Retiree Medical

Types of Benefits Provided:

  • Health reimbursement account benefit
  • Post-retirement health reimbursement account benefit

Key Features:

  • Employer contributions are tax-deductible 
  • Plan investments may grow tax-free
  • Most plan benefit distributions are free of income taxes
  • Plan is in addition to retirement plan benefits (does not interfere with retirement planning

Employers may provide post-retirement benefits for employees, their dependents and beneficiaries.

Such benefit plans are desirable for employers that wish to supplement their existing retirement plans and obtain additional tax deductions by providing these benefits. These plans are also appropriate for employers that wish to provide exceptional benefits to their employees, with slower vesting & benefit accrual rules than those traditionally provided under qualified retirement plans.

Health benefit plans are subject to non-discrimination rules require that "non-highly compensated" employees benefit under the plan at a rate comparable to the rate of "highly compensated" employees. However, these requirements are much more easily satisfied than similar requirements imposed upon qualified retirement plans.

The administrative costs associated with captive life/health insurance arrangements make it a great option for companies who desire to make significant contributions to the plan (at least $50,000 annually).

§§ 101, 105, 162, 419, 419A, 505, 4976 of the Internal Revenue Code impose additional limitations on health insurance plans.