Tax Issues Wholly Owned SCorp, H/W IFP or Small Group?

[yorkriver1]

The accountant for my client, spouse of company founder, S Corp, owner and one 30 hour + EE on payroll, has recommended individual coverage for the owner's family instead of doing small group.

The spouse is working a day job until mid March, to quit and work in the family business. I come in as the broker for the family's health coverage.

The plan was for them to have one month of COBRA, and do tiny small group 4/1/17. My BCBS carrier will allow the owner/family to be the sole insured if other payroll 30 hour + EE's have valid waivers. The one EE's spouse carries them on her employer group.

The owner's accountant has now advised them that for taxes, individual insurance will work better? My tax pro says no, it's fine.

There are complications in IFP scheme, not least, my carrier will never pay me commission on a plan I write after 3/1/17 effective date outside open enrollment, never mind that 2018 is likely to be chaos in IFP.

What do your small business S Corp owners do about taxes?

 

[scagnt83]

Your likely screwed on this one. Sure they "can" do a group. But they also dont have to. And if they are qualifying for subsidies, its likely MUCH more beneficial financially for them to go the exchange route.

I know they probably are a sucessful business. However, it is possible with a SCorp to have a HUGE reduction in taxable income once qualified plans and deductions are accounted for.

Usually this only applies to very small firms that are made up of an owner and just one or two employees... and often one of the employees is the spouse (often for tax reasons as well).

Between two spouses, they could exclude well over $100k combined from their AGI... assuming the right Retirement Plan is in place. And that is not even counting personal and business deductions.

 

[rcduggan]

Your likely screwed on this one. Sure they "can" do a group. But they also dont have to. And if they are qualifying for subsidies, its likely MUCH more beneficial financially for them to go the exchange route.

I know they probably are a sucessful business. However, it is possible with a SCorp to have a HUGE reduction in taxable income once qualified plans and deductions are accounted for.

Usually this only applies to very small firms that are made up of an owner and just one or two employees... and often one of the employees is the spouse (often for tax reasons as well).

Between two spouses, they could exclude well over $100k combined from their AGI... assuming the right Retirement Plan is in place. And that is not even counting personal and business deductions.

what he said ^^^ nicely done, bro.

tell them you're not an accountant, you're the insurance guy. if s-corp owner qualifies for subsidies then this is a no brainer. if they dont, then insert the small group.

 

[yorkriver1]

Thanks, turns out not wanting to offer benefits to new EE's yet, too. Ancillaries for rest of this year, with the IFP.