Stop paying your medical bills with after-tax dollars

You’re already paying for deductibles, prescriptions and co-pays. With the right setup, your business could pay you back for them, tax-free.

In this episode, Mike Jesowshek, CPA, explains how a medical expense reimbursement plan (also called an owner HRA or Section 105 plan) can turn out-of-pocket medical costs into business deductions. He covers who qualifies, which entity types work for single and married owners, and the workaround for S corp owners. He also walks through the paperwork you need, how to report the plan on your tax return, and the common mistakes that can cost you the deduction.

👉Find out how much your business could save in taxes:

TaxSavingsPodcast.com/scorecard

🚀 Book your free demo call today. Click here or visit:

https://taxelm.com/demo/

00:00 Why Your Medical Costs Aren’t Fully Deductible
Mike explains who this strategy is for (owners with no employees outside the family) and why high out-of-pocket medical costs often get little or no deduction as itemized deductions, even in a costly year.

03:00 What a Section 105 Plan Is and Who Qualifies
How a medical expense reimbursement plan lets your business reimburse an employee for qualified family medical costs, turning after-tax spending into pre-tax business deductions. It also covers the no-employee requirement and how other businesses you own could affect whether you qualify.

06:00 Entity Type, Marital Status, and the S Corp Workaround
Why single owners need a C corp and married owners can hire their spouse through a sole proprietorship, partnership, C corp, or rental property. Mike also explains why the plan doesn’t work in an S corp and how moving part of your income into a separate entity can get around that.

09:00 Setting Up the Plan and Reimbursing Expenses
The paperwork you need, including a written plan document, employment agreement, job description, and time log. Mike also covers which expenses qualify under IRS Publication 502 and how receipts, a reimbursement log, and payments from the business account support each claim.

13:00 Reporting the Deduction on Your Tax Return
Where the deduction goes on a Schedule C, partnership return, C corp return, or Schedule E rental, why these costs no longer belong on Schedule A, and the Form 720 filing that goes with the plan.

16:00 Is It Worth It? A Real Number Example
How $50,000 in qualified medical expenses could create more than $17,000 in tax savings. Mike also explains why the plan usually isn’t worth it under $5,000 in costs and when it starts to make sense.

18:00 Mistakes to Avoid and Key Takeaways
The most common mistakes, including missing paperwork, a spouse who doesn’t do real work, outside employees, using an S corp, and improper reimbursements. Mike closes with why getting the structure right matters, especially for families with ongoing medical costs.

Podcast Host:

Mike Jesowshek, CPA – Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com

🚀 Visit: https://www.TaxSavingsPodcast.com

🚀 Check Out TaxElm: https://taxelm.com/

🚀 Join our Free Facebook Group: https://www.facebook.com/groups/taxsavings/

🚀 YouTube: www.TaxSavingsTV.com

👋🏼 GET IN TOUCH
You can Tweet @MJesowshek with any feedback, ideas, or thoughts about the lessons you've learned from the episodes. We want to thank you personally for tuning in 🙏

🙌LEAVE A REVIEW
If you enjoy the podcast, please leave a 5-star review on Apple Podcasts or Spotify—it helps more business owners find the show ⭐