From our CPA office in St. Petersburg, FL – Beginning in 2012, taxpayers may receive a rebate on amounts spent for health insurance. Under the new health care law, health insurers who do not meet the new requirements for medical loss ratios are required to provide annual rebates to policyholders. Medical loss ratios essentially reflect an insurer’s profit margin.
These new rebates may be taxable to taxpayers. If in 2011, a taxpayer deducted premiums paid for health insurance as either an itemized deduction or as a self-employed health insurance deduction, any rebate received may need to be included in your 2012 gross income. This applies whether the rebate was received in cash or as a premium reduction. However, taxpayers who did not deduct health insurance premiums are not subject to federal income tax on the rebates.
Contact us to insure all your tax filings are correct and timely. As tax professionals, McAtee & Associates can help both individual and business taxpayers with all their tax matters.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
