Under the Affordable Care Act, small businesses (<50 employees ) not to offer health insurance required, but most want. And there are new benefits of individual health insurance as the premium tax credits and guaranteed issue coverage.
All these factors allow small entrepreneurs who invest their health benefit dollars in the individual health insurance reimbursement.
individual health insurance reimbursement 101
The basic concept with individual reimbursement health insurance is just that - make a formal health benefits program to employees for their customized with your own health insurance premiums to refund. This approach assumes in America, especially in small and micro employers from and is often funded by the employer individual health insurance or a premium refund program.
How would an employer do this called? Is it tax-free? Is that still in 2014 and 2015 allowed? Keep reading ...
to benefit this type of refund, there are two core approaches take an employer may: a taxable stipend or a tax-free reimbursement plan
. 1. a taxpayer stipend
in this approach, the employer provides a taxable salary or bonus to the employees, with the idea that they are using the additional revenue for health insurance. However, this can have different results. See: 4 Pitfalls of increase in wages for health insurance
2. Tax-free reimbursement plan
In this approach, the employer uses Section 105 of the Internal Revenue Code, a formal self insured medical reimbursement plan to create employees for their justified individual health insurance costs for a refund tax basis .
This type of arrangement is called a Health Care Reimbursement Plan (HRP), and it must be structured to comply with the applicable requirements including the Affordable Care Act of market reforms. Obviously, most employers (and employees) prefer a tax-free solution because of the additional cost savings results.
advantages of individual health insurance reimbursement
The greatest advantage of individual health insurance reimbursement to the employer's cost control. The employer determines the amount of health care workers to contribute, and unlike traditional employer-sponsored health insurance, there is no minimum contribution amounts. Furthermore, the employer is to be able to use the formal health benefits program to attract and retain key employees. This is huge to provide for smaller employers who are fighting for traditional health insurance or qualify.
For the employees, the main benefits are the ability to use their refund benefit on the plan of their choice, sustainable system of health insurance. and lower costs (especially for those employees who are eligible for the premium tax credits through the health insurance marketplaces in question)
FAQ: Can I for insurance 'employee bonuses
While it may be direct tempting to pay for the employee's individual health insurance premiums directly, the answer is "no." Federal regulations prohibit employers from paying directly for individual health insurance premiums of the employee, outside a § 105 Medical Reimbursement Plan (eg health reimbursement arrangement or health reimbursement plan) or other IRS / HIPAA / ERISA qualified tax-free vehicle (eg Section 125). Read more about pay directly for employee's individual health insurance premiums
FAQ :. What about the new ACA rules for individual health insurance reimbursement
From 2014 new Affordable Care Act provisions and requirements impact group health plans - including Section 105 Healthcare reimbursement plans. In particular, from 1 January 2014, all group health plans must be designed with PHS Act to meet in 2711 (annual limit requirements) and 2,713 (preventive care requirements). to provide search Employers tax-free refund, should work with an experienced premium refund software vendors a plan that complies with all applicable requirements set.
What questions do you have about the individual health insurance reimbursement? Leave a comment below!
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