Tax Savings for the Small Business Owner

Agenda• Rising cost of healthcare• AgriPlanNOW & BizPlanNOW HRA Plans• How do HRAs work?• FlexSystem FSA Plans• TASC offers peace of mind• Simple. Successful. Guaranteed• Microbusiness Compliance Suite• Questions

Rising cost of healthcare• According to The Kaiser Family Foundation’s Employer

Health Benefits Annual Survey published in 2013, and titled, “Cost of Health Insurance,” the average annual premium for family coverage in 2012 is $15,745

• There has been an increase in average family premiums of 134% since 1999

Rising cost of healthcare• One in five families reported they experienced serious

financial problems due to family medical bills in the past 12 month period.

• 27% put off or postponed getting needed medical care.• 34% reported skipping dental care or checkups.

Rising cost of healthcare• 2.3 trillion* in 2008• $4.6 trillion* by 2019 • Every year more and more Americans lose

their health insurance for one simple reason: they can’t afford it.

*Source: Centers for Medicare & Medicaid Services“National Health Expenditure Projections 2009-2019” – November 1st, 2010

Save your self-employed clients $5,000 a year!

Perfect fit for:• Family farmers• Truckers• Real estate agents/brokers• Small retail establishments

What is a Section 105 HRA?• Section 105 is a 1954 tax law that allows for family

employment• Converts normal insurance and out-of-pocket

expenses into an employee benefit program and becomes 100% deductible!

HRAs are alive and well!

• Are employer-sponsored HRA Plans still legitimate?

How do HRAs work?

15.0 % Federal tax rate

5.2 % State tax rate15.3 % Self-

employment tax35 % Total tax rate

2014 ComparisonWith Section 105

Premium Deduction 100%$9,299 x 100% = $9,299

Federal, State & SE Tax Rate$9,299 x 35.3% = $3,255Tax Savings = $3,255Non-Insured Expenses 100%$5,362 x 100% = $5,362Federal, State & SE Tax 35.3%Tax Savings $1,877Total Expenses $14,661Total Deduction $14,661

Total Tax Savings$5,132

Without Section 105Premium Deduction 100%$9,299 x 100% = $9,299

Federal Tax Rate $9,299 x 15% = $1,395Tax Savings = $1,395Non-Insured Expenses 0%$5,362 x 0% = $ 0

Federal & State TaxTax Savings = $ 0Total Expenses = $14,661Total Deduction = $9,299

Total Tax Savings $1,395

Who qualifies?• Sole Proprietor• Partnership• C-Corporation• Non-Profit• Limited Liability Company• S-Corporation

Employers without Group Insurance can still offer pre-tax benefits

IRS Notice 2013-54

• A company with more than one eligible employee will no longer receive a tax advantage through a HRA unless it sponsors group insurance

TASC has a solution• No Limit Plan • Non-Employer Sponsored Premium (NESP)• Non-Excepted Health FSA Plan (NEFSA)

No Limit Plan• The No Limit Plan is a self-funded health Plan that

meets all Healthcare Market Reform requirements. • There is no limit to the amount of insurance premiums

or out-of-pocket medical expenses that can be reimbursed to your family-member employees.

• The following are reimbursable expenses under the No Limit Plan: – Insurance premiums– All out-of-pocket medical expenses

No Limit Plan• Disclaimer: No Limit Plan increases risk to the

business– Please be aware that the No Limit Plan could expose your

business to an additional risk: having a high amount of medical claims written off through your business.

– If you have employees who are not family members, this type of benefit Plan is not recommended.

Non-Employer Sponsored Premium• Employers May Continue to Reimburse Employees

for Individual Premiums

Non-Employer Sponsored Premium• TASC’s Non-Employer Sponsored Premium Account

(NESP) is designed for employers and employees to contribute tax-free dollars toward individual health insurance.

Non-Excepted Health FSA Plan

• Both employers and employees may contribute tax-free dollars to help employees pay for eligible out-of-pocket medical expenses

FlexSystem FSA• Section 125 Cafeteria Plan• Pre-Tax Dollars• Flexible Spending Accounts

• Medical• Dependent Care• Transportation• Insurance Premiums

• Save between 25% and 40%• Reduced Payroll Taxes

FlexSystem FSA

Annual Salary: $35,000Out-of-Pocket Medical/Dental Expenses: $ 1,000/yearOut-of-Pocket Dependent Care Expenses: $ 2,500/year Without FSA With FSA

Gross Pay $ 35,000 $ 35,000FSA Contribution - $ 0 - $ 3,500Taxable Income $ 35,000 $ 31,500Taxes (Fed, State, FICA) - $ 10,500 - $ 9,450Out-of-Pocket Expenses - $ 3,500 - $ 3,500Reimbursement from FSA + $ 0 +$ 3,500Take-Home Pay $ 21,000 $ 22,050

Who qualifies?

• Greater than 2% Shareholders of S-Corporations are excluded.

• Highly compensated employees are excluded.

SIMPLE Cafeteria Plans• Provides new opportunities for some owners and

highly compensated employees to participate where they could not in the past.

• A FSA Plan with no discrimination testing, but with a required employer contribution.

• For groups under 100 employees.

SIMPLE Cafeteria Plans• Employer contributions to a SIMPLE Cafeteria Plan

must be sufficient to provide benefits to non-highly compensated employees.

• Employers must choose one of the following contribution methods: – Uniform Contribution: A uniform percentage (at least 2%) of

compensation, whether the employee does or does not make salary reduction contributions to the plan; or

– Matching Contribution: The lesser of 2x the employee’s annual contribution, or 6% of the employee’s annual compensation.

TASC offers peace of mindThese comprehensive and innovative employee benefit plans have been specifically designed for this new regulatory environment.

TASC offers peace of mind• In-house Legislative Analyst to ensure we make any

necessary adjustments to your Client’s Plan features to protect their tax savings.

• AgriPlanNOW and BizPlanNOW include everything you need to ensure your Client’s Plan meets documentation and compliance requirements with IRS, DOL, ERISA

• FlexSystem Clients can add on additional compliance features– Non-Discrimination Testing– 5500 Paperwork Filing– PCORI service

Simple. Successful. Guaranteed!• Industry exclusive Audit Guarantees for AgriPlanNOW

BizPlanNOW and FlexSystem.

• Money Back Guarantee for AgriPlanNOW and BizPlanNOW.

• FlexSystem offers daily reimbursement floating of Uniform Coverage Dollars.

Simple. Successful. Guaranteed!• Innovative TASC Card lets your Clients pay for your

out-of-pocket medical expenses with the swipe of a free debit card.

• Carry Over unused medical expenses.• Online tools.

Simple. Successful. Guaranteed!• MyBenefits

– TASC Card qualifies and pays eligible expenses on the spot

– Purchases are limited to healthcare merchants under your Plan

• MyCash– Reimbursements are fast and convenient– Use MyCash funds just like cash at any retailer

that accepts major cards.– Withdraw at an ATM or transfer to a personal

account.• Mobile App

Simple. Successful. Guaranteed!• National presence with local expertise.• Unique field force model which supports our Providers

by assisting at multiple stages of the sale.• Industry and market education and training.• Dedicated, trained Customer Care staff provides

service through multiple channels.• Microbusiness Inside Specialist team dedicated to

helping you qualify and enroll your Clients.

Microbusiness Compliance Suite

Welfare Benefit Plan Compliance• The Department of Labor (DOL) has jurisdiction over ERISA

compliance• If you provide a Welfare Benefit Plan (such as group insurance)

then you must have a Summary Plan Description (SPD)• You may have plan documents from several providers, but these

are not a SPD.– A SPD merged all single plan document into 1 summary document – SPDs must be distributed to employees in a timely manner and be accurate &

up to date• Failure to provide a plan participant with an SPD within 30 days of

an employee request carries a maximum $110 per day penalty

ERISAEdge• Prepare all required documents

– Plan Document, Summary Plan Description, Summary of Material Modification, Summary Annual Report and the IRS Form 5500 preparation (if applicable).

• Assistance during a Department of Labor (DOL) audit.• Ensure timely disclosure of Plan changes to employees.• Monitor legislative and regulatory changes, ensuring the Plan is

up-to-date.• Automatically distribute all amendments due to regulatory updates

to Plan Participants.• Maintain all required records for the mandated amount of time.• Share guidelines for disclosing required information to employees.

HIPAA Compliance• Assists in compliance with HIPAA requirements.• Provides a cost-effective compliance solution.• Removes burden of researching compliance need, creating

documentation, and more.• Fosters peace of mind that comes with ensured compliance with

HIPAA regulations.• Helps employers avoid fines and penalties.• Provides easy-to-understand materials and directions for

maintaining compliance with HIPAA Privacy and Security rules.• Stays abreast of changing regulations.• Provides toll-free customer service.

Contact us• Call: 888-595-2261 Ext. 17732 • E-mail: microbusiness@tasconline.com• Visit: www.tasconline.com/partner/information-

request/