Deductibility and Tax Changes - UPDATE 10/20/98
Health Insurance deductions for the self employed currently stands at 45%. Those deduction limits will be raised as follows: ( FLASH: OCT ‘98 - Budget bill calls for accelerated premium write off!)HEALTH
INSURANCE: Planned phase-in for self-employed people to deduct 100 percent of their health insurance premiums is moved up to 2003, compared with 2007 in current law. The deduction will be 60 percent in 1999.
New Schedule
- 1999 - 60%
- 2000 - 70%
- 2001 - 80%
- 2002 - 90%
- 2003 - 100%
Old Schedule
- 2003 - 50%
- 2004 - 60%
- 2005 - 70%
- 2006 - 80%
Tax laws will change as follows:
- Benefit payments from Long Term Care policies will be excluded from taxation up to $175 per day, or $63,875 annually.
- Long term care policies are tax deductible to the self-employed within the overall self-employed limits.
- Long term care polices are not allowed under Section 125 or Flexible spending plans.
- Chronically or terminally ill individuals are allowed to receive life insurance benefits prior to death without tax penalty.
- Individuals are allows to withdraw funds from their IRA prior to age 59 1./2 without penalty for medical expenses exceeding the 7.5% threshold.
Maternity and State Law Changes In 1970 the average stay in the hospital for a woman with a normal delivery was 3.9 days. Today over half the normal
births have mother and child home in less than 1 day. With the signing on new legislation today, new mothers will be ensured a two-day stay for normal deliveries, four days for C-Sections, unless both doctor AND patient
agree that they should leave sooner. This law became effect January 1, 1998. Mental Health Law Changes President Clinton also new
mental health legislation that requires insurers to treat mental health the same as any illness. (9-26-96) The law makes insurers who have mental health coverage within their policy cover mental health with the same
limits as physical health. Additionally, this law does not and cannot stop an insurer from dropping mental health benefits or assessing restrictive additional copayments for mental health.
- This law does not apply to groups with fewer than 50 employees
- This law does not take effect until 1-1-98.
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