Understanding the benefits of health reimbursement arrangements

first_imgShare Facebook Twitter Google + LinkedIn Pinterest It’s no secret that a spotlight has been on our country’s healthcare system for some time now — and a bright one at that. Health insurance options and expenditures are a real concern for agribusiness owners and it’s hard to know what options will best fit the needs of your operation. Rest assured there are options; some that can even put money back your pocket.Health Reimbursement Arrangements (HRAs) are based upon Section 105 of the Internal Revenue Code. These particular arraignments allow farmers who qualify to deduct 100% of family medical cost against the farm income. In turn, the taxpayer saves federal, state and FICA taxes for family medical costs (typically a 35% savings).This is done by declaring medical expenses as business expenses, not as Schedule A itemized personal deductions, which are often limited or lost. What’s the catch here you ask? Whether they file as sole proprietor or an LLC, farmers must have a spouse who is employed by their business, at least on a part-time basis. More and more farmers are putting their spouse on the payroll in order to take advantage of HRAs.A Section 4 105 Plan allows a qualified farmer to benefit by deducting 100% of:Health Insurance and dental insurance premiums for eligible employee(s) and family. This also includes qualified long-term care insurance.Uninsured (out of pocket) medical, dental and vision care expenses for eligible employee(s) and family.Chiropractic, medical supplies, contact lenses, hearing aids, Medicare Part A, Medicare Supplemental, optical/vision, and cancer insurance premiums for eligible employee(s).Let’s take a look at scenario that would qualify: Joe owns and runs a farm. His wife, Jane, helps in the fields and takes care of some financial records and administrative functions for the farming business. Because Jane is already a service to the farm operation, Joe makes her a true employee and begins providing her with compensation. They are now eligible for HRAs.Joe compensates Jane a total of $14,000 per year in the following way:1. Reimbursement for family health premiums:  $7,0002. Reimbursements for uninsured medical expenses:  $5,0003. W-2 Cash Wages:  $2,000TOTAL$14,000 By allowing for a 100% federal, state and FICA tax deduction of the $12,000 of reimbursed expenses, Joe would receive $4,200 in actual tax dollar savings by taking advantage of a Section 105 Plan. (Note: the tax savings is assuming rates of 15% federal, 5% state and 15% FICA taxes=35% savings).It’s important to note that farmers who file as C corporations don’t need to abide by the spouse/employee method. The corporation is viewed as the employer in this case and the owner is an employee as long as the employee is receiving scheduled pay. Also note farm entities and sole proprietors with two or more employees may not be eligible for this special deduction because at the two or more employee threshold the new Affordable Health Care Act rules require certain “essential health benefits” (group insurance) and the Section 105 HRA rules may not apply. If you have two or more employees, we advise you consult your accountant for other potential health care solutions.AgriPlanNOW and BizPlanNOW is a couple of the HRAs you may have heard about. HRAs like these aren’t too confused with actual insurance plans. These are reimbursement programs that you must enroll in and there are annual fees, but the savings they provide far outweigh the upfront costs. Once enrolled, you will work with your insurance provider and tax professional to lower your out-of-pocket costs. Because you’re medical costs are now classified as business expenses you will see your deductions increase and tax savings will be the result. Savings will of course vary, but the average is around $5,000 per year.Once you submit an application for an HRA and you are enrolled, then it becomes vital to keep receipts and all records of medical expenses and health insurance premiums as well as payroll transactions. All this information will need to be reviewed and submitted at year-end by your tax professional. A CPA with experience in working with agribusiness professionals can assist you with proper record keeping and of course the tax reporting piece of the puzzle. Brian E. Ravencraft, CPA, CGMA is a Principal with Holbrook & Manter, CPAs. Brian has been with Holbrook & Manter since 1995, primarily focusing on the areas of Tax Consulting and Management Advisory Services within several firm service areas, focusing on agri-business and closely held businesses and their owners.  Holbrook & Manter is a professional services firm founded in 1919 and we are unique in that we offer the resources of a large firm without compromising the focused and responsive personal attention that each client deserves.last_img read more

Mobile-Only Magic: How Instagram Just Killed What Makes It Special

first_imgWell, that’s it folks. It’s all over. Instagram has come to the web – and not just via static web profiles like the company introduced last year.No, Instagram is on the webnow. It’s a full blown web-based social network with a companion app. Forgive me while I totally freak out for a minute over here.This is what I’ve been afraid of. For Instagram, The Rules Were DifferentInstagram is special. It’s why we Instagram acolytes almost start a holy war every time Facebook so much as looks at its billion-dollar acquisition. But what makes Instagram so different? The app has a lot going for it, sure. The interface is lovely, with both social networking and social discovery built right in. But that’s not it.The thing that makes Instagram special is that – until today – it was a social network with no web presence. There’s an inestimable charm to how Instagram feels walled-off in its mobile-only realm.  You just don’t interact with Instagram on desktop. The rules are different. It’s like when the power goes out and you have to play board games. And it’s really, really fun.  A Comprehensive Guide to a Content Audit Guide to Performing Bulk Email Verification Facebook is Becoming Less Personal and More Pro… Tags:#Instagram#mobile photography#photography#social#social networks The Dos and Don’ts of Brand Awareness Videos taylor hatmaker Related Posts Mobile-Only: The Final Frontier Of PlayLook at how (and why) we love to hate Facebook. As a social network, Facebook is woven into the fabric of our workday lives – namely we use it on on our desktop computers when we’re supposed to be doing something else entirely. That fact makes a site like Facebook feel less like play and more like a professional tic. A social network with a ubiquitous presence across platforms becomes something we shove into every micromoment of the workday – and most of those happen while we’re zoning out sitting at a desk.Instagram wasn’t like that – it was serendipitous and social and creative in turns. But that may have all just changed. Now, in every inbox lull and pre-meeting chunk of lagtime, we’ll open a new tab and feel the tug – why not just check Instagram? The Unbearable Lightness Of InstagramThere’s a heaviness to all of this attentional straying. It’s the dopamine surge that lures us back to places like the Facebook News Feed, even though we know that little pleasure spike in our brain is as empty as it is ephemeral. Then we’re back to the unshakeable guilt of what we were abandoned when we wandered off the trail. Mobile is monomaniacal — even with Android’s multitasking and iOS’s relatively nascent notification center and fast app switching, we pick a portal and enter into it. But on a computer, we partition our screen off into hostile factions warring for our attention – and we never seem to be on the winning side. But on mobile, choosing to open Instagram is just that: a choice and not a tic. Instagram is meant to be us at play, capturing the world and parceling it back out to our friends who are out there doing just the same. For Instagram, mobile is more than just a platform. It’s a mindset.Sure, Instagram’s web feed will boost engagement and provide new opportunities for monetization and so on. But it could prove to be a major paradigm shift for the kind of unconditional positive regard that the company has enjoyed to date. We’ll soon be wallowing in our newly compounded web ennui, scrolling back through our web feeds to remember what the good ol’ days were like, way back when Instagram was still fun. Remember?last_img read more