When you are an active shareholder with a W2 wage through the company you can get reimbursed for out of pocket expenses & medical insurance premiums! This benefit to S-Corp owners is accomplished by utilizing a Health Reimbursement Arrangement (HRA ).
What does my HRA cover?
An HRA only covers qualified medical and dental expenses. According to the Internal Revenue Service (IRS), medical expenses are costs incurred to alleviate or prevent a physical or mental ailment, not expenses to maintain general health, such as vitamins.
What are Health Reimbursement Arrangements for small employers?
Health Reimbursement Arrangements (HRAs) for small employers Certain small employers—generally those with less than 50 employees that don’t offer a group health plan—can contribute to their employees’ health care costs through a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
Can a small business claim a medical reimbursement plan?
Medical Expense Reimbursement Plans are appealing to small business owners because they are tax- exempt. Reimbursements are tax exempt, and any employer contributions are tax-deductible business expenses. Once the employer reimburses the employee, the claim can be filed.
What does Section 105 medical reimbursement plan mean?
This medical reimbursement plan is aptly named after Section 105 of the IRS code, which allows an employer to reimburse employees, and their dependents, for their out-of-pocket medical costs and health insurance premiums under an employer-sponsored health plan. A Section 105 plan is not health insurance.
What do you need to know about medical reimbursement plans?
A Medical Expense Reimbursement Plan is fully deductible for the company. Many companies use a Medical Expense Reimbursement Plan to cover ancillary health care services, such as vision or dental insurance, that are not usually covered by a group health care plan.
