Why wouldn't you use a Sec. 105(b) plan? Wouldn't that be easier in your single employee situation?
I just set one of these up last week using Core Documents after consultation with my accountant and asking a lot of questions about ACA compatibility. Short answer: they're totally legal for one-employee LLC S-corps, even if that employee is the owner. I set mine up with an HSA-compatible deductible ($1300 individual, $2600 family) so I can save the max in my HSA and also reimburse myself for most expenses from the HRA.
This $149 investment instantly saved me almost $2,500 on taxes because we already maxed our out of pocket limit for the year. Bonus: both reimbursements and HSA contributions count as W-2 box 1 income but they don't count for FICA, so I also get to contribute an additional 25% of my reimbursements and HSA contributions to my solo 401(k).
Hello there, @Protostache! Thank you for your comments ... they are very informative! I am very interested in doing the same with my healthcare as you have outlined. I am a 100% s-corp owner and I have some of the very questions that I am sure you had. Please, if you have the chance, I would appreciate some help! Thank you so much!
1. In addition to reimbursing healthcare premiums, do both HSA contributions and HRA reimbursements get put into W-2 box 1 as income (but not FICA)?
2. Can you explain what you mean by being able to contribute an additional 25% of your HRA reimbursements and HSA contributions to your solo 401(k)? This sounds pretty sweet!
3. Is there an annual limit/cap specific to 2%+ s-corp owners for HRA reimbursements? How about the HSA contributions?
4. I'm curious. Does your s-corp pay for your insurance premiums directly? Or do you get reimbursed via an Accountable Plan?
5. Do your HRA reimbursements get paid to you via Payroll, then taking out the taxes at the same time? Or does your payroll do "zero dollar paychecks" for the s-corp healthcare, then personally owing a "tax loan" to the s-corp? I'm using Intuit Online Payroll and mine does the $0 paychecks. I'm wrapping my head around this...
6. The $149 HRA deal thru Core Documents sounds great! Are you administering the HRA yourself? Do you need to pay for any other outside serves? I've found a few HR outlets that offer HRA services like zenefits.com and
www.TakeCommandHealth.com. Is a service like this necessary? Or can I simply reimburse myself health expenses, as long as I have the paperwork formed by Core Documents or similar?
7. Lastly, I am looking for a new health insurance plan with an HSA attached. If I purchase on the Health Marketplace / Exchange and get any sort of credit ... does that still entitle me to health premium reimbursement thru the s-corp?
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Thanks again! I greatly appreciate your time!