Health care - Linkenheimer LLP CPAs & Advisors

Some Small Businesses Can Still Benefit from the Health Care Coverage Credit

Tax credits reduce tax liability dollar-for-dollar. As a result, they can be more valuable than deductions, which reduce only the amount of income subject to tax. One tax credit that hasn’t been getting much attention lately but that can still be valuable for some small businesses is the credit for providing health insurance to employees.

Who’s eligible?

Under the Affordable Care Act (ACA), certain small employers that provide employees with health care coverage are eligible for this tax credit. Although it’s been available for more than a decade and generally can be claimed for only two years, some small businesses may still be eligible. These may include newer businesses as well as older ones that only recently have begun offering health insurance.

The maximum credit is 50% of group health coverage premiums paid by the employer, if it contributes at least 50% of the total premium or of a benchmark premium. For 2025, the full credit is available for employers with 10 or fewer full-time equivalent employees (FTEs) and average annual wages of $33,300 or less per employee. Partial credits are available on a sliding scale to businesses with fewer than 25 […]

By Linkenheimer LLP|2026-02-16T20:14:31+00:00February 16th, 2026|business, Health care, tax credit|0 Comments

Health Care Self-Insurance and Stop-Loss Coverage: What Business Owners Need to Know

For businesses, cost-effectively sponsoring a health insurance plan for employees is an ongoing battle. In the broadest sense, you have two options: fully insured or self-funded.

A fully insured plan is simply one you buy from an insurer. Doing so limits your financial risk while offering the most predictable costs. The other option is what’s commonly known as “self-insurance.” Under this approach, your company funds and manages the plan, usually with the help of a third-party administrator.

If you’re tired of dealing with big insurers, and you’re prepared to design your own plan and handle the claims process, self-insurance may be for you. However, bear in mind that your business will incur the full financial risk of a self-funded plan — and health care costs can be unpredictable and potentially catastrophic. That’s why, if you’re seriously considering self-insurance, you’ll also need to familiarize yourself with stop-loss coverage.

Basic features

Stop-loss coverage […]

By Linkenheimer LLP|2024-05-09T18:15:35+00:00May 9th, 2024|Health care, insurance|0 Comments

Don’t Forget to Empty Out Your Flexible Spending Account

If you have a tax-saving flexible spending account (FSA) with your employer to help pay for health or dependent care expenses, there’s an important date coming up. You may have to use the money in the account by year-end or you’ll lose it (unless your employer has a grace period).

As the end of 2023 gets closer, here are some rules and reminders to keep in mind.

Health FSA

A pre-tax contribution of $3,050 to a health FSA is permitted in 2023. This amount will be increasing to $3,200 in 2024. You save taxes in these accounts because you use pre-tax dollars to pay for medical expenses that might not be deductible. For example, expenses won’t be deductible if you don’t itemize deductions on your tax return. Even if you do itemize, medical expenses must exceed a certain percentage of your adjusted gross income in order to be deductible. Additionally, the amounts that you contribute to a health FSA aren’t subject to FICA taxes.

Your employer’s plan should have a list of qualifying items and any documentation from a medical provider that may be needed to get reimbursed for these expenses.

FSAs generally have a “use-it-or-lose-it” rule, […]

By Linkenheimer LLP|2023-12-05T17:30:27+00:00December 5th, 2023|Health care, hsa, year-end|0 Comments

No Parking: Unused Compensation Reductions Can’t Go To Health FSA

Among the many lasting effects of the pandemic is that some businesses are allowing employees to continue working from home — even now that the most acute phases of the public health crisis seem to be over in some places. This decision is raising some interesting questions about fringe benefits.

For example, in IRS Information Letter 2022-0002, the tax agency recently answered an inquiry involving a qualified transportation plan participant whose employer now lets him work from home permanently. To avoid losing dollars he’d previously set aside for parking, the participant asked whether he could transfer unused compensation reductions to his health Flexible Spending Account (FSA), which his employer offered through its qualified cafeteria plan.

No cash refunds

The letter explains that, under an employer’s qualified transportation plan, unused compensation reduction amounts can be carried over to subsequent plan periods and used for future commuting expenses. Caveat: employees can’t receive benefits that exceed the maximum excludable amount in any month.

By Linkenheimer LLP|2022-04-27T21:37:40+00:00April 27th, 2022|Health care, irs|0 Comments

COBRA Provisions Play Critical Role in COVID-19 Relief Law

During the COVID-19 pandemic, many employees and their families have lost group health plan coverage because of layoffs or reduced hours. If your business has had to take such steps, and it’s required to offer continuing health care coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the recently passed American Rescue Plan Act (ARPA) includes some critical provisions that you should be aware of.

100% subsidy

Under the ARPA, assistance-eligible individuals (AEIs) may receive a 100% subsidy for COBRA premiums during the period beginning April 1, 2021, and ending on September 30, 2021.

An AEI is a COBRA qualified beneficiary — in other words, an employee, former employee, covered spouse or covered dependent — who’s eligible for and elects COBRA coverage because of a qualifying event of involuntary termination of employment or reduction of hours. For purposes of the law, the subsidy is available for AEIs for the period beginning April 1, 2021, and ending September 30, 2021.

Extended election period

Individuals without a COBRA election in effect on April 1, 2021, but who would be an AEI if they did, are eligible for the subsidy. Those who elected but discontinued COBRA coverage before April 1, 2021, are also eligible if they’d […]

By Linkenheimer LLP|2021-03-24T21:18:41+00:00March 24th, 2021|covid-19, Health care, New Tax Laws|0 Comments