Section 105
Section 105 (16 Pages)
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IRS Publication 15 B Employer Guide to Fringe Benefits
Publication 15 B – Employer Guide to Fringe Benefits
Sample Plan Document
Sample Plan Document

HRA’s – Health Reimbursement Accounts  allow an  employer to pay or  Self Fund say by using a Ben E Lect Program  and possibly save thousands of $$$, for his and the employees uninsured medical care  for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. and deduct them.     (§IRC §213 (d), IRS Publication 502 Allowable Medical Expenses   Internal Revenue Code (IRC) §105 Publication 969)

President Barack Obama on Dec. 13 signed into law the 21st Century Cures Act, which will let small businesses use health reimbursement arrangements (HRAs) to fund employees who purchase individual health plans on the open market.

Learn More===>SHRM.org

The 21st Century Cures Act, which incorporates key elements of the proposed Small Business Healthcare Relief Act, creates a new type of HRA—the qualified small employer health reimbursement arrangement (QSEHRA). The legislation specifies that:

  • The maximum reimbursement for health expenses that small employers can provide through employee QSEHRAs is $4,950 for single coverage and $10,000 for family coverage, to be adjusted annually for inflation.
  • Small employers that choose to provide QSEHRAs must offer them to all full-time employees except those who have not yet completed 90 days of service, are under 25 years of age, or who are covered by a collective bargaining agreement for accident and health benefits. Part-time and seasonal workers may also be excluded.
  • Generally, an employer must make the same QSEHRA contributions for all eligible employees. However, amounts may vary based on the price of an insurance policy in the relevant individual health insurance market, which in turn can be based on the age of the employee and eligible family members, or the number of family members covered. Learn More===SHRM.org

MERP’s – Medical Expense Reimbursement Plans IRS Section §105  Wikipedia  On the other hand, many Insurance Carriers do not allow  Wraps (see Ben E Lect)    Blue Cross requires a signed statement that you won’t do it).  Qualified claims must be described in the HRA plan document at inception, i.e., before reimbursing employees for those medical expenses.

The employee does not have to report income as long as the plan complies with §106,   105 (b) and  Rev Ruling 2-41 The funding for medical expenses can be pay as you go.

AetnaKaiser UHC and Health Net offer HRA’s &   HSA’s (Health Savings Accounts).
Please email [email protected] or call us 310.519.1335 to discuss further.

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Other Insurance Clause – Dual Coverage?

Can the 105 plan pay lower benefits depending on the amount the employee receives from other insurance, like Medicare?

Section 105 of the Internal Revenue Code

Revenue Ruling 71-588 and

IRS Letter Ruling 9409006.

Section 105- Amounts Received Under Accident and Health Plans (Also Section 106-Contributions by Employers to Accident and Health Plans) Rev. Rul. 2005-24

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Purchase Plan Documents – It is not necessary for tax purposes that the plan be in writing or that the employee’s rights to benefits under the plan be enforceable. For example, an employer’s custom or policy of continuing wages during disability, known to the employees generally, has been held to constitute a plan. Niekamp v. U.S. , 240 F. Supp. 195 (E.D. Mo. 1965); Pickle, TC Memo 1971-304

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