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What is a Health Insurance Premium?
A Health Insurance Premium is the monthly amount you pay for your health insurance premium. During that time, you will make monthly, quarterly, or annual payments called premiums.
Are Health Insurance Premiums Tax-Deductible?
It is only deductible to the extent that you itemize your tax return and deduct at least 7.5 % of your income as medical expenses, so average wage earners need not apply for this deduction. It’s a truly high-income benefit.
How you pay your premiums will determine when, or if at all, they are deductible on your tax return:
- You cannot itemize your health insurance premiums if you paid them before taxes were deducted from your paycheck stubs.
- If you pay for insurance and after-tax contributions are deducted from your pay, you would have a medical expense deduction.
- Those health insurance premiums would only be subtracted if you end up having out-of-pocket expenses, and even then, the costs must reflect the coverage that you paid for.
How Much Does Health Insurance Cost?
In 2022, the average health insurance cost for an individual plan was $7,911, and for a family plan, it was $22,463. The premium for family coverage rose more than 20% in the last five years and 43% in the last decade.
Added together in a finance report fine print, they showed that the average contribution of an employee was about 17% of the premium for single coverage and slightly over 28% for family coverage. Thus, for a single participant and family plan in 2022, the contributions determined by the employee were $1,327 and $6,106, respectively.
