Health Insurance reimbursement >2% shareholder

[Lion]

I'm going to charge a lot for this!

[geekgirldany]

Thank you so much for posting that explanation. What course did you take from Western CPE for the ACA?

I know of at least three clients this will apply to. With these clients the S-Corp pays directly to the health insurance company. I am wondering if it could be reclassified as distributions since they will be taxed on it SS/Med... will there be any benefit of including it at all on the W-2/941? I will have to look at each individual situation but seems that taking it as an SE Health Ins adjustment, it will just net out to what will have to be paid on the SS/Med tax.

[Lion]

The Western CPE quote was posted on another tax preparers' bulletin board. My courses were at the CCH Users' Conference and at the NY/CT-ATP Seminar. I have one more coming up 7 January. And a lot or re-reading over the holidays!

[JohnH]

I'm trying to figure out how this applies to a non-profit corp. This 501(c)3 had one full-time employee plus one part-timer (who is covered by their spouse's health plan). The organization has been paying the "contributions" for the full-timer into a Christian Healthcare plan, and also paying a Medical Reimbursement (MERP) for out-of-pocket medical expenses. It appears to me that the payments to the Healthcare plan and the MERP should be added to compensation on the w-2 form for 2014 and forward. Anyone have any experience with this?

[TXEA]

John, I agree that the contributions to the Health Sharing Ministry and the Medical Reimb plan should be included in the W-2 subject to SS, Med, and FIT W/H.

A medical reimbursement plan must be paired with an ACA compliant plan to avoid scrutiny.

[Gretel]

The way I understand reimbursements to one person, when this is the only eligible person in the company, is that this is one of the exemptions from ACA, just like reimbursements for dental, vision and some other medical expenses. As far as I know nothing changed if it is only one employee eligible. If part time workers are eligible too that would be a different story.

[Burke]

In general, when you see the term "HRA" is that taken to mean HSA's as well? Or is that a different animal?

[TXEA]

OMG. Only if it's a One Member Group can you continue as in the past. Still, there's arguments about whether a One Member Group means only one in the plan or only one employee in the company. If more than one employee, it's probably not business as usual due to ACA.

A one member group means only one employee in the company. S-Corp shareholders who have even one additional employee beyond themselves must make an offer of coverage to that employee on the same terms as the shareholders to keep their tax benefit.

If an S-Corp has only shareholder employees and maintain a group plan, then I think they keep their benefit.

Here is the only gray area I can find. Suppose you have a S-Corp with one 100% shareholder and one non-shareholder employee. The S-corp owner makes an offer to the non-shareholder employee to have coverage under a two person group. Suppose the non-shareholder employee refuses the coverage. This would force the shareholder employee to an individual policy (as compared to a group policy).

In this instance only, I think the shareholder should maintain the IRS Notice 2008-1 benefits since a legitimate offer of coverage was made and refused. I would think the offer of coverage would have to be done annually and somehow documented............And, I am still not certain this would work.

I have told my S-Corp clients that do not offer group coverage, but instead reimburse their own coverage only that their reimbursements are subject to FITW, SS W/H and Medicare Tax W/H.

If someone has something authoritative that disputes this, I would be grateful if it was shared with the group.

[Burke]

I have told my S-Corp clients that do not offer group coverage, but instead reimburse their own coverage only that their reimbursements are subject to FITW, SS W/H and Medicare Tax W/H. If someone has something authoritative that disputes this, I would be grateful if it was shared with the group.

I have notified mine of the same. And this applies to 2014?

[TXEA]

I have notified mine of the same. And this applies to 2014?

Yes, this does apply to 2014.

[TaxGuyBill]

I have told my S-Corp clients that do not offer group coverage, but instead reimburse their own coverage only that their reimbursements are subject to FITW, SS W/H and Medicare Tax W/H.

If someone has something authoritative that disputes this, I would be grateful if it was shared with the group.

Do not have "reimbursements" AT ALL. Just increase their wages.

http://www.dol.gov/ebsa/faqs/faq-aca22.html

[TXEA]

I agree TaxGuy Bill......Going forward that is what they are doing. However, the first couple of months in 2014, some did not get the reimbursements stopped.

[Burke]

[QUOTE=geekgirldany;167292]I know of at least three clients this will apply to. With these clients the S-Corp pays directly to the health insurance company. I am wondering if it could be reclassified as distributions since they will be taxed on it SS/Med... will there be any benefit of including it at all on the W-2/941? I will have to look at each individual situation but seems that taking it as an SE Health Ins adjustment, it will just net out to what will have to be paid on the SS/Med tax.[/QUOT

[dktax]

Reimbursements not stopped

The reimbursements were included in box 1 wages only and duly reported on 941's. So what is the best way to correct this?

[TAX4US]

OK I have s corp, Employees husband and wife and secretary. S copr pays health Ins for husband and wife. Secretary is covered by her husband at his employer. Husband and wife own 100% of S corp stock and both take reasonable salaries. B4 I was including health ins on w-2 as wages but not subject to the Fica,mt unemployment rules and deducting for AGI on personal return. Can I continue this way? If not viable alternative?