and small child, would this be more expensive than a PPO or HMO, when factoring in total costs (premiums, deductibles, etc.?) I don’t understand why it would make a difference. I am trying to decide between two potential employers, one with an HSA and one with the usual HMO / PPO option.

Answer: It depends on what you consider expensive. The way an HSA works, your insurance coverage has a very high deductible, usually at least $1000 per person or $2000 or higher (family cap is usuall 2X the single person rate). This means you have to self-insure up to the deductible, plus there is usually a copay like any other insurance plan, up to an annual maximum.

When you have an HSA, in addition to the premium for the insurance, you also put money PRETAX (this means it comes out of your check before taxes like a 401K) into a savings account that is part of the HSA that you use to cover the uninsured medical costs.

Some of the major advantages to an HSA are that the money in the savings account that you use for uninsured costs will cover a much broader range of expenses, and can be used for things like dental, vision and mental health expenses even if those are not covered as part of the insurance policy. Because this money is coming out of pretax savings, it costs you less.

When you have a normal health insurance plan, everything that they don’t pay you are paying with after tax dollars. This difference can be significant. If you live in a high income tax state and are in a higher tax bracket, this might mean a savings of 40%.

Any money you don’t use out of the savings account stays in the account for future years OR can be used exactly like an IRA or 401K, meaning it grows tax-deferred until retirement. So in essence, it’s an extra tax-deferred savings account. Clearly that’s a pretty cool thing.

The drawbacks, well, you do have to fund that deductible at least partially, so your monthly payment may be higher, depending on what, if any, your employer pays in. Just keep in mind that all that money is before taxes, so you aren’t losing spendable cash dollar for dollar but on a discounted basis depending on your tax rate. You usually have some flexibility in deciding how much money you want to go into the savings account each month.

I like it. I like that my money is pretax, I like that it grows tax deferred, and I like that the health insurance in the plan offers me a broader use of the money (like alternative medicine).

In the truest sense it is cheaper than a regular plan, but if you’re looking at which will dent your current check more, it IS possible the HSA will. Of course some of that depends on how often you use it. Copays on regular insurance add up and all would be post tax.

If current income matters, here’s what I’d do:
1. Find out how much, if any, each employer pays towards the premium and what your cost will be each month.
2. Figure out how much you went out of pocket last year on ALL your uninsured costs.

the combination of your out of pocket last year and your share of premium will give you a pretty good idea of whether the traditional plan costs you more or not.

Little kids and wives who get pregnant can be mighty expensive.

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Health Savings Account Enrollment Reaches Ten Million

Ten million Americans are covered by Health Savings Account (HSA)-eligible insurance plans, an increase of 25 percent since last year, a new census released today by America’s Health Insurance Plans (AHIP) finds. (PRWeb May 19, 2010) Read the full story at http://www.prweb.com/releases/ahip-study/enrollment/prweb4023264.htm

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Question: Can a person’s HSA be used by other spouse, though she might not be enrolled in HDHP plan?

I recently started job where my employer pays from my health insurance premium when I sign up for High Deductible plan. On top of that employer contributes to my HSA account every year. My wife also works (not at the same employer) and has health insurance for her and kids through her employer. If I enroll her and kids into my high deductible plan, the insurance premiums are very high. Also I do want to take advantage of the benefit my employer is providing me on HSA and covering my insurance premiums, so I don’t want to go on her insurance plan.

Answer: Yes, they can be used for any eligible medical expenses by any of your dependents or spouse.

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Hewitt Analysis Shows Percentage Of U.S. Workers Actively Enrolling In Benefits Reaches An All-Time High

With U.S. health care and large-scale health reform in the media spotlight, a new analysis by Hewitt Associates, a global human resources consulting and outsourcing company, shows a record percentage of workers took an active role in selecting their health care benefits during open enrollment for the 2010 plan year

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Question: Home Owners Insurance – Higher Deductible or Higher Premium?

When buying a Home Owners Insurance, what is the best approach…. Keeping Higher Deductible or Higher Premium?

Answer: $500 Deductible? That is NOT a high deductible.

But since you shouldn’t be claiming small claims, because 2 will get you cancelled, you should take a high deductible. The premium savings varies, between 10% and 25% off the $500 deductible, if you take a $1000 or $2500 deductible.

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Teens can raise insurance costs

Dear Action Line: My 16-year-old has his ‘intermediate license’ but can’t stop texting long enough to ask for the car. What should I look for on insurance? — W.S., Tulsa.

Lowering Premiums by Paying for Routine Care (Step 3)