Busting Up the Group Health Plan

[ABC]

Tomorrow I have my first employee meeting with busting up a small group health plan for 2014. This is the 1st of 11 small groups.

The current group has 27 on the plan and 8 of the key guys. Current cost of the plan is $150 a year and owner is paying $120K of it.

The 8 managers will not qualify for subsidies. Estimated cost increase for an non exchange plan is $200-$300 a month. Owner is going to give the 8 people raises to some what cover the cost. Total he is looking at about $20k in increase payroll.

The owner is going to save about $100K or so by dropping.

The majority of the employee will benefit from subsidies.

As I am writing this I had my 2nd group call and say they were also ready to drop. This is a 10 life group that is laying out $85k a year on group and the owner is picking up $65K. This group is electing the HRA approach. So they end up saving $42K.

I may be breaking up groups but I am picking up a lot of individual sales. Off and on The exchange.

 

[smokin goose]

Tomorrow I have my first employee meeting with busting up a small group health plan for 2014. This is the 1st of 11 small groups.

The current group has 27 on the plan and 8 of the key guys. Current cost of the plan is $150 a year and owner is paying $120K of it.

The 8 managers will not qualify for subsidies. Estimated cost increase for an non exchange plan is $200-$300 a month. Owner is going to give the 8 people raises to some what cover the cost. Total he is looking at about $20k in increase payroll.

The owner is going to save about $100K or so by dropping.

The majority of the employee will benefit from subsidies.

As I am writing this I had my 2nd group call and say they were also ready to drop. This is a 10 life group that is laying out $85k a year on group and the owner is picking up $65K. This group is electing the HRA approach. So they end up saving $42K.

I may be breaking up groups but I am picking up a lot of individual sales. Off and on The exchange.

I'm guessing this isn't too bad of a situation? More opportunity to get referrals.

 

[Full Throttle]

Tomorrow I have my first employee meeting with busting up a small group health plan for 2014. This is the 1st of 11 small groups.

The current group has 27 on the plan and 8 of the key guys. Current cost of the plan is $150 a year and owner is paying $120K of it.

The 8 managers will not qualify for subsidies. Estimated cost increase for an non exchange plan is $200-$300 a month. Owner is going to give the 8 people raises to some what cover the cost. Total he is looking at about $20k in increase payroll.

The owner is going to save about $100K or so by dropping.

The majority of the employee will benefit from subsidies.

As I am writing this I had my 2nd group call and say they were also ready to drop. This is a 10 life group that is laying out $85k a year on group and the owner is picking up $65K. This group is electing the HRA approach. So they end up saving $42K.

I may be breaking up groups but I am picking up a lot of individual sales. Off and on The exchange.

What is the HRA approach? My understanding is an HRA can no longer be used to pay individual premiums or as a stand alone for claims as they were ruled a health plan and must have unlimited liability. My understanding is Sect 125 plans can also no longer pre-tax individual premiums (medical). My two main TPAs have told me this, have you heard differently?

 

[Zane Benefits]

What is the HRA approach? My understanding is an HRA can no longer be used to pay individual premiums or as a stand alone for claims as they were ruled a health plan and must have unlimited liability. My understanding is Sect 125 plans can also no longer pre-tax individual premiums (medical). My two main TPAs have told me this, have you heard differently?

A great approach, and a direction a lot of small businesses (< 50 employees) and their brokers are going.

Are the stand-alone HRAs going away in 2014? Yes, according to new technical release issued Sept. 13, 2013 (for plan years starting Jan. 1, 2014 or later and for businesses with 2+ participants). However, nothing has changed in the Section 105 tax code so employers can use a limited-purpose Section 105 medical reimbursement plan to reimburse just individual premiums. This can achieve similar results to a stand-alone HRA, with some limitations to be compliant with ACA. And, an opportunity to pick up those individual policy sales.

 

[Full Throttle]

A great approach, and a direction a lot of small businesses (< 50 employees) and their brokers are going.

Are the stand-alone HRAs going away in 2014? Yes, according to new technical release issued Sept. 13, 2013 (for plan years starting Jan. 1, 2014 or later and for businesses with 2+ participants). However, nothing has changed in the Section 105 tax code so employers can use a limited-purpose Section 105 medical reimbursement plan to reimburse just individual premiums. This can achieve similar results to a stand-alone HRA, with some limitations to be compliant with ACA. And, an opportunity to pick up those individual policy sales.

I have been told by many credible sources this is not true (I want it to be true). The final guidelines released in September due not allow for HRAs to reimburse individual premiums (2+ EEs), even if the HRA is limited to individual premiums only. Can anyone point at anything official that says this is not the case?

A google search of "Are HRAs allowed to reimburse individual medical premiums?" returned a who list of TPAs saying premium reimbursement plans are no longer allowed in 2014. The exception on that first page of google results in Zane Benefits. What are you seeing that the others are missing?