s-corp one share holder health ins

[Bjorn]

Is it true you need to have the insurance in the name of the corp? They say it is hard to get a sole member insuarnce policy in the corp name.

What are the options on this one?

Thanks.

[sandysea]

My clients do not have the health insurance for the S/H in the corporation name but as an employee of the corp, my client takes the insurance deduction on the corporate books, takes the total as wages and then takes the credit on their 1040's.

Yes, in a perfect world the corporation has the policy in it's name, but many times insurance companies will not write a policy for a sole s/h...so even though IRS indicates this, you could argue "substance over form doctrine" in this case and still be reasonably not audited.

[Brad Imsdahl]

Many experts recommend that you set up a Section 105(b) health reimbursement arrangement (HRA). That way the S corporation reimburses the shareholder for all medical costs, including the shareholder's personal health policy premiums. The experts believe this should meet IRS requirements for the self-employed health insurance deduction rule.

[JoshinNC]

I don't have a problem getting single s/h insurance plans

My clients who are single s/h plans (construction, medical, legal fields) have plans in the corp name. I've never even heard of this being a problem. BTW, I also sell health insurance.

[sandysea]

Look up Revenue Ruling 61-146

This is from IRS about reimbursements for health insurance to S/H...

[dsi]

My clients who are single s/h plans (construction, medical, legal fields) have plans in the corp name. I've never even heard of this being a problem. BTW, I also sell health insurance.

I guess some in some states it is impossible to get health insurance for a corp that is owned by a single SH.

[oceanlovin'ea]

HRA required?

I'm resurrecting an old post.

Do you have to set up a Section 105(b) through a company that handles those? Or can you just write up a health reimbursement plan and put it in the corporation's minutes?

They charge a lot of money and I can't see where it is worth the costs.

Linda F

[Gretel]

The very same question is occupying my mind. So I will bring it back to the top of the posts.

I would love to be able to set up a HRA myself but for nothing in the world would I risk to have this deduction thrown out because a t wasn't crossed.

[RJM]

S 105 medical reimbursement plans

it has been several years now since a court case (think it was a court case, not a letter ruling), which allowed unwritten medical reimbursement plans. Still I always recommend that clients put it in writing. No... you don't need an attorney, just put a paragraph in the employee manual if there is one, otherwise just put it in a memo to employees. Section 105 benefits are in nearly all cases required to be non-discriminatory, so they must be applied equally to all employees (with some participation criteria allowed).

For the health insurance, a S106 insurance plan is better, because the benefit can be discriminatory among classes of employees. And the insurance can be in the employee's (or employee-owner's) name, and reimbursed OR paid directly by the business. Much case law and letter rulings in this area. -Bob

[oceanlovin'ea]

Rjm

Can you tell us more about the S106 or tell us where we can find out more about it.

Linda F

[S T]

More on s106

I would also be curious to find out more about S106 and the health insuance. Can you point us to some links or research material.

Sandy

[geekgirldany]

I typed this into google:
section 106 discriminatory among classes of employees

Clicked on the link for the Tax Almanac website. Look at that. I didn't read all of it though. But they are discussing the same thing it appears.

[Gretel]

Correct me if I am wrong. My understanding of the S-Corp. health insurance problem is that - if it is not possible to have policy in Corp. name - it has to be a Sec. 105 plan, available to all employees. So every employee gets to choose if the reimbursment is for insurance or medical expenses or both. Sec. 106 plan will not work for S-Corps.

Question remains: Is it advisable to have plan through a company, which offers these plans or is a self written plan OK.

[twoodscpa]

Shareholder can be reimbursed for premium. Then make the W2 treatment

Is it true you need to have the insurance in the name of the corp? They say it is hard to get a sole member insuarnce policy in the corp name.

What are the options on this one?

Thanks.

Specifically came up at seminar. Now, S Corp can reimburse the shareholder. The add to box 1 of his W2, but not boxes 3 and 5. Also show in box 14. On personal return it shows as income on line 1, a reduction of S Corp income, and self-employee health insurance deduction. In the company return show it as officer wages