Fall is in the air, which also means looming expenses with the upcoming holiday season, as well as an increase in utility bills. That makes this time of year the perfect time to consider money saving benefit and tax planning strategies.
One thing small business owners should consider is a Section 105 Health Reimbursement Arrangement (HRA). An HRA allows self-employed business owners an opportunity to save thousands in tax dollars on family medical expenses. The average BASE® HRA client saves over $4,500 each year!
A BASE® client out of Lenox, IA stated, “We depend on our CPA to provide us with every legitimate tax deduction we can get. That is why we have been using the BASE® Health Reimbursement Arrangement (HRA) to deduct our medical expenses each year. The HRA makes a big difference in the amount of income taxes we have to pay – all money out of our pocket.”
BASE® has worked closely with tax advisors and insurance professionals across the country to offer this tax saving program to qualified small business owners. With rules and regulations being handed down by the Department of Labor and Internal Revenue Service continually changing, these busy professionals rely on BASE® to help keep their clients in compliance.
Fall is the perfect time of year to consider the Section 105 HRA. As business owners prepare to meet with their accountants, this is a great time for small business owners to see if they are going beyond the standard deduction and utilizing a Section 105 HRA to deduct their medical expenses from their business return.
While small business owners can enroll in the BASE® HRA any time during the year, why not fall into savings now with BASE®!
The PCORI fee deadline is on July 31, 2016 and relates to Health Reimbursement Arrangements (HRAs), per the Affordable Care Act. If you or your clients have been utilizing an HRA, be aware of the impending deadline.
The fee is required to be reported annually on Form 720, Quarterly Federal Excise Tax Return, for the second quarter of the calendar year. The fee for a plan year ending on or after October 1, 2015, but before October 1, 2016, is $2.17 multiplied by the number of employees covered under the plan for that plan year. However, plan years ending before October 1, 2015 should figure the fee by multiplying the number of employees covered under the plan for that plan year by $2.08.
This fee has been in effect since 2012 and will continue to be adjusted annually based on inflation, as determined by the Secretary of Health and Human Services. Currently, the PCORI fee will no longer apply to policy or plan years ending after September 30, 2019. Employers should review Summary Plan Descriptions to make certain the correct dollar amount is being used on the form for 2016.
Not all HRA plan sponsors are required to pay the fee per IRS and Department of Labor guidance issued.
• Section 105 HRA (with only 1 employee)
Business owners with one employee that have an HRA in place do not have to pay this fee.
• Integrated HRA (with 2 or more employees)
Business owners with two or more employees that have an HRA in place are required to pay the fee by July 31, 2016.
• Excepted Benefits HRA
Business owners with an Excepted Benefits HRA in place are not subject to the fee since it provides only excepted benefits.
For complete instructions on paying and submitting the PCORI fee, please visit http://www.irs.gov/pub/irs-pdf/i720.pdf. If you have any questions regarding this information or tax advantaged plans call BASE® at 1-888-386-9680. Learn more about how you and your clients can save money with tax saving benefits by visiting www.BASEonline.com or contacting a BASE® representative.