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JBE, CPA
JBE, CPA, Certified Public Accountant (CPA)
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Experience:  25 Years Experience
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Tax issues

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I have a scenario and I am trying to find out the issue:
Patty is a partner in the law firm of JBP, a general partnership. The partnership pays health insurance premiums on her behalf and those payments amounted to $6,000 last year. In addition, the partnership has a medical expense reimbursement program that covers uninsured prescription drug costs (such as copays) and Patty was paid $350 from that program during the year.
What is the problem with this situation? I am lost!
You need to be a little more specific with your question? Please try again.
The partnership can certainly pay Patty's health premiums for her; that's not a problem. The partnership cannont deduct those premiums for tax purposes but will separately report them on her K-1. Patty will be eligible to deduct the health premiums on her income tax return.

A written medical reimbursement plan, which defines eligibility and participation, doesnt discriminate, and is otherwise qualified then there really shouldnt be any problems with the medical reimbursement plan of the partnership.

Do you have some other specific concern?

JBE, CPA
JBE, CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 137
Experience: 25 Years Experience
JBE, CPA and other Tax Specialists are ready to help you
A partner is not considered an employee and is therefore ineligible to participate in a medical reimbursement plan.
Customer: replied 11 years ago.
Reply to Christopher Phelps's Post: Thank you for the replies, Chritopher Phelps reply was very helpful.
Customer: replied 11 years ago.
Reply to Christopher Phelps's Post: Thank you for the response it was very helpful.
Customer: replied 11 years ago.
Reply to JBE, CPA's Post: Yes I do, thank you for asking. If Patty is a partner in the company doesn't that prohibit her from being able to accept reimbursements?

Again thank you for the initial response!

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