Park City, Utah (PRWEB) September 04, 2013
Today, Zane Benefits, the number one online small business health benefits solution, published new information on section 105 and 125 plans.
According to Zane Benefits’ website, as businesses plan their health benefits strategy for 2014 and beyond, many are looking for ways to incorporate advantages of the individual health insurance exchanges and the individual health insurance tax subsidies.
Naturally, the next question is how to do this in a tax free and compliant way... the answer is to use a 100% employer-funded Section 105 medical reimbursement plan, not a Section 125 cafeteria plan.
A Section 105 medical reimbursement plan allows businesses to reimburse an employee for medical and insurance expenses incurred by the employee or his or her dependents.
As explained further below, employees can use employer-funded Section 105 plans to reimburse the non-subsidized premium of their individually purchased, exchange-based plan.
A Section 125 plan, commonly referred to as a "cafeteria plan", is a benefit provided by an employer which allows an employee a choice between taxable salary and a non taxable benefit.
Common Section 125 plans:
Premium Only Plans
Premium Reimbursement Accounts
Flexible Spending Accounts (FSAs).
As explained further below, the Affordable Care Act (ACA) does not allow employees to use a Section 125 cafeteria plan to pre-tax an individually purchased, exchange-based plan.
Because employer-funded Section 105 medical reimbursement plans are allowed to reimburse for employees' individually purchased, exchange-based health insurance plans (and Section 125 plans are not), it's a no-brainer to use them as the base of a defined contribution health plan in 2014 and beyond.
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.