What should taxpayers consider as they make their health care plan elections for 2022?

Wolters Kluwer Tax & Accounting looks at various options for health care coverage in 2022 and their tax implications for taxpayers.

What: While many of the health care plan elections available to taxpayers have not changed significantly from the past year, US Congress has enacted some changes to make certain elections more attractive. In follow-up to the COVID-19 pandemic legislation passed last year, the American Rescue Plan Act enacted in March 2021 also includes some health care-related provisions. US Congress is still working on additional legislation that could possibly pass by the end of 2021 and include additional changes related to health care. 

Why: Individuals and their advisors should remain alert to the health care elections available and the deadlines to make those elections.

• Employer-sponsored Health Plans. Employee enrollments in employer-sponsored health plans typically occur in the last quarter of the year. The health care offerings vary with each employer but typically include a choice of health care plans, vision and dental plans, and a Health Care Flexible Spending Account election. The window to make elections is set by the employer and may only be a short period of time 
• Health Insurance Marketplace. Open enrollment with the Health Insurance Marketplace under the Affordable Care Act runs from November 1, 2021 to January 15, 2022, but the cut-off is December 15, 2021 for coverage starting January 1, 2022. The American Rescue Plan Act enhanced the Premium Tax Credit available to enrollees
• Health Insurance Marketplace Special Enrollment. Enrollment under the Health Insurance Marketplace may be available at other times for special situations, such as loss of health insurance coverage, getting married, moving, having a baby, or adopting a child 
• Medicare. The enrollment period for Medicare health and drug plans has already commenced and ends on December 7, 2021 
• Medicaid and CHIP. Eligible low-income individuals may enroll in Medicaid or the Children’s Health Insurance Program at any time during the year
• COBRA. The American Rescue Plan Act provides that individuals eligible for COBRA coverage following a termination of employment or reduction in hours may be entitled to have the employer pay the COBRA premiums for the period April 1, 2021 through September 30, 2021, with the employer eligible for a tax credit against hospital insurance payroll taxes to reimburse the employer for the premium paid
• Medical Expense Deduction Threshold. For taxpayers who can itemize deductions, as a result of legislation enacted at the end of 2020, the medical deduction threshold is now permanently set at 7.5 percent of adjusted gross income. It had been scheduled to revert to 10 percent for 2021 tax returns
• COVID vaccinations. COVID vaccinations are free of charge, including booster vaccinations and vaccinations that will soon be available for children ages 5 through 11 

Who: Tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting, can help discuss the health care enrollment elections and related tax law changes. 

PLEASE NOTE: These materials are designed to provide accurate and authoritative information in regard to the subject matter covered. The information is provided with the understanding that Wolters Kluwer Tax & Accounting is not engaged in rendering tax advice or accounting, legal, tax or other professional service.

Contact: To arrange an interview with Mark Luscombe or other federal and state tax experts from Wolters Kluwer Tax & Accounting on this or any other tax-related topics, please contact Bart Lipinski.