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December 15, 2000

Maximize tax savings
with AgriPlan/BizPlan

Texas Farm Bureau members who are self-employed have the opportunity to join the ranks of some 50,000 farmers, ranchers, and small business owners who each enjoy average annual tax savings of $2,450 on health insurance premiums. AgriPlan/BizPlan, the nation's largest administrator of Section 105 plans, offers a means for qualified, self-employed individuals to deduct 100 percent of their health costs, provided they qualify under Internal Revenue Service guidelines.

"Twenty-four hundred and fifty dollars is a good piece of money, a good hunk of cash," says Kevin Pickard, regional sales director in Texas for TASC (Total Administrative Services Corporation), preparers and third party administrators of the AgriPlan/Biz Plan program. "There isn't anybody out there who couldn't use it, whether they use it to pay for a college education, put it away for retirement or just pay for daily expenses that are hitting all of us all the time."

Pickard says the plan is particularly beneficial to those self-employed individuals who do not currently take full advantage of allowable deductions.

"AgriPlan/Biz Plan can be very advantageous to eligible Texas Farm Bureau members. So many are not taking deductions on all medical expenses. The program is set up to help them maximize tax savings. As a matter of fact, we offer a guarantee that if we do not help an individual find at least $500 in tax savings, we'll return the cost of the program," Pickard adds.

According to Pickard, the tax savings program is based on an IRS code that has been on the books since 1954. Here is how it works: By using AgriPlan/BizPlan, a self-employed farmer may offer an employed spouse a medical reimbursement package. The reimbursement package covers any costs incurred by the employee and any family members (including the employer him/herself). The end result is a 100 percent deduction for the employer's family's medical costs.

Don Neumann, TFB member benefits and services director, suggests that the AgriPlan/Biz Plan program is especially attractive to those concerned with spiraling medical costs. Neumann cites a Bureau of Labor Statistics report showing that medical costs rose at a rate that exceeded the General Consumer Price Index (CPI) by 10.97 percent between July 1992 and June 1998, with higher costs anticipated in the future. In fact, says Neumann, two national surveys of businesses found employers expecting premiums to increase by nine and eight percent this year.

The Tax and Trade Relief Extension Act signed into law by President Clinton accelerates the percentage of deduction for health insurance premiums for the self-employed, allowing a 60 percent in 1999-2001; 70 percent in 2002; and 100 percent in 2003.

"While this is good news for the self-employed, those qualifying for Section 105 have a greater medical deduction available than the above premium percentage," Neumann points out.

The 100 percent deduction level does not take effect for four years while Section 105 is available right now, he says. Also, under the premium deduction, only health insurance premiums will be 100 percent deductible. With Section 105, qualifying business owners and farmers are able to deduct 100 percent of health insurance and dental insurance premiums for an eligible employee(s) and their families. This also includes qualified long-term care insurance, uninsured medical, dental and vision care expenses for an eligible employee(s) and their families and life and disability income insurance premiums for an eligible employee(s).

Moreover, the premium deduction is only available at the federal level. State and social security taxes remain the same. Section 105 is a tax deduction at the federal, state and social security tax levels.

"Even when the self-employed health insurance deduction is fully phased in, self-employed individuals will save 75 percent more with Section 105," he says.

TFB members are entitled to a members-only annual discount on the already low $175 enrollment fee.

For more information call 1-800-422-4661 and press 7.