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Getting Better Health Insurance Rates


If you are an entrepreneur, or work at home person, you know the importance of having self-employed health insurance. Whether you work out of your home, or at an outside location, being self-employed means only one thing - you will be responsible for the cost of health insurance.

In the United States, those utilizing self-employed health insurance can face a substantial financial burden. The best that can be made of this expense is to take advantage of every available legal tax benefit. In almost all cases, self-employed health insurance costs are probably a deductible expense for you. These costs, can at least help to reduce your tax burden. To be sure, consult a tax professional for your specific circumstances.

The United States Internal Revenue Service (IRS) website says the following regarding the utilization of self-employed health insurance: "If you were self-employed and had a net profit for the year, were a general partner (or a limited partner receiving guaranteed payments), or received wages from an S corporation in which you were a more than 2% shareholder (who is treated as a partner), you may be able to deduct, as an adjustment to income, all of the amount paid for medical and qualified long-term care insurance on behalf of yourself, your spouse, and dependents."

The IRS website goes on to explain that the self-employed health insurance plan must have been established under your business entity. They continue by stating, the deduction for self-employed health insurance premiums cannot exceed the amount of your earned income. Finally, the deduction for self-employed health insurance cannot be claimed for any month in which you were eligible to be covered by your employer (if you have a second job), or your spouse's employer.

Recording these expenses is quite easy. Should you qualify for the self-employed health insurance deduction, you will find, included with your 1040 Tax Package, the Self-Employed Health Insurance Deduction Worksheet.

However, if you had more than one source of income that was subject to self-employment tax, you cannot use the Self-Employed Health Insurance Worksheet. In addition, if you are filing either Form 2555 (Foreign Earned Income), or Form 2555-EZ (Foreign Earned Income Exclusion), you also cannot use the worksheet. Finally, premiums and costs associated with qualified long-term care insurance also cannot be used with the Self-Employed Health Insurance Worksheet.

Should you fall into one of the above categories, and are prohibited from using the worksheet to figure your self-employed health insurance deduction, you will find a worksheet in IRS Publication 535 (Business Expenses). Whatever your self-employed situation, you should be able to deduct some, or possibly most of your self-employed health insurance premiums..

Health Rates Vary

Rates for group health insurance will vary a great deal. They will vary based on the carrier, type of plan, how old, and even by how healthy your group is. It is very important that you get a wide variety of quotes from at least three of the industries top rated insurance carriers.

The correct process in getting group rates would be to first contact a broker, fill out a form on the internet, or ask someone else you know that has a group policy for more information. Once that has been accomplished have a phone conversation with the brokerage you have found and narrow down some of your options. Upon reviewing the options that the broker has shown you from three of the top insurance carriers, (UnitedHealthCare, Aetna, BCBS of Florida), and have a face to face meeting to get accurate answers to all of your questions.

Do you know what the key to finding the right plan at the best rates is? Ask these three questions to start:

  1. Is this an HMO, PPO, or Fee for service plan?
  2. What are these companies financial rating? (A.M. Best Rating)
  3. How long have they been doing business in Florida?

These three questions will get you in the right direction. Once you have all of these three questions answered by your vendor be sure to understand the different components your plan provides. The basic group health plan will have options for the following?

  1. Hospital Deductible
  2. Office Visit Copay
  3. Emergency Room Copay
  4. Prescription Copay

Most of the time employees on a group health plan will generally be thinking the question, what is my copay? And really don?t look any further than that. With these types of plans on the decline be sure to understand the newer programs available to you as an employer. These will offer you a great deal when it comes to tax incentives. Section 125 in the IRS tax codes gives advantages to employers that offer Health Reimbursement Arrangements (HRA), Health Savings Accounts (HSA), and Flexible Spending Accounts (FSA).

These are the health insurance programs of the future and you should understand how each work. Although all three of these programs offer great tax advantages you can?t usually ever beat an HRA. Ask an insurance professional to explain the three programs to you and start implementing one of these financial programs today!

Group health insurance rates can vary a great deal. HMO, PPO, and Fee For Services plans all cover medical, surgical, and hospital expenses in some form. In most instances, prescription drugs are also covered. Do you have a plan that gives you options for which employees contribute an authorized payroll deduction amount? If not be sure to revisit your HRA, HSA, or FSA options.

As an employer be sure to do your homework. Group health insurance is not always comparing apples to apples. In many cases group health insurance brokerages have risk managers that can implement special financial programs that can enhance your savings and increase benefits. Over the next few years you will be changing over to one of these programs, so why wait? Get the best possible group health insurance rates through a tax incentive based financial program.

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