Gain Tax Efficiency with Your Personal Healthcare Expenses

As a business owner, it’s easy to sacrifice what you deserve personally because you’re focused on providing for all of your employees. But that doesn’t mean you should. You’ve worked hard and taken risks to get your business where it is. Isn’t it time to leverage what you’ve accomplished? One easy way to do that is with your healthcare expenses.

Let’s look at your out-of-pocket healthcare expenses. Do you have a lot that you’re paying with after-tax money? Most business owners have $10,000 or more for themselves and their immediate family. But there’s a way to switch those personal out-of-pocket healthcare costs over to your business with ArmadaCare’s supplemental health insurance plan, Ultimate Health®.

Dual Tax-Efficiency

Ultimate Health® is a fully insured 105(h) plan, which means there’s dual tax-efficiency*:

  • The premiums are a tax-deductible business expense.
  • Reimbursements are non-taxable to enrolled employees or employees don’t need to pay taxes on the benefits received.

Both of these tax savings have advantages, enabling you to get more out of your business. Let’s take a closer look at how this unique type of supplemental health insurance works by exploring 3 different scenarios.

Stay in Control of Your Health Benefits

Our first scenario is about a small business whose 3 co-owners were facing the impact of limited primary coverage. They were tired of their high out-of-pocket health expenses and searching for a solution to enhance their coverage. However, as owners, they were not eligible for the HRA that they offered the rest of the company.

Their solution was to layer Ultimate Health® on top of their primary plan for just the 3 owners. Ultimate Health® falls under one of the categories of excepted benefits, exempting it from ACA nondiscrimination and other regulations. This strategic move enabled the owners to expand their coverage while converting their personal out-of-pocket expenses into a tax-deductible business expense.

Plus, by choosing our premier plan, Ultimate Health®, they were able to get back to pre-ACA “100% coverage” levels with reimbursements for: 

  • Primary plan gaps (deductibles, coinsurance and co-pays)
  • Elective executive physicals
  • Well-being services such as prescribed massage therapy
  • Brand name prescriptions
  • Robust dental and vision coverage
  • And more…

Compensation Alternative

This scenario deals with a financial services company that needed to bring in a team of cyber-security specialists. As you know, recruiting the right talent continues to be a challenge in many sectors. While competitive compensation is crucial, relying solely on it can lead to bidding wars, with larger businesses having the ample funds to outbid smaller companies.

Given the fierce competition for IT talent, a sign-on bonus alone wasn’t sufficient. By utilizing a supplemental health insurance plan, the company was able to provide a “carve-out” benefits strategy solution.

Instead of offering traditional sign-on bonuses, the company redirected those funds towards a mid-level expense reimbursed insurance plan for the cybersecurity team.

Since the plan’s premiums were tax-deductible business expenses that did not incur payroll taxes, it ended up costing the company less than traditional sign-on bonuses. Furthermore, it provided the new employees with a potential $25,000 of annual health insurance value, far more attractive than a one-time cash bonus offered by competitors. 

Solving Turnover Troubles

In this last scenario, an assisted living facility struggled to retain a crucial group of employees: their senior nurses. Despite offering a competitive primary health plan, they were hemorrhaging money in turnover costs. To set themselves apart in the industry, they needed a unique solution. Unfortunately, they couldn’t afford to enhance benefits for their entire workforce.

Enter expense reimbursed insurance. This type of supplemental plan can be offered to specific employee classes as defined by the employer. This enabled the employer to enhance benefits selectively to just their senior nurses. This benefits strategy proved to be a worthwhile investment in their talent, costing much less than what was being spent due to turnover costs.

A Differentiator that Pays for Itself

Supplemental expense reimbursed insurance really does offer the best of both worlds. It provides a more targeted boost when it comes to winning and keeping talent, while simultaneously helping you stand out from your competitors without landing in a bidding war.

Plus, it’s health insurance, the most valued benefit for employees when deciding whether to join or leave a company. In the current talent market, it’s essential to consider the areas that matter most to employees. And while primary health insurance costs rise, supplemental expense reimbursed insurance provides a unique way to maintain budgetary control while enhancing your benefits package.

Discover how ArmadaCare’s extensive lineup of supplemental health insurance plans can support your company’s objectives. Explore our products.

Interested in learning more about ArmadaCare’s market-leading supplemental health insurance products?

Get in touch with one of our experts. You choose the time that’s best for you, and we’ll do the rest!

*This is not local, state or federal tax advice. This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied on for, tax advice. Each person and each company is unique with their own facts and circumstances. It is recommended that you seek the independent counsel of a professional tax adviser.