Health Reimbursement a Potential Huge Win Win

As health insurance costs spiral to an average of $19,000 per year to insure a family, employers and employees struggle to find some sanity. Every Employer, regardless of size of the group, should give serious consideration to a Section 105 Health Reimbursement Plan.

This is not a specific insurance policy. It is a strategy supported by the IRS Tax Code Section 105. In it’s simplest form, the employer purchases a less expensive policy but self insures those benefits that were given up to lower the premium. This can be put simply in the following illustration.

If an Employer raises the deductible in his current plan from $1,000 to $2,000, he saves a certain amount of money. This lowers his and the employee’s cost. In an attempt to still provide quality health care, the same employer drafts a Section 105 agreement that offers to pay the extra $1,000 of expense for everyone who incurs the claim. Properly drafted, the savings significantly outweighs the risk, creating better insurance for lower coverage. We have able to lower costs 15% to 35% depending on how the Plan is drafted.

The agreement can be very creative. It must be non-discriminatory. In other words, it can not favor only certain employees.

What is needed to explore the potential savings? The Employer needs to confer with highly competent professionals. They should bring in a firm that is experienced in drafting Section 105 agreements. They should have a highly qualified independent insurance professional to help in designing the correct Insurance Plan. They also need an experienced and qualified Administrator to handle the Section 105 claims.

For one stop shopping, the Peter Lemieux Agency provides all three levels of service. We would be happy to demonstrate our expertise in all these areas. One phone call to set up a free consultation could help bring some sanity to increasing Health Care costs.

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