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Good News! One-Person Section 105 HRAs Survive ObamaCare Restrictions for 2014 through 2018

3D_0009_hra1It was very good news, and a relief to many, to see Section 105 HRAs survive Obamacare rules making. For decades small family farms have provided medical, dental, and vision benefits to a spouse/family member/employee tax-free as a business expense under IRC Section 105.

These small employer sponsored self-funded plans could reimburse medical insurance premium and first-dollar out of pocket medical expenses as part of the employment and compensation agreement to a spouse (or just 1 employee).

When it’s a spouse/employee the business owner is covered as a dependent of the spouse. Insurance cost and out of pocket medical expenses for the business owner and spouse are then 100% tax deductible.

Without a Section 105 Plan the business owner could only deduct medical expenses in excess of 10% of their adjusted gross income. Most never exceed the 10% of adjusted gross income barrier and lose first dollar deduction capability.

Section 105 HRA plans solved that problem. Business owners also realize additional self-employment tax reductions by paying insurance premium through a Section 105 HRA.

It wasn’t long before non-agricultural small business owners realized they could hire a spouse and take these same tax-favored deductions. Today millions of small business owners routinely hire a spouse as a legitimate employee and take advantage of this tax-deduction.

To take these deductions the IRS requires the business owner to first establish a formal Section 105 HRA plan document. Core Documents has been assisting small business owners to establish these plans and providing the required IRS compliant Section 105 HRA plan document since 1997. See: www.Core105.com

Before 2002 Section 105 HRA plans had numerous names in the marketplace such as BizPlan, AgriPlan, Medical Expense Reimbursement Plans or MERPs, and just a plain old Section 105 Plan. In 2002 the IRS issued new guidance in IRS Notice 2002-45 and Revenue Ruling 2002-41 and dubbed these small Defined Contribution Health Plans as Health Reimbursement Arrangements, or HRAs.

Since 2002 HRAs have become extremely popular with employers of all sizes to provide a defined monthly benefit to their employees on a tax-advantaged basis. HRA plan benefits could be easily budgeted by the business from year to year. Many employers used the HRA concept to provide employees with tax-free dollars to purchase individual health insurance, which normally cost less than group insurance. Many more employers were allowing their employees to use the HRA benefit dollars for out-of-pocket medical, dental, and vision expenses. That all changed under new ObamaCare regulations that effectively eliminated this benefit option, and ObamaCare competition.

HRA plans got caught up in this new no annual/lifetime requirement and tens of thousands of employees nationwide are also losing HRA benefits as well. Most employers are being forced to end or amend their HRA because they can’t afford to have a no annual/lifetime benefit on a small self-funded HRA plan.

The Good News for 2018 Planning:

Because ACA made the no annual/lifetime benefit requirement for plans with 2 or more employees, all one person HRA plans survived this new ACA/Affordable Care Act regulation, and are still a viable benefit option. What does this mean for many intelligent, self-employed business owners, or potential new small business owners?

Establish a Section 105 HRA through Core Documents and reimburse your insurance premium and out-of-pocket medical, dental, and vision expenses and save thousands of dollars you couldn’t deduct otherwise.

I can’t think of a better reason to start a small family business than to use those funds, tax-free to pay for the extremely high cost of healthcare in a post-Affordable Care Act world.

Core Documents has been providing Section 105 HRA plans for small business owners since 1997. They would be happy to assist you in establishing your own small self-funded Section 105 HRA plan document and administrative kit for only $149. Call us today at 1-888-755-3373 and talk to a Plan Consultant about how we can assist you and reduce 2014 income tax liability.

3D_0009_hra1Average Savings = $5,000 Per Year with a Section 105 HRA Plan Document

$149 one-time fee in PDF via email*

$199 one-time fee in PDF email* + Deluxe Binder via USPS

Section 105 HRA plans are designed specifically for small business owners that legitimately hire just one employee or a spouse/employee.

When the employee is a spouse of the business owner they can be reimbursed for family expenses, so the employer/owner indirectly benefits as well.

This type of plan is very useful for any small business with just one-employee. Many churches use this type of HRA Plan.

This type of plan is made possible by Section 105 of the Internal Revenue Code, Revenue Ruling 71-588 and IRS Letter Ruling 9409006.

  Get Started Today!
Order the Core 105 plan document package for only $149 from Core Documents, Inc.  today and start saving tax dollars with your Section 105 one-person HRA ASAP! Order the Core 105 plan document package for only $149 from Core Documents, Inc.  today and start saving tax dollars with your Section 105 one-person HRA ASAP!

Whatever order method you choose, major credit/debit cards and e-checks are accepted for Core Documents' Section 105 One-Person HRA plan document package.

Core Documents will notify you when there are sufficient changes in the Code to require amending and restating your Plan.  You can amend and update anytime for just $129, and only when necessary which is the most cost effective way to establish and maintain a HRA Plan.

*Most documents go out the same day via email within hours M-F. Orders placed on the weekend will be emailed Monday morning. Keep in mind that December, January, and February are our busiest months of the year and documents are processed in the order they are received. The Rush Order fee ($25) simply brings your document to the top of the stack to be processed immediately.



Section 105 HRA plans are Medical Expense Reimbursement Plans that allow you to save substantial tax dollars on insurance premiums and out-of-pocket medical expenses not covered by insurance.

For a standard group Health Reimbursement Arrangement for small businesses with more than one employee see Core HRA Plans.

Core Documents, Inc. has been providing free consulting, affordable plan documents, and plan updates as needed for Section 125 Cafeteria Plans and Health Reimbursement Arrangements since 1997. See more information about these fringe benefit plans at Core Documents’ website: http://www.coredocuments.com, or call toll free 1-888-755-3373.