Employer-Provided Health Benefits – Section 105 Healthcare Reimbursement Plans

Employer-provided health benefits are changing in America, especially for small businesses. Group healthcare costs continue to rise. Annual premiums for group policies have increased over 180 percent in the last 15 years, with the average coverage cost per family expected to reach $20,000 by 2016.

As such, many employers have stopped providing group healthcare policies entirely. The Wall Street Journal recently reported that the implementation of the Affordable Care Act prevents pre-existing conditions from being factored into policy prices, eliminating several incentives for small businesses to even offer group plans. In fact, the percentage of small to medium employers offering health benefits to their employees dropped 11 percent from 2010 to 2013.Employer-Provided Health Benefits

The drop in group coverage has led some employees to the individual market where they can select and purchase healthcare coverage that best suits their needs.

Employer-Provided Health Benefits Are Still an Option

Section 105 Healthcare Reimbursement Plans (HRPs) are available to employers to reimburse qualified health insurance premiums.

This gives small business owners an opportunity to offer employer-provided health benefits to their employees without purchasing a group health insurance plan. Employees purchase the individual insurance that best suits them, and the HRP reimburses the cost of the premium up to the specified allowance.

How Does an HRP Work?

HRPs offer tax free dollars to reimburse employees for their premium expenses. It is one of several premium reimbursement options.

Employers select the specified monthly healthcare allowance available to employees, and the plan reimburses employees when they submit documentation showing that they have paid their health insurance premiums.

Is an HRP a Compliant Form of Employer-Provided Health Benefits?

Yes. When designed and administered correctly, HRPs comply with all applicable IRS, HIPAA, COBRA, ERISA, and ACA rules.

One of the biggest questions is how HRPs comply with the ACA’s “Market Reforms.” In order to comply with the Market Reforms, HRPs must be structured to comply with PHS Act Section 2711 annual limit rules and PHS Act Section 2713 preventive care rules.

PHS Act Section 2711 requires group health plans (including HRPs) not to place annual or lifetime limits on “essential health benefits.”

PHS Act Section 2713 requires group health plans (including HPRs) to cover basic preventive care services without cost-sharing.

It is important to note that PHS Act Section 2711 allows group health plans (including HRPs) to place annual limits on benefits that are not essential health benefits. Since health insurance premiums are not essential health benefits, group health plans (including HRPs) may place a “premium-specific” annual limit on premium reimbursements.

However, group health plans (including HRPs) may not place an annual limit on the basic preventive care expenses required by PHS Act Section 2713 because preventive care expenses are considered essential health benefits.

As such, one way to structure a compliant HRP is to design the arrangement to reimburse employees for health insurance premiums up to a specified monthly healthcare allowance, and preventive care as required by PHS Act Section 2713.

Employer-provided health benefits are viable in conjunction with individual insurance, and it is important to understand the fundamentals surrounding healthcare reimbursement plans as more and more employers drop group coverage.

Original article posted by our partner, Zane Benefits: http://www.zanebenefits.com/blog/employer-provided-health-benefits-section-105-healthcare-reimbursement-plans

Covered California plans pair well with Health Savings Accounts

HSAs can be used to lower your MAGI and qualify for better cost assistance on the Health Insurance Marketplace, this makes high deductible Silver plans very attractive.

We highly recommend using a Health Savings Account (HSA) if your plan has an annual deductible of more than $1,300 for self-only coverage or $2,600 for family coverage.

Health Savings Account Overview

All funds you put in your HSA are 100% tax deductible from gross income and can be used tax free to pay for out-of-pocket medical expenses, including dental and vision.  There are limits to the amount of money you can put in tax free and the amount of money you can use tax free as well. Funds roll over year to year and can be used with Medicare after retirement. If you want to take money out of the account for non-medical reasons you must pay taxes and a 20% penalty.

Other Medical Savings Accounts include Flexible Spending Accounts (FSAs) and Archer Medical Savings Accounts (MSAs).

Who Should Use a Health Savings Account

Anyone with a high deductible plan can use a Heath Savings Account.  HSAs can be used by individuals and families who buy private insurance and by employees and employers. Specifically your plan should state that it is a High Deductible Health Plan (HDHP) and is HSA eligible.

 

If you qualify for cost assistance on the Marketplace you can use an HSA to bring down your total Modified Adjusted Gross Income, as Health Savings Accounts and thus qualify for more subsidies. So you may want to consider a Silver HSA eligible plan.
HSAs and High Deductible Plans

You can only pair an HSA with a High Deductible Health Plan (HDHP). Your plan is considered a High Deductible plan if it has an annual deductible of more than $1,300 for self-only coverage or $2,600 for family coverage

High deductible health plan. For calendar year 2015, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,450 for self-only coverage or $12,900 for family coverage. IRS

Deadline for January Payments…

Christmas is just a few days away and I know all of us are running around with a million things to do before Christmas.

However, if you recently got insurance through Covered California you need to remember to call your insurance company and make your first payment before, December 26th. If you want your coverage to begin January 1st.

Here is the phone numbers you need to make those payments:

Healthnet: 1-888-236-4490
BlueShield: 1-855-836-9705
Anthem Blue Cross: 1-855-634-3381

When you called the numbers above and just say: “..I am calling to make my 1st payment for my health insurance for coverage starting on January 9th.” Give them your name, address, and social security number and they can take your payment over the phone.”

Be prepared for busy phone numbers or challenges. Remember there are 1000’s of people trying to make payments. Just make sure you document your call or calls in case there are challenges.

If you where offered Medical – You do not need to do anything just wait for your package to come
in the mail.

I am here to help in anyway.

Your friend,
Carlos Samaniego
HealthCareTaxAdvisor
909-570-1103 Direct Number
909-792-3302 Office

Is the End of Employer Provided Health Insurance Around the Corner?

Frequent readers are familiar with the fact that many analysts believe health-care reform will drive businesses to drop medical benefits for their employees.  The argument is that it will be a better financial deal for staff to acquire insurance on the Marketplace than for the employer to continue to pay for coverage.

This is because ACA subsidizes the individual for the cost of health insurance but most businesses do not receive any type of assistance.  It’s true that some employers get the benefit of the Small Business Health Care Tax Credit.  But because of the particular rules associated with the credit, others won’t see the value.

A recent article by Kaiser Health News profiles the changing dynamics of the health-care landscape.  It describes the circumstances of a small Atlanta-based restaurant chain that moved its managers to the Marketplace from employer-based coverage. The economics of ACA meant that it was much more expensive to leave them on the open market instead of allowing the government to subsidize the cost.

From the article:

“I had a lot of regrets going into it,” Dunn, who owns three Italian Oven restaurants in suburban Atlanta, said of his decision. “I don’t think I have as many now — only because I’ve seen the affordability factor for my managers improve.”

With subsidies factored in along with unrelated pay increases, the managers “are going to be saving money out of the deal” while getting coverage comparable to what they had before, Dunn said. “My managers actually got excited about it because they’re saving money on their health Book-Best-of-2014insurance.

The question remains how quickly, and how broadly, this change will take place. I highly recommend reading the best selling book, “The End of Employer-Provided Health Insurance.” by Paul Zane Plizer & Rick Lindquist

If you are employer and would like to see what options are now available, give us a call directly at 909-570-1103

Are Health Insurance Premiums Tax Deductible?

Every day I hear small business owners, entrepreneurs, and free-lancers ask, “are health insurance premiums tax deductible?” The rules about when health insurance premiums are tax deductible can be confusing.

Whether you are an individual, self-employed worker, or small business owner, here is a simple breakdown about when health insurance premiums are tax deductible.

As an individual, your unreimbursed health insurance premiums are generally deductible if you paid for your health insurance premiums with your own after-tax money.

For example, if you bought an individual or family health insurance policy on your state’s health insurance exchange, the money you paid toward your monthly health insurance premiums (after health insurance tax credits are applied) can be taken as a tax deduction. You’ll list this deduction as a medical expense on Schedule A of Form 1040.

However, if you pay for a portion of your workplace premium pre-tax through a payroll deduction, this amount would not be deductible.

If you’re covered under Medicare, Medicare Part B, Part D prescription coverage, and Medigap supplemental premiums are deductible. Medicare Part A is usually not deductible.

Lastly, there is a limit to how much you can deduct. You may deduct only the amount by which your total medical expenses exceed 10% of your adjusted gross income or 7.5% if you or your spouse is 65 or older.

For more information on health insurance tax deductions for individuals, see IRS Publication 502.

Self-Employed Workers

If you are self-employed, you’ll likely be able to deduct your health insurance premiums, including age-based premiums for long-term care coverage. The line 29 deduction on the 1040 return is still available to those whose business income shows a profit, who are not eligible for employer-provided insurance (either from a side job or a spouse’s job), and who meet other criteria. If you received a health insurance tax credit, you would list the actual out-of-pocket cost to you, not including any tax credit received.

Small Businesses

If you are a small business owner, health benefits you offer to employees may be tax-deductible as a business expense.

  • Group health insurance premiums you pay are tax deductible as a business expense.
  • Reimbursements made through formal reimbursement plans are often tax deductible as a business expense.

 

Article posted originally at: http://www.zanebenefits.com/blog/faq-are-health-insurance-premiums-tax-deductible?utm_source=hs_email&utm_medium=email&utm_content=15350524&_hsenc=p2ANqtz-_zXhEsoRdtGIK7d8pV8cWaWOK_25qP33rOfYikMOy6vkKzCsX2ysHnEHH2aqjwF0UzO-IsvW2p5Hc_3VYASJCVGiv3s04c94Jh66lcjMfmSDgXdEc&_hsmi=15350524