How to offset the rising cost of health insurance for the self-employed.

Jake Randall

Did you get that painful letter in the mail? The one that told you that your insurance premium is going up 25% or more in January? My friend Josh got his letter and it made him sick…

His rate skyrocketed for his mediocre health insurance plan from $1200/month to a staggering $1,750/month – More than his monthly mortgage payment!

For the next few days he appeared to be in a state of shock… a mental haze… trying to figure out how he was going to pay for the insane increase.

Are you frustrated with the rising cost of insurance?

If you are self-employed there may be something you can do about it.

Do you appreciate creative solutions as much as I do? Then you are going to love this.

The Different Classification of Medical Expenses

There are two types of medical expenses. The cost of your monthly insurance payments (premiums) and everything else.

Unfortunately there is not much you can do to lower the cost of monthly insurance premium. But there is a way you can offset your costs on everything else including:

  • Co-pays
  • Deductibles
  • Chiropractic care
  • Braces and Orthodontics
  • Corrective eye surgery
  • And, almost any other service you can think of… everything your insurance doesn’t pay for.

How do we lower the cost of these expenses? It all comes down to a tax law.

The Tax Law That Could Save You $5,000 & Offset Your Rising Insurance Costs

Deducting the cost of your monthly insurance premium is standard practice. But deducting “everything else” is mostly off limits.

However, in 1955 there was an provision added to Section 105 of the IRS tax code. This section allows a particular group of self-employed individuals to write off 100% of their medical expenses.

Not everyone qualifies… But if you do it can save you serious cash. This provision is most commonly referred to as a Health Reimbursement Arrangement (HRA). We will discuss how it works shortly.

Without an HRA you there are strict rules about deducting medical expenses. Under the Affordable Care Act you can deduct medical expenses AFTER they exceed 10% of your income. For example, if you make $80,000 then you can deduct medical expenses after they exceed $8,000. If you had $10,000 in medical bills then the 10% rule would allow you to deduct a mere $2,000.

But if you qualify to use an HRA you can legally skirt the 10% rule and deduct all $10,000. How is that better? If you were in an average tax bracket of around 35% it would save you $3500 in taxes – even more if you are in a higher tax bracket.

TASC, an administrator that manages tens-of-thousands of HRA plans for self-employed people said, “This strategy saves our users an average of $5,984 in taxes each year.”

How Does It Work

First a qualified business puts in place a formal written policy and plan. The plan works like a tuition reimbursement program for employees… only for medical expenses. Note: The policy must comply with federal laws (We will show you how to do this part later).  

The company agrees to reimburse employees for medical expenses not covered by insurance. Employees submit receipts for a medical expenses and the company reimburses the employee. Because this is offered as an “employee benefit” the company can deduct the cost. 

Why Haven’t I Heard Of This Before and Why Isn’t The Media Talking About It?

Because one of the stipulations of the law states that you must offer it to ALL employees, it wouldn’t make sense for larger companies because they simply couldn’t afford it. BUT, for a small business owner like you, it may work great.

(Note: There is a little flexibility in the plan. For example, you can offer it to full time employees and not part time etc.)

So, If you are self-employed (or run a family business), you will be paying for your medical expenses anyway… If you are going to be paying for the medical expenses anyway, wouldn’t it be great to be able to deduct the entire expense?

There are hundreds-of-thousands of businesses in the US that have these plans.  So if you are wondering if it is legitimate, you can be rest assured.  This has been upheld in courts and is a completely legal strategy approved and accepted by the IRS.  It is written in the tax code.

Consider what a former IRS attorney has said…

This is a gold-mine for self employed people. If you qualify for this and don’t do it you are insane.

– Sanford Botkin (Former IRS attorney responsible for training agents)

Lets look at some examples:

Example: 1

James Monroe
Income: $70,000
Age: 40
Occupation: Real estate agent

James has 2 kids in braces and his wife wants corrective laser eye surgery.  He estimates that his medical expenses this year will be $12,000 out of pocket.

Without a plan: He will be able to deduct $5,000 because of 10% rule as a federal income deduction.

With an HRA he will be able to deduct $12,000 saving him $4,200 in taxes (Assuming he pays 30% federal taxes and 5% state taxes).

Example: 2

Sheryl Thacker
Income: $45,000
Age: 50
Occupation: Direct Sales

Sheryl had to have surgery this last year and after her insurance paid she was left with a $4,000 medical bill.

Without a plan: She won’t be able to deduct anything because of the 10% federal income deduction rule. In fact, she will have to spend another $500 out of pocket in order to even start deducting anything.

With an HRA plan, she would be able to deduct the entire $4,500 saving her $1,150 in taxes if she is in the 25% tax bracket.

How Do I Start A Plan For My Business?

The easiest way to do this is to use a third party administration company to handle it.  These plans have to stay in compliance with healthcare laws.  So unless you are an expert in tax and employment law it would be a waste of time to manage one on your own. Besides it’s very inexpensive to have a plan set up…

There is a drawback however, the difficulty in the past has been the management of the reimbursement and maintaining compliance. Many providers provide a web portal for document submittal. These sites are cumbersome. They require uploading of many documents from many sources for each expense. They require a bill, proof of payment, proof of insurance contribution, etc… It is a slow, tedious process.

The good news? We have finally found a company that has simplified the process to make it manageable.

We whole heartedly recommend Total Administration Services Corp (TASC) to our clients. We use them personally. Why? Because they understand you have a business to run and don’t have time to make sure you are doing correctly. By utilizing some ingenuity paired with technology, they’ve figured out how to do everything for their clients.

At TASC they provide you with a specialized debit card that you can connect to any bank you choose.  The reason is brilliant.  So they can process the transaction.

By running it through their card they have first hand information about the expenses.  So they can do all the paperwork for you.  You don’t have to do ANYTHING besides swipe your card when its a medical expense.

You don’t have to spend hours compiling documents. Forget searching for insurance forms, receipts, and bank statements. All you do is pay for medical expenses with the card and they take care of the rest.

It is one of the easiest things you can do to save on your business taxes.

Find Out If You Qualify

TASC has set up a special department of experts to help self-employed people find out if they could qualify. These professionals will spend 15 minutes with you on the phone to find out about your situation. They will determine if your business legally qualifies for an HRA plan. If you do qualify then they can help set it up. If you don’t qualify they can point you in the right direction for other solutions.

Click here to request some more information or set up a time to see if you could qualify.

TASC is running a promotion right now and if you are one of the first 50 to schedule a call then they will knock $50.00 off any HRA plan that you set up.   

Schedule your call now:  Click here

Oh, by the way…

There is a $2,200 deduction guarantee

Once you have a TASC HRA in place you qualify for their money back policy. If you don’t find $2,200 or more in deductions from the HRA then TASC will refund your money – hassle free. (PS. The cost of the HRA is so minimal you will be floored when you hear how inexpensive it is).

Since TASC is unique in the way it tracks the medical deductions through the debit card, they also guarantee tax compliance. If you use the card to pay for your medical expenses they guarantee your deductions in the case of an IRS audit.

These Plans Only Work for Future Expenses

You cannot “back date” an HRA plan to cover you for any time in the past. You can only start deducting medical expenses going forward from the time the plan is in place.

With Healthcare costs rising at astronomical rates each year you know you need to do something to offset your total costs. Schedule a free call now while its on your mind before you get too busy and end up paying too much next year.

In summary: 

  • You might qualify to deduct the cost of your medical expenses legally with an HRA
  • This tax savings will help offset the rising cost of healthcare.
  • It’s painless to manage if you use TASC’s card technology
  • TASC can help you find out if you qualify
  • Setting up the HRA is easy and very inexpensive
  • TASC provides a $2200 deduction guarantee if you qualify or its free to you.
  • TASC will give $50 credit to the first 50 people who request information today.

Are you ready to find out if you qualify?  Click here to request more information and set up a time to chat or email someone.

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