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    4 Replies Latest reply on Feb 9, 2008 7:47 AM by dublincpa

    Can I administer my own HRA (Health Reimboursement Account)

    dcart2007 Newbie
      I have 1 employee business, can I administer HRA by myself or do I need to hire someone to do it? What does it entail? I'm offering any health benefits to the E'ee, he has his own individual health insurance policy.

      Thank you for your help!!
        • Re: Can I administer my own HRA (Health Reimboursement Account)
          LUCKIEST Guide
          2007, Why not keep it simple. Instead of reimbursing the cost of the
          heath insurance, let the business
          write out the check for the insurance. Much cleaner and you get the tax deduction.
          LUCKIEST
            • Re: Can I administer my own HRA (Health Reimboursement Account)
              dcart2007 Newbie
              and it wouldn't be taxable to the E'ee?
                • Re: Can I administer my own HRA (Health Reimboursement Account)
                  dublincpa Scout
                  You are right to ask. If it is not a group health plan and no reimbursement plan exists, the employer's payment of the premium would be taxable compensation.

                  You would need to buy a qualifying HRA plan document and perform the discrimination testing. It is probably not worth the hassle if you screw up and get audited, you and the employees get taxed. If the owner/owner's spouse is the employee in question, you might be able to just buy a plan doc on the web and go it alone. However, I don't recommend it. What type of entity, Sole Prop, S Corp, C Corp, Partnership?

                   

                  A "relatively" inexpensive administrator is BASE - www.baseonline.com. I am a CPA. I am not affiliated in any way and receive no compensation. The guy I deal will is Nate Hawkins. I have had two satisfied clients use them so far.

                  If you are interested, but want proof that I am not related, email me at dublincpa@gmail.com.
                  • Re: Can I administer my own HRA (Health Reimboursement Account)
                    dublincpa Scout
                    I apologize if there is a duplication here. I don't see my original post.

                    You are right to ask. The direct payment of the premium absent a qualified benefit plan would create taxable wages to the employee.

                    In general, I don't recommend going it alone. If the employee is the only one who will benefit from the plan then you might be able to just buy a document online. If the owner or owner's spouse and another employee receive or will receive benefits under the plan at any time, you will probably want to pay for administration. You have to do testing to prove the plan isn't a sham to benefit the owner and stiff the other EEs.

                    I have a recommendation of a third party administrator that is reasonable. I have two satisfied clients and don't receive a dime from them for referrals. Well actually, they offer me a whopping $25 that I pass on to my clients.

                    Email me at dublincpa@gmail.com if you want their name and/or proof that I am not affiliated.