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Small Business Employee Benefits and HR Blog

Tax Free Individual Health Insurance Using HRAs, POPs and Payroll Reimbursement Arrangements

Tax free individual health insurance allows employers and employees to take a tax deduction on employees’ payments for individually purchased health insurance products. 

The general concept of tax free individual health insurance is that a company allows each employee to voluntary elect to reimburse themselves (tax free) for individually purchased health insurance policies.   Employee generally save 20-40% of their health insurance costs in taxes, while employers save 7.65% on every dollar.

Tax free individual health insurance is the ideal benefit solution for employers that:

  1. Do not offer health insurance
  2. Have part-time employees who are not eligible for the group plan
  3. Have employees who want to purchase individual dental, vision and critical illness on pretax basis.
  4. Have employees who want to pay COBRA premiums on pretax basis.
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