COBRA insurance premiums
Before COBRA (Consolidated Omnibus Budget Reconciliation Act), if you had an employer-based health plan, losing your job would mean losing your health insurance.
Now, even if you’re no longer employed there anymore, you can buy insurance coverage through your old workplace. But you’re on the hook for the whole bill — including whatever your employer used to pay.
That can get very expensive.
Biden’s COVID relief bill includes a provision that the government will pay the entire COBRA premium from April to September for laid-off employees and their families — provided you don’t have coverage through Medicare, voluntarily left your job or have new employer-based coverage.
Under the law, employers are required to send former employees a notice if they’re eligible for COBRA. If you haven’t received a notice, call your former workplace to make sure you’re signed up.
More affordable Obamacare
A key provision of the relief bill not only temporarily lowers the cost of health insurance, it expands coverage to more than 1 million Americans.
People not covered through an employer or government plan like Medicare or Medicaid can have their premiums capped at 8.5% of their income if they buy coverage on an Affordable Care Act (ACA) marketplace like Healthcare.gov.
And those subsidies, which take the form of tax credits, are newly available to people earning more than four times the federal poverty rate — up to approximately $51,520 for single people and $106,000 for a family of four.
And since Biden has reopened Obamacare enrollment through Aug. 15, there’s never been a better time than now to lock in affordable health coverage and claim those generous subsidies on your tax return.
Bigger medical deductions
If you opt to itemize your deductions when you file your taxes, you can claim some of your medical expenses. And now, thanks to a bill passed last December, you’ll have a more generous allowance for that.
Before the bill, what you could claim was capped at 10% of your adjusted gross income (AGI). But now, anything that’s over and above 7.5% of your AGI is allowed to be claimed.
How does that work out? Let’s say your AGI last year was $55,000. The change means any qualifying medical expenses adding up to more than $4,125 can be claimed.
The IRS provides a full list of what you can deduct, including doctor’s fees and inpatient hospital care.
Higher health spending account limits
For workers whose employers let them invest pre-tax funds in a flexible spending account to cover qualifying child-care or medical expenses throughout the year, the IRS has recently adjusted how much you’ll be allowed to contribute.
In 2022, individuals with self-only coverage can save up to $3,650 in an HSA, while those with family coverage can save $7,300.
That’s a $50 and $100 increase, respectively.
And thanks to a 2020’s Taxpayer Certainty and Disaster Tax Relief Act, it’s now possible for you to carry over unused FSA funds to the next year.
Usually, you’ll have two and a half months to use up any unused funds at the end of the year, but this year, you can now roll over up to $550 and still contribute the maximum to your plan in 2022.
Finding room in your budget right now
Since it may take some time for a few of these provisions to impact your budget, you may want to consider some other options to lighten your load.
Are health insurance and medical costs weighing you down? You may want to consider folding your loans into a single, lower interest loan to give yourself some breathing room and help get out from under your debt sooner.
And when it comes to savings, why stop with just your health insurance?
By shopping around for the cheapest policy, you could potentially shave more than $1,000 from your annual car insurance bill and knock down your homeowners insurance bill by hundreds as well.
Along with your more affordable health insurance plan, you’ll be making your own monthly stimulus checks without having to rely on Congress.
Compare insurance quotes and save money
Did you know that you could be saving some serious money just by switching insurance companies?
It’s true. You could be paying way less for the same coverage. All you need to do is look for it.
But don’t waste your time hopping around to different insurance companies. Use a website called SmartFinancial to see all of your options at once.
SmartFinancial will provide you with a tailor-made list of possible policies from all major and most relevant insurance carriers.