HSA, High Deductible Health Insurance

[RiverpointeTax]

This applies to my fellow colleagues with high deductible health insurance plans. I hope this will help with your tax planning.

The IRS released Revenue Procedure 2024-25 which provides the 2025 inflation adjustment amounts for health savings accounts (HSAs). Taxpayers with a high deductible health plan can deduct up to $4,300 ($8,550 for family coverage) for contributions to an HSA. The deductible contributions must be made from the taxpayer’s funds, not from employer payroll deductions.

Mark

[hbleiwas]

Mark;

Very good point.

Thanks for posting this to the community.

I think we should also talk about IRC 105 ‘Self-insured medical reimbursement plans’ which, for qualified businesses, allow for the exclusion from income (i.e.: deduction) of employee reimbursements for healthcare expenses.

With a IRC 105 plan, employers and employees don’t have to pay taxes on reimbursed expenses.

Employers who cannot offer group health insurance often resort to offering taxable wage increases. Employers and employees can save money with an IRC 105 plan, as payroll and income taxes aren’t applied.

Limited Liability Companies (LLC’s), C- and S-corporations, and partnerships can generally take a full tax deduction of IRC 105 plans as long as they satisfy the requirements and keep good records.

Deductible costs include health insurance and dental insurance premiums, qualified long-term care insurance, out-of-pocket medical, dental, and vision care expenses, and other eligible expenses paid to employees.

An IRC 105 plan doesn’t have to be a standalone benefit. Employers already offering a group health plan can offer a IRC 105 alongside the group plan, further reducing the after-tax health care costs to the taxpayer.

I’ve seen it make a big difference.

These plans generally do not apply to self-employed individuals (i.e.: sole proprietors); reference IRC 105(g).

It’s not applicable to everyone, but it’s a ‘nice arrow to have in the quiver’.

One other point with IRC 105 plans - Document. Document. Document. There’s no good reason to have this valuable benefit disallowed later by the IRS, solely because substantiating records aren’t available.

Interested parties should consult a qualified and experienced tax professional.

HWB.