ICHRA Unleashed: Transforming Small Business Health Benefits

Written by Coach Janelle CPA on Agust 23, 2023

The individual coverage health reimbursement arrangement (ICHRA) allows businesses of all sizes, from large corporations to small businesses like yours, to reimburse employees for their personally purchased health insurance expenses.

The ICHRA is particularly beneficial for businesses with fewer than 50 employees because they are not obligated to provide health benefits under the Affordable Care Act. But when they do provide coverage, they expose themselves to a $100-per-day penalty for each employee. The ICHRA avoids this penalty.

The ICHRA offers several benefits to the employer, including

1. the flexibility to choose the reimbursement limits

2. the ability to offer different plans to different employees based on classifications, and

3. the ability to offer a cafeteria plan that allows employees to pay pre-tax for additional 4. insurance coverage above what the ICHRA reimburses.

There are restrictions on who can participate. Employees eligible for an ICHRA are those enrolled in individual exchange coverage, other individual insurance coverage, or Medicare. More-than-2-percent S corporation shareholders, their family members, and Form 1040, Schedule C taxpayers are not eligible to participate in an ICHRA.

If you plan to offer an ICHRA, you need to provide your employees with at least a 90-days’ notice before the beginning of the plan year. We encourage you to start planning now if you wish to offer an ICHRA on January 1, 2024, as this gives you a target date for the ICHRA notice of October 2, 2023. 

About Coach Janelle CPA

Sign Up To Our Weekly Newsletter

Get the latest tax planning tips content delivered straight to your inbox.

 All Your Information is Protected When You Sign Up

Check Out Some Of Our Latest Blog Post

The QSEHRA Health Plan

Written by Coach Janelle CPA on August 4, 2023

If you’re a small employer (fewer than 50 employees), you should consider the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) as a good way to help your employees with their medical expenses....

Strategic Insights for Employing Your Spouse

Written by Coach Janelle CPA on July 21, 2023

If you own your own business and operate as a proprietorship or partnership (wherein your spouse is not a partner), one of the smartest tax moves you can make is hiring your spouse to work as your employee. But the tax savings may be a mirage if you don’t pay your spouse the...

Shutting Down a C Corporation

Written by Coach Janelle CPA on July 13, 2023

There are several tax implications that you need to be aware of when shutting down a C corporation. Complete liquidation of a C corporation is when it ceases to be a going concern, winds up its affairs, pays its debts, and distributes its remaining assets to the shareholder(s). In tax terms, the corporation...

The Cleaning Lady and Your Home-Office Deduction

Written by Coach Janelle CPA on July 6, 2023

If you have an office in your home that qualifies for the home-office deduction and you employ a cleaning lady who maintains both your home and your home office, there are a couple of tax considerations to keep in mind.

Claim Your 2020 COVID Sick and Family Leave Credits Today

Written by Coach Janelle CPA on June 28, 2023

You may have overlooked potential COVID-19 sick and family leave tax credits on your 2020 tax return. You might be eligible for up to $15,110 in tax credits, and the good news is that it’s not too late to claim them.

Act Now to Qualify for Your 2020 and 2021 ERC Money

Written by Coach Janelle CPA on June 21, 2023

It’s 2023, but you still have the chance to qualify for the employee retention credit (ERC) for the 2020 and 2021 calendar years. This credit can potentially help you recover a significant amount of money.

One Ugly Rule for S Corp Owners Deducting Health Insurance

Written by Coach Janelle CPA on June 8, 2023

When your S corporation covers or reimburses your more-than-2-percent-shareholder-employee health insurance expenses, it classifies the payments as box 1 W-2 wages but not box 3 or box 5 wages.

Basic Estate Planning

Written by Coach Janelle CPA on June 1, 2023

You need an estate plan, regardless of whether or not you are among the ultra-rich. As recent news has shown, even those who have won the lottery or have substantial wealth can fall victim to poor estate planning.

Using Family Loans to Secure Better Home Loan Interest Rates

Written by Coach Janelle CPA on May 25, 2023

Here’s some information on how you can help a family member buy a home by making a loan to them while ensuring that you and the family member benefit from a tax-smart loan structure.

Tax Credits for Electric Vehicles: The Latest from the IRS

Written by Coach Janelle CPA on May 19, 2023

Share Us On Social Media