Can a Gym Owner Deduct Health Insurance Premiums?

For the past few decades, healthcare costs have been rising faster than inflation, with no signs of slowing down. Unfortunately, this trend leaves many companies searching for ways to save themselves money while minimizing the impact of this costly health care on their business.

Fortunately, as a gym owner, you may have options when it comes to these health insurance premiums. Through this blog post, we want to help you better understand how you can take advantage of the available healthcare-related tax deductions and how they can help reduce your business costs.

Deducting Health Insurance Expenses- The Basics

Gym owners, like other larger companies, can typically deduct some of their health insurance-related expenses from their federal business taxes. In many instances, these gym owners can:

• Deduct payments made to group health insurance premiums
• Deduct contributions to a Health Savings Account
• Set aside tax-advantaged dollars to help employees buy their own coverage

When gym owners take these deductions into account, not only can they make offering health coverage for their employees more of a possibility. But these deductions can also significantly help the business financially.

In What Situations Can A Gym Owner Deduct Health Insurance Premiums

One of the largest concerns for any business is whether contributions toward health coverage premiums are deductible. This answer can be broken down into the following:

• When an employer pays money towards health insurance premiums for an employee, their tax dependents, or their opposite-sex spouse, these contributions are generally 100% deductible as a business expense. This is true, no matter if the business is a partnership, sole proprietorship, corporation, or LLC. In addition, these regulations also apply to C corporation owners and LLCs, which are classified as corporations. In these instances, these business owners are considered an employee of the business for premium contribution tax treatment purposes.
• When an employer is considered to be self-employed, their contributions for themselves, their opposite-sex spouse, and tax dependents are also 100% deductible as a business expense.

One other vital factor to note is that some smaller businesses may also qualify for health insurance tax credits under the Patient Protection and Affordable Care Act. These health insurance tax credits are an excellent way for a business to offset their insurance costs. However, to qualify for these tax credits, the company needs to:

• Employ fewer than 25 employees, who make either $50,000 or less every year.
• Offer its employees a group health insurance policy and cover at least 50% of the premium costs.
• Purchase this policy through the SHOP Marketplace if any SHOP plans are available.

Those businesses that qualify for these health insurance tax credits can receive up to 50% of the contributions made toward their employee's premium costs.

Does Your Corporate Structure Affect Your Health Insurance Premium Deductions

When it comes to premium deductions, there are quite a few factors that can influence your ability to receive these deductions. That is why to have a better understanding of your health insurance premium deduction eligibility, you need to look into your gym's corporate structure. Consider the following:

Partners and LLC Members

If your gym operates as an LLC or a partnership, then for tax purposes, you are considered to be self-employed. This means that

• If you are in this category and you pay your own health insurance premiums, you can claim the page one deduction
• If the LLC or the partnership pays premiums, then special tax reporting rules apply to your return. But under these situations, you can still claim the deduction for your health insurance premiums paid for your coverage.

Business with Employees

If your gym has employees and you pay their health insurance premiums. These amounts can then be deducted. You just need to make sure they are deducted on the appropriate tax form and line for employee benefit program expenses.

Other Health Deductions A Gym Owner Can Take

What many gym owners also fail to realize is that when it comes to health insurance coverage, they not only have a variety of options, but they also are able to deduct other health-related expenses that can make their health care costs significantly lower. Consider the following additional health care deductions:

• Health Savings Account (HSA): If the health plan your gym offers is eligible for use with a Health Savings Account or an HSA, the contributions that you and your employees make to these accounts are tax-deductible up to the annual limits. These annual limits often depend on your age, the date you become eligible, the date you stop being eligible, and the type of high-deductible health plan you have. Yet, if the money in the HSA is used to pay for qualified medical expenses, many businesses find that they will not need to pay small business taxes on it.
• Tax-Advantaged Dollars: If you are a gym owner who wants to help their workers with their health coverage but cannot afford to sponsor a group health insurance plan. You can still help them buy coverage. Even better, this coverage can be provided in a tax-advantaged way. Under federal law, specific businesses can fund special health reimbursement accounts for their workers to purchase family or individual health insurance. The money deposited into these accounts is tax-deductible for qualifying small businesses up to a certain limit.

Let NEXOFit Help Get You The Savings You Need

NEXO Fitness Solutions was created with the goal of solving the many problems faced by gym owners. Specifically, their insurance issues, equipment financing, and marketing campaigns. Today, our NEXOFit team makes it a point to offer a variety of services and resources to help both small and large gyms succeed in this ever-competitive market.

That is why, if you are looking for ways to lower your business costs or find ways to save on your health insurance plans. Do not wait any longer. Contact our team today to see what services we can offer you or go over any questions or concerns you may have.