SECTION 105 - MEDICAL REIMBURSEMENT PLANS
If you think it costs too much to stay healthy, we've got bad news and we've got good news. The bad news, of course, is that you're right. Health care swallows nearly 16% of our GNP, and topped $5,440 per head in 2002. 2003 figures aren't available yet--but they didn't go down.
Soaring health premiums regularly make front page news. The average family premium, which stood at $9,160 in 2003, will climb to $15,545 by the end of 2006. How can you stay in the game? What will you do when your employees' health insurance costs more than their house payment?
The good news is you don't have to feel that way IF you have a better stratagey.
PLEASE UNDERSTAND THIS: BUYING HEALTH INSURANCE IS SO MUCH MORE EXPENSIVE THAN BUYING HEALTH BENEFITS!
Instead of buying expensive health insurance, why not only buy the health benefits you use?
You insure your home, but not for a $60 plumber bill. You insure your car, but not for a $40 oil change, it would cost a fortune. So, why insure employees for a $50 office visit? Raising health insurance deductibles works the same way, and can cut premium costs up to 50%
Here's the answer:
By moving to a high deductible insurance plan and then adding a Section 105 medical expense reimbursement plan..you can reimburse employees for medical costs they incur for themselves and their families up to the deductible..TAX FREE
Optionally, you can add supplemental "gap" plans that reimburse you, the employer, for accidents, surgeries and other medical costs that would otherwise be reimbursed from you.
WHAT'S A SECTION 105 PLAN?
Created under section 105 of the Internal Revenue Service code, this plan allows employers to reimburse their employees "tax free" for eligible healthcare expenses such as deductibles and coinsurance not covered by insurance.
These plans are funded entirely by the employer and sometimes are referred to as defined contribution plans or health reimbursement accounts. Untaxed at the employee level, the reimbursements also are tax-deductible at the corporate level.
Employers can't discriminate in favor of highly compensated employees. But you can use a classification test to qualify participants. You can exclude part-time, seasonal, short-term and other classes. You choose what to cover and how much to pay. Most employers choose simply to replace benefits under their old "first dollar plans" but only if and when the benefits are used. You can reimburse the employee or pay the health care providers directly.
Section 105 and high deductible plans are fast becoming the norm. You owe it to yourself to look at the premium savings and cost savings you can achieve. Simply give us a call and we'll be glad to prepare a cost analysis and proposal for you.