54 Archery Club Road New Ringgold, PA 17960

(570) 386-4574 info@straussinsurance.com

A Different Approach to Employee Benefits

Many employers have considered offering their employees individual health insurance as opposed to their current group health programs. The main reason for this is the substantial cost savings. Just take a look at this one-page rate comparison spreadsheet . The plan on the far left is a fairly standard Blue Cross Blue Shield program that is similar in cost and benefits to what many businesses in Central and Northeastern Pennsylvania offer. Comparable individual plans, columns to the right, are as much as 37% less!

There are a number of reasons why more employers have not jumped at this cost savings opportunity such as eligibility issues and billing logistics. However the single biggest reason is the Government’s restriction on allowing employers to directly pay for their employees’ individual health insurance coverage. Basically companies were forced to reimburse employees for the cost of their individual health insurance by raising their wages. This caused higher payroll taxes and increased worker’s compensation costs. It also affects the business’s ability to “write-off” the cost of health coverage on its taxes.

We may have found a solution… the Section 105, Medical Reimbursement Plan. Rather than paying the costs to provide a specific group health plan, small business owners can control the cost of health benefits by establishing Section 105 Medical Reimbursement Plan. The general concept is that your business would:

  • Cancel your group health insurance plan (if you have one).
  • Define the amount you can afford for health benefits.
  • Use the Section 105 to give each employee a fixed dollar amount to use for their health insurance.
  • Employees use their healthcare allowance to purchase their own individual/family policies (we assist the employees in the plan comparison and selection process).

It should be noted that this method is still controversial among the insurance community, lawyers and accountants. It’s definitely not for everyone. However we have partnered with the industry leading firm that provides Section 105 plan documents, administration and ongoing support to over 20,000 customers. Their software and support staff make the process as painless as possible for employers and employees. They pride themselves on keeping their customers compliant.

If you are interested in more information on the The Section 105: Medical Reimbursement Plans, individual quotes customized for your business or anything else health insurance related please call or email us anytime. We can provide a live demonstration on how the Section 105 Plan administration works. Please consult your accountant before considering a Section 105 Plan for your business. Thank you!

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