Pre-tax health care premiums, self-employed health care premiums, and other out of pocket medical expenses can be accounted for within client plans using Medical Expense cards.
Medical expenses can be entered into RightCapital within the Expenses section of the Profile (or the Expenses step of the initial data entry process), by clicking Add Expense > Medical:
Please be aware that there is a separate card in the Profile > Goals section for Retirement Health Care Costs, which is primarily used to model Medicare expenses.
Medical Expense Data Entry
Click on this card to open a data entry drawer on the right side of your screen, allowing you to input the details:
Monthly expense - the dollar amount (monthly) of the expense.
Owner - the individual for whom this medical expense is for.
Type - indicates the type of medical expense:
- Out of pocket medical expense - reflects an itemized deduction on Line 1 of the Schedule A.
- Pre-tax health care premium - reflects a payroll deduction for employer-provided health care, reducing wages on Line 1 of the 1040.
- Self-employed health care premium - reflects the deduction for self-employed individuals on Line 17 of the Schedule 1.
Expense starts - The start year is the first year the expense is included in the plan.
Expense ends - The end year is the final year the expense is included in the plan.
Annual increase - indicates the percentage increase that will be reflected each year. You can choose 'Customized inflation' to enter a specific percentage.
Additional Information
Medical Expense Taxation
Medical expenses will have different tax implications depending on the expense Type that you choose:
- Out of pocket medical expense - reflects an itemized deduction on Line 1 of the Schedule A. Anything beyond the medical expense deduction threshold (7.5% of the household's AGI) will be deductible.
- Pre-tax health care premium - reflects a payroll deduction for employer-provided health care, reducing wages on Line 1 of the 1040.
- Self-employed health care premium - reflects the deduction for self-employed individuals on Line 17 of the Schedule 1.
Sample tax forms can be viewed in the Tax > Tax Estimate > Details tab:
Medical Expense Cash Flows Location
Medical expenses can be tracked within the Retirement > Cash Flows > Summary page, by clicking into the Expenses > Health Care > Other Medical Expense column:
