Business Insurance Group Benefits


Group Benefits COBRA and Cafeteria Plan Administration


With group insurance you've also got to consider what options you have with COBRA and Cafeteria Plan administration.  We can help you sort through your options, and then we've also partnered with a local administrator (Ben-X) to offer you the best price and service for these plans. Please click here to visit their website for additional information and enrollment forms.  They will work with you directly to enroll and set up your plans, but please contact us with any additional questions and our preferred pricing.

COBRA Administration

 
What is COBRA Continuation Coverage?

COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1986) is a federal ruling that requires most group health plans to offer temporary continuation of health coverage that might otherwise be terminated.

COBRA requires that continuation coverage be accessible to covered employees, their spouses, former spouses and dependent children when group health coverage would otherwise be lost due to certain qualifying events.

Some Common COBRA Qualifying Events
  • Termination of the covered employee (for anything other than gross misconduct)
  • A reduction in hours for the covered employee
  • Death of the covered employee
  • Divorce or legal separation from the covered employee
  • The covered employee becoming entitled to Medicare
  • A loss of dependent status for a dependent child
Reasons Why Your Employees May want to Choose COBRA Coverage
  • No Coverage Lapse- COBRA coverage will ensure that you won't experience a lapse in coverage, which could be devastating in the event of a sudden illness or an accident.
  • Same Provider Network- COBRA will enable you to continue using the same network of providers as your previous employer, because your coverage remains the same.
Does COBRA Apply to You?

COBRA generally applies to all private-sector group health plans maintained by employers that have at least 20 employees on more than 50 percent of its typical business days in the previous calendar year. Both full- and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of a full-time employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full-time. 

Click here for Employer and click here for Employee COBRA FAQ and more info from Ben-X.

Utah Mini-Cobra (Under 20 full-time employees)

If you do have a fully insured health plan and under 20 full-time employees then you would fall under the Utah Mini-COBRA guidelines.  Click here for more information about the Utah Mini-COBRA (extension) rights. 

Group Conversion Coverage

These plans offer guaranteed health coverage without proof of insurability for those whose current group policies are terminating and have provisions that include this benefit.

Your employees may be eligible for conversion of group coverage to an individual plan if they meet the following criteria:

  • are covered on a group plan for at least six consecutive months
  • are no longer eligible for group coverage
  • have exhausted all eligibility for coverage under COBRA or Utah mini-COBRA

If eligible, your employees must apply for conversion coverage within 60 days from the date their group coverage was terminated.  This options is available through your group health carrier. 



Section 125 Cafeteria Plans

What is Section 125?

The US Congress created Code section 125 in an effort to make benefit programs more affordable for employees.

Section 125 is part of the IRS Code that allows employees to convert a taxable cash benefit (salary) into non-taxable benefits. Under a Section 125 program you may choose to pay for qualified benefit premiums before any taxes are deducted from employee paychecks.  Click here to see who qualifies to participate in a Cafeteria Plan. 

The Section 125 program is a tremendous opportunity for you to enhance your benefits package.

The Premium Only Plan (POP) is the building block of the Section 125 Plan. It allows for certain employee paid group insurance premiums to be paid with pre-tax dollars. The qualified premiums (if offered by employer) are:

Health, Prescription, Dental, Vision, Disability (not recommended, Employee Group Term Life (up to $50,000.00), Cancer, Medicare Supplement, Hospital Indemnity, Accident

Ben-X will set up your POP plan and make sure it complies with all reporting and discrimination testing.

A Flex Spending Account (FSA), Health Reimbursement Account (HRA), Health Savings Account (HSA), and a Premium Reimbursement Account (PRA) are classified under the Section 125 Cafeteria Plans also.  See below for more information on these plans.

Click here to see a Side-by-Side Summary Chart of our most common Cafeteria Plans, or watch the video below to compare some of the most popular plans. 

Why offer a Section 125 Cafeteria Plan?

Employee Savings

Employees can save 20 - 40% of their payroll deductions. The savings are on city, state, and federal income taxes, including Social Security and Medicare.

Employer Savings

Employers save the matching Social Security (6.20%) and Medicare (1.45%) taxes, which equates to 7.65% of all the dollars put through the plan, a substantial savings.


 

Flexible Spending Account (FSA)

Understanding Flexible Spending

Sometimes referred to as a cafeteria plan, flex plan, or a Section 125 plan, a Flexible Spending Account (FSA) lets employees set aside a certain amount of each paycheck into an account--before paying income taxes.

What if we told you we could save you hundreds, even thousands of dollars every year by simply enrolling in a Flexible Spending Plan?  It seems too good to be true, but it is.  Flexible spending creates more spendable dollars from the same paycheck while you pay less in taxes.

Example of a FSA for an employee:

 

Without FSA Plan

With FSA Plan

Monthly Pay

$3,000

$3,000

Pre-Tax Deductions

Insurance Premiums

$0

$60

Medical Expenses

$0

$50

Dependent Care Expenses

$0

$350

Taxable Income

$3,000

$2,540

Tax

$829

$702

Net Pay

$2,171

$1,838

After Tax Deductions

Insurance Premiums

$60

$0

Medical Expenses

$50

$0

Dependent Care Expenses

$350

$0

Spendable Income

$1,711

$1,838

Monthly Increase in Spendable Income

$0

$127

Annual Increase in Spendable Income

$0

$1,524

This employee saved $1,524 last year through their Flexible Spending Cafeteria Plan. 

If you currently participate in premium sharing in Health Insurance, Dental Insurance, Vision Insurance or Group Term Life Insurance, you should take advantage of one or all of the following pre-tax benefit plans:

  • Health Care Flexible Spending Accounts - Eliminates FICA, and in most states Federal and State income taxes, on unreimbursed employee health care expenses like deductibles, co payments, vision care, dental care and many other expenses.
  • Dependent Care Flexible Spending Accounts - Eliminates FICA, and in most states Federal and State income taxes, on up to $5,000 (or $2,500 if filing separately) of employment related day care expenses annually.

 

Health Reimbursement Arrangement (HRA)

A Health Reimbursement Arrangement (HRA) is an employer-funded and sponsored program that provides the employer with a way to give their employees freedom of choice in healthcare planning  while controlling their own costs.

How an HRA Works

By redesigning your insurance plan to help reduce the premiums you can use the HRA to reimburse your employees for specified out-of-pocket costs such as deductibles or co-pays. The dollars contributed to the HRA are usually offset by the reduction in premiums due to the cost of shifting to the employee. Expenses include:

  • Co-insurance amounts                      
  • Dental/Orthodontic fees
  • Eyeglasses, including the exam fee
  • Health insurance deductibles
  • Hospital bills
  • Insulin and diabetic supplies
  • Mileage for medical care
  • Obstetrical expenses

HRA Advantages for the Employer

HRA's allow the employer to offer a high deductible insurance plan and contribute the premium savings to the HRA for future employee medical care insurance premium expenses on a pretax basis.  They also allow employer contributions to be 100% tax deductible and are not subject to federal, state, or social security taxes.  The employer can define who can participate, employer contribution amount, payment frequency, and expenses covered.  They do not require that employers advance claims payment therefore reducing employer risk and are available to employers of all sizes.

HRA Advantages for the Employee

HRA's provide an employee with funds contributed by the employer to use for medical expenses and any unused dollars can be rolled-over into the next year. They allow the employee to accumulate money for future medical needs such as retirement healthcare expenses. HRA's also provide money for COBRA premiums.

Requirements of the HRA

The employer must have an updated Plan Document on-site.  Ben-X will assist in developing a personalized plan design and will maintain all updates for the Plan Document. The IRS prohibits certain owners and their immediate family members from participating in the HRA. These include:

  • More than 2% shareholders in a Subchapter S, and their spouses, parents, children, and grandchildren.
  • Partners in partnership including LLP's and LLC's that operate under partnership rules (spouses and dependents are eligible).
  • Sole proprietors (spouses and dependents are eligible.

*Note: While owners may not participate, employees of these types of business can participate.


Health Savings Account (HSA)

Discover a new way for employees to pay for health insurance! A Health Savings Account (HSA) is a tax-favored account used to pay for any out-of-pocket medical and dental expenses. An HSA is combined with a High Deductible Health Plan (HDHP) to reduce your monthly health insurance premium dramatically!


Your HSA-Eligible High Deductible Health Plan (HDHP)

HDHP are often much less expensive than other traditional health insurance plans. Our agency is appointed with the top health insurance carriers to offer you the best value!  SelectHealth, Regence BlueCross BlueShield, Altius, United Healthcare, and Humana!

Your HSA Administrator

Next, choose an administrator for your Health Savings Account.

Most banks or credit unions will offer you a HSA account including Chase, Wells Fargo, etc.

Make Healthcare More Affordable

  • Money you put in your HSA is tax deductible.
  • Money you withdraw is tax-free for qualifying medical and dental expenses.
  • Money in your account can be invested in many different investment options, including mutual funds, and grows tax-free.
  •  If money isn’t used for medical expenses then it becomes a retirement account!

 Click here to learn more about an HSA from one of our other preferred vendors HSA Bank.

Premium Reimbursement Account (PRA)

The Premium Reimbursement Account option, or PRA, is available to employees if they carry an individually owned health insurance policy. With an PRA plan in place, employees can have their individually owned healthcare premiums deducted from their paycheck on a pre-tax basis through salary deduction.

The employee retains the responsibility for paying their insurance premiums, but they will be reimbursed by their employer for their expenses.

To qualify for PRA, employees must participate in an approved individual accident and health insurance policy.

The policy that is owned by the employee must meet the following requirements:

  • The policy must be an individual or family plan and cannot be part of an employer-sponsored or group insurance plan.
  • It is recommended that the employee participating in the PRA plan be named as the policyholder.
  • The policy must be paid for by direct payments from the employee who owns the policy.

If a PRA applies to your employees' circumstances, they will be able to gain financially by paying their premiums on a pre-tax basis.