NASE HRA Calculator

NASE HRA 105 Potential Savings Calculator

Calculate Your Effective Income Tax Rates

For small-business owners, an HRA Plan can net a tax savings of hundreds or even thousands of dollars. To estimate how much an HRA might save you in taxes, please complete the requested information below.

If you have not already done so, determine if you personally can benefit from an HRA Plan by clicking here.

It will help if you have a copy of your latest personal federal and state tax returns and a list of one full year's medical expenses to complete your Effective Income Tax Rates and Estimated Tax Savings.

  1. Enter MONTHLY dollar amounts (whole dollars only ... do not use cents)
  2. Make entries ONLY in the        colored inputs.

Actual savings may vary depending on personal tax issues and other factors that effect your personal taxes. Use your last year federal and state tax return information to calculate your effective income tax rates. If you expect current year taxes to be different than the prior year, enter projected income and tax amounts. If you don't have tax returns, input a tax rate in both the federal and state white boxes.

Federal Income Tax Rate Calculator
Taxable Income (Federal 1040)
$
Income Taxes Paid (Federal 1040)
$

Effective Federal Tax Rate
%

OR

Estimated Federal Tax Rate
%
State Income Tax Rate Calculator
Taxable Income (State Tax Return)
$
Income Taxes Paid (State Tax Return)
$

Effective State Tax Rate
%

OR

Estimated State Tax Rate
%
HRA Estimated Tax Savings Calculator
What is the tax structure of your business?
Amount
Annual
Monthly health insurance premium1
$
$
Monthly long term care insurance premium1,3
$
$
Monthly out of pocket expenses2
$
$
Total Annual Medical Expenses
$
Estimated Savings
Tax Rate
Savings
Estimated social security and Medicare tax savings
%
$
Estimated federal income tax savings**
%
$
Estimated state income tax savings**
%
$
Total HRA estimated tax savings
$

1Sole Proprietors, Partners, and S Corporation Principles generally qualify to deduct health insurance premiums as an adjustment to gross income on their personal income tax returns. Under an HRA plan, by converting premiums to a business expense, you exclude premiums from Social Security and Medicare taxes.

If you are a sole proprietor OR own 2% or more in stock of an S Corporation and are an employee. Do you or your spouse qualify to participate in an employer paid medical insurance plan?

Regardless of whether you choose to participate or not, if you answer YES to the above question, you may not qualify to deduct your insurance premiums on your federal 1040 tax return as an adjustment for self-employed health insurance but you still qualify to take the premium deduction on Schedule A if you itemize deductions.

2Out of pocket expenses include all qualified medical expenses not reimbursed under insurance coverage. This includes doctor office co-pays, prescription drugs, eye care, dental, and other medical costs as approved under IRS regulations. For a list of expenses allowed by IRS rules refer to Publication 502, Medical and Dental Expenses at www.IRS.gov.

**2% or more owners and spouses of an S Corporation are not exempt from income taxes on out of pocket expenses.

The above calculations do not take into consideration the tax effect of being able to take deductions on your personal 1040 tax return versus an HRA plan if your medical expenses exceed the AGI IRS rule.

If your taxable business profit exceeds the FICA tax base limit, special tax considerations apply and you should speak with a tax professional to determine the benefits of an HRA 105 plan.

The examples and amounts of potential savings are of a general nature and may not apply to your particular situation. For specific tax advice, please consult your tax professional.

Courtesy of NASE.org
https://www.nase.org/become-a-member/member-benefits/health-resources/hra105/calculator