The BIG PICTURE for the Section 105 HRA

So many great businesses start small, and many choose to stay that way.  As a self-employed business owner, understanding and running your business is your life.  Being detail oriented and a visionary with your business when you wear so many hats, can sometimes mean there are some big picture items that fall through the cracks. One of those items might be health care expenses for your health and well-being, which could lead to thousands in missed tax savings for self-employed business owners.

What BIG PICTURE item can save self-employed business owners thousands in tax savings each year on health care spending?  The answer is the Section 105 Health Reimbursement Arrangement, which is an employer-sponsored health benefit plan that allows small business owners the opportunity to deduct up-to 100% of health care costs, such as individual insurance premiums and out-of-pocket health care, dental, and vision expenses, on a tax-free basis. 

The BASE® Section 105 HRA is especially applicable to the small business owner who can legitimately hire their spouse.  It helps to reduce the cost of health care insurance premiums and out-of-pocket health care expenses while saving money by not paying taxes on the reimbursement for eligible expenses.  On average, BASE® clients save $5,900 a year in valuable tax savings. 

The BASE® Section 105 HRA gives the self-employed business the best possible health care reimbursement plan.  The first requirement?  One employee only.  The second requirement?  Operate the business as one of the following:  Sole Proprietor, Partnership, C Corporation, or S Corporation. 

For example, when a self-employed business owner legitimately hires their spouse to work in the business, the employee-spouse purchases family health insurance coverage, and the business owner enrolls in the BASE® Section 105 HRA.  They reimburse their employee-spouse for their health care expenses, such as health insurance, copays, and other health care expenses not covered by the insurance.  The health care expenses will be incurred by the employee, the employee’s spouse (aka self-employed business owner), and the employee’s dependents.  BASE® will do the math – calculating in the federal tax bracket, the self-employment tax bracket, and state tax bracket, finding the self-employed business owner thousands of dollars a year in valuable tax savings. 

In the “BIG PICTURE” of things with the BASE® Section 105 HRA, personal health care expenses are turned into a business deduction.  The plan reimburses the employee-spouse for their family health care expenses tax-free, turning the reimbursements into a business expense on the tax return as an employee welfare benefits

BASE® can show self-employed business owners the “BIG PICTURE” and provide insight into the future savings that could be with this plan in place when it comes to the Section 105 HRA.  For more information contact BASE® at 888.386.9680 or visit

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