The Section 105 Medical Plan is suitable for single-owned businesses. It creates deductions that were not available earlier. In the case of health care deductions that existed earlier, the tax benefits are increased. Here are some answers to the questions on the Section 105 HRA plan.
Section 105-HRA can be considered if the businesses owned by you and your spouse do not have more than one W-2 employee.
When it comes to reimbursement to employee, the Section 105-HRA plan allows both monthly and yearly reimbursement to make it look like a real business.
Under Section 105 plan, an employee spouse can be compensated with W-2 wages.
Long term care policies’ premiums can be added as reimbursable expenses under 105-HRA plan, allowing full premium deductions without any ceiling.
Remember, Section 105 plan is used as reimbursement for medical expenses and not as a compensation for retirement plan purposes. If someone is paid through health care reimbursements, then SEP IRA additional contributions are not needed.