Defined Contribution and Private Health Exchanges Enable Client Retention
Park City, UT. December 12, 2011
Small employers are increasingly canceling group health benefits for 2012.
Zane Benefits, Inc. (http://www.ZaneBenefits.com) is partnering with local brokers to offer these clients
defined contribution solutions with new private health exchange technology.
Approximately 50% of U.S. small businesses with less than 50 employees do not offer group health insurance to their employees. This figure is expected to greatly increase in 2012 due to:
1. Employer Contribution Requirements – Insurance companies require a minimum percentage of the premium for each employee that must be paid by the employer, or the entire plan is cancelled;
2. Employee Participation Requirements – Insurance companies require a minimum percentage of employees join the group plan, or the entire plan is cancelled; and
3. Cost per Participant – Group health plans for 2012 are facing the greatest increase in the history of U.S. health benefits, due to increasing health care costs and new coverage requirements imposed by ACA (Health Care Reform).
Zane’s technology platform directly addresses each of these issues.
Click here to read the full press release.
Note: this should not be taken as tax or legal advice.
- The health benefit market is currently dominated by “defined-benefit” health plans that will shift to "defined contribution" health plans similar to 401(k)s
- The primary driver of this shift is U.S. Employers need to limit exposure to health-care costs
- The Health Reform law will accelerate the shift
"A misleading survey by McKinsey & Co. has suggested the potential for huge declines in employer-based health insurance. But projections from the Congressional Budget Office and other respected researchers generally point to only a modest net decrease."
In a single sentence, Orszag calls McKinsey & Co. "misleading" for suggesting a decline in employer-sponsored health insurance and the Congressional Budget Office "respected researchers" for suggesting the opposite.
Did we mention Peter Orszag was a former director of the Office of Management and Budget?
Note: None of this should be taken as legal or tax advice. HRAs (Health Reimbursement Arrangements) are governed by Section 105 of the Internal Revenue Code. Only employers may contribute to HRAs. All reimbursements are excluded from an employee’s gross income and wages subject to FICA (7.65%). Similarly, employers deduct reimbursements as a business expense and exclude them from wages subject to FUTA (0.8%) and the employer portion of FICA (7.65%).
See
Publication 969 for more information.
