Leveraging our numbers for health.
Group health plans for members.
We know health insurance can be difficult to tackle. That’s why we are here as your trusted HR Advisor to help you through the process. With options and plans to meet your needs and the cost advantages of a group health plan, independent Cooperative members can finally have peace of mind and savings too.
The Group Advantage:
- Group plans reduce premium costs.
- National provider network.
- Multiple plans to choose.
- Can be offered as employee benefit.
- Use benefits as recruiting advantage.
- Cooperative HR Advisors always available.
- Can be used with a Cafeteria Plan (Sec. 125).
- Reduce tax on premiums up to 31.6% through Cafeteria Plan.
- Health Savings Plans available.
What to Know:
Individual Plan – Health insurance programs that you can purchase on your own, for yourself and/or your family, on the open market. This may include purchasing from a broker, direct from an insurance company, or from a health insurance exchange. The plan specifications, types, and benefits are up to the policy holder to choose and can vary widely to fill the needs of the holder.
Group Health Plan – A health plan offered by an employer or employee organization, providing health coverage to employees and their families as a benefit of the group.
These plans are generally uniform in nature, or limited to a group of options, offering the
same benefits to all members. With group health insurance, the individual risk is spread
throughout the participants of the group, helping to lower the cost of participation.
Costs vary from plan to plan, but in general, Individual Plan premiums rose about 30% last year while Group Plans rose about 6%. With the individual mandate expiring after 2018, there is an expectation that
Individual Plans will rise even more as healthy policy holders opt to drop their healthcare, leaving less
healthy holders that raise the risk and premium levels.
Group Health Plans provide many benefits to employers large and small. Health benefits are a great tool to attract and keep the best talent. Employees and owners may move from an individual plan to a group plan at any time. Because group plans are managed and risk is spread over the entire group, premiums are typically significantly less that individual plans.
Cafeteria Plan: A reimbursement plan governed by IRS Section 125 which allows employees to contribute a certain amount of their gross income to a designated account or accounts before taxes are calculated, thereby reducing the amount paid in Federal Insurance Contributions Act (FICA or Social Security), Federal Unemployment Tax Act (FUTA), Workers’ Compensation, and some State taxes.
Once you have a Group Plan, you can pay for your health insurance using pretax dollars through a Cafeteria Plan or a Section 125 plan. The average person can avoid paying 31.6% on taxes from money used to pay for health insurance. That includes 7.65% for FICA, 1.95% for Medicare, and 24% for the average Federal tax payer. Please ask your tax advisor if a Cafeteria Plan works for your situation.
IRS Publication15-B precludes a 2% shareholder in a S Corporation from participating in a cafeteria plan. Because of this, using a PEO maybe a good way to avoid this distinction and allow you to participate in a Cafeteria Plan to pay for your healthcare premiums.
PEO (Professional Employer Organization): A PEO is a firm that provides a service under which an employer can outsource employee management tasks, such as employee benefits, payroll and workers’ compensation, recruiting, risk/safety management, and training and development. The PEO does this by hiring a client company’s employees, thus becoming their employer of record for tax purposes and insurance purposes. This practice is known as co-employment.
In order to participate in a Group Health Insurance Plan, the participants must be employed by the same group. This is where the PEO comes in. PEO’s can become the “Employer of Record” for tax purposes but the dentist remains the “Employer of Site and Management” for everything else. Once the PEO is utilized, the participants can participate in any group benefits, usually at significant cost advantages. Without a PEO, patients seeking insurance are usually left to purchasing Individual Plans or to use a Health Exchange.
Health Savings Accounts (HSA): A tax-advantaged medical savings account available to taxpayers enrolled in a high-deductible health plan. The funds contributed to an HSA are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), HSA funds roll over and accumulate year to year if they are not spent. The 2018 annual maximum contributions to an HSA are $3,450 for an individual, $6,850 for a family, and $7,850 if you are over 55.
Moving to a high deductible plan will typically mean some savings in your monthly premium, which we recommend putting those savings into an HSA each month. Moving from the average group gold plan to a $6,550 high deductible plan would save over $500 a month in premiums, or $6,000 a year now available to contribute to an HSA. The money contributed to an HSA will not be taxed and carries over each year. Any money left over at age 65 can be treated like a traditional 401k or be kept as an HSA.