BASE^® Blog

The Section 105 HRA is not actual magic, but what it can do for small business owners is magical.  This HRA helps businesses go beyond the standard deduction and save thousands of dollars each year.  With just the flick of a wand (or a click of a mouse to submit eligible medical expenses with BASE®), a client could save, on average, $5,900 in tax savings. 

The Section 105 Health Reimbursement Arrangement is an IRS-approved health benefit that allows self-employed individuals to employ their spouse, who is active in the business, and reimburse, tax-free, eligible health care expenses for the employee, spouse, and their dependents.      

The BASE® Section 105 HRA is a tax savings plan that allows small business owners the opportunity to deduct up-to 100% of health care costs, including insurance premiums and qualified out-of-pocket health care expenses as a business deduction. 

Let’s see how the magic works with a real-life example >>>

Tom is the sole proprietorship.  His wife, Anna, provides valuable services to the business such as bookkeeping and more.  Through the advice of his financial planner, Tom decides to enroll in the Section 105 HRA with BASE®.  Tom talks to a Sales Rep with BASE® and they put a compensation plan together for Anna, and Tom and Anna start saving valuable tax dollars right away. 

ABRACADABRA…and the wave of a magic wand… MAGIC HAPPENS.  Because Tom files his taxes as a sole proprietor on Schedule C of the Form 1040 going beyond the standard deduction, making the savings with the BASE® Section 105 HRA purely magical.  By turning Tom and Anna’s health care expenses into a tax-favored business deduction, they can offset income and self-employment taxes. 

The BASE® Section 105 HRA is a great method of increasing tax savings for a wide variety of small businesses, such as the farmer, self-employed business owner, and more.  Business structures that qualify are sole proprietors, partnerships, C Corporations, and S Corporations.  When businesses enroll in the BASE® Section 105 HRA, the employers have access to a comprehensive tax-advantaged health benefit plan with reliable service and support, reducing the financial impact of health care expenses and paying for eligible out-of-pocket health care while paying no taxes on reimbursements. 

For more information on the BASE® Section 105 HRA, contact BASE® at 888.386.9680 or visit www.BASEonline.com

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ERISA requires more benefit plans to be in compliance than many employers realize, and it takes more than just a plan booklet or explanation of benefits to comply with this federal regulation.  There is one simple way to stay in compliance with ERISA…the BASE® ERISA Wrap.

The Employee Retirement Income Security Act (ERISA) is a federal law that sets the minimum standards for health and welfare benefit plans to provide the protection for the participants in the employer-sponsored plans.  ERISA regulates plan administrators and sponsors of the health benefits to ensure they provide plan information to their participants and their dependents, and the offered benefits are outlined. 

The BASE® ERISA Wrap is a risk management tool that is designed to help employers provide the required provisions and information necessary to comply with the ERISA requirements and wrap around the existing certificates of insurance and benefit plan booklets with the Summary Plan Description (SPD) and Plan Document.  The ERISA Wrap applies to virtually all employers who sponsor a health benefits plan, regardless of size, structure, or number of participants. 

So, what is the Summary Plan Description (SPD) and Wrap Document?

The Summary Plan Description (SPD) is an important and required document that is given to the participants that outlines what their plan provides and how it operates.  It also provides the employee with the information on when they can begin to participate in the health benefits and how to file a claim for their benefits. 

The SPD is required for health plans such as group health, dental, vision, flexible spending account (FSA), health reimbursement arrangements (HRAs), and other fringe health benefits.  It contains information such as summary and description of benefits, features, benefit contributions and accrual, claim procedures, the right to sue due to a breach of fiduciary duty, guarantee of payment of certain benefits should the plan be terminated, and more. 

Not only does the SPD inform employees on important health plan information, but it is also used to protect employers from potential legal action. 

The Wrap Document “wraps around” all ERISA health and welfare benefits and includes the required disclosures that are not found in any other documents.  It simplifies employee health and welfare benefits by putting them together under a single plan. 

In this document, a participant will find that it packages all the separate employee benefits together and is put together in one comprehensive overview of benefits, administrators, fiduciaries, plan types, and other important and required details.

The Wrap Document is not required, but if a business has 100 or more employees, making them subject to Form 5500 reporting, they are widely necessary and simplify SPD compliance.    

As we are amid the Open Enrollment season, it is imperative that every business be in compliance with ERISA rules, plan documentation, disclosures, and other reporting requirements. 

For more information on the BASE® ERISA Wrap, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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