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Small Business Owner? Have You Heard of HRA 105?

Posted by Cathy Meder on Wednesday, August 11th, 2010 at 2:32pm.

Okay; maybe I did just fall off the turnip truck. I just learned about something called a HRA 105. HRA means Health Reimbursement Arrangement and that can mean, if you qualify, a big fat tax deduction. Now I know you are listening. I know I am.

We have some medical stuff coming up and this required talking to our insurance company. So I talked to my insurance agent, Diane, to get her help. We talked about our high deductible which got her to thinking about how to save money for us. (We love Diane!) She began to tell us about the HRA 105.

This is a tax arrangement, in place since 1954 that allows qualifying members to deduct 100% of their health insurance premiums and non-insured medical expenses from federal, state and self-employment taxes. 60-70% of self employed people qualify. The most likely people to qualify are employers who are married and their spouse is active in the business and there are no other employees.

Basically, it allows the company to reimburse the employee (the spouse) for all of their medical expense. It's tax deductible for the employer and tax free for the employee. Anything on the IRS Publication 502 is eligible to be deducted. It includes medical premiums, deductibles, co-pays, plus things like chiropractor, massage therapy and other types of health care that's not typically covered by health insurance. And I just found out that long term care premiums also qualify to be deducted.

We signed up with a company called BASE because our insurance agent referred them to us. You can look at their website which is www.association105.com. What they offer is: keeping your plan compliant, written plan documentation, summary and plan descriptions that are required each year and they do the 3rd party adjudication which is required by the government - all medical expenses are adjudicated to ensure deductibility. It cost us $199 for the year and they save their clients an average of $3800 yearly.

Check it out and see what you think. If you want to speak with someone directly, you can call Victoria from BASE at 888-227-3105 and tell her that Cathy Meder sent you.

© Copyright 2010 Cathy Meder. You may not edit this article without the author’s written permission. You may duplicate this article without any revisions subject to the author's name, email, and website be included at the original locations of the article.

Cathy Meder

RE/MAX Around Atlanta

Marietta Homes & Real Estate

770.778.4500