Travel Medical Insurance Webinar

If you were unable to attend our recent webinar on June 10th with Heidi Bunnel of Affordable Health Solutions, LLC, you can watch it on our website, here. Heidi gave a fantastic overview of travel medical insurance and its importance when traveling abroad. Many domestic health insurance plans provide limited or no international coverage, so knowing where you are and aren’t covered, as well as how to choose a coverage plan for your needs is essential in planning a trip outside the country.

HSA Limits Increased

The IRS announced HSA contribution deductions will increase to $4,500 for an individual with self-only coverage under a High Deductible Health Plan (HDHP) or $9,000 for family coverage for 2027. An HDHP is defined as a health plan with an annual deductible not less than $1,750 for self-only coverage or $3,500 for family coverage, with annual out-of-pocket expenses (deductibles, copayments, and other amounts, but not premiums) not exceeding $8,700 for self-only coverage or $17,400 for family coverage. We love HSAs as tax-free savings vehicles for clients, and have written about them here and also written about how the rules change once you file for Medicare (part A or B).

New Double Taxation for Irrevocable Trusts and Estates

Part of the new tax law passed last July 4 limits the benefit of itemized deductions to effectively the 35% tax bracket. This means that those in the 37% bracket will have their itemized deductions reduced on their individual income tax return, starting in 2026. In mid-May, the Joint Committee on Taxation (JCT) provided clarification, explaining that this rule will also apply to trusts and estates, and classifies deductions for charity, taxes and distributions as itemized deductions. The statute, as clarified by the above JCT summary (and footnote), turns estate and trust planning on its head by potentially pitting current and future beneficiaries against each other. It also causes some odd results, as charitable trusts with income over ~$16K will now have a tax liability.

The way the statute is currently worded, it creates an “algebraic loop” for calculating the tax for trusts with charitable or distribution deductions.

In addition, a trust that is the named beneficiary of an IRA that distributes all of the IRA distributions to beneficiaries (who will be fully taxed on that amount) will not be able to deduct the entire distribution, and therefore a portion will be taxed again (hence the double taxation) to the trust at compressed trust tax rates.

Another issue is who pays the tax – the current income beneficiaries or the future contingent beneficiaries? In general, any allocation of deductions legally needs to be fair and equitable, but how to do that is not clear.

The complete implications of this JCT summary on estates and trusts are still being identified. Trustees and planners everywhere are hoping Congress passes a technical correction before filing season, as this takes effect for the 2026 filing year. The issue isn’t just about hiking taxes on trusts, but on the ability of trustees to determine beneficiary distributions this year and for tax preparers to know how to prepare these returns.

Taxes and financial planning are complex, but you don’t have to navigate them alone. A financial advisor can help you stay informed about tax law changes, optimize your savings and investments, and avoid costly mistakes. If you need tailored guidance, our team is here to help. Talk to an advisor or call (603) 589-8010 to integrate tax planning into your comprehensive financial strategy.