Can I deduct health insurance paid for by my spouse and reimbursed?

[RosieQ]

I'm a new partner in a physician group that has a health plan option that's over $500 per month for just my coverage, however would be tax deductible as a business expense.

My wife works for another group that allows a spouse to be added to their health plan which is better in almost all aspects of coverage, total additional cost of $123 per month. This is deducted from her paycheck automatically after tax.

If I reimburse her for this expense am I still able to claim this $123 of health care premiums as a business expense? If not the difference between the two insurance options narrows quite a bit, especially since my group includes an HSA option with the plan while hers does not.

[The White Coat Investor]

$500 sounds like a deal. I'm paying $1200 right now. $123 means someone else is paying the premiums, so yes, I'd take that whether I could deduct it or not.

But no, I don't see how you can deduct this. Your spouse isn't a health insurance company. You can't pay her for health insurance and then claim it on line 29 of the 1040.

Personally, I'd just go on her plan, forget the HSA, and invest in taxable.

The IRS instructions for line 29 say that "the insurance plan must be established under your business." Hmm....I may need to run my health insurance more formally through my partnership or WCI in case of an audit. I learned something to day.

At any rate, the relevant line for you is a little lower, where it basically reads: "if you were able to be covered by your spouse's plan, you can't take this deduction."

[Craigy]

This is a good question for your CPA.

Even if you could write it off as a business expense, she'd probably have to include it as income on her/your personal return.

[RosieQ]

The White Coat Investor wrote:

$500 sounds like a deal. I’m paying $1200 right now. $123 means someone else is paying the premiums, so yes, I’d take that whether I could deduct it or not.

But no, I don’t see how you can deduct this. Your spouse isn’t a health insurance company. You can’t pay her for health insurance and then claim it on line 29 of the 1040.

Personally, I’d just go on her plan, forget the HSA, and invest in taxable.

The IRS instructions for line 29 say that “the insurance plan must be established under your business.” Hmm….I may need to run my health insurance more formally through my partnership or WCI in case of an audit. I learned something to day.

At any rate, the relevant line for you is a little lower, where it basically reads: “if you were able to be covered by your spouse’s plan, you can’t take this deduction.”

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I think this sounds right. The $500 is just for me. Our group also charges about $1200 for family coverage but we wouldn't need that as my wife has her own better option. It sounds like the less expensive option is better for now. After 1.5 years I'm obligated to buy into my group's insurance so I'll try and take advantage of the price break while I can.