If you are self-employed or a single-member limited liability company (LLC) taxed as a proprietorship and your spouse is your only eligible employee:

Your business can reimburse your employee-spouse for the cost of health insurance, whether purchased through a public health insurance exchange or an insurance company.

Your health insurance reimbursement to your employee-spouse works with a family coverage policy, meaning that you reimburse your spouse for coverage that includes you and your family’s dependents.

Your business deducts the reimbursement to your spouse as a business expense. It’s an employee fringe benefit.

Your spouse receives the benefit tax-free.

Your reimbursement plan can include all medical expenses. You don’t have to limit it to health insurance.

Structuring the reimbursement correctly

creates a business expense deduction,

saves on employment and income taxes for the business owner and the employee-spouse,

avoids the $100-a-day penalty for reimbursing individually purchased insurance, and

avoids any state-imposed individual mandate penalty for not having health insurance. (The Tax Cuts and Jobs Act eliminated the federal mandate penalty, so no worries there.)

If the insurance is purchased through an exchange, individuals may receive premium tax credits—government subsidies to help pay the insurance premium cost. To receive subsidized coverage, an individual must have a low income (not more than 400 percent of the federal poverty level) and must not be eligible for an employer-sponsored group plan.1

Unlike most other citizens, proprietorships cash in on tax savings when utilizing this plan. ... Log in to view full article.