By reimbursing employees for individual health insurance premiums, businesses save 20% to 60% on healthcare costs. Many small business owners ask us if there is a "right way" to set up a Premium Reimbursement Program. The answer is yes.
Here are five quick tips for reimbursing individual health insurance premiums.
5 Tips for Reimbursing Individual Health Insurance Premiums
1. Set up a Formal Premium Reimbursement Program
Some businesses consider giving employees taxable raises or bonuses with the hope that employees will use it on health insurance. However, this usually causes more headaches than it's worth. See: 4 Pitfalls of Increasing Wages for Health Insurance.
2. Use a Reimbursement Software Provider
Use a third-party Reimbursement Software (such as Section 105 Software) to set up a compliant plan, to make administration easy, and to provide tools to educate employees.
3. Work with a Broker
Work with a health insurance broker or agent to help employees select plans.
4. Understand Compliance
Understand the compliance requirements of reimbursing employees for individual health insurance premiums. This includes IRS, ERISA, HIPAA, ACA, and other applicable rules. For example, the business should not getting involved with the selection or purchase of employees' individual health insurance policies.
To make sure your plan is compliant, and to make compliance easy, use a Reimbursement Software Provider.
5. Educate Employees
Take time to educate employees about the reimbursement program and about the advantages of individual health insurance.
What questions do you have?