Under IRS rules, small businesses can reimburse employees for their health insurance in a tax-advantaged way. The most prominent vehicle for doing so is the health reimbursement arrangement (HRA).
When an HRA is compliant with the IRS, companies can reimburse their employees’ health expenses tax-free to both the business and the employees. In this case, all HRA reimbursements are tax-free.
To get the tax benefits, however, an HRA must follow IRS procedures, including strict rules about setting up formal plan documents.
In this post, we'll go over three steps to make sure your company's health insurance reimbursement is tax-free.
