Health Insurance and Disability Question
Sorry to hear about your spouse's health issues. May he have a speedy and, as far as possible, full recovery. The Patient Protectection and Affordable Care Act (PPACA, aka Obamacare) is now the law of the land. Among its many provisions are that insurers may no longer deny coverage for pre-existing conditions, they may not put lifetime caps on benefits, and they may not charge different premiums based on any criteria except age cohort and geographic area (i.e. rates may be higher for 50 year olds than 30 year olds, but sick and healthy 50 year olds living in the same area pay the same). If he gets government health coverage because he's on disability, this may not matter. On the other hand, you might find it better to put him on your employer's policy, because you like the coverage better, the employer covers part of the dependent premium, or some other reason. In any case, they can't discriminate against him or you based on his condition. ETA: Rates may vary by geography as well as age.
Healthcare for the employee is more valuable to the employer than is providing healthcare for the rest of the family members.  Depending on the family situation, you're going to see significant differences in price between out of pocket costs for insurance of just the employee, vs cost for insuring the entire family.  This is because in the first instance the insurance is more subsidized by the company (as a percentage of the total cost).   The costs to the company for insuring just the individual (mid-career) are in the neighborhood of $5000 per year.  If this is all that's being negotiated (single person coverage) then I would use that amount as a baseline. Checkout the worksheet on page 20 of Pub 535.  Also the text starting in the last half of the third column of page 18 onward. https://www.irs.gov/pub/irs-pdf/p535.pdf The fact that you get a W-2 is irrelevant as far as I can see.  Your self-employment business has to meet some criteria (such as being profitable) and the plan needs to be provided through your own business (although if you're sole proprietor filing on Schedule C, it looks like having it in your own name does the trick).  Check the publication for all of the rules. There is this exception that would prevent many people with full-time jobs on W-2 from taking the deduction: Other coverage. You cannot take the deduc­tion for any month you were eligible to partici­pate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of ei­ther your dependent or your child who was un­der age 27 at the end of 2014, do not use amounts paid for coverage for that month to fig­ure the deduction. (Pages 20-21).  Sounds like in your case, though, this doesn't apply. (Although your original question doesn't mention a spouse, which might be relevant to the rule if you have one and he/she works.) The publication should help.  If still in doubt, you'll probably need a CPA or other professional to assess your individual situation. "There are two types of insurance, which causes some confusion. Social Security Disability Insurance (which you indicate you have) is insurance you can receive benefit from if you earn enough ""work credits"" (payroll taxes) prior to your disability onset. It is not a needs-based program. Supplemental Security Income is a need-based program which does not consider your work history. To qualify for this, your total assets need to be lower than some threshold and your family income also below some threshold. If you inherit a home, or money, I doubt this would jeopardize your SSDI qualification, since your qualification was based on a disabling condition and work history. If you inherit an income property, which you manage (i.e. you become a landlord), this may jeopardize your claim that you are unable to work. Even if you are not making an ""income"" as the landlord, but the work your are performing is deemed to have some ""value"" this too could jeopardize your claim. All of this can be very complicated, and there are some excellent references on the web including SSA website, and some other related websites. Finally, if you become able to work while on SSDI, your benefit may/will end depending on the level of work you are able to perform. But just because you are able to work again does not mean you need to repay past benefits received (assuming your condition has not been falsified). Your local social security office, or the social security main office both offer telephone support and can also answer questions regarding your concern. Here are a couple relevant links:" Another source of insurance can be through the working spouses employment. Some companies do provide free or low cost coverage for spouses without a need for a physical exam. The risk is that it might not be available at the amount you want, and that if the main spouse switches companies it might not be available with the new employer. A plus is that if there is a cost it is only a one year commitment. Term insurance is the way to go. It is simple to purchase, and not complex to understand. Sizing is key. You may need to provide some level of coverage until the youngest child is in high school or college. Of course the youngest child might not have been born yet. The longer the term, the higher the cost to account for the inflation during the period of the insurance. If the term expires, but the need still exists, it is possible to get another policy but the cost of the new term policy will be higher because the insured is older. If there are special needs children involved the amount and length may need to be increased due to the increased costs and duration of need.   Don't forget to periodically review the insurance situation to make sure your need haven't changed so much a new level of insurance would be needed. "I was in the health insurance game for 10 years and never heard of this until the Affordable Care Act came about.  To my knowledge, there is no rule or regulation prohibiting it, however trying to get an insurer underwrite that risk is extremely unlikely. It's the same reason why you don't see AAA offering health insurance. There isn't a contractual relationship between the church and their constituents, so no underwriter worth their salt would put a reasonable price on that risk.   Members can easily come and go, and since insurance through your employer is still the dominant distribution channel for health insurance, it would be seen as an adverse risk, meaning that people who couldn't get it through ""normal"" channels must be getting it through the church, which it would then be assumed that this person applying for coverage is an ""adverse risk"" or someone who is abnormally unhealthy.  There are faith-based healthcare reimbursement programs that are NOT health insurance and do not satisfy the ACA required minimum coverages. From what I've seen and read, it's basically members of the religion or faith that pay money into the system (like paying an insurance premium) and they elect a board that basically evaluates each claim and pays or doesn't pay it, either partially or in full. While this is a nice way to get your bills paid, odds are it won't cover your $300,000 cancer treatment or your $50,000 cesarean section birth." Turns out Social Security and disability insurance are two different things but if you take disability insurance before retirement age when you get to full retirement age the disability money becomes the social security money. http://www.ssa.gov/dibplan/dqualify.htm If you are receiving Social Security disability benefits when you reach full retirement age, your disability benefits automatically convert to retirement benefits, but the amount remains the same. If you are not open to changing the amount of money you are willing to spend, your options are limited. Why change your amounts and proportions? Your situation changed. You got married, divorced, purchased a new car, the company added free disability coverage. If the amount spent per year can't change, then you are asking how to review if your proportions are correct. The first thing is to look at what must you spend it on. If you have a mortgage or car loan, the bank will tell you the minimum amount. If you own a car the state will tell you the minimum amount for auto coverage. If there is any money left look at life, and disability. These can wreck the life of your dependents.  When you have meet those needs, then increase auto and home to cover additional liability. "I am very late to this forum and post - but will just respond that I am a sole proprietor, who was just audited by the IRS for 2009, and this is one of the items that they disallowed.  My husband lost his job in 2008, I was unable to get health insurance on my own due to pre-existing ( not) conditions and so we had to stay on the Cobra system.  None of the cost was funded by the employer and so I took it as a SE HI deduction on Line 29.  It was disallowed and unfortunately, due to AGI limits, I get nothing by taking it on Sch. A.  The auditor made it very clear that if the plan was not in my name, or the company's name, I could not take the deduction above the line.  In his words, ""it's not fair, but it is the law!""" Unfortunately I've seen every single example you've provided from the health care providers perspective.  Trust me, they aren't happy about the situation either - hence the reason they will demand up front payment from you based on who your insurance carrier is.  I could name a few of the top brand name insurance companies in this country that do all of this to their clients.   Medical billing is an incredibly over complicated beast.  One that insurance companies have been doing everything they can to make worse over the years.  The codes can change annually and there are MANY different codes which can cover the exact same situation.  Sure the insurance company might cover gallstones, but if you happen to be pregnant, well, that may not covered even though the treatment is the exact same. What can you do? Consider locating a new insurance company.  You do have options and don't have to go with the one your company uses.  The downside is that this is going to take quite a bit of research on your part and it will end up costing you more money on your monthly premiums simply because your company won't be footing part of the bill.   Talk to other co-workers and see if their experiences match yours.  If so, try to get a large enough group together to approach management and demand resolution.   A third potential avenue is to get politically involved - but I'm enough of a pessimist that I doubt that would do any good.  From what I've seen, neither major political party's current position actually does anything to solve the problem. A fourth option is suing the insurance company - but that is going to be incredibly expensive and take forever.  You might have better luck getting together with a bunch of local people and demand your attorney general review the billing/payment practices. Again, this is going to require a LOT of effort. A fifth option is to attempt to cash pay your bills and submit them yourself to the insurance company for reimbursement.  If you do this you can likely negotiate lower bills with the medical provider.  For anything less than about $2,000 I negotiate the amount prior to service.  Believe me when I say that providers are more than happy to give decent discounts if they know they won't have to deal with the insurance companies themselves.  Slightly more work for you, but could be far cheaper in the long run. "In addition to the good answers already provided, I want to point out that many (most?) providers will handle filing your health insurance claim for you even though it's really your responsibility. So here's how medical bills ""you don't have to pay"" might come about: * It's possible that your balance is $4, or $20, or $65, or even still $100 depending on your particular insurance plan. Whatever is left at this step is what you pay." "Some of this may depend on how your employer chose to deal with your notice period.  Most employers employ you for the duration (which means you'd be covered for March on your insurance).  They could 'send you home' but pay you (in which case you're an employee for the duration still); or they could terminate you on your notice day, and give you effectively a severance equal to two weeks' pay.  That is what it sounds like they did. They should have made this clear to you when you left (on 2/23).  Assuming you work in an at-will state, there's nothing wrong (legally) with them doing it this way, although it is not something I believe is right morally.  Basically, they're trying to avoid some costs for your last two weeks (if they employ you through 3/6, they pay for another month of insurance, and some other things).  In exchange, you lose some insurance benefits and FSA benefits. Your FSA terminates the day you terminate employment (see this pdf for a good explanation of these issues).  This means that the FSA administrator is correct to reject expenses incurred after 2/23.  The FSA is in no way tied to your insurance plan; you can have one or the other or both.  You still can submit claims for expenses prior to 2/23 during your runout period, which is often 60 or 90 days. In the future, you will want to think ahead when leaving employment, and you may want to time when you give notice carefully to maximize your benefits in the event something like this happens again.  It's a shady business practice in my mind (to terminate you when you give notice), but it's not unknown. As far as the HSA/FSA, you aren't eligible to contribute to an HSA in a year you're also in an FSA, except that they use ""plan year"" in the language (so if your benefits period is 6/1/yy - 5/31/yy, that's the relevant 'year').  I'd be cautious about opening a HSA without advice from a tax professional, or at least a more knowledgeable person here." "I believe you are confusing ""retirement"" and ""disability"". If you become disabled, then yes, the above chart you referenced applies to you. The US government will send you a disability check to assist you with living. This is very different from retirement." "If I read your figures correctly, then the cost difference is negligible. ($1.84 difference) The main determining factor, I'd think, would be the coverage.  Do you get more, or less, coverage now than you would if you went together on the same plan?  You'd both be covered, but what is the cap? Plans, and employer contributions, change all the time.  How is business in both of your companies?  Are you likely to get cut? Are you able to get back into a plan at each of your employers if you quit the plan for a while?  These rules may be unpleasant surprises if, say, your wife cancels her plan, goes on yours, and you lose your job.  She may not be able to get back into her insurance immediately, or possibly not at all.  A spouse losing a job isn't a ""qualifying life event"" the way marriage, birth of a child, divorce, etc., is." "You are kind of thinking of this correctly, but you will and should pay for insurance at some point.  What I mean by that is that, although the insurance company is making a profit, that removing the risk for certain incidents from your life, you are still receiving a lot of value.   Things that inflict large losses in your life tend to be good insurance buys.  Health, liability, long term care, long term disability and property insurance typically fall into this category.   In your case, assuming you are young and healthy, it would be a poor choice to drop the major medical health insurance.  There is a small chance you will get very sick in the next 10 years or so and require the use of this insurance.  A much smaller chance than what is represented by the premium.  But if you do get very sick, and don't have insurance, it will probably wipe you out financially.  The devastation could last the rest of your life.   You are paying to mitigate that possibility.  And as you said, it's pretty low cost.   While you seem to be really good at numbers it is hard to quantify the risk avoidance.  But it must be considered in your analysis. Also along those lines is car insurance.  While you may not be willing to pay for ""full coverage"" it's a great idea to max out your personal liability if you have sufficient assets." We frequently get whole insurance vs term insurance questions; and most of the answers will support term insurance.  We get questions regarding getting insurance before there is a need in case there is a problem getting it later. And for most people it doesn't make sense to over-insure early. You have asked from a slightly different position, you have a more solid reason to be concerned about your health. You don't have a need now, and can't estimate what your need will be, or when it will be. Those numbers you quote may seem high, but when you don't know how many kids you may have, or what you will need to protect against, they may turn out to be inadequate when you do need the insurance. You need to sit down with a fee only financial planner. They can lay out your options today, and as your situation changes.  Then as the years go by, have that plan reexamined. The fee only planner will not tell you what company to buy insurance from, or what funds to invest in, but they will help you decide what types of protection and investment you need.