Author Topic: HRA expansion proposal  (Read 560 times)

Paul der Krake

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HRA expansion proposal
« on: October 26, 2018, 01:05:37 PM »
https://www.dol.gov/newsroom/releases/ebsa/ebsa20181023

Did the Trump administration essentially just make ACA premiums pre-tax?

If I'm reading this right you just need to generate some self-employment income, and you can give it entirely to your employees (i.e. yourself), free of payroll and income taxes to pay for ACA premiums and out of pocket expenses.

Is this the next great fiscal gift to early retirees?

seattlecyclone

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Re: HRA expansion proposal
« Reply #1 on: October 26, 2018, 02:18:53 PM »
Self-employed people are already allowed to deduct the cost of their health insurance, aren't they?

MMbergmann

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Re: HRA expansion proposal
« Reply #2 on: October 26, 2018, 02:30:39 PM »
https://www.dol.gov/newsroom/releases/ebsa/ebsa20181023

Did the Trump administration essentially just make ACA premiums pre-tax?

If I'm reading this right you just need to generate some self-employment income, and you can give it entirely to your employees (i.e. yourself), free of payroll and income taxes to pay for ACA premiums and out of pocket expenses.

Is this the next great fiscal gift to early retirees?
@seattlecyclone see the part bolded in what he said above. This (if true) would be a game changer for people with lots of medical expenses.

Paul der Krake

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Re: HRA expansion proposal
« Reply #3 on: October 26, 2018, 02:40:37 PM »
AFAICT self-employed individuals can claim the deduction for premiums on their income taxes (line 29 of 1040, 2017 edition) but not from the hefty payroll taxes. Somebody correct me if I'm wrong on that.

MMbergmann

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Re: HRA expansion proposal
« Reply #4 on: October 26, 2018, 02:55:48 PM »
AFAICT self-employed individuals can claim the deduction for premiums on their income taxes (line 29 of 1040, 2017 edition) but not from the hefty payroll taxes. Somebody correct me if I'm wrong on that.

It does not reduce self employment taxes, no. (what I am assuming you are referring to as payroll taxes - they work the same way I'm just being technical :P)

MDM

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Re: HRA expansion proposal
« Reply #5 on: October 27, 2018, 10:26:11 AM »
AFAICT self-employed individuals can claim the deduction for premiums on their income taxes (line 29 of 1040, 2017 edition) but not from the hefty payroll taxes. Somebody correct me if I'm wrong on that.

It does not reduce self employment taxes, no. (what I am assuming you are referring to as payroll taxes - they work the same way I'm just being technical :P)
Appears that it will reduce SE tax, based on "the proposed regulation extends the tax advantage for traditional employer group insurance (exclusion of premiums, and benefits received, from federal income and payroll taxes) to HRA reimbursements of individual market insurance premiums."

MMbergmann

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Re: HRA expansion proposal
« Reply #6 on: October 27, 2018, 01:49:52 PM »
@MDM he was referring to the current self employed health insurance, unless I just read it wrong.

MDM

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Re: HRA expansion proposal
« Reply #7 on: October 27, 2018, 01:53:44 PM »
@MDM he was referring to the current self employed health insurance, unless I just read it wrong.
Pronoun antecedents can be ambiguous.  Guess it depends on what the meaning of "it" is. :)

Yes, a line 29 deduction does not affect SE tax.  Appears use of this new proposal will affect SE tax.

Paul der Krake

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Re: HRA expansion proposal
« Reply #8 on: October 28, 2018, 09:30:19 PM »
Cool, it sounds like we all agree about the self-employment taxes. That's already a win.

If this also allows us to pay for other qualified expenses, like HRAs already do currently, then what we have is straight up tax free healthcare expenses. Which would be pretty incredible.

Thought experiment #1: can I hire my wife to make me pancakes in the morning, then we use all of her pancake earnings to pay for the co-pays from my employer coverage?

Thought experiment #2: can I use an HRA to pay for premiums of an HSA-enabled health plan?

Someone at the IRS is going to have a fun time making sense of all this and update Pub 969...