Generally, the government takes care of a portion of your health insurance premiums. The amount is based on someone’s income bracket, which changes every year because of inflation. In a previous article, we discussed how this impacts the average monthly health insurance cost, even if a household’s income doesn’t go up or down. The change will effect the 2019 Medicare Part B premium prices, low cost medical insurance polices, and contributions to employer-sponsored plans.
However, the new health care laws and different states’ policies can make things complicated. Consequently, many people fail to utilize potential tax deductions and other resources that may drastically lower their health care expenses.
There are many savings opportunities and ways for consumers to take advantage of inflation. In turn, taxpayers may qualify for low cost medical insurance benefits or enjoy a discount on their 2019 Medicare Part B premium payments. Moreover, these strategies make it easier to deal with the rising cost of living.
The Savings Are Tempting
Consumers should prepare for inflation. First of all, unless your annual household earnings increase, all income brackets will pay a lower premium next year.
Having said that, in most cases, people only save a tenth of a percent of their annual earnings. For example, someone that makes $100,000 will only pay $100 less towards their health policy in 2020.
However, when combined with tax deductions and the right financial accounts, these savings may balloon. This is especially important to Social Security recipients. Because their benefits are going to rise next year, some of them may move to a higher income bracket. As a result, their 2019 Medicare Part B premium may increase in 2020.
In part three of this article series, we look at the best ways for consumers to save money on insurance and medical expenses. More specifically, there are many accounts that provide you with generous tax deductions and similar benefits.
A consumer doesn’t pay taxes on their contributions towards a health savings account (HSA), for example. In turn, they can use the money to take care of copays and out-of-pocket costs. Here, they enjoy two advantages at the same time: Less taxes and relatively low cost medical insurance premiums. In fact, the HSA’s deduction may cause their income to go down to a lower bracket, which enables consumers to save even more money.
Retirement accounts, such as 401(k)s, allow you to access similar tax deductions. Compare this to consumers who earn more money but, at the same time, incur more health expenses and pay higher taxes.
Social Security benefits and wages are going up for a reason. The overall cost of living, in itself, is overheating. Therefore, the government and employers are matching inflation with more benefits.
In short, all of your purchases become more expensive year after year. This includes retail products, foods, beverages, and auto leases. The last thing you want to deal with is a costly health insurance policy.
Accounting and budgeting for inflation, in its own respect, is time-consuming and demanding. Those who take advantage of potential deductions, savings accounts, and other medical resources are efficiently prepared for these extra expenses.
Keeping Your Health Insurance Low
The new income brackets mean that all taxpayers, regardless of their earnings, will save money in 2020. Getting a raise doesn’t necessarily mean more costly premiums.
By opening a health savings account, utilizing your deductions, and budgeting ahead of time, you can enjoy sizable savings. This is even more important to those who are just above or below their bracket’s threshold.
Uncle Sam and the IRS are going to knock on taxpayers’ doors soon. When you file this year’s return, keep your low cost medical insurance or relatively cheap 2019 Medicare Part B premiums in mind.
Reviewing your finances and identifying potential deductions might make this tax season somewhat joyful.