Generally speaking, current or former W-2 employees, and their qualified dependents, are eligible to participate in your company's Zane Plan and receive reimbursements 100% tax-free.  

Who are qualified dependents?

A qualified dependent must be a dependent per the IRS (federal) definition. Qualified dependents include a spouse, child(ren) or qualified relatives. For detailed definitions see: IRS Publication 502.

Can our owner participate in the Zane Plan?

Yes. However, whether or not owners can receive reimbursements 100% tax free depends on how the company files, and the owner's status.

  • C-Corporation Owners: C-Corp owners may participate in the Plan and receive all reimbursements 100% tax-free.
  • Sole Proprietors, Partners, or S-Corp shareholders that own >2% of the company's shares:  These Non-C-Corp owners can use the platform to reimburse and track expenses. However, reimbursements must be reported on the owners'/partners' wages (on their W-2 and 1040 forms) and are subject to federal income taxes. 

Can 1099 contractors participate in the Plan?

Technically, the answer is no. However, many businesses use Zane's Software to offer health benefits to 1099 contractors. The primary difference is that, unlike W-2 employees, 1099 contractors must report all reimbursements as income on their personal tax return.

Can a company set other eligibility requirements for employee participation? 

Yes. Within your company's plan design, you set specific eligibility requirements for participation such as a waiting period, job classification, part-time/full-time status, or enrollment in the company-sponsored group health plan. 

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