What is a Section 105 plan?
A Section 105 plan is an employer-funded medical reimbursement program authorized under Section 105 of the Internal Revenue Code that allows businesses to reimburse employees for qualified medical expenses on a tax-free basis. The most common form is a Health reimbursement arrangement. These plans require written documentation, substantiation of medical expenses under Section 213(d), and non-discriminatory benefit structures under Section 105(h). Employers claim reimbursements as business deductions while employees receive benefits tax-free.
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