Consider a Medical Reimbursement Plan
Are you looking to rein in out-of-control health care costs? If so, you may want to consider a Section 105 Medical Expense Reimbursement Plan.
Can you legitimately employ your spouse to help manage your business, farm, or rental real estate? If so, you can hire them, establish the plan, and reimburse them for all medical expenses they incur for themselves, their spouse (you!), and their dependents. (If you're not married and you operate your business as a C-corp, you can establish the plan for yourself.)
You don't even have to pay them a salary. You can pay them in benefits only (and avoid managing a payroll) so long as you follow a few simple formalities and the reimbursements are “reasonable compensation” for the work your spouse performs.
Once you’ve established the plan, you can deduct all your medical bills:
· Major medical, long-term care, and “Medigap” insurance premiums,
· Co-pays, deductibles, and prescriptions,
· Dental care, vision care, and chiropractic care,
· “Big ticket” expenses like LASIK surgery and braces for your kids’ teeth,
· Even non-prescription medical expenses and supplies!
There’s no statutory limit on how much you can reimburse. And there’s no need to pre-fund expenses as there is with “flexible spending” (use-it-or-lose-it) and health savings accounts.
The National Association for the Self-Employed reports that the average plan sponsor saved $3,800 in 2005. Call us at 502.657.6428 to discuss a plan for you!
Dwayne K Dowell, CPA/PFS