Are Fehb Premiums Tax Deductible and How It Works

Fehb premiums are indeed tax deductible, but only up to a certain point. This means that you can subtract a portion of your Fehb premiums from your taxable income, which can lead to significant tax savings.

According to the IRS, Fehb premiums are tax deductible for self-employed individuals and small business owners who pay their own premiums. This is because Fehb premiums are considered a business expense.

As a self-employed individual, you can deduct up to 80% of your Fehb premiums as a business expense on your tax return. This can include premiums paid for yourself, your spouse, and dependents.

Discover more: Can I Deduct Life Insurance Premiums as a Business Expense

You can save a significant amount of money on taxes with the FedFlex Plan's Premium Conversion.

Premium Conversion is a "pre-tax" arrangement, meaning that the part of your salary that goes for health insurance premiums will become non-taxable. This saves you on Federal income tax and FICA taxes (Social Security and Medicare taxes). In most cases, you'll also save on State income tax and local income tax.

A different take: Is Disability Income Insurance Tax Deductible

If your annual premium is $1800, and you pay 35% in taxes on that amount of salary, you save 35% of $1800. That's $630, or $24.23 every two weeks.

Don't confuse premium conversion with the deferred taxation of Thrift Savings Plan contributions, which are taxed when you receive the money.

You don't need to fill out a form to sign up for Premium Conversion, the payroll office will do it automatically.

A fresh viewpoint: Fehb Premium Conversion