H2R CPA Blog
Tax Reform Resource Center
by H2R CPA Team
In December, Congress passed the 21st Century Cures Act. The long and complex bill covers a broad range of health care topics, but of particular interest to some businesses should be the Health Reimbursement Arrangement (HRA) provision. Specifically, qualified small employers can now use HRAs to reimburse employees who purchase individual insurance coverage, rather than providing employees with costly group health plans.
The need for HRA relief
Employers can use HRAs to reimburse their workers’ medical expenses, including health insurance premiums, up to a certain amount each year. The reimbursements are excludable from employees’ taxable income, and untapped amounts can be rolled over to future years. HRAs generally have been considered to be group health plans for tax purposes.
But the Affordable Care Act (ACA) prohibits group health plans from imposing annual or lifetime benefits limits and requires such plans to provide certain preventive services without any cost-sharing by employees. And according to previous IRS guidance, “standalone HRAs” — those not tied to an existing group health plan — didn’t comply with these rules, even if the HRAs were used to purchase health insurance coverage that did comply. Businesses that provided the HRAs were subject to fines of $100 per day for each affected employee.
The IRS position was troublesome for smaller businesses that struggled to pay for traditional group health plans or to administer their own self-insurance plans. The changes in the Cures Act give these employers a third option for providing one of the benefits most valued by today’s employees.
by Alex M. Kindler, CPA/ABV/CFF/PFS, CVA, MBA
There are many circumstances which might require a professional assessment of the value of your business, such as selling the business, succession planning, divorce, retirement planning and estate planning. Because a business is a significant asset to owners, lenders, creditors and other parties of interest, it is critical to obtain an objective, independent and well-supported appraisal of its value.
Valuing an ongoing business involves more than an appraisal of the underlying tangible assets. It requires an analysis of a company’s financial performance as well as an understanding of its market and industry. The value of a closely held business is primarily determined by the future economic benefit derived by its owners.
At H2R CPA, our IRS-qualified appraisers provide comprehensive reports that identify and explain the value of a business. When working with business owners, we not only provide a valuation, but also educate the business owner as to the steps the company can take to enhance its value going forward.
Contact us at 412-391-2920 or email@example.com for a complimentary consultation.
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