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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Health plan for spouse of self-employed

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: Can you please advise if I have an owner of a LLC with a spouse and family contract. Since the employee (an owner) is not eligible, would the spouse and dependent be eligible for HRA reimbursement as long as they are not listed on the LLC Corp paperwork? How would that work?

A: Assuming that the spouse is an employee of the business and you are referring to reimbursement of uninsured medical expenses, then there is clear authority from IRS with regard to medical expense reimbursement plans (MERP) but nothing specifically pertaining to HRA plans. Still, it is safe to assume that the same tax treatment applies. No special provisions are required to set up an HRA in this case. An HRA plan already includes a provision excluding self-employed persons that would exclude the LLC member. But an employee spouse may qualify as an employee under this benefit plan. 2005 clarified that the employee may include expenses incurred on behalf of "dependants", in this case the LLC member. There are articles that include specific tax law references in the articles section at and the revised instructions for Form 1120 also contain detailed information on some aspects of this topic.


More resources:

"Third Party Claim Validation in Uninsured Health Plans" "Consumer-Driven Health Plans for Small Businesses" SIMPLE Cafeteria Plans for Small Businesses Tax Update for Consumer-Driven Health Plans Terms of Service Agreement "25 Reasons Small Business owners Choose Heath Reimbursement Account (HRA) Plans" "HRA vs. MSA: Which is Best for Me? Comparing Health Reimbursement Arrangements with Medical Savings Accounts" "HRAs Help Owner/Employees" HRA Design Worksheet