Many S-Corp owners don’t realize it but as small-business owners they have more options to save on healthcare costs than any other group of Americans. For example, in order to get the HSA deduction in 2018, you needed to have a high deductible health insurance plan in place by December 15, 2017. You should at least bring this up with your insurance agent. As you know, health insurance is 100% deductible for you as a small-business owner, whether you cover your other employees or not. As an S-Corp, it’s required and critical that you report the payment of your health insurance in a specific manner. Your W-2 as a shareholder/employee needs to indicate the amount of health insurance paid by the business on your behalf. If it doesn’t, the IRS can disallow the deduction. It will be in box 1 (not subject to social security and box 14.

If you pay for some portion of your employees’ health insurance premiums, the Small Business Healthcare Tax Credit for Small Employers may make sense. To qualify, you will need to purchase insurance through the exchange. This is a literal dollar-for-dollar tax credit against any taxes you owe and up to 50 percent of any healthcare premiums you pay for on behalf of your employees. There are a number of rules that really aren’t that bad, but they do require you to cover at least half of the cost of single (not family) healthcare coverage. In addition, you must have fewer than 25 full-time equivalent employees, and those employees must have average wages of less than $50,000 a year.

You may also consider the Health Reimbursement Arrangement (HRA). This is a fantastic strategy strictly for business owners, and it really benefits those with higher-than-average medical expenses. The HRA allows you to set up your own “benefit plan” for health care and reimburse yourself for ALL of your health care expenses — thereby getting a 100 percent write-off for all of your medical expenses. The only challenge can be the structure you need to use in order to make the plan work. Sometimes it takes a little extra business planning and structuring — and certainly some attention to bookkeeping — to make it happen. But again, it can be very lucrative and worth the extra time. Also, consider qualified small employer health reimbursement arrangement (QSEHRA), the small business can reimburse for the health insurance which is different that the HSA. Some employers like to use both the HRA and HAS!

Also, make sure also to investigate the types of “metal” health insurance plans and the differences between each one. Essentially, you will have to choose from platinum, gold, silver and bronze plans, with different benefits, deductibles and, of course, premiums. Generally, the platinum plans provide the greatest benefits and lowest deductibles. On the other extreme, the bronze plans have high deductibles opening the door to the HSA and are also the most affordable. Keep your anticipated health in mind as you try and choose the right type of plan for your situation.

Also, there is NO penalty in 2019 for not have qualifying insurance. Now with that said I’m not recommending that you don’t get insurance. Be aware of what enrollment options are available in your area. Also, don’t forget the open market. The private marketplace for insurance is still alive and well.

As you look closer, you will be surprised to see the wide range in premiums among the various types of “metal” plans. The reason isn’t just the benefits — it’s also the network of doctors that come with a particular plan. Many people don’t realize that the savings under certain policies are because the insurance company provides a smaller network of doctors under the plan, and it may be stripped of additional benefits, such as dental or vision care.

I hope as you discuss with your insurance agent, you will find something that is a good fit for you and I will be happy to discuss your options for tax savings.