Set as micro-enterprise shop and grow their businesses, they often search tax-free way for health insurance to pay. The most popular route is a tax-preferred premium set reimbursement program to yourself and the employee reimbursed tax-free for individual health insurance. 
What is tax Preferred premium refund?
The concept is simple. The company offers qualified owner * and employees money monthly healthcare use on individual health insurance - rather than a group health insurance contribution. Staff their own health plan to buy, and reimbursed tax-free to them available
to obtain the tax benefits up to the amount, the business is a one of the following :.
1. Health Reimbursement Arrangement (HRA) - For 1 person plans
For micro-enterprises with an employee (or a eligible owners), an arrangement health reimbursement or HRA, is an option. A one-person HRA allowed tax-free reimbursement of insurance premiums health and out-of-pocket medical expenses.
2. Limited § 105 Medical Reimbursement Plan - for plans with 2+ participants
want to provide for micro-enterprises, the tax-free reimbursement for more than one employee or eligible owner, the solution is a limited § 105 Medical refund plan.
A limited § 105 Medical Reimbursement Plan is similar to a HRA, but is limited to the reimbursement of individual health insurance premiums and preventive care services. It also has different rules Roll. The plan is structured in this way with new ACA to meet requirements, while the new ACA requirements (also known as "market reforms") do not apply to one-person HRAs
. * Note: The tax benefits by HRA or § 105 Medical Reimbursement Plan vary for some types of owners. Please refer:.
evaluate the ROI on Tax-Preferred premium refund for micro enterprises
Micro enterprises often the cost (and savings) give a tax-free solution compared to employees tax increase or bonus for your health care costs. T here is a big advantage of a tax-preferred plan .: cost savings
Next, we will examine the cost savings for micro-enterprises, if a tax with preferred premium refund provides plan against a controllable increase.
tax savings Business
1. The company pays taxes on a raise. A taxpayer increase or bonus of $ 300 per month gross fiscal are actually cost $ 323 per month after FICA / FUTA wage tax (7.65%) factored. Once a year the business expenditure is $ 3,875 to offer a raise / bonus $ 3,0.
2. Tax preference refunds are tax-deductible for the company. If the small business employees a $ 300 per month gives money, the actual cost to the company $ 300 (FICA / FUTA payroll taxes do not apply to the reimbursement). the company will offer $ 3,0 spending before tax benefit $ 3,0 annually.
tax savings to the owner / employee
1. Workers pay taxes on a raise. to the employees Assuming 1) Single and 2) Preparation of $ 35,000+ the employee receives $ 1,175 of the $ 3,0 tax ($ 3,0 x pay 32.65% *). Annually, the company spends $ 3,875 after tax ( "take home") Bonus from 2425 $ to offer.
* For 25% marginal tax rate + 7.65% FICA / FUTA
2. Tax preference refunds are 100% tax-free to the employee. For this reason, $ 1 in tax preferred refund is worth about $ 1.50 - $ 2.00 in a taxable bonus (depending on the tax bracket of the employee). With a control preferred plan, the business will be spending $ 3,0 annual tax benefit of $ 3,0 offer, which translates to $ 5,400 value -. $ 7,0 in a taxable bonus
Additional savings for the business - it Finally, if a company's unused Stay funds with the business
a controllable increase or bonus, it is not guaranteed employees spend the money on health care costs.
In a preferred control premium reimbursement program, the company reimbursed for eligible health insurance and medical expenses under the terms of the plan documents. Employees will only be reimbursed if they show proof of their premium costs. And the employees are reimbursed only to the amount of their compensation on.
For example, in the case of $ 300 per month allowance, if the insurance company of the employee costs only $ 210 per month, the plan paid only $ 210 per month. The remaining $ 0 per month will remain with the company.
If you are a micro business, what questions you have about tax preferred premium refund? Leave a comment below.
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