If you are self-employed, you can reduce the high cost of health insurance and out-of-pocket medical expenses by establishing a Section 105 Health Reimbursement Arrangement (BizPlan). This is a Medical Expense Reimbursement Plan that allows your business to reimburse the costs for health insurance premiums and out-of-pocket medical expenses. 

It will immediately save most self-employed families $3000 or more every year.

Here is a example showing you how just the tax savings alone can save nearly $5000 for someone self-employed.

Can't I Already Do This?

If your self-employed you are allowed the standard deduction for your  health insurance premiums on your Tax Form 1040.  However you still must pay the self-employment (FICA), federal unemployment (FUTA) and your state's income taxes on this amount. 

And only those Medical Expenses which exceed 7.5% or your Adjusted Income if you itemize are deductible. 

Now with an HRA all of these items and others may be deducted as a top line business expense thereby eliminating many of the taxes you would otherwise pay. 

See how much you could be saving Savings Calculator

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Lower Your Health Premiums
Though you may choose to your existing health plan with the HRA, many clients find that by switch from a traditional plan to a Consumer Driven Health Plan they are able to realize additional savings up to 30% or more from their premiums. 

Why pay the insurance company for expensive benefits you may not even use unless they give you back some of your money before the end of the year?

Be sure to read the next example below to the next example to see how you may even save more.   Back to Top Combine with an HSA for Even More Savings Without Plan     Annual Health Plan Premium = $8,000 Federal Tax Rate Deduction Available Only $8,000 x 15% Income Tax Rate   Tax Savings = $ 1,200     Out of Pocket Expenses   Covered Expenses including things like Deductibles, copays, etc. $1000 Non Insured Health Related Expenses*= $4,000     Federal Tax Deduction Not Eligible $0 x 15% Income Tax Rate   Tax Savings = $0     Total Tax Savings $1,200   Net Health Care Expense =   $11,400 With HRA, CDHP & HSA     Annual Health Plan Premium = $6,000 Federal, State & SE Tax Deduction $6,000 x 35% =   Tax Savings = $2,100     Out of Pocket Expenses   Covered Expenses including things like Deductibles, copays, etc. $1000 Non Insured Health Related Expenses*= $4,000     Federal, State & SE Tax Deduction $4,600 x 35% Income Tax Rate   Tax Savings = $1,750     HSA Business Funded Contribution   Federal, State & SE Tax Deduction $3,000 x 35% Income Tax Rate   Tax Savings = $1,050     Total Tax Savings $4,900 Net Health Care Expense = $6,100 Total Savings With HRA & CDHP & HSA $5,300.00 The examples above illustrated only the savings based on health insurance.  Additional benefits you may provide with your tax deductible HRA plan include Long Term Care Premiums and some life insurance.   Back to Top How the Plan Works An IRS Code Section 105 Medical Reimbursement Plan, allows you to deduct 100 percent of your family’s health insurance premiums and out-of-pocket medical, vision and dental expenses not covered by insurance. Self-employed business owner offers an employed spouse a medical reimbursement package. The package covers qualified costs and those incurred by family members—which include you, the employer. The bottom line? A 100% deduction for your family’s medical costs. Real dollars and real savings in excess of $2,400 a year. For Self-Employed Business Owners, this plan will offer Real and Significant Tax Savings Significant reduction of federal, state, and self-employment taxes 100% deduction of all health insurance premiums, including long-term care and spouse’s disability policies 100% deduction of all uninsured medical, dental, and vision expenses Deductions of term life insurance premiums (up to $50,000 in coverage) Compare These Unparalleled Administrative Advantages Complete documentation and compliance with Section 105 of IRS, DOL, and ERISA Efficient processing of eligible expenses -- including the NEW Benefits Card that reduces your out-of-pocket expense and streamlines claims processing The ability to check your year-end totals on-line or via BizPlan’s voice response system Industry-exclusive Audit Guarantee Our 15+ years of experience in administering these plans brings valuable insights and streamlined procedures Annual Minimum Guaranteed Savings Comprehensive updates of changes affecting your Plan Support and guidance via a toll-free hotline Timely mailing of year-end summary statements which are required for tax preparation Your Responsibilities Complete the necessary tax forms, we can help you. Formalize the employment relationship with your spouse Establish a checking account for your spouse or family that is completely separate from your business account Reimburse eligible employees for family medical insurance premiums, out-of-pocket medical expenses, and other qualified expenses Send one form per employee to TASC/BizPlan for our review at year-end Keep good records for your business, separate from your personal accounts Plan Features Eligible Expenses (Examples) Benefits Card (Free) Tax Savings Guarantee Payroll Administration (Optional) Audit Guarantee   Back to Top

Carolyn A, SoloE.com Subscriber and Biz Plan Participant

Eligibility

*Please note the list above is not comprehensive and is only met as a guide

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Frequently Asked Questions

Is this legal?
HRA's are based upon the former Medical Reimbursement Accounts which are supported by several rulings and letters from the Internal Revenue Code.  These plans have been in existent since the 1950's and have been used by larger corporations for several years to help them save thousands of dollars. 

How do I set Up a Section 105 Plan?
A Section 105 Plan is a Defined Contribution Plan and as such the IRS requires you have your plan properly documented.  We can help you with defining your plan and properly documenting it for IRS purposes.  

Who qualifies?
To qualify for a Section 105 Plan, a business owner must be able to legitimately employ his or her spouse. (For corporations, family employment is not necessary.) Those who qualify include sole proprietors, partnerships, limited liability companies and corporations (including sub-chapter S corporations).

How does this work?
The spouse becomes an employee in the business. The business owner provides the employed-spouse a compensation package that includes a reasonable wage for necessary business duties and a benefit package that includes reimbursement of health care expenses. These expenses are now a business expenses and are 100 percent deductible.   The "reasonable wage" may be substantially less than the "benefits package".

How much will I save?
The average participant saved more than $3,450 annually in taxes last year. 

How much does it cost?
Less than $200 per year for plan documentation and complete administrative services.  Through our 3rd party Provider we offer an additional discount to clients who designate us as their Broker of Record on their health insurance policy.

Why Haven't I Heard About this Before?
The only thing I can figure out is insurance agents and companies make more money the more you pay in premiums, while most accountants are not completely aware of all the intricacies surrounding health insurance plans.  We specialize in both areas and have combined this information to offer a cost effective way for you to manage your health care costs. 

How much time does it take to set up and maintain the Plan?
Setting up a Plan is very easy. You simply enroll in the Plan, employ your spouse by establishing a compensation package and reimburse your employee's medical expenses. Annual duties include submitting benefit expenses tfor review, renewing your Plan and re-electing your benefits. BizPlan provides all the required documents and forms and toll-free support.

Why do I need AgriPlan/BizPlan?
IRS rulings have stated repeatedly that a business must have a formal written Plan in place to take these deductions without the risk of them later being disallowed and subject to penalties and fines.  AgriPlan/BizPlan, developed in 1986, simplifies the accounting procedures and provides the administration and documentation required to maintain a proper Section 105 Medical Reimbursement Plan. That includes a Plan Document, an Adoption Agreement, a Required Summary Plan Description, an annual Documentation of Benefits Paid and a Third Party Adjudication of Claims. AgriPlan/BizPlan also offers an Audit Guarantee to all Participants.

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Guarantee

The set up fee to adopt an HRA is much less than $200, if however you do not in your first year save at least $500 in taxes (total of Federal, State & FICA) you will receive a full refund of your enrollment fee.  Be sure to also review our industry exclusive Audit Guarantee

Stewart Poths, Broker

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How to Get Started

If you would like to receive our FREE 7 page report which explains in more detail how a Section 105, or HRA may benefit you with real life examples simply complete the form below and we will email it to you right away, or phone our offices Monday through Friday if you would prefer to speak to us. 

Our phone number 360-687-3002 or Toll Free 866-527-1910 for a brief introductory interview with absolutely no-obligation.  5 minutes is usually all we need to help give you an idea how much money you will save each year with a Health Reimbursement Account (BizPlan).