Tax Reduction Podcast

Episode 10. Using QSEHRA can save you money on Employee’s Health Insurance

• Boris Musheyev • Episode 10

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Using QSEHRA can save you money on Employee Health Insurance - Boris Musheyev, Tax Advisor

🩺✨ In this episode, we delve deep into how business owners can use Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) to save you money on Employee Health Insurance. This tax strategy is optimal for tax savings. If you're a business owner looking to navigate the complex world of health insurance and seeking strategies to maximize your tax benefits, you're in the right place. 📊💡

Discover:
🩺The advantages of QSEHRA over traditional group health plans.
🩺How to integrate QSEHRA seamlessly into your business model.
🩺The tax strategy every business owner should know to save thousands annually.


I've put together this FREE resource for you:

7 Write-Offs Every S-Corporation Business Owner MUST Know
🆓 Download FREE PDF here: https://7taxwriteoffs.com/

Ready to start saving money on your taxes?
☎️ Schedule your FREE Tax Advisory Session: https://taxplanningcall.com/

🤩 If you are looking for easy-to-use payroll software, I personally use and recommend to my clients Gusto Payroll Software - https://gusto.com/r/boris466

P.S. When you sign up for Gusto, you get a $100 Visa gift card

*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this reason, ...

Speaker 1:

If you have a group health plan in your business and you're offering health insurance to your employees and it's costing you tons of money on taxes, I'm here to tell you you can stop offering group health plan to your employees and instead opt in for an alternative method that IRS allows you, so you will still get a tax deduction, your employees will still get a health insurance benefit tax-free and you get a deduction ready. Let's go.

Speaker 2:

Welcome to the Tax Reduction Podcast for Money Making Entrepreneurs with Boris Mousheyev. Boris has helped entrepreneurs across the United States collectively save millions of dollars in taxes with the power of tax planning and advisory. The only way you, the business owner, can save money on taxes is by using proactive tax strategies, and this podcast is all about saving you money on taxes. Boris will share with you in depth and easy to understand tax reduction strategies that you can implement in your business within 30 days or less. Let's jump into today's episode.

Speaker 1:

Welcome to another tax strategy.

Speaker 1:

Now, today we're gonna talk about what's called the Q-SATA Qualified Small Employer Health Reimbursement Arrangement. Now why is this really, really important? You see, back when CARES Act was introduced by President Obama, or also known as Obamacare, everybody was required to have health insurance and the business owner was also required to offer health insurance. Now there was a little exception to the rule if you had less than 50 employees, you were considered a small business. Therefore you did not have to offer health insurance to your employees. But that was kind of backfiring them, because employees at that time needed to have health insurance because it was requirement. Today it's not requirement anymore, but the rules state. So we're gonna talk about them.

Speaker 1:

Now what happened is that employees wanted health insurance when they came to an employer. He can't afford you. The business owner can't necessarily always afford a group health plan from the marketplace for employers. That stuff is really expensive. When I was looking at the prices for my own business, I was like bam, that's expensive. So I went out and I implemented what's called a Q-SERRA.

Speaker 1:

Now, any employee that wants health insurance, a health insurance for themselves. What we say is that why don't we follow the QSARA law? The QSARA exception basically says you know what, if you're a small employer, the business owner and your employees want health insurance, you don't necessarily have to offer them a group plan. What you can do is say you know what, why don't you go get essential coverage, the minimum coverage that you need, and I can't reimburse you. Now here's the kicker CARES Act said you can't reimburse your employees without having a QSARA. If we find out, if the IRS finds out, that you are reimbursing your employees without QSARA, that's $100 a day penalty per employee. Crazy, what, what? Just think about it $100 a day penalty per employer. So they came up with something that's called QSARA.

Speaker 1:

Now, a lot of business owners don't know about this. Their accountant is not really talking about them, let alone they don't even know how to implement this tax strategy. First of all, we're gonna talk about QSARA, but I am gonna give you a tax strategy, exactly how to implement it in your business. So make sure you stay till the end to get all the ticks and trips and be able to implement it within 30 days. Now that's really the QSARA.

Speaker 1:

Now, why QSARA is so good? Because it's so flexible, right? You, as a business owner, have control of the cost. Now the laws of the QSARA is that if your employee wants to take a single coverage and they want a single coverage you get to reimburse them up to $5,850. Now these numbers have for $2,023. That means you as an employer get to decide how much you get to reimburse them, which is up to $5,850. Now, if it's a family coverage, you can reimburse them up to $11,800. Now, if you alternatively look at group health plans, in most states and in most cases they're way more expensive than this and the truth is, on a marketplace, the insurances may be cheaper individually for an employee. They can get their own insurance and you can follow the QSARA rule by just reimbursing them. Irs totally allows it, it's a deduction for you and it's a tax-free benefit for your employees. Now, really, let's talk about how it works and, like I said, stay till the end so I can give you exact tax strategy for your business right after this break.

Speaker 2:

If you have a tax preparer, then you do not have a tax advisor. The only way you can save money on taxes is by using proactive tax planning strategies that only a tax advisor can give you. Boris put together a free PDF for you, the business owner Seven tax write-offs every S corporation business owner must know. In this PDF you can find seven tax strategies that you can start using in your business to instantly start saving money on taxes. Click on the link in the description below for a free download.

Speaker 1:

Welcome back. Let's talk about how this tax strategy works Now. First of all, you cannot be offering group health plan to that same employee. That includes vision and dental. So you cannot be like you know what? Why don't I offer you vision and dental through a group health plan, and the rest I'm going to reimburse you through QSARA? You're not allowed to do that and it's going to jeopardize your tax strategy. So the second thing is that you want to set up a plan document okay, and basically it says hey, I am reimbursing you for health insurance and you have to set up limits. The maximum limit that you as a business owner can use is $5850 for a single coverage and $11,800 for a family coverage. Again, it is up to you to make that limit, but it cannot exceed $5850. It also has to be minimum essential coverage. Now what happens is that your employee can go out to a marketplace a shop marketplace or, excuse me, shop on a marketplace, okay and get an insurance for themselves, and those marketplaces already have that as a minimum essential coverage. They get that minimum essential coverage and what happens is that they submit a reimbursement expense to you Okay, they submitted to you, and then you reimburse them tax-free and again, you have those limits picked out in your plan document.

Speaker 1:

Now what's really important is that you've got to work with the tax advisor to get this right. Now I'm sharing this tax strategy for you so that you, the business owner, know enough, right, know enough to be able. Hey, I can do this. I can save money on group health plan. I can't tell you how much our clients have saved by switching from group health plan, because what happens is that sometimes even only two out of 10 employees want to go for a group health plan for insurance, excuse me, now you need to get a group health plan and that becomes really, really, really expensive. Eight employees, for example, may not need a health insurance, but two will. And how much money? It's costing you, the business owner, a lot. So you want to strategize with the tax advisor. Hey, if we do a Q-Sara, these are the numbers. This is how much we're going to pay in insurance. How much are we going to save on money as a deduction? How much will our employees save on taxes, right, and how much is it really going to cash our effect excuse me, our cash flow, compared to group health plan? So, really, really important and, honestly, it's super, super, super easy to set up. We're going to talk about that in a tax strategy. It's super easy to follow no major compliance, no extra filings, no like. Really, this is like.

Speaker 1:

This is one of those things that a lot of accountants do not know, and the reason a lot of accountants do not know is because they're tax preparers. Tax preparers do not know a tax strategy. A tax advisor knows a tax strategy. If you want to pay less in taxes, you've got to start using tax strategies from a tax advisor. I can't stress this enough how much business owners are overpaying in taxes by not doing things properly in their business. And you, sarah health excuse me qualified self-employer health reimbursement arrangement is one of those strategies. All right, let's really talk about how does this tax strategy work and what can you do in your business within the next 30 days so that you can start implementing this tax strategy right after this break?

Speaker 2:

If all your accountant does is taxes, you may be overpaying in taxes by thousands of dollars every year. Every week, Boris releases a tax strategy on his podcast so that you, the business owner, can pay less in taxes every single year. Be sure to subscribe to our podcast to be notified when a new tax strategy is released. If you're ready to work with a tax advisor on your tax strategy and planning, be sure to schedule your call by heading over to wwwtaxplanningcallcom. Again, that's wwwtaxplanningcallcom.

Speaker 1:

Welcome back. Let's talk about a tax strategy Now. In order for this to work, you obviously need to have a planned document. You can't just send a Slack message to your employee like hey, by the way, we're offering a health insurance benefit, blah, blah, blah, it's called QSARA. It doesn't work that way. You've got to set up what's called a plan document. A plan document basically says hey, from now on, we're offering a health reimbursement arrangement. For you to qualify for health insurance, you need to go get your own health insurance, you need to submit the reimbursement for that health insurance and we have the limits right, we have the limits for that health insurance. Everything needs to be in a plan document and then your employee gets to sign it and you get to sign it. The beautiful thing is that you don't have to file it anywhere. You just keep it with your documents, not that you have established a plan document.

Speaker 1:

Now, it doesn't mean that all employees now have to participate. No, it is completely optional. Some employees could already have a spouse that is getting a health insurance benefit from their job, so they don't want to participate. That is totally okay. Okay, now that's a plan document. Now they got to give you proof before you're reimbursing them. Do not adapt a habit of just reimbursing them on a monthly basis. Oh, jane gets health insurance $500 a month, so I'm just going to reimburse automatically $500 a month. No, you need proof, you need documentation. You will not get an habit of reimbursing them until they submit that proof to you.

Speaker 1:

Now what's important is that you have, for existing employees, october 2nd is a deadline to give them a plan document that says hey, we're not going to do this starting January. Okay, you have to notify your employees three months 90 days, so to speak before this health insurance is implemented. Now your question might be well, boris, what if I hire somebody in November? Does that mean we're out of time? No, actually, the plan document that you'll put together, you'll put in that plan document that we're complying by the 90-day rule to give existing employees notice before the year starts, 90 days before, which is October 2nd, unless it's a new employee. Okay, the new employee gets the notice right away and that's okay. So if you have somebody starting to work for you in February, well, guess what? This will still work. Okay, the 90-day rule is only for existing employees to start next year. New employees can start within three months after they start the employment. However you want to structure that Now, what's really, really important as well is that when you do offer a Q-SERRA, you have to report it on a W-2.

Speaker 1:

I can't tell you with how many accountants have spoken and actually educated on how to report Such a tax strategy. Simple tax strategy that helps you, the business owner, to save thousands of dollars on taxes okay, thousands of dollars and a simple tax strategy that other accountants not really using. So what you want to do is report it on a W-2. It would go on a box 12 of a W-2 and with the code FF. Again. I'm sharing this with you now, not so that you can go and go into your payroll software register for payroll Software and try to do it on your own.

Speaker 1:

You are a business owner. You need time to run the business and make money. It's your tax advisor's job to save your money on taxes. My job is to educate you on a tax strategies. If you're working with a tax preparer, you are overpaying in taxes. Stop it. You need to start working with a tax advisor. Start doing tax planning, start being proactive. Stop waiting until the year is over. Okay, so to be surprised by another tax bill.

Speaker 1:

Now back to our W-2 reporting. What happens is that you report on a W-2 box 12 code FF, and what's funny is that you have to report. If you gave somebody a single coverage, you have to report the maximum amount. So let's say you reimbursed employee Joe $3,000 for the course of the year. Box 12 code FF would not include $3,000, it would just include $5,850. Just would include this limits, even though you reimburse them less.

Speaker 1:

Don't ask me why. Sometimes I res does some weird stuff. Okay, we just have to comply by it. The last thing you have to do is actually file what's called PC or I fee. It's like patient care Something, research initiative, I don't know, drives me nuts, but anyways, it's $3 per employees. Your tax advisor should be able to do that for you. Now again, like I said before, if you're working with a tax preparer, you are overpaying in taxes. There's a lot of tax strategies within our tax code that actually help you save money on taxes, not big make you pay more. You know who makes you pay more on taxes. That is your accountant. What you need is a tax advisor that understands the tax code, interprets it, interprets it, interprets the tax code so that you can save money on taxes. Thank you so much. Until the next time.

Speaker 2:

That's it for today's episode. Be sure to check out the description below for some free tax reduction resources that Boris put together for you. If you're ready to work with a tax advisor on your tax planning, be sure to schedule your call by heading over to wwwtaxplanningcallcom. That's wwwtaxplanningcallcom. And be sure to subscribe to our podcast to be notified when the next strategy is released.