MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

The 6th Tax Day of Christmas: Health Reimbursement Arrangement

26 Dec 2019 · 1 min

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1:15

In this concise tax‑advice video, Mark Kocher explains Health Reimbursement Arrangements (HRAs) as a tax‑saving tool specifically for small‑business owners. He clarifies that an HRA is distinct from Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs), highlighting its tax‑deferred growth and the ability to write off contributions. Kocher outlines the essential requirements: the HRA must be established at the beginning of the year, proper documentation is needed, and reimbursements to employees or family members must be completed by December 31 of that year. He notes that a third‑party administrator is not required, making HRAs affordable. Finally, he advises viewers to consider adopting an HRA on January 1 to capture the tax benefits for the following year, positioning it as a valuable addition to a small business’s tax‑strategy arsenal.

Chapters

On the sixth day of Christmas, my true love brought me some health care receipts. That's right. It's time to process the expenses under an HRA or a health reimbursement arrangement. Now this is only for small business owners. And if it's been established in your little circle of structure or entity based on being married or single, we can do what's called an hra. This is not a flexible spending account. Use it or lose it. It's not a health savings account. Account grows tax deferred, you get a write off to put money in. It's a reimbursement arrangement. Now, you have to establish it at the beginning of the year and use some proper documentation, but you don't have to use a third party to do it. It's very, very affordable. But again, if you're going to reimburse a family member or yourself for health care during the year, you've got to actually go through the process and push that money through by just destroying December 31st. That's the rule. So if this is new to you and you're thinking, oh my gosh, I like that write off, read below. Got some great information on how the HRA works and it's something you may need to adopt on January 1st coming up so that next year you can take advantage of this. But it's a great health care savings strategy. Look into it and add it to your arsenal of tax strategies.