Posts Tagged ‘HRA’

The Most Ridiculous Tax Ever

Monday, July 15th, 2013

Suppose you have a Section 105 Health Reimbursement Arrangement. Do you know that you have a tax deadline approaching in just 16 days? Jason Dinesen has an excellent post on this.

A Health Reimbursement Arrangement (HRA) is a common method for a sole proprietor to provide health insurance to himself and his spouse. He hires his spouse, and then (in many states) qualifies for health insurance. This allows for what is called the HRA to be put in force.

Under ObamaCare, every self-insured health plan must pay a $1 per covered individual “Patient Centered Outcomes Trust Fund Fee.” There is no exemption for small plans. Thus, if you have an HRA, you must file Form 720 and pay $1 per person covered–probably an average tax collected of $2. This is due with the second quarter excise tax filings (July 31st) on an annual basis. I have a couple of clients who use this; they must complete Form 720 and pay…$2 each.

How much will it cost the IRS to administer this for the HRAs? It doesn’t take a brain surgeon to know that it’s a lot more than the average $2 tax paid. The form must be processed. Just cashing the check will cost the government more than $2.

It’s yet another way that ObamaCare is unpopular, unworkable, and insane.