Alternative to Group Health for Owners?

bellabraz

New Member
3
I have a small group in CA that I don't think will fly as the employees cannot afford their portion of the premiums. ER doesn't want to fork out more $$.
Has anyone done something like a defined contribution to EE's that would allow them to go into exchange but give ER some tax benefit?
 
Have the ee go to exchange and by the HSA bronze plan. Then have the employer contribute an agreed amount into the HSA tax free.
 
Hamben has a reasonable idea there. The problem is, you need to make sure people understand how the HSA plans work. They are not for everyone, especially those who go to the doctor a lot or have prescription needs.

A lot of EE's might sign up for it to get the HSA contribution, but end up spending a lot more out of pocket than if they picked a higher level plan and didn't take the ER contribution. To do it properly, you need to go through all these scenarios with the owner and come up with a reasonable solution.
 
Hamben has a reasonable idea there. The problem is, you need to make sure people understand how the HSA plans work. They are not for everyone, especially those who go to the doctor a lot or have prescription needs.

A lot of EE's might sign up for it to get the HSA contribution, but end up spending a lot more out of pocket than if they picked a higher level plan and didn't take the ER contribution. To do it properly, you need to go through all these scenarios with the owner and come up with a reasonable solution.

Why would the employer not contribute to a higher level plan and only the HSA plan?
It is my understanding the group cannot be split between a group plan and an
Individual exchange plan
Don Levit
 
That HSA are not for everyone. Nothing is cheaper than tax free. Sick people who use the benefits and buy there deductables down are still going to spend more than the collect and are going to do it with after tax dollars.

Don, employer can not contribute to the premiums of a individual plan without tax problems and ACA compliance problems. They can however contribute to the HSA .
 
That HSA are not for everyone. Nothing is cheaper than tax free. Sick people who use the benefits and buy there deductables down are still going to spend more than the collect and are going to do it with after tax dollars. .

Hamben, you have got to be kidding me. If you really think that the HSA is for everyone, then you need to take a closer look.

Let's just assume that the EE goes to the Exchange and qualifies for an HSA with a $5000 annual deductible and a $6350 MOOP. They are able to get it for say $50 per month due to the subsidy. ER agrees to contribute the annual max for an individual of $3,300.

If an individual just goes to the doctor a few time throughout the year or has some modest expenses like x-rays or lab work, then the $3,300 ER contribution will likely more than cover it and the EE comes out ahead.

However, suppose an EE has Rheumatoid Arthritis and has a prescription for Lialda, which costs roughly $2300 per month. The ER contribution gets them about 1.5 months of the prescription. Then the EE has to cover the remaining $1700 of the deductible out of their pocket. Then they will have to cover the coinsurance of the drug. This all happens within the first 3 months. Then they will have to cover the coinsurance until reaching the MOOP of $6,350. So, the EE in this case ends up spending $3,050 of their own money on prescriptions in a relatively short period of time, plus the $50 per month in premium.

Same EE picks a Gold level plan on the exchange that costs them $100 per month after the subsidy and no ER contribution. Lialda is still a specialty drug, but they can shop ALL the plans and pick the one with the best prescription coverage for their need. Maybe they find a plan with the specialty drug cost of $50 co-pay, which is common in my market. EE pays $50 per month every month for a total of $600 for the year. Add an additional $50 for the higher premium and they are out of pocket $1200 for the year versus $3,650 on the HSA.

If we are talking people who can't afford a higher contribution to group coverage, how would they foot the difference in this cost? Granted this is only one example, but I have seen it several times in the past few years, so it happens on a regular basis.

So, I challenge your opinion that HSA's are for everyone and nothing beats tax free.:nah:
 
Well it's hard to argue when you make up numbers.. Where on earth are you going to find a gold plan for $50 more than a bronze! Give me a real life scenario age and location and you will see that there is noway you will ever come out ahead by buying your deductables down...pick an age of a person and pick a state and county and let's run the numbers.. I accept your challange my friend...
 

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