Maximizing Tax Savings: The Benefits of BASE® HRA for Self-Employed and Small Business Owners
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As a small business owner, the costs of healthcare can be a significant burden on your finances. However, there is a solution that could provide some much-needed relief. The BASE® Health Reimbursement Arrangement (HRA) is an IRS-approved tax savings plan that allows you to deduct healthcare costs as a business expense, resulting in significant tax savings. In fact, the average client of BASE® HRA saves over $6,200 in taxes annually.
The plan covers eligible out-of-pocket medical expenses, including individual insurance premiums, co-pays, and deductibles. With the BASE® HRA, you can reduce the financial impact of healthcare expenses and pay for eligible expenses without paying taxes on reimbursements. The plan is also fully compliant with all federal and state tax laws and insurance regulations, ensuring that you stay on the right side of the law.
The BASE® HRA is a Section 105 plan, which has been in existence since 1954. The Affordable Care Act (ACA) granted Safe Harbor to businesses with one employee, making it an accessible option for small business owners. The plan creates all necessary plan documents as required by the Internal Revenue Service (IRS), Department of Labor (DOL), Employee Retirement Income Security Act (ERISA), and the ACA. It also performs an annual adjudication of all medical expenses, as required by the IRS. Moreover, BASE® HRA provides an Annual Summary Report (ASR) that summarizes all deductions for the business tax deduction.
One of the significant advantages of the BASE® HRA is the increase in tax savings for small business owners. It is a great method of reducing the financial burden of healthcare expenses. The eligibility criteria for the plan vary depending on the business structure, including sole proprietorships, partnerships, C corporations, and S corporations. Business owners who have a spouse providing legitimate services to the business, pay for all or some of the family medical expenses, and meet other requirements may qualify for the plan.
The savings provided by the BASE® HRA can be substantial. While 100% of health insurance premiums are tax deductible for the self-employed, this only affects income tax and does not reduce income when calculating Social Security taxes (Self-Employment Tax). With an HRA in place, employers can take the additional 15.3% Self-Employment deduction, and Social Security taxes are eliminated for the employee and the employer. By utilizing the BASE® HRA, small business owners can take advantage of a tremendous tax savings opportunity.
The BASE® HRA is an excellent solution for small business owners looking to reduce the financial impact of healthcare expenses. The plan offers significant tax savings while ensuring compliance with all federal and state tax laws and insurance regulations. By providing coverage for eligible medical expenses, the BASE® HRA offers a cost-effective way for small business owners to take care of their healthcare needs while reducing their tax liabilities. If you are a small business owner struggling with healthcare costs, the BASE® HRA may be an ideal solution for you.
For more information and to use their tax savings calculator, go to: https://www.baseonline.com/products/105hra.html