Medical Premium Reimbursements

Forum|Forum|4 years ago
March 3, 2022
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I am retired and my company reimburses me for 75% of my medical premiums. I received a 1095A for the premiums, which was entered into Turbo Tax, which then put that information into the medical expense worksheet, which feeds the itemized deduction worksheet. I do not receive a 1099 for the premium reimbursement from my company. While I read that medical premium reimbursements are not taxable, it doesn't seem right to get the 100% deduction for paying for the premium when, I am being reimbursed for 75% of it. Does the 75% amount get entered on the medical expense worksheet as a reimbursement (assume line 13B) or, is the reimbursement amount not entered on my taxes?

HelenC12

Yes, the 75% medical reimbursement from your employer gets entered on your taxes if you itemize your deductions. Please see the following:

If you itemize, you can either subtract the reimbursement from the expenses you originally paid and enter the new expense amount, or enter it after you've finished entering all of your medical expenses. Either way, the reimbursement simply reduces your medical expense deduction by that amount.
If you take the standard deduction, you don't have to enter the reimbursement.

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john4kathy1Author

Hello,

When I take the standard deduction, I still receive a large tax credit from the "Premium Tax Credit" form 8962. This form uses the 1099A information entered to calculate the credit. There is no option to enter any HRA reimbursement on this form. Is this now correct?

tmunoz

It depends. If the Health Reimbursement Arrangement money is included as taxable income on your Form W-2, then it was part of your pay and taxable income. If it was taxable income, you should be able to take the Premium Tax Credit with your Marketplace health insurance.

Employers have two choices. They can provide you with employer-sponsored group health insurance and offer an HRA to reimburse you tax-free for out-of-pocket costs like co-pays. Or, if they have fewer than 25 employees and are exempt from the ACA employer mandate, they can provide you with taxable money to buy your own insurance, which is essentially treated as a pay raise.

If the HRA funds are not included in the taxable income on your Form W-2, then indeed, this is a problem.