03 Mar Check Out This Health Reimbursement Arrangement
Let me introduce you to the Section 105-HRA–created from the IRS Section 105 medical reimbursement plan and the health reimbursement arrangement (HRA).
This plan provides the best possible medical reimbursement plan. To qualify you must have only 1 employee and operate your business as:
- Proprietorship reporting on Schedule C
- Partnership filing Form1065
- Rental Real Estate business–Schedule E filing
- C Corporation
The 105-HRA may reimburse an employee for expenses incurred for the medical care of
- the employee
- the employee’s spouse
- the employee’s dependents, and
- and child of the employee who has not attained age 27 by the end of the year
Therefore, if you file as a sole proprietor; the tax law does not consider you to be an employee for the purposes of medical plans–so you hire your wife to overcome this.
The reason this plan is so powerful is that it turns personal medical expenses into business deductions.
If you are not married, I recommend structuring your business as a C Corporation, and you are the only employee.
If you have less than 20 employees, please consider other plans such as the qualified small business HRA.
I provide for my clients the necessary IRS Section 105 document, a proper medical reimbursement request form, and an employee time sheet to prove work performed.