Showing posts from October, 2019

What to Know About Health Arrangements for Employees and in Retirement

        When looking into options to provide health coverage for employees, Health Reimbursement Arrangements ( HRA ) are often chosen by different businesses. This is a popular option for firms to give to their retired employees, as it gives a predictability ( maximum number ) for their yearly health costs. However, there are limitations on what they can cover. Some are put in place by the company, others by the Internal Revenue Service ( IRS ). HRA ’s are an attractive option because funding them is tax deductible for the company, but they are not the only option available.           A Flexible Spending Account ( FSA ) can be created. The employee will decide how much goes into this account, using some of their pre-tax salary to fund it. Typically, if there is any unused money at the end of the year, it cannot be rolled over to the next. A Health Savings Account ( HSA ) is paired with a high-deductible health plan to pay for medical and dental costs not covered by their plan. I

Changes to Health Reimbursement Arrangements

         A Health Reimbursement Arrangement ( HRA ) is a plan set up by a business to cover the qualified medical expenses such as prescription medications, physical exams, care from a psychologist or psychiatrist, and more. They are a tax deduction for the employer and tax free for the employee. In our last post, we mentioned that January 2020 would mark a big change in how HRA ’s could be administered.           Next year, a new type of HRA can be offered and used to buy health insurance inside or outside the Affordable Care Act marketplace. Another option that is available applies to companies that continue to offer group health insurance. They can offer an excepted benefit HRA , which would reimburse employees up to $1,800 for qualified medical expenses. If an employee were to decline group coverage and only go with the HRA , they could only use it for expenses, short term insurance and premiums.           The uses of an HRA are limited by the Internal Revenue Servic

What Is A Health Reimbursement Arrangement?

          A Health Reimbursement Arrangement ( HRA ) is a plan set up by an employer. It covers medical expenses related to the care of employees and their dependents. This type of fund can be claimed as a deduction by the business and is usually tax free for the employee. This is often an attractive option for businesses because they determine how much will be in the fund. Any expenses over that amount will be covered by the employee.           This is not an account that can have withdrawals as necessary. The expense must be made, then it will be reimbursed. Since the HRA belongs to the company, if the employee leaves, they will lose the benefit. Starting in January 2020, HRA ’s will undergo a massive change. Our next post will detail why that is.

SALT May Take On A Different Look

         The limit that was put on the amount of State and Local Taxes ( SALT ) that could be deducted from Federal Taxes as a part of the Tax Cuts and Jobs Act ( TCJA ), was quite a controversial topic. Some felt that they were being targeted and this led to various schemes and lawsuits being filed. Those feelings have not changed, and as a result of different tax changes being considered, the SALT deductions are being reconsidered in Congress.           While the SALT deductions will expire in 2025, it is unlikely that a repeal will happen before then. However, there are different alternatives that might come into play. For example, a limit on all deductions, which would include mortgage interest and charitable contributions. There are certain tax deductions which have not been limited. To find out more about them and if they apply to your situation, talk to your Qualified Tax Professional .