Reimbursement for health insurance premiums vs. paying expenses under HRA.
I am an owner of S-corp. The corporation has two employee-owners: me and my partner, and one straight employee. In my state having total of three employees does not qualify for corporate group insurance plans. So we want everybody to get their individual plans and the corporation to reimburse the premiums to both employee-owners and straight employees.
My understanding is that in addition to that we can setup health HRA. We want ultimately corporation to reimburse employee-owners and likewise straight employees for the following:
1. Health insurance premiums
2. Out of pocket deductibles paid during doctor-visits and emergency room visits
3. Dental payments not covered by insurance
4. Prescription medication not covered by insurance
All 4 categories combined, in my vision, are subject to $3,000 per employee per year limit, which is the same for employee-owners and straight employees.
Question: is #1 different from all other categories from taxation
stand point? I am about to treat them the same, would that be wrong?
How do I account for all that specifically when doing my payroll and taxes
? I am using Intuit online payroll service. And then prepare my taxes using Turbotax software for business. Here is what I am about to do:
* When paying (reimbursing) for either of 1 to 4 categories to straight employees I am not putting any of it on payroll, respectively they are not going on employees W2. But when doing corporate 1120S I deduct them under I-18 “Employee benefit programs”
* When paying (reimbursing) for either of 1 to 4 categories to owner-employees I enter amounts in Intuit “S-Corp Owners Health Insurance”. (There is actually other category in Intuit called “Company HSA Contribution” – not sure what that is). Then when doing taxes this payments become part of owner-employees W2 and respectively I-7 deduction
for “officers compensation”.
How wrong is that?