Before Internal Revenue Code Section 105(h) was passed, a corporation could directly reimburse executives for out-of-pocket medical, dental and vision expenses on a discriminatory basis. It could deduct the self-funded expenses, and the employee could receive the money tax-free.
Since IRC Section 105(h) passed, corporations may no longer provide this benefit on a discriminatory basis unless it is part of an insured program.
Therefore, we make available Medical Expenses – Insured Reimbursement Plans that legally allow for employers and key personnel to pay themselves (on a discriminatory basis) for health care expenses they currently or otherwise, without such a plan, are paying with out-of-pocket hard earned after-tax income. We recommend only State by State, Department of Insurance filed and approved Plans, that are A.M. Best top rated (A “Excellent”) or better Insurance Companies.
Such Medical Expenses – Insured Reimbursement Plans are really designed to address the medical expenses reimbursement needs of owner/key executives and these Plans are issued to, or via, their respective business. These Plans work for all types of businesses.
Generally, insured group plans that reimburse health care expenses are tax-deductible for an employer as an ordinary-and-reasonable cost of doing business. The benefits of a group medical plan are tax-free to the covered person. This combination means no taxation for reimbursable health care expenses, as permitted by Section 213 of the Internal Revenue Code and by the insurance policy provisions, limitations and exclusions. The permitted expenses are much, much more than just deductibles and coinsurance, and include medical, dental, vision, prescriptions, over-the-counter drugs, wellness, prevention, fertility, sterilization and non-traditional treatment modalities, among many others. What’s more, the level of treatment is not an issue. For example, if one is nearsighted, you can use the plan to pay for Lasik eye surgery, instead of eyeglasses.
Small Business Owner to Any Size Employer – A Plan Example:
As an individual with taxable income, you currently pay out-of-pocket medical expenses with after-tax income. As a business owner, you can put part of what you are paying in expenses toward the tax-deductible premium of a Medical Expenses – Insured Reimbursement Plan. When you do, you save the amount you would have paid in taxes. The benefits you receive under the plan are tax-free. If you have no out-of-pocket health care costs at all during a plan year, your expense is a tax-deductible base premium of typically somewhere around $250 for an individual or a family. You pay no additional premium until you claim your expenses for reimbursement. The additional premium is 10% more than covered expenses. All premium goes to pay the cost of acquisition, insurance, sales and administration, as well as other plan benefits, and either (in one such Plan) a $100,000 Accidental Death Benefit or a $5,000 lump-sum Critical Illness (cash) benefit.
Compare the minimal premium rate to your income tax rate, and you will see the difference. The savings are significant, and can be leveraged into helping the key executive/owner/employer with the costs of acquiring additional benefit programs. What do the savings mean to you personally?
Many use the savings of such Medical Expenses – Insured Reimbursement Plans to fund IRAs, ROTH IRAs and more. Many accountants and attorneys themselves have such insured plans, as do a wide variety of all types of business entities.
Please let us know how we can help you too obtain such a valuable Plan: 800.482.5347
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