Is there a calculator somewhere that I can use to figure how much I will save per month if my health insurance is deducted pre-tax? I have three health insurance options this year ranging from $500-660 per month, but the cost will be much lower since it is pre-tax right?
DH and DD are on an individual plan because it was so much cheaper, but next year the rates are doubling, so it would probably make more sense to bring them on to mine.
Do you know what federal tax bracket you're in, and what your state (and local, if applicable) tax rate is? If so, you can get a pretty good approximation. Like, say you're in the 20% tax bracket, and state and local taxes are 8% -- in that case, take 28% off of what you're paying to figure out the savings are.
I think the easiest way to see the impact of your premium on your net pay is to use paycheck city and your W4/withholdings info. Calculate, on a per-pay-period basis, the cost of the health insurance to you as a percentage of your gross income, and let the calculator figure out the rest. Then you can compare the difference in your current net pay vs. what the rates will be come January. Also, you may want to check out plans for them on the exchange. The subsidies, for a family of 3, stop around $78k/year.
Example, if you make $60k/year, your gross is $5k/mo. If the health insurance is $500/mo, and you get paid twice monthly, you will pay $250/pay period and your gross pay is $2500/pay period, so the health insurance is 10%. Then take out the rest of your pre-tax deductions like retirement, and click calculate and voila!
Post by barefootcontessa on Oct 1, 2013 8:22:20 GMT -5
If your marginal rate is 25%, you can assume the actual cost to you (taking into account the tax savings) is 25% less than the stated premium (and perhaps more if you have state and/or local income tax). Basically whatever you spend on premiums is not calculated as income, so that amount is coming off the top of your annual income. I am not sure what other deductions you take, but reducing your income may make you eligible for other income-based deductions.
I think the easiest way to see the impact of your premium on your net pay is to use paycheck city and your W4/withholdings info. Calculate, on a per-pay-period basis, the cost of the health insurance to you as a percentage of your gross income, and let the calculator figure out the rest. Then you can compare the difference in your current net pay vs. what the rates will be come January. Also, you may want to check out plans for them on the exchange. The subsidies, for a family of 3, stop around $78k/year.
Ditto this. I always use paycheckcity to run different scenarios for 401k withholdings, etc.
I think the easiest way to see the impact of your premium on your net pay is to use paycheck city and your W4/withholdings info. Calculate, on a per-pay-period basis, the cost of the health insurance to you as a percentage of your gross income, and let the calculator figure out the rest. Then you can compare the difference in your current net pay vs. what the rates will be come January. Also, you may want to check out plans for them on the exchange. The subsidies, for a family of 3, stop around $78k/year.
Thanks! Unfortunately (but fortunately) we miss the limit for the subsidies by a very small amount
@songforyou, no there's no income limit BUT the subsidies are based on your MAGI, and then you are only eligible for them if you either don't have insurance through your employer, your plan does not meet certain specifications WRT coverage, and/or if the premium for a single person/employee is more than 9.5% of your gross income.
If you have an employer plan, and it complies with the minimum value standard (covers at least 60% of most things), and is considered affordable (it only costs your husband 9.5% or less of his wages for coverage for him alone, because employers do not have to subsidize dependents), you are ineligible for any of the income-based premium credits.
Sep 28, 2013 at 12:43pm lys said: If you have the option of employer insurance plan, then you do not qualify for tax subsidies.
If you will remember prior to the passage of ACA, Obama claimed that 14% was a reasonable amount to pay for health care.
IMO there are going to be a good number of people unhappily surprised about the cost of the "new affordable" health care . The bolded isn't 100% true.
The least benefit rich plan provided by the employer (because some employers have 2+ plans) has to meet minimum guidelines. If it does not, you are eligible for a subsidy. But the vast majority of the plans in my state adhere to at least the minimum value standard. The affordable standard depends on how much the employer subsidizes for the least benefit rich plan. Here, the minimum employer contribution is 10%. For instance, if an employee's premium for the least benefit rich plan - for a single employee - is $400, and the employer only contributes 10% ($40, meaning the employee pays $360) and the employee makes any less than $3790/mo gross, it does not meet the affordable standard.
Post by sometimesrunner on Oct 1, 2013 11:03:36 GMT -5
Health insurance contributions are also pre-SS and Med tax, so that's another 7.65% of savings. You mentioned your marginal rate is 25%, so 25 + 7.65 = 32.65%. Take whatever the premiums are *.3265 and that is your savings. So $500*.3265= $163.25 in tax savings.
What I would do is just take a look at your tax return from 2012 (the one you filed this past spring).
Look at what your net tax rate was. It should be there on the cover page fro mturbotax or you can look at the total tax you paid and divide it with your MAGI to get your net tax paid.
Or you can just calculate what your income would have been last year minus extra pre-tax withholdings.
So say your income for your 2012 taxes was $70,000. If you sign up for this insurance that costs $600/month, that means that your income for 2014 will be $7200/less per year.
Subtract $7200 from your MAGI and look at the tax tables to see what sort of tax you would pay on a total income of that amount.
You can then compare that to what you paid in 2012 and figure out the difference.
But between state and local taxes, for example, paying premiums of $7200 pre-tax could save a family of four that pays a net tax rate of 20% about $1,440/year in federal taxes. If you have state income tax of 5% that would be an additional $360 in savings. So approximately $1800/year.
So the net cost of the premiums is really only $7200 - $1800 = $5400, which is $450/month.
So I would say that if you are getting exchange prices in that realm, I would probably opt for the employer/group plan.
What I would do is just take a look at your tax return from 2012 (the one you filed this past spring).
Look at what your net tax rate was. It should be there on the cover page fro mturbotax or you can look at the total tax you paid and divide it with your MAGI to get your net tax paid.
Or you can just calculate what your income would have been last year minus extra pre-tax withholdings.
So say your income for your 2012 taxes was $70,000. If you sign up for this insurance that costs $600/month, that means that your income for 2014 will be $7200/less per year.
Subtract $7200 from your MAGI and look at the tax tables to see what sort of tax you would pay on a total income of that amount.
You can then compare that to what you paid in 2012 and figure out the difference.
But between state and local taxes, for example, paying premiums of $7200 pre-tax could save a family of four that pays a net tax rate of 20% about $1,440/year in federal taxes. If you have state income tax of 5% that would be an additional $360 in savings. So approximately $1800/year.
So the net cost of the premiums is really only $7200 - $1800 = $5400, which is $450/month.
So I would say that if you are getting exchange prices in that realm, I would probably opt for the employer/group plan.
Thanks. So on my cover page I have my ago, taxable income, total tax, total payments:credits, amount to be refused and effective tax rate. What do I do with those numbers?
Well I just did the paycheck city page bc that seemed easier than figuring it out based on last years tax return. According to the calculator it will save us 25%- The $660 plan will actually be $500. the $550 plan will be $415 and the $500 plan will be $337. I really hope it doesn't come out to screw us at the end of the year, but it shouldn't right? Because we aren't paying taxes on the premiums it will be a wash at the end right?
I don't think it will screw you, especially not with the increase in your current carrier's rates. Lowering your taxable income is always a plus in my book.
It still sucks. We are looking at a net increase of $150- $200 a month .. waaahh
It's better insurance, but DD and DH are pretty healthy so we take the gamble with the higher deductible. It will go from $2500 to $1500, which is good, but still $150+ a month more
Now to decide if we want an HRA or a PPO.. hmm decisions
It still sucks. We are looking at a net increase of $150- $200 a month .. waaahh
It's better insurance, but DD and DH are pretty healthy so we take the gamble with the higher deductible. It will go from $2500 to $1500, which is good, but still $150+ a month more
Now to decide if we want an HRA or a PPO.. hmm decisions
I have an HRA with a PPO plan.
The HRA, health reimbursement account, is funded by my employer for $1500/year.
That money is for my deductible.
My health insurance plan is a PPO with a $1500 deductible.
What kind of rates were you seeing in the exchange for your family?
I didn't get in the exchange, but I got into our individual BCBSNC page. Our current plan is going away, so this is the most comparable plan they are offering. Everything is the same from our old one that is $250 a month to the new one except the deductible was increased $300.
I am still trying to the exchange, but it's backed up.
$430 a month for DD and DH (I think DH was around 280 and DD was 160)- $2800 deductible. $30 primary copay, $60 specialist, $50 urgent care, $150 ER, 30% coinsurance.
It just sucks to have a $180 a month increase and have an increased deductible.
It still sucks. We are looking at a net increase of $150- $200 a month .. waaahh
It's better insurance, but DD and DH are pretty healthy so we take the gamble with the higher deductible. It will go from $2500 to $1500, which is good, but still $150+ a month more
Now to decide if we want an HRA or a PPO.. hmm decisions
I have an HRA with a PPO plan.
The HRA, health reimbursement account, is funded by my employer for $1500/year.
That money is for my deductible.
My health insurance plan is a PPO with a $1500 deductible.
That sounds pretty good. Unfortunately we do not have that option, it's a straight PPO or the new "consumer driven plan" with an HRA