A Healthy Loophole

Congress just declined to give the self-employed a 100% deduction for health insurance, but there's a back door for some small companies. You can offer medical insurance as an employee benefit, employ your spouse, and let your spouse cover the family. As long as all employees are eligible under the same rules, it's 100% deductible. Many accountants are suspicious of this little-known loophole, but the Internal Revenue Service admits it's legit. Iowa-based Midwest Financial Services Ltd. (800 298-2923) will custom design and implement a benefits plan for your company that will satisfy the IRS. Midwest also guarantees to pay any penalties, fines, or interest that might result from an audit.

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