What is it?

For about the last 25 years, the IRS has allowed small businesses to adopt Mediacal Expense Reimbursement Plans for their employees. The plans allow for your business to pay for things like insurance premiums, dental care, eye care, prescription drugs, etc. on behalf of your employees. The logic is that even though most people have some insurance coverage they still pay out of pocket costs like their portion of premiums, deductibles, doctor visit payments, kids braces, co-pays on prescription drugs, etc. All of these items can be included in the plan as reimbursable expenses. The good news is that the reimbursements are a tax deduction for your business but are not taxable income to the employee.

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