As businesses see the benefits of individual health insurance they are passing away insurance group and self-insured medical reimbursement plans means tax-free to reimburse employees for individual health insurance. This article examines the IRS rules for this type of control preferred premium reimbursement plans.
Introduction to Tax-Preferred premium reimbursement plans
Based on a tax preferred premium refund plan, the employer places a limited self-insured medical reimbursement plan, a healthcare reimbursement plan (HRP) or § 105 Medical reimbursement plan called. The plan is structured to employees for eligible health insurance premiums up to a certain monthly health allowance, and b asic preventive health services without any cost sharing.
For employers reimburse refunds are tax-deductible as an operating expense in the same manner as are premiums for group insurance or other benefits paid expenses.
for employees, not included repayments in employee income and thus to income or income tax deduction subject to premium reimbursement tax preferable as long as the plan with IRS rules equivalent, and other applicable rules, including compliance with ERISA , COBRA, HIPAA and the ACA.
the tax code allows.
See also:
3 Key IRS rules for premium reimbursement plans
There are three important rules IRS premium must follow reimbursement plans.
1. plan documents
The IRS requires that written plan documents established and maintained. to define planning documents, which costs for reimbursement are concerned, the amount of employer contributions and other necessary information on the repayment plan.
Tip Employers should use a premium refund software vendors to create custom and precise plan documents that can be easily updated with schedule changes.
2. Documentation
The IRS requires that employees submit proper documentation verifying their application for a refund, and that documents is stored on file for ten years.
Tip :. provides for a premium refund software with compliance documentation IRS rules
3. Non-discrimination
The refund plan with IRS non-discrimination rules must comply. The rules of the plan does not compensate for heavily persons (HCIs) to participate in terms of eligibility in the plan or benefits under the plan discriminate
Tip .: employee classes needs to bona fide job based criteria. All employees in the same class should be treated equally.
Other rules control Preferred premium reimbursement plans must follow
In addition to IRS rules, tax preferred plans premium refund to these rules and regulations to follow:
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ERISA compliance
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HIPAA Medical Privacy
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COBRA
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Affordable Care Act (ACA)
in future articles we will discuss each of these topics in detail. For a complete list of rules and regulations, download the new eBook "101 Compliance".
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