Health Reimbursement Accounts – When a Health Savings Account Is Not an Option

Some of you do not qualify for Health Saving Accounts (e.g. – on Medicare or have the “wrong” type of insurance). And even some of you who do qualify would be better off with a Health Reimbursement Arrangement.

  Health Reimbursement Arrangements: When You Do Not Qualify for Health Savings Accounts

By Attorney John Hyre

I love Health Savings Accounts (“HSA’s”). Specifically:

• Contribute money (up to $6,750 for 2017), take a tax deduction on a favorable part of your Form 1040 (page 1, which is way better than deductions on page 2 or on Schedule A);

• Track (but not necessarily pay from the HSA) medical expenses that arise from the date the HSA was opened;

• Invest the HSA account balance in things like rentals, flips, lending, discounted notes, and the like;

• Use the proceeds of your self-directed investing to reimburse yourself for past medical bills that you paid (while the account existed, and that you did not deduct on your 1040);

• Pay for medical bills going forward;

• Remember that “medical” is very broadly defined. For example, it can include swimming pools (if legitimately prescribed by a doctor) and medical tourism (e.g. – sinus surgery I had done overseas, same quality as US, 20% of the price)

The problem: Not everyone has (or wants) a Qualified High Deductible Health Plan, which is needed to qualify for an HSA. You might be paying for Medicare-related insurance, which does not normally qualify as a “Qualified High Deductible Health Plan”. Your employer might not offer a qualifying plan. Or you might have a better plan that is not worth parting with, even to qualify for an HSA.

Enter Health Reimbursement Arrangements aka “HRA’s”. Such plans allow you to run medical costs (including health insurance) through your company as a deductible business expense. These plans can pay for anything an HSA can pay for – and more. HSA’s cannot pay for most kinds of insurance, but HRA’s can. For example, if you run up $7,000 in out of pocket healthcare costs, plus spend $12,000 on health insurance premiums, the HRA can reimburse you for the entire amount. The company that sponsors the HRA gets a full write-off for the $19,000.

There are of course “catches” and “details”. You need a written plan (we will provide one at the July 15 & 16 workshop in Sarasota). An HRA can include employees, but ideally it does not. Such a plan requires a C-Corporation or a cooperative spouse (We will discuss which is cheaper!). We will cover all of those details and much more at the workshop. Bottom line: If you do not presently qualify to contribute to an HAS, an HRA makes sense for anyone with significant healthcare costs that are presently not deductible or are only deductible in a bad place (Schedule A) of their 1040.

Tax & Entities Workshop

Sarasota, Florida

Saturday July 15 & Sunday July 16


Topics to be covered (Boiled-Down & Distilled):
•Best Way to write off vehicles, vacations, meals, golf, shooting and other entertainment
•Health Reimbursement Arrangement–What they are, when they beat Health Savings Accounts,
how to create & run one, and a free sample plan
• Which meals can be written off 100% instead of the usual 50%
• How to meet five hours in Mexico and write off the plane ticket for the entire week-long trip
• How to get the special “manufacturers tax deduction” for builders and rehabbers
• What is a “real estate professional”, should you be one, how to qualify
• “Dealer” Status–how it is different from being a “real estate professional”, what it means and what to do about it
• How to maximize depreciation deductions on your rentals – are you depreciating the driveway, shrubbery, and patio?
• How to get nice furniture in your personal home – tax-free
• Which entity is best for flipping/rehabbing/renting/lending/lease options
• Will a “satellite C-Corporation” allow you to engage in tax bracket arbitrage?
• When do S-Corporations make sense – and how to use them
• Entity structuring for asset protection
• Overseas entities – when they make sense and what are their limits
• Should entities be set up in Nevada, Wyoming or Delaware?
• How many entities should we have?
• What role should land trusts play?
• What causes liability? How do you avoid it?
• Using a vacation house for tax reduction
• Taxation of Airbnb rentals.
• Writing off things you love to do/How the IRS treats hobbies
• 1031 Like-Kind/Tax – Deferred Exchanges, some creative twists
• Installment Sales of real property
• And lots of Q&A on all non-retirement tax topics
                   o We cover Self-Directed IRA’s and similar accounts in a separate workshop
$499 per person.
Note: I charge $350 per hour. $499 would normally equal less than 1 & ½ hours of my time. The seminar should involve about 14 hours of speaking time, with lots of opportunity for Q&A. It is an excellent value.
Holiday Inn Express & Suites Sarasota
East I-75 5730 Gantt Road Sarasota FL 34233
(No room blocks, book wherever you’d like on your own)
To Order:
Email or fax (614) 750-3001.
Information I will need:
– Name of attendees
– Email, address & phone number of attendees
– I will then bill you via Pay Pal so you can pay via credit card
– You can also mail a check to Real Estate Tax Law, LLC, 666 High Street, Suite 200A, Worthington, OH 43085
– Refundable through day before the event, with a $50 processing fee kept by us, no refunds during or after the event.
John Hyre is a tax attorney, accountant and real estate investor with over 20 years of experience. His nation-wide law practice caters primarily to real estate investors, self-directed IRA & 401k owners, and small businesses. John provides a broad range of planning & tax-reduction services, asset protection & entity advice. John also handles IRS audits nationwide and has successfully sued the IRS in Tax Court. John has extensive hands-on experience at dramatically reducing tax liability, including going through client structures, tax-returns, books and practices from “top to bottom”. John’s expertise includes law that is “on the books” as well “how things are really done” at the IRS. John shall be the sole presenter at the workshop. This is a chance to ask questions at less than the usual $350 per hour.


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Services We Offer

IRA & Tax Planning
  • Self-Directed: IRAs, HSAs (powerful Health Savings Accounts), CESAs (Education IRAs), and 401(k)s
  •  “Checkbook” LLC (IRA-Owned LLC) (we help you decide whether you really need one and review why they should NOT be self-managed)
  • Screening deals for fatal prohibited transactions
  • Discussing UBIT (IRA Tax)

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