One of the biggest plans that continues to grow in popularity is the defined-contribution health-benefits plan. It is taking over for group health insurance since it is more affordable and does not have complications that you’d normally find with other plans. It is basically an allowance given to employees that they can use on their health-care needs.

One of the things that is needed in order to set up this account for employees is Section 105, a medical-reimbursement plan. This allows the employer to reimburse the employees and/or dependents for any health-insurance costs that they have to pay out of their own pockets. Businesses can also use this type of insurance for both personal and business savings on their taxes.

A lot of businesses wonder if they are eligible to enroll in this type of plan for their employees. Companies that are an S Corp, C Corp, sole proprietor, LLC, partnership or a one-person, nonprofit organization can enroll in this type of insurance coverage.

There are stipulations for each one of these types of companies:

• C Corp – Excellent insurance option and is 100 percent tax-free.
• Sole Proprietor and Partnerships – Get full use if spouse is a W-2 employee, but are not tax-exempt.
• S Corp – Not tax exempt, but can use it to track medical expenses.
• Churches and Nonprofits – Receive full use of the plan, 100 percent tax-free and can be an excellent option to use for health insurance.

Even if you don’t think you’ll qualify for the tax rebates, a company should still enroll in the program. It might provide other incentives that you’re unable to get from other types of health-insurance coverage. Find out more of what is offered from this type of insurance when enrolling your business.