Line 15: Health Insurance Deduction

For taxpayers who are 65 years of age or older and whose Iowa taxable income is less than $100,000, enter 100% of the amount paid for health and dental insurance premiums paid with post-tax funds. Typically, employer health insurance premiums are paid on a pre-tax-basis when they are deducted from wages and are not considered post-tax; and thus, they would not be included as a deduction on this line. Do not include any amount of health insurance that was used as a deduction in the computation of federal taxable income, this includes amounts reported on federal 1040, Schedule A, line 1, and federal 1040, Schedule 1, Part II, line 17.

Enter 100% of the amount paid for:

health insurance premiums paid with post-tax dollars

supplemental health insurance, such as: Medicare B supplemental medical insurance Medicare D voluntary prescription drug insurance

dental insurance premiums paid with post-tax dollars

long-term nursing home coverage premiums paid with post-tax dollars regardless of age

Do NOT include:

“Medicare tax withheld” on your W-2

premiums paid with pre-tax dollars

premiums which are later reimbursed, in the same tax year

The $100,000 taxable income limitation is calculated without regard to filing status, meaning that a single taxpayer, a married taxpayer filing separately, and a couple that files married filing jointly will all have a $100,000 taxable income limitation.

Health Insurance reported on federal Schedule A, line 1

Qualifying taxpayers who reported medical and dental expenses on federal Schedule A, line 1, may deduct, subject to the income limitation, a portion of the health insurance which was not allowed as a deduction to arrive at federal taxable income. The taxpayer should use a ratio of health insurance premiums to total medical expenses included in Federal Schedule A and apply that ratio to the amount not allowed to be deducted for federal taxable income.

Example: Taxpayer T reports the following medical expenses of $10,000 on Federal Schedule A, line 1, the breakdown of the expenses is as follows:

Doctor bills: $2,000

Health insurance premiums: $8,000

Federal Schedule A line 3, reports a 7.5% adjusted gross income limitation of $1,950. This would represent the amount of medical expenses which were not allowed in the calculation of federal taxable income.

Federal Schedule A, line 4, reports $8,050 of allowed medical and dental expenses. This represents the amount of medical expenses which were allowed in the calculation of federal taxable income.

Assuming the $100,000 income limitation is not exceeded, Taxpayer T could include a portion of the health insurance which was not allowed in the calculation of federal taxable income as an Iowa health insurance deduction. The allowed portion would be calculated as follows:

Disallowed portion of medical expenses x the health insurance portion of medical expenses/total medical expenses reported on federal Schedule A, line 1. In this example the deduction would be: $1,560 which is $1,950 x ($8,000/$10,000)

$1,950 (disallowed portion of medical expenses) x $8,000 (health insurance premiums) / $10,000 (total medical expenses claimed on federal Schedule A, line 1) = $1,560

To calculate taxable income for purposes of this deduction, use the following calculation:

Health Insurance Taxable Income Worksheet Health Insurance Taxable Income Worksheet 1. Report the amount of Iowa taxable income reported on IA 1040, line 4. 1. ________ 2. Report the following adjustments, if applicable: (a) Federal itemized or standard deduction to the extent it does not exceed federal adjusted gross income 2a.________ (b) Federal personal exemption deduction 2b.________ (c) Federal Qualifying Business Income Deduction 2c.________ (d) Social Security income reported on federal 1040, line 6b 2d.________ (e) Pensions or other retirement income received from a source that is not taxable in Iowa, reported on IA 1040, Schedule 1, lines 4 and 7 2e.________ (f) Health insurance deduction reported IA 1040, Schedule 1, line 15 2f.________ (g) Total of lines 2a through 2f. 2g.________ 3. Add line 2g to line 1 3. ________

If line 3 is less than $100,000 and you are age 65 or older you are eligible to deduct health and dental insurance paid with post-tax funds.

If line 3 is $100,000 or more you are NOT eligible to deduct health and dental insurance, IA 1040, Schedule 1, line 15 should be changed to zero.

The deduction must be reduced by the amount of any premium reimbursement from Health Reimbursement Arrangements (HRAs).