Originally Posted by robschmidt
Hi, my wife and i own a family farm, c corporation. I am the only full time employee. Under new ACA can the corporation reimburse my health insurance premium? Insurance is a family plan purchased off of MN exchange. I also have a HRA for other med expenses. thank you
I guess a deduction for medical/health ins premium can only be taken at the corp level if they had wages and could be called employees not just shareholders; Insurers either agree or are required by law to cover all qualified employees in a group, along with their dependents. Some states require employers that employ more than a set number of people to provide group coverage for their employees. Others make employee health coverage strictly voluntary. C Corp can deduct health insurance premiums for an individual health plan that the employee has procured on his or her own. In either case, employers must typically pay for at least half of the coverage, while the employee contributes the remainder. The employee does not pay taxes on money the employer spends on his behalf, but the employer can take a tax deduction on any premiums it pays to provide health coverage for its employees, to include owner-employees. If the employer sponsors a plan and pays the premiums, the employer can deduct the cost of premiums as an ordinary business expense.So, as long as a C corp pays the health insurance premiums for a majority stockholder , the premiums are deductible by the corp assuming you've got no reasonable compensation issue. Generally speaking, a C-corp enjoys a full deduction for the cost of employees’ (including owner employees’) health insurance premiums and even long-term care premiums without regard to age-based limitations. Thus the corporation can deduct any medical expenses or health insurance it pays for the officer/employee as a health insurance deduction item."If the C Corp reimburses you, it would not constitute income to you as long as the option must be offered to all employees. For C-corp health insurance premiums paid for employees and families that qualify as nondiscriminatory are deductible for C-corp and excludable from gross income for shareholders. It also doesn't matter if premiums are paid directly from the business account or reimbursed to the employee.The premiums are not included in the stockholder's w-2 as payroll and /or fringe benefits. If properly documented, it does not constitute taxable income to you as it is a non taxable fringe benefit. However, this option must be offered to all employees. The whole point of a small C-corp is to get health insurance / medical reimbursement. In general, insurance companies, in other words, may require that EEs work a minimum number of hours every week so that employers don't put sick people (relatives, for example) on the payroll solely for health coverage. I guess you can check with your state insurance department to see if that's the law in your state(for more accurate info in detail).