Zane Benefits Publishes New Information on Section 105 for Small Business Owners

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Three FAQs on Section 105 Medical Reimbursement Plans. The top three questions about Section 105 plans from small business owners.

Today, Zane Benefits, the online alternative to group health insurance, published new information on section 105 medical reimbursement plans.

According to Zane Benefits’ website, small businesses often use Section 105 Medical Reimbursement Plans as a solution for small business health insurance. Section 105 of the IRS code allows an employer to reimburse employees for their out-of-pocket medical costs and health insurance. They are commonly known as Health Reimbursement Arrangements (HRAs), and are the foundation of a defined contribution health plan.

Here are the top three questions from small business owners about setting up a Section 105 Medical Reimbursement Plans:

FAQ #1: Can I administer the Section 105 Plan myself?

A small business can self-administer its own Section 105 Plan, but failure to comply with the minimum federal administration requirements is common without utilizing proper Section 105 (HRA) Software. The plan needs to comply with ERISA, HIPAA, COBRA, and ACA regulations. As a result the administrative cost likely outweighs the benefits. Fines for not complying with these regulations are costly and for these, reasons most small businesses do not self-administer their Section 105 Plan.

FAQ #2: Can I pay for employees’ individual health insurance premiums without a Section 105 Plan?

Paying directly for an employee's individual health insurance plan without utilizing an ERISA and HIPAA-compliant platform may put the business out of compliance with federal regulations, and may increase the business’s (and employees’) tax liability.

FAQ #3: Can a small business owner participate in a Section 105 Plan?

Yes, a small business owner can and should participate in the business’s Section 105 Plan. However, whether or not owners are eligible to receive reimbursements 100% tax free depends on how the company files taxes, and the owner's status.

C-Corp owners may participate in a Section 105 Plan and receive all reimbursements 100% tax-free.

Sole Proprietors, Partners, or S-Corp shareholders that own >2% of the company's shares can use the Section 105 software platform to reimburse and track medical expenses. However, all reimbursements must be reported on the owners'/partners' wages (on their W-2 and 1040 forms) and are subject to federal income taxes.

Click here to read the full article.

About Zane Benefits
Zane Benefits was founded in 2006 to provide a revolutionized SaaS (Software-as-a-Service) administration platform ("ZaneHRA") for Health Reimbursement Arrangements (HRAs) and defined contribution health care. The flagship software provides a 100% paperless administration experience to small businesses and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about ZaneHRA, visit http://www.zanebenefits.com.

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Christina Merhar
Zane Benefits
800-391-9209 6725
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