Medical Reimbursement

Understanding a Corporate Medical Reimbursement Plan A corporate medical reimbursement plan allows a business to reimburse employees for eligible medical expenses tax-free. This creates significant financial advantages. The plan is entirely employer-funded. Employees cannot contribute to maintain the tax-free nature of reimbursements under IRS rules. It is a formal arrangement that requires a written plan […]

Health Savings Accounts (HSAs) and Section 105 plans are both tax-advantaged health benefit arrangements. Both provide significant tax benefits but operate under different regulatory frameworks and contribution structures. But can you use them together?

C-Corporations have generous fringe benefit provisions. But that’s not the case for S-Corps. We’ll discuss the different provisions.

The IRS treats majority shareholders as self-employed individuals rather than employees, meaning any health benefits become taxable income instead of tax-free reimbursements. However, enterprising S-Corp owners have found legitimate workarounds by creating C-Corporation subsidiaries or sole proprietorship arrangements where they can qualify as employees.

Self-employed individuals often struggle to deduct medical expenses. While insurance premiums may be partially deductible, most out-of-pocket costs are not. However, a properly structured Section 105 plan can change that.