Employer Strategies for Health & Savings
This program is a tax-qualified program with a preventative care focus. It uses tax provisions under Section 125 and the Affordable Care Act (ACA) that form the structure and compliance of this program.
SIMRP / WI TAX SAVINGS PLAN
(Self-insured Medical Reimbursement Plan / Wellness Integrated)
A tax-advantaged, group health overlay plan, that produces tax savings to pay for targeted health and wellness services. It also reduces employer payroll taxes to provide a welcome boost to the bottom line.
FINANCIAL ENHANCEMENTS:
For most employees, the program provides a nontaxable benefit reserve. This can be used to offset health insurance or supplemental benefit premiums, pay healthcare expenses, or increase bottom-line take-home pay. Employers enjoy significant FICA savings that goes straight to the business bottom line.
CAN BUSINESS OWNERS PARTICIPATE IN A SECTION 125 PLAN?
Section 125 plans have participation limitations dictated by business entity as follows:
S-Corporations (S-Corps):
Owners are not eligible to participate. The owner’s spouse, children, parents, or grandparents are also unable to participate if they are employed by the company sponsoring the Section 125 plan.
Limited Liability Corporations (LLCs):
Owners and/or partners owning an
interest in the company are not eligible to participate. Eligible family members of the owner who work for the business are allowed to participate.
Limited Liability Partnerships (LLPs):
Owners and/or partners owning an interest in the company are not eligible to participate. Eligible family members of the owner who work for the business are allowed to participate.
Partnerships:
Owners or partners owning an interest in the company are not eligible to participate. Eligible family members of the owner who work for the business are allowed to participate.
C-Corporations (C-Corps):
There are no restrictions; owners and family as well as employees can participate, but the owner must be a W-2/common law employee. Excessive participation of these individuals in a Section 125 plan may cause the failure of certain mandated nondiscrimination tests.
Sole Proprietor:
Owners and/or partners owning an
interest in the company are not eligible to participate. Eligible family members of the owner who work for the business are allowed to participate.
This is a sample paycheck illustration. Each person's paycheck will reflect a snapshot of their individual payroll status at the time the data is captured on the payroll census used for the proposal. Your paycheck illustration is not a guarantee of the values shown. Variables such as income, tax brackets, exemptions/allowances, and other payroll deductions can affect the values, including the Benefit Reserve Amount. If there are any changes in your income, payroll tax, or other payroll factors, the benefits illustrated could change. If you have questions specific to your personal tax and related benefit status, please consult a tax professional.
