Sayhealthy.net – For most occupations, the solution to ObamaCare is simple: Present a “Business Expense Account” for Healthcare. an employer can get out of the health insurance business, and simply return hand-picked employee monthly allows to spend on their own health insurance policy in a state health insurance exchange exploiting a Part 105 medical reimbursement contrive( aka Healthcare Reimbursement Plan or HRP ). If you understand how business expense accounts duty, you will understand how this health care approach succeeds as well.

How Business Expense Accounts Work

With business expense accounts, corporations repay employee for business-related expenses 100% tax-free. These expenses include expedition, entertainment, gifts, and other expenses related to the employer’s business activity. To retain preferred levy care, the business expense account plan must be administered to meet certain requirements of the IRS:

  1. There must be a business connection;
  2. Expenses must be substantiated (usually through a receipt); and
  3. Any amount received by an employee in excess of actual expenses must be returned to the employer.

Substantiation is necessary that the employer must be able to identify the specific nature of each overhead and determine that the expense was business-related. Outlays may not be aggregated into expansive categories, and they may not be reported applying indistinct terminology.

If the company’s business expense account hope encounters the above requirements, then all coin received by an employee under the hope is excluded from the employee’s gross income and deductible to the business!

HRPs: A Business Expense Account for Healthcare

So, what is a Healthcare Reimbursement Plan( HRP) and how can it be used like a business expense account for healthcare?

Using a Segment 105 HRP, business reimburses employee for individual health insurance premiums. To retain preferred taxation medicine and abide compliant with various regulations, the contrive must be formally administered to satisfy certain requirements of the IRS:

They stores must recoup qualified health insurance premium expenses;

Expenses must be substantiated( generally through support payments receipt or money ); and

  1. Any amount received by an employee in excess of actual expenses must be returned to the employer.
  2. Substantiation is necessary that the employer must be able to identify the specific nature of each outlay and determine that the expense was medically-related. Overheads may not be aggregated into expansive categories, and they may not be reported applying ambiguous idiom.
  3. If the company’s Section 105 mean fulfils the above requirements, then all coin received by an employee for the purposes of the mean is excluded from the employee’s gross revenues and deductible to the business!

Substantiation means that the employer must be able to identify the specific nature of each expenditure and determine that the expense was medically-related. Expenditures may not be aggregated into wide-ranging categories, and they may not be reported expending ambiguous terminology.

If the company’s Division 105 strategy matches the above requirements, then all fund received without an employee for the purposes of the strategy is excluded from the employee’s gross revenues and deductible to the business!

It’s really that simple-minded, but there’s a slight catch: “HIPAA”.

Unlike Business Expense Accounts, HRPs are Subject to the HIPAA Privacy Rule

The catch is that Section 105 HRPs, unlike business expense accounts, are subject to the HIPAA Privacy Rule. In say to administer a Part 105 scheme properly, the employer must ensure that the employee refund entreaties are substantiated in compliance with HIPAA. As a decision, virtually all companies use a third-party to handle the premium outlay substantiation process.

So, How Can a Business Offer an HRP?

To offer this type of plan, the business should select a defined contribution software provider and follow the below steps:

1. Setup the Plan – This is when the business determines employee eligibility and the monthly HRP allowance amounts.

Employer Administration Time: 15 minutes online.

2. Add Eligible Employees – This is when the business enrols employees into the plan and distributes IRS/ERISA/ACA required plan documents, SPDs and notices to each eligible employee.

Employer Administration Time: 15 minutes online.

3. Let Employees Purchase Their Own Individual Health Insurance Plan – Each employee chooses and pays for his or her own individual health insurance policy and submits proper documentation for reimbursement.

Employer Administration Time: 0 minutes.

4. Substantiate the Expense in Compliance with HIPAA – A HIPAA-compliant claims processor should review the reimbursement requests.

Employer Administration Time: 0 minutes.

5. Reimburse Employees – Once reimbursements are substantiated, the business should reimburse each employee for the approved amount up to the available HRP balance.

Employer Administration Time: 1-5 minutes online per month.

Employee no longer involve employers to purchase high-cost health insurance, and, begin in 2014, employee making less than 400% of the FPL (~$ 94,000 for their own families of four in 2013) per year who purchase a personal policy in a state health insurance exchange looked forward to receiving a large federal aid on their payment if their company doesn’t offer a group health insurance intention.

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