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Can you reimburse yourself for health insurance cost from your company?



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We all need health insurance whether we are responsible for just ourselves or an entire family. If you are the owner of a company that either chooses not to participate in a group health insurance plan or does not have enough employees to do so, then you are stuck buying health insurance independently. Self-employed health insurance premiums may seem expensive, but your company can reimburse you for the expense.


The I.R.S. considers any ordinary expenses of doing business, such as health insurance, a taxable write-off for the business. Therefore, ordinary expenses paid by a business owner from his or her personal funds are reimbursable by his or her company and the company is then able to take it as an expense.


When a business owner writes a personal check for his health insurance premiums he is then able to submit the receipt to his company. The company then writes a check to him and inputs the check into the companies accounting records as an expense for health insurance. The business owner is then compensated for his out-of-pocket premiums and the business is able to use the expense to lower its taxable income.


However, some rules do apply. You can deduct 100% of your health insurance premiums only. Co-payments, deductibles, prescription cost are not considered ordinary cost of doing business. They are considered personal expenses and therefore aren’t reimbursable. If you are an entity other than a sole-proprietorship you must make this option available to all employees if you have them. Independent contractors, those you give a 1099 to, are not considered employees.


If you are a sole-proprietor, however, you can only use this method if you do not have other insurance available to you. For more information on how a company reimburses for health insurance talk to your local accountant.


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