Millions of Americans are unaware of the power of an HRA or “Health Reimbursement Arrangement”, in fact, many don’t even know that they exist.

This is a very important question and something we often analyze for clients in our office. In fact, many clients rush to put their spouse on payroll, but for the wrong reasons and it could actually be a costly mistake.

This new program allows states to establish tax-exempt “Achieving a Better Life Experience” (ABLE) accounts, which are tax-free accounts that can be used to save for disability-related expenses.

This boils down to taxpayers reporting if they got a credit, how much, and if not, did they pay for their insurance and did they avoid the ‘penalty’ for not caring insurance under the ACA.

For example, this year (2014) your spouse could contribute up to $17,500 (or $22,500 if over 55) and your Company take a tax deduction for the W-2, while your spouse doesn’t claim any income on the W-2. The exact paycheck to the spouse, and deductible to the Company, is actually $20,178 (for a deferral of $17,500), because the company must withhold and match FICA of 7.65%, for a total of 15.3%. Nonetheless, the ultimate tax benefit is significant due to the ‘time value of money’ and the opportunity of the spouse to create and fund a 401k.

With all of the news coverage, opinions and justifiable confusion with implementation of its final stages, I would like to provide some strategies that can help you through this maze.