Tax-free Health Insurance Reimbursement Plan (THIRP)

Avoid the Hassle of Group Health Insurance, Lower Your Taxes, and Save Your Employees Money on Health Coverage!

A Tax-free Health Insurance Reimbursement Plan (THIRP) is a valuable benefit employers can offer their employees to reimburse them for individual and family health insurance plans.

A THIRP is not health insurance; rather it is a tax-favored, health insurance reimbursement benefit to repay employees for their premium payments.

Who can establish a THIRP?

Any employer who wants to offer their employees a credible health benefit instead of an expensive Affordable Care Act (ACA) group plan can establish a THIRP.

There is no minimum or maximum number of employees required in order to establish a THIRP. Unlike ACA-qualified employer-based health insurance, a THIRP can be used by companies of any size, and can benefit full or part-time employees and their families.

Can self-employed individuals or sole proprietors with families enroll in a THIRP?

Self-employed, sole proprietors and spouses who work for one’s business can also use a THIRP for to reimburse themselves for both individual and family benefits. By having the business reimburse for the cost of the family’s health insurance, self-employed people can lower their FICA/self-employment taxes and save hundreds of dollars every year.

Can a THIRP be used for those who qualify for an ACA subsidy?

Since a THIRP is not a health insurance plan, it will not affect eligibility for a health tax credit (subsidy) for either the employee or the employee’s spouse (unlike an ACA group plan which automatically disqualifies the spouse’s ability to get a subsidy). The reimbursement employees receive for premiums is tax-free, so it won’t affect taxable income that affects eligibility for a subsidy.

What are the benefits of offering a THIRP instead of a group health insurance plan?

Offering employees a THIRP to repay their premium payments allows them to make personal choices about health insurance. Employees can work with a licensed, independent agent to shop for individual and family plans to suit their budget, apply for subsidies, and watch for rate changes to adjust to a plan of their preference without being denied coverage for pre-existing conditions.   

How much do employers contribute to a THIRP?

A THIRP is a defined contribution benefit. Employers can decide exactly how much they want to contribute monthly to their THIRP. The money they contribute to a THIRP is considered a tax-deductible business expense.

An employer can designate the amounts of contributions based on different job classifications such as date of hire, hourly status, job description and location.

Hassle-Free Account Maintenance 

Contributions to a THIRP are dispersed through payroll by a THIRP administrator. The employer does not need to place THIRP funds in an outside account. The employer is not involved in approving charges, or providing group health insurance coverage.

The employee simply submits a record of premium payment each month for reimbursement of approved charges by the THIRP administrator. It’s that simple.

Easy THIRP Account Setup

The last thing your business needs is a time-consuming, complicated stack of paperwork. In a short 15-minute telephone call, we can typically get all the initial THIRP-related setup taken care of. We make it simple for you to start benefiting from your THIRP as soon as possible because we know the questions to ask to avoid delays in your benefits. These questions are pretty simple:

Setup for self-employed couples: Before setting up a THIRP for your family’s reimbursement benefit, you need to establish the employee/employer agreement between your spouse and yourself. You’ll need to describe job duties and define hours your spouse works for the business.

When setting up a THIRP for multiple employees, you’ll want to think about eligibility requirements since a THIRP can be tailored to different levels of reimbursement benefits to suit varied classifications of employees (hours, age and length of employment—we can help you with this). You’ll also want to decide how much your reimbursement will be.

Once your account is established, your employees simply submit proof of their health insurance expense and the administrator will issue the reimbursement. 

There is a one-time $600 setup fee to establish your THIRP, plus a $35 enrollment fee per employee. After that, there is a $12-per-month administrative fee per employee. 

Valuable Tax Advantages

The contributions an employer makes to a THIRP account are tax-deductible business expenses recognized by the IRS. Their employees then benefit from tax-free repayment for premiums paid. THIRP reimbursements do not affect an employee’s gross taxable income.*

For example, an employer may decide to reimburse each of his or her employees up to $250 per month towards the cost of his or her health insurance premium. The employee can shop for the individual health plan of his choice, receive tax-free reimbursement for the plan premiums via his THIRP, and still be able to apply for a health tax credit (subsidy) if he purchases a plan offered on the state exchange.

We encourage employees to seek the guidance of an experienced, licensed health insurance advisor to match their THIRP benefits with the right ACA-approved plan, on or off the exchange. An HSA for America Personal Advisor can help employees determine whether or not they qualify for a subsidy, and even share additional tax-favored ways to improve subsidy eligibility.

How a Self-Employed Couple Can Use a THIRP

A THIRP is an effective, tax-free way for self-employed individuals to reimburse themselves the cost of their premiums. Rather than claiming a health insurance deduction on their IRS form 1040, self-employed individuals can now claim THIRP contributions as a schedule C expense!  

Using a THIRP, your business can reimburse an employee-spouse for the cost of family health insurance premiums. This makes the entire expense a tax, saving your business the additional Medicare and self-employment taxes.  

For example, consider a family paying a monthly health insurance premium of $1,000. Because they are self-employed, they are already eligible to write off the cost of their health insurance on their IRS 1040 form. However, by having the business reimburse for this expense, they are also able to avoid the 15.3 percent self-employment tax.

The family in this example would be able to save an additional $153 per month, or over $1,800 per year.

Tax-free reimbursement plans applied under section 105 of the IRS code have been used by big businesses and corporations for years to lower health coverage expenses. The regulations and paperwork have deterred many small business owners from taking advantage of such plans. HSA for America makes it simple and affordable for small businesses to take advantage of this smart benefit.

Can a THIRP be used to repay premiums for a health plan combined with a health savings account (HSA)?

Yes! In fact, it’s a very smart combination to consider. By enrolling in an HSA-qualified health insurance plan, you can still use your THIRP for premium payment reimbursement, and fund your HSA to pay for deductibles and copays.

An employer who establishes a THIRP benefit decides on a fixed monthly contribution to a tax-free account that’s specifically used to reimburse health insurance premium payments made by the employee. A THIRP is designed for premium reimbursement only—it cannot be used for any other health care expense. Even so, a THIRP can cut an employer’s health care costs by half when compared to ACA-qualified group plans.

The HSA for America THIRP Tax-Saver 100 Percent Money-Back Guarantee

We are so confident in the exceptional value you’ll experience with a THIRP that we guarantee you will reduce your taxes by at least THREE TIMES the actual cost of your THIRP or we will cheerfully refund 100 percent of what you’ve paid for your THIRP!

To get started taking advantage of excellent THIRP benefits for you and your employees, enter your contact information here so that your Personal Advisor can begin the simple process.

Your HSA for America Personal Advisor can help you today at (866) 749-2039. You can also schedule a consultation at info@hsaforamerica.com for whatever time is best for you!

*(Gross income does not include amounts paid, directly or indirectly, to the taxpayer to reimburse the taxpayer for expenses incurred by the taxpayer for the medical care (as defined in § 213(d)) of the taxpayer or the taxpayer's spouse or dependents (as defined in § 152)). – IRS Code § 105(b) 

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749 S. Lemay Ave, Suite A3-116
Fort Collins, CO 80524
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