What is a Section 105 HRA for 1 Employee or Spouse?
Employers with small businesses that only have one employee or hire their spouse, Section 105 HRA are designed specifically for them. With Section 105 HRA spouse or employee/s can reimburse for family health insurance and medical expenses tax-free, indirectly the employers also benefit from as a dependent of the spouse/employee or as tax-deductible expenses to the business and employee. IRS Letter Ruling 9409006 and Section 105 of the Internal Revenue Code, Revenue Ruling 71-588 made this plan possible. Any health plan with 2 or more employees he annual and lifetime dollar limit is eliminated because of the Affordable Care Act (ACA), all one person HRA plans survived this new ACA/Obama Care regulation and are still a viable benefit option.
Who Can Participate?
Employees of sole proprietors, corporations, limited liability companies, and partnerships are best suited to Section HRA plans. The C Corporation and S Corporation owner can participate without the spouse/employee arrangement. This spouse/employee approach has become so popular with sole proprietors and LLCs taxed as a sole proprietor.
Have Questions? and want to read more about the changes click One Employee or Spouse Section 105 HRA for more details.
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