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Section 105 HRA - Medical Expense Administration

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Jill

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What do you guys use for managing your medical expenses for your corporation or small business. My former accountant told me I need to find a 3rd party administrator to manage this aspect of my business for me. I'm inclined to agree, but I don't know what the alternatives are.

The marketing collateral from one of the providers I'm considering describes it like this:

"With the Section 105 HRA plan, small business owners who qualify are able to take advantage of tremendous tax savings by deducting up-to 100% of qualifying medical expenses and health insurance premiums. More often than not, small businesses only take the standard deduction offered on Form 1040 for their self-employed health insurance costs. Enrollment in the Section 105 HRA gives employers the opportunity to deduct both their premiums and qualified out-of-pocket expenses on their business tax return."

Would love to hear what you guys are doing to stay compliant on the medical expenses you are claiming. Point-of-information: In my case, this would be to cover the costs that my husband's bennie plan at work does NOT cover.
 

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Diane Kennedy

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Typically the company you have medical insurance with will provide admin free of charge. This is also known as a "cafeteria plan", just FYI.

This is a different type than a Medical Expense Reimbursement Plan (MERP) that a C Corp can set up and that you can self-administer.
 
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Jill

Jill

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Thanks for the comments, and explanation.

Actually husband has full benefits through his W2 job. So the only things that I want to cover out of our corporation are the co-pays, the 20% UNcovered medical expenses or other uncovered things like dental, vision, etc. It's only $15/mo or so, and considering I'm so very administratively inept, I thot it couldn't hurt!
 

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