Q. What is a Zane Benefits solution?
A. Zane Benefits provides online software solutions that allows companies to legally reimburse employees for individual health insurance premiums.
Q. How do health reimbursement plans work?
A. Using a Zane Benefits HRP:
The company sets monthly healthcare allowances.
Employees purchase their own health plan.
Employees submit a reimbursement request through the employee interface.
The software processes the request and notifies the company of the amount to reimburse employees.
The company reimburses employees for the approved expense via payroll, check, or direct deposit.
Q. How are Zane Benefits solutions structured?
A. Our health reimbursement plans are structured as a Self-insured Medical Reimbursement Plan to reimburse employees for health insurance premiums up to a specified monthly healthcare allowance, and basic preventive health services as required by Public Health Services (“PHS”) Act Section 2713.
Q. How much time will it take the company to administer a Zane Benefits solution?
A. Once implemented, your plan will take less than 5 minutes per month to administer online. Companies use the software to add approved reimbursements to payroll. There are no time-consuming annual renewals, and employees maintain a direct relationship with the insurance company of their choice.
Q. How do companies transition to a Zane Benefits solution?
A. Our implementation team ensures a smooth and fast transition for the company and employees. The setup process takes 30-60 minutes online, and is 100% paperless. The implementation team helps companies customize materials to educate employees about their new benefits.
Q. How do Zane Benefits solutions work for employees?
A. Employees select and purchase an individual health policy that best fits their families' needs, choosing any plan, from any carrier. Employees use Zane Benefits software to submit a reimbursement request for their premium expense, and are reimbursed up to the amount available in their balance. They can keep their same network and doctors, and pick a coverage level that fits their health needs. Individual health plans cost 20-60% less than traditional group plans, and new tax credits may be available to qualifying employees.
Q. How much do Zane Benefits solutions cost?
A. Your company sets and controls the contribution amounts. Administering a Zane Benefits plan costs as little as $49/month for basic plan services, and $12/user/month for plans that utilize the tax-free reimbursement solution. There are also one-time account set up and plan design fees.
Q. Are Zane Benefits Solutions considered health insurance?
A. No. Zane Benefits solutions are not health insurance. Our plans are Self-insured Medical Reimbursement Plans, also called a Healthcare Reimbursement Plan (HRP).
Q: Where will employees purchase insurance?
A. Buying an individual health insurance policy has never been easier. Employees can purchase insurance through a licensed health insurance agent (who is appointed to represent the insurance carriers), online, or through the Health Insurance Marketplace. Employees are no longer asked medical history information on the application, and cannot be denied or charged more because of a pre-existing condition.
Q. Selecting and purchasing health insurance is new to many employees. How is this made easier?
A. During setup, Zane Benefit’s implementation team helps customize materials to educate employees, including information on health insurance. Many companies also find it helpful to have a licensed health insurance agent help employees navigate plan choices at no extra charge. This feature is referred to as Zane Benefit's Health Benefits Advisor.
Q. What is individual health insurance?
A. Individual health insurance is a type of policy that an employee purchases for himself and/or his family - just like car insurance. Employees own the policy and can take it with them if they leave the company. Employees pay for their policy with their own money, and can use ZaneHealth to reimburse themselves for the premium (or a portion of the premium).
Q. What type of healthcare expenses are reimbursable through ZaneHealth?
A. Healthcare expenses that may be reimbursed through ZaneHealth include qualified health insurance premiums and basic preventive health services.
Q. Is there a minimum or maximum number of participants that must enroll in ZaneHealth?
A. No. Companies of all sizes can use ZaneHealth. Additionally, there are no required minimum participation requirements, and the company determines the eligibility requirements during implementation.
Q. Can ZaneHealth only be offered to key employees?
A. All employees in the same class should be treated equally. ZaneHealth does not have to be offered to all employees so long as benefits offered to one or more classes of employees do not discriminate in favor of highly compensated individuals.
Q. What defines an employee class?
A. Employee classes are defined by the employer and must be based on genuine job classifications. Criteria that may be used to define a class include job description, full-time versus part-time status, active versus retired status, geographic location, and membership in a collective bargaining agreement (e.g. union). Employers may also give different benefits to employees based on the employees’ choice of plan (e.g., ZaneHealth may be available only to those opting out of a group plan).
Q. Can the company give different allowances to different employees?
A. Employees in different employee classes may receive different allowances. Allowances may also vary by family status. All employees in the same class should be treated equally.
Q. Can ZaneHealth be offered to independent contractors?
A. ZaneHealth makes it easy to reimburse independent contractors for qualified health insurance premiums. Contractors who do not earn W-2 wages may still receive reimbursements but must report these reimbursements as taxable income. Independent contractors can use their ZaneHealth website to view their total income from reimbursements each year.
Q. Where do companies keep the accumulated balances? Do they send the money to Zane Benefits or set up a separate account to keep track of the liability?
A. ZaneHealth is a notional arrangement; no funds are expensed until reimbursements are paid directly from the company to employee(s). Once an employee’s health insurance premium has been submitted and approved, reimbursements are paid out via payroll. All notional accounting is tracked in real-time via the ZaneHealth ledgers.
Q. How should the allowances be accounted for?
A. For financial reporting purposes, companies will want to accrue a liability on their balance sheets for the portion of unused contributions they believe will ultimately be used. Currently, no specific accounting standards exist for recording or specifically disclosing these types of liabilities. The most conservative treatment is to accrue 100% of the unused contributions on the balance sheet.
Q. How can the company minimize exposure?
A. ZaneHealth’s reporting features make real-time monitoring of liabilities, reimbursements, and utilization easy. The company can change benefits at any time, or cancel the entire benefit at any time. Further, any unused benefits stay with the company at the end of the plan year, or when an employee leaves the company.
Q. Are reimbursements from ZaneHealth tax-deductible for the company?
A. Yes. ZaneHealth reimbursements are tax-deductible for the company. The reimbursements are deductible as a business expense, the same way as premiums paid for a group insurance policy or other benefits expenses.
Q. Are reimbursements from ZaneHealth tax-free to employees?
A. Yes. Reimbursements are not included in employees’ income and thus not subject to any income or payroll tax withholding. Internal Revenue Code (IRC) Section 105 allows qualified distributions from accident and health plans (such as ZaneHealth) to be excluded from income (“tax-free”). The tax-free nature of ZaneHealth reimbursements received by proprietors, partners, and some S-Corp shareholders may be limited.
Q. Does ZaneHealth comply with the Affordable Care Act (ACA) rules?
A. Yes. ZaneHealth is designed to comply with all applicable ACA rules, as well as ERISA, IRS, and HIPAA rules.
Q: Is ZaneHealth a group health plan?
A. Yes. ZaneHealth is a Self-insured Medical Reimbursement Plan, which is considered a group health plan. As such, ZaneHealth must comply with IRS, ERISA, HIPAA, and ACA rules. ZaneHealth is designed to comply with all applicable rules.
Q. Does ZaneHealth satisfy the ACA Employer Shared Responsibility Payment (“Employer Mandate”) for companies with >50 full-time employees?
A. No. ZaneHealth is not an “eligible employer-sponsored plan” (i.e. minimum essential coverage) and will not satisfy the Employer Mandate.
Q. Does ZaneHealth satisfy the ACA Individual Shared Responsibility Payment (“Individual Mandate”) for employees?
A. No. ZaneHealth is not an “eligible employer-sponsored plan” (i.e. minimum essential coverage) and will not satisfy the Individual Mandate. To avoid the Individual Shared Responsibility Payment, employees need to be covered under a qualified health insurance policy. Employees can use ZaneHealth to be reimbursed for their premium, or a portion of their premium.
Q. How does ZaneHealth comply with IRS Notice 2013-54?
A. ZaneHealth is designed to comply with the Affordable Care Act’s “Market Reforms” outlined in IRS Notice 2013-54. Specifically, ZaneHealth complies with the PHS Act 2711 annual limit requirements and the PHS Act 2713 preventive health services requirements outlined in IRS Notice 2013-54.
PHS Act 2713 requires ZaneHealth to cover basic preventive health services without cost-sharing. ZaneHealth meets this requirement.
PHS Act 2711 provides that no annual or lifetime limits may be placed on essential health benefits. As a result, ZaneHealth may not place an annual limit on the basic preventive health services expenses required by PHS Act 2713.
PHS Act 2711 provides that annual limits and lifetime limits may be placed on benefits that are not essential health benefits. Health insurance premiums are not essential health benefits – thus, ZaneHealth may place a “premium-specific” annual limit on premium reimbursements.
Q. If an employee submits a $1,000 preventive health expense, is the company required to reimburse it?
A. Yes. In compliance with the Market Reforms, ZaneHealth covers basic preventive health services without cost sharing. While these basic preventive health services are limited by definition, they are not subject to an annual limit.
ZaneHealth has built-in protections that help companies control costs:
Reimbursement for preventive health expenses are drawn from the employee’s available balance for health insurance premium reimbursement. For example, an employee has a $200/month allowance (a $2,400 annual liability to the company). The employee submits a $1,000 preventive health services expense and is reimbursed $1,000. This amount is taken from the employee’s overall $2,400 annual allowance leaving $1,400 available during that year for health insurance premium reimbursement.
Additionally, companies may elect to require employees to show proof of having non-grandfathered, minimum essential coverage to be eligible for ZaneHealth. This ensures that employees receive preventive health services coverage via their own health insurance policy.
Q. Is ZaneHealth an "Employer Payment Plan" as defined in IRS Notice 2013-54?
A. No. ZaneHealth is not an Employer Payment Plan. Employer Payment Plans do not cover preventive health services. According to Notice 2013-54, an Employer Payment Plan is an arrangement (as described as Revenue Ruling 61-146) under which an employer treats its direct contributions (either through payment or reimbursement) to individual health insurance premiums as tax-free (i.e. excludable from income) under Section 106 of the Internal Revenue Code (the “IRC”).
ZaneHealth is a Self-insured Medical Reimbursement Plan as defined in IRC Section 105. Per IRC Section 105, a Self-insured Medical Reimbursement Plan is a plan offered by an employer to reimburse employees for medical care as defined in IRC Section 213(d) (which includes amounts paid for health insurance). With this approach, the employer makes contributions to the Self-insured Medical Reimbursement Plan (not directly to individual policies) and employees use the plan to reimburse their out-of-pocket 213(d) medical care costs. As long as the reimbursements are for expenses within the definition of medical care (which includes insurance premiums), the reimbursements (i.e. distributions from the plan) are excludable from employees’ taxable income under IRC Section 105.
Q. What if the company is audited by the IRS?
A. ZaneHealth is designed to comply with all applicable ACA rules, as well as ERISA, IRS, and HIPAA rules. If a company is audited, ZaneHealth will assist the company in preparing all documents to prove compliance of the plan.
Q. Is ZaneHealth compliant with PHS Act 2711?
A. ZaneHealth is specifically designed to comply with PHS Act Sections 2711 and 2713 and other applicable laws. If a company is accused of violating PHS Act 2711, ZaneHealth will assist the company in preparing all documents to prove compliance of the plan.
While ZaneHealth is designed to comply with these guidelines, if a specific failure is identified, an employer could be exposed to excise taxes under IRC Section 4980D of up to $100 per day if the failure is not corrected (Note: this tax is limited to 10% of the amount paid under the plan if the failure is due to reasonable cause and the tax can be avoided in entirety if the employer can show that they did not know that the failure existed and it is corrected within 30 days). If a failure is identified, ZaneHealth will assist the company in correcting the failure to avoid this excise tax.
To learn more about ZaneHealth, contact us at 800.391.9209, email@example.com, or learn more www.zanebenefits.com.