We are now in open enrollment season for health insurance for 2019, and many who work in the agriculture industry are wondering if there are any solutions for affordable health insurance. While the Affordable Care Act is still in effect, there is some reprieve from the penalties associated with not having insurance at all. But assuming you don’t qualify for an exemption and do not have a government-provided insurance (such as Medicare or Tricare) option available to you, you are probably weighing out the following options:
- Employer-provided health insurance through a group health plan from off-farm employment: Typically, the employee pays a portion of the premium through pre-tax payroll deductions, and the employer pays the balance.
- Group health insurance: This involves creating a group of family members and/or employees to purchase health insurance.
- Health insurance acquired through a health insurance marketplace exchange: If your household income is below 400% of the federal poverty level, you may qualify for an advance premium tax credit to reduce your premiums. It is important to note this is not an option if you have affordable minimum essential coverage available from an employer (which may include a medical reimbursement plan from a farm corporation).
- Private health insurance on the open market: This is typically the most expensive option, with very high premiums.
- Healthcare ministries: This is another option that meets the ACA minimum essential coverage requirements. It involves paying into a pooled fund of people who provide for all members’ healthcare needs.
I would strongly discourage going without health insurance, even without the risk of penalties. Some of the options provide more control than others. With the lower individual tax rates and section 199A deduction available on 2018 tax returns, you might be more comfortable with a higher level of income for tax purposes this year than you have been in the past. The repayment provision of the advanced premium tax credit remains in effect and will be due with your 2018 return if you obtained health insurance on the marketplace and have higher than estimated income. You don’t want to overlook this factor and owe it back when you file your tax return this spring if you can avoid it.
Also, be sure to consider your 2019 income options. If you have been deferring income and prepaying expenses consistently, you may want to consider other options for health insurance for 2019 rather than trying to qualify for an advanced premium tax credit. However, we can’t overlook the very significant impact that may have on your health insurance premiums if your health insurance is through the marketplace and you have been receiving an advanced premium tax credit throughout the year.
It is difficult to balance the tax impact with the cost of health insurance premiums, and it is hard to plan long-term when we don’t know what healthcare reform may bring. Please contact your Wipfli ag tax professional to discuss your specific concerns and find the best guidance for your situation.