The Section 105 medical plan is ideally suited for the one-owner proprietorship business with no employees other than the owner’s spouse.
Proprietors in this situation can hire their spouses as their only employees, cover their employee-spouses with Section 105 medical reimbursement plans, and count the reimbursements under the plans as the sole remuneration to the spouses. In this scenario
employer-spouses (proprietors) deduct the 105 reimbursements as business expenses on their Schedule Cs in the employee welfare benefit category and
employee-spouses receive tax-free fringe ... Log in to view full article.