| Issue: # 16 |
April 30, 2008 |
Greetings!
Keeping you informed of the latest developments in the employee benefit marketplace.
If you have any questions, e-mail Bill or Vanessa. To learn more about Advantage Benefits, click here. Many of our clients have found these newsletters to be quite helpful and we have now set up a link to hold all the archived newsletters on-line that can be accessed at anytime.
If you know anyone, who may find this information of interest, please forward them this newsletter (there is a link on the bottom), and they can subscribe themselves.
Sincerely,
Bill Randell, CLU, CHFC Vanessa Costa, CLU,CHFC
Advantage Benefits Group, Inc. |
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Offering Two Plans
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Over the past several years, we've seen employers switch to alternate plan designs with higher co-payments or change carriers to maintain health insurance costs. Now we see more employers reluctant to change carriers again and are offering a 2nd HMO from the current carrier.
Example: A company with a $500 hospitalization plan design receives a 15% renewal increase. The employer accepts this plan but introduces a 2nd plan from the same carrier. In this case, the second plan is a $1,000 hospitalization plan design with a 6% rate increase. The employee can 1) keep the current plan with a 15% increase or 2) switch to the new plan with a higher exposure and a 6% increase.
Here is another idea/option. The 2nd plan you offer is a PPO high deductible that is Health Savings Account compliant. Employees could choose this high deductible plan (HSA compliant plan) and then be able to defer monies tax deductible and tax deferred ($2,900 for a single employee and $5,800 for a family) into a Health Savings Account (HSA). This 2nd plan may also be an attractive option for owners and/or key people as it will allow a Pre-Tax deduction and no fear of the "use it or lose it" principle.
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| Health Savings Account
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Once you decide to offer a plan that allows an employee to defer monies into a HSA on a tax deductible and tax deferred basis, what do you next?
First, you need to open account. One option is to check with your local bank, but, as we have learned, many of the banks are not up and running on this and it is hard to get answers . Some Banks, like Sovereign, are looking at HSAs like an IRA, an see it as an opportunity to get deposits. A second option is to review on-line banks like HSA Bank. If you have a few minutes and want to see a great presentation on HSAs, check out the presentation on-line by the HSA Bank. They are very current and answer most questions you can think of on the website.
Second, you need to deposit money into an account. Good news for Employers - You do not have to allow employees to use payroll deductions. Employers have so many deductions and responsibilities, we suggest that employees fund their accounts outside the payroll system on their own. At the end of the year the insitution holding the funds will issue an accounting of deposits for deduction on your personal tax return.
So, you can establish an HSA but employees may either send money direct to the account, or they may even set up automatic deduction out of their personal checking accounts. The employer does not have to take on this burden.
Withdrawals will also be handled between the employee and the institution that holds the monies. Most places will issue a debit card to present to doctors and/or hospitals, or you may simply call up for a withdrawal to pay medical invoices. Again, the employer does not have to be the middleman. |
| CommonwealthCare
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Over 176,000 have signed up for Commonwealth Care, the state-subsidized program for low and moderate-income residents. Nearly 75 percent of these individuals make no monthly premium payments, so the state must pick up the cost. There is simply no way the Commonwealth can afford to keep doing this. Think about that--176,000 subscibers and 75% of them pay nothing.
Eligibility needs to tightend up for CommonwealthCare, an asset test must be implemented and premiums need to be charged for all subscribers. If this is not addressed quickly, this may in fact be the next Big Dig.
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