Your small business does not offer traditional health insurance coverage, but you want to help with employee insurance costs. As such, your company gives employees a tax increase or bonus to use toward health care.
But here's a thought. Your small business could save money, and contribute more to the health of employees, by establishing a tax advantage repayment plan.
The tax-free money for employee health insurance?
Yes, it is still possible. Employers may reimburse employees tax-free for their health insurance expenses using a conforming formal health reimbursement plan.
The key here is to use a consistent Health repayment plan. Under health reform, there are new rules for reimbursement of employee health insurance costs and new penalties for non-compliance. The penalties are stiff - up to $ 100 per day, per employee
In other words, employers can still use repayment plans of health insurance premiums as long as they comply with the new rules [
what is a tax-free reimbursement plane look Like?
Employers can use a repayment plan for self-insured medical expenses, sometimes called a health care reimbursement plan (HRP) . Here's how it works :.
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The company establishes a HRP to give employees a monthly contribution of health care ( "allowance")
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employees purchase their own health plan and submit reimbursement claims by the HRP. Typically, a third examines the claim.
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The company then reimburses employees, their available balance.
Learn more about how to work HRPS (downloadable PDF).
4 steps to give employees the tax-free money for health insurance
To implement a plan refund tax free, follow these four simple steps.
1. Determine a timeline
If the company is in the process of helping employees with taxable bonuses or raises, or another type of health benefis, regardless of when to switch to a repayment plan tax-free.
2. Create a budget
Decide how the company wants to contribute monthly to the health of employees. With a corporate tax-free repayment plan that reimburses employees for what they spend.
3. Set the formal repayment plan
Most small companies are working with supplier health reimbursement software , or other third parties to develop and help to administer the plan. Working with a third party ensures compliance and makes administration easy repayments.
4. Educate employees
Finally, take the time to educate employees on how the non-taxable benefit is working for them and their families
Related :. How to educate employees on individual health insurance Money
Conclusion
is there a way to help employees with the tax-free health insurance? Yes. Using a formal repayment plan consistent as HRP, allows refunds to be employees and employers deductible tax free tax.
What questions do you have about tax-free reimbursement of health insurance? Leave a comment below and we'll help you answer them.
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