Other Tax Issues of Interest

Health Benefits in Small Businesses

Self-Employed Health Insurance Deduction

You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents.

Cafeteria Plan

A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages.

Flexible Spending Arrangements

A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. FSAs are usually funded through voluntary salary reduction agreements with your employer. No employment or federal income taxes are deducted from your contribution. The employer may also contribute.

Health Coverage Tax Credit

The health coverage tax credit is available to certain individuals who receive a pension benefit from the Pension Benefit Guaranty Corporation (PBGC) or are eligible trade adjustment assistance (TAA) recipients or eligible alternative trade adjustment assistance (alternative TAA) recipients.

Health Reimbursement Arrangements

A health reimbursement arrangement (HRA) must be funded solely by an employer. The contribution cannot be paid through a voluntary salary reduction agreement on the part of an employee. Employees are reimbursed tax free for qualified medical expenses up to a maximum dollar amount for a coverage period. An HRA may be offered with other health plans, including FSAs.

Health Savings Accounts and Other Tax-Favored Health Plans