health care

Discussion in 'Professional Trading' started by Boomer, Dec 31, 2003.

  1. Boomer


    i am trying to put some figures together about starting an llc to trade through. i have read some prior threads on health care, and i know it is changing rapidly. what i am wondering is what do yall llc traders pay for you and your spouse? even a ballpark figure would help. thanks. and feel free to offer any additional comments...
  2. cdbern


    If you don't already have your LLC, consider a C corp. The tax advantages are far superior in addition last Sept the IRS made it possible for C corps to pay employees for non-prescription health care needs. Let your imagination take over with regards to that. Traders do a lot of sitting, need a better bed?? :) Have a cold? :) This payment is non taxable for the employee yet is a tax deduction for the corp..... I believe.

    Check out the chat archieve for Traders Accounting. They're the tax experts.

    LLC's are more limited in the reimbursement etc they can pay for.
  3. Hi Boomer:

    Here’s the big picture: A flow-thru entity such as an LLC can pay for medical insurance premiums of the owner-members with entity pretax dollars, and such payment by the entity will not be deemed income to the LLC members. The mechanics by which that is accomplished are a little complicated, but that is the net result.

    That is the end of what an LLC can do for medical expenses. Any other expenses, such as deductibles, copays, and uninsured medical expenses (such as chiropractic, acupuncture, naturopathic treatments, and other such alternative treatments that are not covered by the specific medical insurance plan) cannot be paid or reimbursed by the LLC without such payments being income to the members.

    There is an obtuse exception to what I just said that purports to get around this rule by hiring a non-owner spouse. I’m not comfortable with that exception because it all rests on the legal foundation that the spouse is, in fact and in law, a non-owner. That simply won’t fly in community property states, e.g., CA, TX, AZ, ID, LA, NV, NM, WI, and WA. In those states the spouse has an ownership interest by law. Nor will it fly in states that have a property ownership regime called “tenancy by the entirety.”

    So to avoid trying to guild the lily with the subtleties of the “non-owner spouse” exception in every individual situation, we take the position that the better way to go is with a corporate medical reimbursement plan. These medical reimbursement plans are great! Under a corporate MRP, the corporation can pay for ALL medical expenses of the corporate employee, his spouse and dependents, with corporate pretax dollars. The payments are deductible to the corporation and are not income to the employee. This reimbursement not only covers the medical insurance premiums, but all other medical expenses including deductibles, copays, and uninsured medical expenses. Moreover, under a recent Revenue Ruling, even over-the-counter medications purchased without prescription are reimbursable under certain situations.

    I wrote a fairly extensive article on corporate medical reimbursements plans several months ago that I invite you and all other viewers to review. It is on our website, and the link is:

    I think the info in that article will be helpful to you!
  4. Boomer


    thanks for all the info. another question i was trying to get a grip on is how much medical insurance premiums are for a husband/wife? i am about to graduate college, and i am trying to get a feel for expenses. thanks...
  5. Boomer, there is no crisp answer to how much medical insurance premiums cost. The premiums vary on a host of factors: how much deductible the insureds are willing to bear, the extent to which certain services are excluded from coverage entirely, what percentage of medical services are going to be covered [e.g., 80? 100?], the extent to which preventive care services are covered, the extent of copays the insureds will bear, on and on. It is like trying to compare motor vehicles--the cost depends on the make, model, accessories ordered, options, etc.

    Having said all that, my medical insurance covers me, my wife [we are both 53 years old] and our 11 year old son, and our monthly premiums are around $856.
  6. I am looking into health care right now myself. I am a young man with no health problems, no prescription meds, etc. Hence I'm just going for basic emergency care coverage. If anyone else is in my boat they may want to check out:


    for basic coverage.

    In my opinion health care is not as neccessary as it seems. You do the math. The insurance companies make the money, not you. From a trading perspective its a bad trade. I guess the only way to get an "edge" in this market would be to drive wrecklessly, smoke, eat fast food every day, and do daily base jumps. At least that would stack the odds in your favor of getting your money's worth. Either way you lose.
  7. I pay for health insurance for me and my wife out of pocket. Our plan is basically for major medical emergencies only and covers little else. With a $2,000 deductible it costs me about $210 a month. For a $1,000 deductible it would be almost $375 a month. If your employer does not contribute it can be really expensive if you want coverage that is comparable to what you would get through a large company.
  8. tmb


    In New Jersey, for a Blue Cross Blue Shield indemnity policy for 1 person, with a $10,000 deductible (the highest available), the rate is $234.55. For a $1000 deductible it would be $672.51! I doubt many states have worse rates than this.
  9. Maverick74


    Agree. insurance is basically for people that have no intention of leading healthy lives. It just doesn't make sense in the grand scheme of things. That's why I don't understand why people on the left want government to pay for their insurance since it is such a bad bet. So is car insurance but unfortunately most states force you to have it.

    A better alternative is medical savings accounts. At least the money is yours. You can take it off your income and invest the money tax deferred till your 65. And if you live a healthy life and don't need, you get to keep all the money you invested plus all the gains. That is a much better deal then paying monthly premiums. Of couse since it makes so much sense, very few people will actually take advantage of it.

    There are also medical discount card which can save you 30% off your hospital bills. For many minor procedures this will be very comparable to what you will pay for your deductible and the cards can be had for as little as $30 a month for your whole family. But make sure you get some kind of catastrophic insurance for anything serious.
  10. Maverick,

    Your idea is reat until some unexpeted accident comes along and puts you in the hospital. I had a three day stint in the hospital a few years back due something beyond my control. The bill was just over $12,000. At the time I was in college and fortunate to still be on my dads insurance. The point is sometimes shit happens and unless you have insurance a lot of hospitals and doctors will not see you. And if they do your bill could wind up being more than the value of all of you assests. That is the reason I keep insurance.
    #10     Jan 2, 2004