In this presentation, the speaker outlines health insurance options for business owners, emphasizing the need to consult a qualified health insurance agent for state‑specific choices. He explains that a group health plan is only mandatory once a company reaches 50 employees, but smaller firms may still offer benefits to attract top talent. The talk covers the use of Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs), noting that FSAs have lower contribution limits while HRAs allow higher limits and can be offered based on salary tiers. For owners without a group plan, private insurance and potential income‑based subsidies are options, again requiring professional guidance. The core of the presentation focuses on S‑corporation tax treatment: premiums should be paid by the business, reported as taxable wages on the owner’s W‑2, and then deducted on the personal tax return under “adjustments to income” to achieve pre‑tax benefits. The speaker highlights two common errors—failing to pay premiums through the business or not reporting them on the W‑2—and advises using a payroll service and a qualified accountant to ensure compliance and maximize tax benefits. The overall message encourages business owners to make intentional profit‑focused decisions regarding health coverage.
Chapters
What are health insurance options for me as a business owner, and can I deduct it? So what I want to cover here is just a small snippet of it. You really do need to talk to a health insurance agent about the options that exist for you in your state based on the unique factors of your company and your team. You're not required to have a group insurance plan for your business until you have 50 team members or more. But for those of you who might be in industries like mine where the talent is really competitive, you may need to consider having some sort of a health insurance benefit before you get to 50, just to have some sort of attraction level for A-players. Now, I personally still can't compete with the bigger companies who offer 100% health insurance coverage. But we're doing something, so it's at least something. It minimizes that hit when we're hiring for team members. We— when we were about 20 team members, we offered an FSA, which is a flex spending arrangement that has very specific rules tied to whatever the IRS is controlling. And you're limited to how much money you can put into that. So we got to the point where, as we were bringing in higher-level team members with more experience who were paid more, we added a second option of an HRA, a health reimbursement arrangement. The HRA still has a limit, but it's a little bit higher than the FSA, which is why we then at that point were offering both policies depending on what your salary range was. We offered one or the other. So that's an option. When it comes to your personal insurance, if you don't have a group plan, you obviously could go out and get a private plan, and that's by talking to any health insurance agent. Based on your income, you may or may not qualify for health subsidies. So again, it's really important that you talk to a qualified health insurance agent so they can walk you through all those details. I do want to give you the answer to to how you use this in your business, specifically if you're an S corporation, because this— we see this done incorrectly all the time, and we do our best to help our clients be in compliance when they made a mistake and then get them to fix the future so that they are completely in compliance. You do pay for your health insurance out of your business. As an S corporation, pay the premium out of your business, book it as health insurance expense. As the owner of the S corp, assuming you own more than 2%, which in our case all of our clients do, you have to pick up your insurance amount, your health insurance amount, on your W-2 as W-2 income. And if that sounds complicated to you, It probably should because you aren't in the business of running payroll. Use a payroll company, make sure it's done correctly. So I pay for the health insurance out of my S corp, I pick up the health insurance amount on my W-2, then when I file my personal tax return, there's a spot on your personal tax return, it's called adjustments to income, and you put your health insurance amount there. So that it is reducing your taxable income. Those are the steps you need to take in order to make sure that those are pre-income tax dollars that you're using, because you do get a tax benefit for it, but you got to do that. The 2 biggest mistakes we see is they're either not paying for it out of their business or they're not picking it up on their W-2. Again, get A good qualified accounting professional to help you do that the right way. It's very easy to do for an accountant, but like I just explained, there are 3 steps to make sure that happens the right way so you get the max benefit without getting in trouble by doing it the wrong way. So, um, that is how you do health insurance. Remember, profit is a choice. Have the courage and wisdom to choose it.
