Private health insurance tax deduction for married couple - employer stipend question

My husband and I chose to get private health insurance since his company doesn't provide it as a benefit. We're paying the monthly premiums ourselves, but there's a twist - his employer gives him a monthly stipend specifically meant to help cover health insurance costs. This stipend shows up on his paystub every month. The thing is, I'm not sure how this affects our taxes when filing jointly. Does this stipend count as taxable income? Can we still deduct our health insurance premiums even though he's getting this stipend? The stipend doesn't fully cover our costs - we're still paying about $380 out of pocket each month after the stipend. I'm trying to figure out if we can take any deductions for the premium payments on our joint return. Also wondering if the stipend needs special reporting since it's specifically for health insurance. Any advice would be really appreciated as we get ready for tax season! This is our first year dealing with private insurance rather than employer-provided coverage.

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19 comments

Nora Bennett

•8M

This is actually a common situation! The monthly stipend your husband receives is considered taxable income and should already be included in his W-2 wages. You'll notice his paystub probably shows it added to his gross income before taxes are calculated. For the health insurance premiums, if you're paying them with after-tax dollars (which it sounds like you are), you may be able to deduct them as a medical expense on Schedule A. However, there's a catch - you can only deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI). So if your combined AGI is $100,000, you'd need more than $7,500 in total medical expenses before you could start deducting. Another option worth exploring: if either of you is self-employed (even part-time), you might qualify for the self-employed health insurance deduction, which is an "above-the-line" deduction and doesn't require itemizing.

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Nora Bennett

•8M

The specific label doesn't change its taxable status - if it's included in his gross wages and had taxes withheld, it's taxable income regardless of what it's called. Some companies offer Section 125 plans (cafeteria plans) where health benefits are pre-tax, but a simple reimbursement stipend doesn't qualify for that treatment. For your HSA question - yes, that's actually great news! HSA contributions are deductible "above-the-line" (meaning you don't need to itemize to benefit). So while the premium itself might be hard to deduct due to the 7.5% AGI threshold, your HSA contributions will reduce your taxable income dollar-for-dollar up to the annual limit ($7,750 for family coverage in 2025).

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Lauren Zeb

•8M

I was in this exact situation last year and found that using taxr.ai really helped me make sense of all this. I was so confused about how to handle the stipend my wife was getting from her company for our private insurance. I uploaded our paystubs and policy documents to https://taxr.ai and it clarified everything - showed exactly how the stipend should be reported and which portions of our premiums might be deductible. The tool gave me step-by-step guidance specific to our situation that I couldn't find anywhere else. It even flagged that we could partially deduct our premiums as self-employment expenses since I do some freelance work, which I had no idea about!

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Lauren Zeb

•8M

You upload whatever documents you have questions about - in my case I uploaded my wife's paystubs showing the stipend and our health insurance policy. It doesn't fill out your tax forms, but gives you detailed guidance on how to report everything correctly on your return. Think of it more like having a tax pro review your specific documents and give you personalized advice. For security, they use bank-level encryption and don't store your documents after analysis. The big difference from TurboTax is that taxr.ai answers questions specific to your actual documents rather than generic questionnaires, so it spotted nuances in our situation that we would have missed.

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Aurora Lacasse

•8M

Just wanted to follow up here. I was skeptical but decided to try taxr.ai since our situation with health insurance reimbursements is so specific. Really glad I did! Uploaded my husband's paystubs and our insurance policy, and got super clear guidance about how the stipend affects our taxes. The analysis showed that the stipend was already being properly taxed in our case, but identified that we could deduct a portion of our out-of-pocket premiums because I have some self-employment income from my side business. Would have completely missed this otherwise! The document analysis was impressively detailed - even flagged that we were eligible for a premium tax credit we didn't know about. Definitely using this for all our tax document questions going forward.

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Anthony Young

•8M

If you're having trouble getting answers from the IRS about this health insurance stipend situation, I highly recommend trying Claimyr. I was stuck in an endless loop trying to reach someone at the IRS about a similar health insurance tax question (my employer gives a "wellness bonus" rather than a stipend). After weeks of frustration, I used https://claimyr.com and got through to an actual IRS agent in under 45 minutes. There's a demo video of how it works here: https://youtu.be/_kiP6q8DX5c The agent clarified exactly how I needed to report the wellness bonus and confirmed which portions of my premiums were deductible in my specific situation. Saved me hours of hold music and wondering if I was doing things right!

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Anthony Young

•8M

It doesn't just call for you - it uses a system that navigates the IRS phone tree and waits on hold in your place. When it actually reaches a human agent, you get a call back so you can talk directly to them. It's faster because their system constantly redials during high-volume periods when most calls get rejected. The reason it works is that the IRS phone system is designed to limit call volume by rejecting calls when queues are full. Claimyr's system keeps trying at the perfect intervals until it gets through. Once you're in the queue, you're guaranteed to eventually speak with someone - the problem is getting into that queue in the first place, which is what Claimyr solves.

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Admin_Masters

•8M

I have to come back and eat my words. After my skeptical comment above, I was desperate enough to try Claimyr for my HSA question that was somewhat similar to this health insurance stipend issue. I honestly couldn't believe it when I got a call back about 35 minutes later with an actual IRS agent on the line. The agent explained exactly how my wife's employer health stipend should be reported and confirmed that in our case, we could deduct a portion of our premiums because we itemize and have enough medical expenses to exceed the 7.5% AGI threshold. She even walked me through the specific form lines where everything needed to be reported. After months of confusion and failed attempts to reach someone, this was a game-changer. The time I saved was worth every penny, especially considering I was about to pay an accountant $300+ just to answer this one question.

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Matthew Sanchez

•8M

Have you looked into if your health insurance qualifies as an HDHP (High Deductible Health Plan)? If it does, you might be eligible to contribute to an HSA which gives you a tax deduction for the contributions. For 2025, married couples can contribute up to $8,050! This is separate from how you handle the stipend income. Also, don't forget to check if you qualify for the Premium Tax Credit. Even with the stipend, if your income is within certain ranges and you bought your insurance through the marketplace, you might be eligible.

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Matthew Sanchez

•8M

Yes, that's a key point I should have clarified - to qualify for the Premium Tax Credit, you must purchase your health insurance through the Health Insurance Marketplace (Healthcare.gov or your state's exchange). If you bought your insurance privately outside the marketplace, you won't be eligible for the Premium Tax Credit regardless of your income. For your HSA, you're making a smart move by maxing it out! The stipend doesn't affect your HSA contribution limits at all. You'll still get the full tax deduction for your HSA contributions even while receiving the stipend, which is one of the few "double benefits" allowed in the tax code.

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