New 1099 employee with Cobra insurance
For the first four months of the year, when you were an employee, the health insurance premiums were paid for with pre-tax money.  When you receive your W-2 at the end of the year, the amount in Box 1 of the W-2 will be reduced by the amount you paid for health insurance.  You can't deduct it on your tax return because it has already been deducted for you. Now that you are a 1099 independent contractor, you are self-employed and eligible for the self-employed health insurance deduction.  However, as you noted, the COBRA premiums are likely not eligible for this deduction, because the policy is in your old employer's name.  See this question for details, but keep in mind that there are conflicting answers on that question. "While COBRA premiums are not eligible to be a ""business"" expense they can be a medical expense for personal deduction purposes.  If you're itemizing your deductions you may be able to deduct that way.  However, you will only be able to deduct the portion of the premium that exceeds 10% of your AGI. Are you a full time employee now or are you a 1099 contractor?  Do you have access to your employers health plan?"
This is only one of a series of questions your friend needs to understand. They will also need to know what happens to: vacation balances; the vacation earning schedule; retirement fund matching; the pension program; all the costs and rules regarding health, dental and vision;life insurance amounts. Some of these can be changed immediately. Some will not be changed this year because of IRS regulations. Everything can be changed by the next year. But there is no way to know if they will change a little a possible or as much a possible. It will depend on if they are buying the company, or if the company is going out of business and the new company is buying the remnants. They may also be essentially terminating the employees at the old place, and giving them the first opportunity for interviews. If they are essentially quitting they will not have to continue paying into the plan. The bad news is that their last day of work is also probably their last day to incur expenses that they can pay for with the flexible plan. If They are being purchased or absorbed the company will likely make no changes to the current plan, and fold them into the plan next year. I have been involved with company purchases and company splits, and this is how it was handled. "Whenever you do paid work for a company, you will need to fill out some sort of paperwork so that the company knows how to pay you, and also how to report how much they paid you to the appropriate government agencies. You should not think of this as a ""hurdle"" and you shouldn't worry that you haven't been employed for a long time. The two most common ways a company pays an individual are via employee wages, or ""independent contractor"" payments. When you start a relationship with a company, if you are going to become an employee, then you will out a W4 form, and at the end of the year you will receive a W2 form. If you are an independent contractor, (which you would be considered in this case), you will fill out form W9 and at the end of the year you will receive a 1099. This is completely normal and you have nothing to worry about. All it means is that if you make more than a certain amount (typically $600) in a year, you will receive a 1099 in the mail or electronically. The 1099 form basically means that they are reporting that amount to the IRS, and it also helps you file your tax return by showing you all the numbers you need on one form. Please remember that when you are paid as an independent contractor, no taxes are withheld on your behalf, so you may owe some tax on the money you make. It's best to set aside some of your income so you are prepared to pay it come tax time next year." "Just a real-world counterpoint, in the UK, we negotiate the ""before tax"" salary as some number of pounds per period of time. Out of this amount, income tax is typically deducted and this calculation is quoted on the payslip. (Like most of the rest of the world.) However, there's another grade of income tax called ""Employer’s National Insurance"". This is calculated just like the other forms of income tax, paid by the employer directly, but the employee never sees this on their payslip and it is not part of the negotiated salary. https://www.gov.uk/national-insurance-rates-letters/contribution-rates So say you're an employer and you've budgeted £1000/month for a potential employee's salary. You'd have to offer that person £878.73/month salary to bring the amount you'd actually be paying to the £1000 you've budgeted. Why they do this, I have no idea. https://politics.stackexchange.com/questions/4917/what-is-the-rationale-for-employers-national-insurance-in-the-uk" Careful.  I would personally need a LOT more than $5 more per hour to go from W-2 employment to 1099 employment.  It boils down to two reasons: (1) employers pay a huge amount of taxes on behalf of their employees, and (2) you would have to pay all of your own withholding up front. Your current proposal from them doesn't account for that. There are also risks that you face as a 1099.  On the first item, your employer currently pays 6.2% of your Social Security tax. You pay the other 6.2%. If you go to 1099 status, you will be self-employed as an independent contractor and have to pay the full 12.4% out of your increased 1099 wages.  On the second item, your employer also does your withholding out of your paychecks based on what you tell them on a form W-4. If you're disciplined enough to pay this out yourself in estimated taxes every time you get a paycheck, great. Many people aren't and just see a much bigger paycheck with no taxes out of it, and end up with a large tax bill at the end of the year.  Overall, there are some other considerations like healthcare and other benefits. These will not be available to you as a 1099 employee. You can also be terminated spontaneously, unless you have a specific contract length with the company.  As I see it, not including any benefits you would receive, you're looking at LESS money in your pocket at $50/hr as a contractor than at your $48/hr. Your pay net social security deductions is: $48 x 40 hrs x 52 weeks = 99,840 * .938 = 93,649.92. As a 1099 @ $50/hr you would net $50 x 40 hrs x 52 weeks = 104,000 * .876 = 91,104.  Then there are the rest of taxes, etc to figure out your real take-home pay.  I'm not a tax advisor, but I would be very careful to get the whole picture figured out before jumping. I would ask for a lot more with the added risk you would take as an independent, too. W9 is required for any payments. However, in your case - these are not payments, but refunds, i.e.: you're not receiving any income from the company that is subject to tax or withholding rules, you're receiving money that is yours already. I do not think they have a right to demand W9 as a condition of refund, and as Joe suggested - would dispute the charge as fraudulent. You have to sit down with HR for the school district. The options involved with with parents working for the same employer can be handled multiple ways. Unless you are a very small district, this situation has come up before. They will tell you what they allow, and then you have to determine which one saves you the most money. Also look into how the deductibles will work with the two policies. You also need to look at options for the two policies. For example if there are different levels of dental: you may not want to cover an orthodontist  on the single plan. HSA rules are different in some regards than deductions allowable under Pub 502 which deals with medical expenses deductible in Schedule A of your tax return. Pub 969 governs HSA's and similar reimbursement plans, and the guidelines are as follows: Insurance premiums. You can’t treat insurance premiums as qualified medical expenses unless the premiums are for: -Long-term care insurance. -Health care continuation coverage (such as coverage under COBRA). -Health care coverage while receiving unemployment compensation under federal or state law. -Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap). Since your wife is still being treated like an employee for health benefits, and you are not on COBRA, thus not eligible for a deduction. You may qualify under the unemployment provision depending on the cause of her disability. "I don't think so. There is a provision in ObamaCare called ""community rating"" that applies starting in 2014. Insurance companies must place individual and small group plans into a pool of people from the same geographical region. The same plan must cost the same for all small businesses from the same region. So having employees who have high costs will not significantly affect the company's cost; it will get factored into the cost for all people in the area; but the effect gets averaged out over all businesses and individuals who have plans."