Employee Benefits for Small and Mid-Size Businesses

I compare the carriers for you

Instead of you visiting one carrier website after another, I request pricing and plan details from the insurance companies I represent and put them next to each other, so you can see the real differences in one place.

I explain the true cost

Premium is only part of it. I walk you through deductibles, copays, out-of-pocket limits, how much the business pays toward each employee and what the employee pays, so you know what a plan will cost your team in a good year and a bad one.

I explain the tradeoffs

A lower premium usually means a higher deductible or a narrower network. A richer plan costs more every month. I show you what you give up and what you gain with each option, so the decision is yours and you make it with the full picture.

I look at your people, not just a rate

I ask about your employees: their ages, their families, their doctors and prescriptions, and what they value. A plan only helps your team if they can use it, so I match the design and the network to the people who will be on it.

I handle enrollment with you

I explain the plan to your employees in plain language, help your business complete the paperwork, and make sure new hires know how to get covered. You are not left with a stack of forms and a deadline.

One person to call all year

Employees have questions about coverage, claims and ID cards long after enrollment. You call me, in English or Spanish, instead of waiting on hold with a carrier. That includes new hires, life changes and renewal.

I start before renewal, not after

Renewal increases arrive with little warning. I recommend starting 60 to 90 days ahead, so we can review your current plan, compare alternatives and decide calmly, while you still have every option open.

Benefits beyond health insurance

If you want to add life insurance or retirement income planning for owners and employees, I can explain those options too, so your benefits package is built by one advisor and works together.

25 years and 15,000 clients

I have spent 25 years helping more than 15,000 individuals, families and businesses understand insurance. You get that experience without paying extra for it.

Fully insured

You pay the carrier a fixed monthly premium, and the carrier takes on the claims risk.

• Predictable cost for the whole plan year
• The carrier handles claims, networks and filings
• Renewal rates are set by the carrier, with little claims detail shared

Level funded

A fixed monthly payment that covers estimated claims, administration and stop loss protection.

• Possible refund if claims run lower than expected
• More claims reporting than a fully insured plan
• Pricing depends on your group medical profile, and not every state allows it

Self funded (self insured)

Your company pays employee claims directly, usually with a third party administrator and stop loss insurance.

• Pay for claims actually incurred, plus fees
• Full claims data and freedom to design benefits
• Monthly costs vary, so cash flow planning matters

Reference based pricing

A self funded approach that pays providers a set percentage of Medicare rates instead of network discounts.

• Savings can be meaningful
• Employees may face balance billing questions
• Strong member support matters

What is in your monthly payment

One level payment each month is built from three main pieces.

• The claims fund: money set aside to pay your employees claims, usually the largest piece
• Administrative fees: claims processing, network access and customer service
• Stop loss premium: insurance that protects you from very large claims

A year in a level funded plan

• Underwriting: the carrier reviews your group, often including health questions, and sets your monthly payment
• Plan year: you pay the same amount each month and employees use the plan like any other
• Claims: the administrator pays claims from the claims fund
• Run out period: claims still arriving after the year ends are counted
• Reconciliation: if claims plus run out came in below the fund, a refund may follow

Specific stop loss

Protects you when one person has very large claims. Once a single member passes the specific deductible, stop loss pays the rest, up to the policy limits.

• Higher deductibles lower your payment but raise your risk
• Ask what the limit is per person
• Ask whether the deductible is the same for every member

Aggregate stop loss

Protects you if total group claims pass a ceiling for the year, often set as a percentage of expected claims.

• Your maximum yearly exposure is set when you sign
• Check the exact ceiling, because it is part of the real cost
• Ask how the ceiling is calculated each month

Lasering

At underwriting or renewal, the stop loss carrier may give one member with known high claims a higher specific deductible. That is called a laser.

• Ask if any members are lasered before you sign
• Ask how lasers are handled at renewal
• A laser can change your real risk, even when the payment looks the same

Contract basis

The contract basis decides which claims count toward your plan year.

• Incurred and paid rules decide which claims are covered
• A longer run out period counts more late claims
• Ask for the exact terms, because they affect refunds and stop loss reimbursement

Refunds, and what to know

If claims come in low, many plans return a share of the unused claims fund after the run out period ends.

• The refund share varies by carrier
• Refunds usually arrive months after the plan year ends
• If employees paid part of the premium, a portion of a refund may belong to the plan and need to be used for employees, so ask your tax advisor and administrator
• A refund is possible, never guaranteed

Renewal

Renewal is based on your own claims, which can work for or against you.

• A strong year can bring a better renewal
• A bad year can raise your payment, change your stop loss terms or bring lasers
• Some carriers offer rate caps or guarantees, so ask
• You can often compare the market again at renewal, including fully insured plans

Underwriting and eligibility

Level funded plans are medically underwritten, so pricing depends on your employees health history.

• Carriers set minimum participation and employer contribution rules
• Health questions are typically part of the application
• Late enrollees and new hires may follow special rules
• Not every state allows level funding for small groups

Who it often fits

Level funding tends to work best when you want stable payments and your group is fairly healthy.

• Groups with younger or healthier employees
• Employers who want claims reporting and a chance at a refund
• Small to mid size groups, with eligibility that varies by carrier and state
• Groups that are comfortable with a little more complexity than a traditional plan

Things to be aware of

Level funded plans are a form of self funding, so a few details differ from fully insured plans.

• They are governed mainly by federal ERISA rules, not by state insurance mandates
• They must meet ACA minimum value to satisfy the employer mandate, but may not cover every state mandated benefit
• Review exclusions, limits and the network carefully with me
• The administrator can change, so ask how claims support works

Questions to ask before you sign

• What is the specific deductible, and are there any lasers?
• What is the aggregate ceiling and how is it calculated?
• What is the refund share, and what is the run out period?
• Who is the administrator, and which network is used?
• Can I see claims reports during the year?
• What happens at renewal, and are there rate caps?

How an ICHRA works

You choose a monthly allowance for each employee. Each employee picks an individual health plan, on or off the marketplace, and you reimburse the premium up to the allowance.

• You set the budget, so your cost stays predictable
• Employees choose their own carrier, network and plan
• Employees show proof of coverage and you reimburse them

Employee classes and allowances

You can set different allowances for different classes, such as full time and part time, salaried and hourly, or employees in different locations. Everyone in a class is offered the same terms.

• Allowances can be adjusted by age and family size within federal limits
• Classes must follow IRS rules
• Class size rules can apply when you offer an ICHRA to some employees and a group plan to others

Who it often fits

An ICHRA can work well when a traditional group plan is hard to build or keeps getting more expensive.

• Small employers that cannot meet carrier participation rules
• Teams spread across several states
• Businesses with part time, seasonal or hourly staff
• Owners who want a fixed budget instead of renewal surprises

Strengths

Many owners like how simple the budget becomes.

• No group underwriting based on your employees health history
• Employees keep the plan they choose if they change jobs and keep paying it themselves
• No minimum participation requirement from a carrier
• Offer different allowances to different classes of employees

Things to weigh

An ICHRA shifts the shopping to your employees, so support matters.

• Plans, prices and networks vary by county and carrier
• Individual plans may have narrower networks than a group plan
• You do not control the plan design
• Premiums change each year, so allowances should be reviewed
• Employers with 50 or more full time equivalent employees must make sure the allowance is affordable under IRS rules

Tax and compliance basics

Reimbursements are generally tax free for the employee and deductible for the employer, as long as the rules are followed.

• Employees must have individual coverage to be reimbursed
• Employees must receive written notice, generally 90 days before the plan year starts
• An employee who accepts an affordable ICHRA generally cannot also take marketplace premium tax credits
• Rules depend on your situation, so I confirm each case with you

ICHRA and Medicare

Employees who are on Medicare can generally be reimbursed for Medicare premiums under an ICHRA too. Because Medicare is my specialty, I help older employees choose coverage that works alongside it, in English or Spanish.

How I help

I take the guesswork out of an ICHRA for you and your team.

• Compare an ICHRA with group plan options side by side
• Model allowances for each employee class so you see your budget
• Check plan availability by ZIP code for your employees
• Help employees choose and enroll
• Coordinate notices and paperwork with your administrator

HMO

Employees stay inside a defined network and choose a primary care doctor.

• Referrals are usually needed for specialists
• Generally covers emergencies only outside the network
• Lower premiums and copays, less choice

PPO

Employees can see in network or out of network providers.

• No referrals needed
• Out of network care is covered at a higher cost share
• Higher premiums, the most flexibility

EPO

Network only like an HMO, but often without referral rules.

• Generally no out of network coverage except emergencies
• Simple to use
• Moderate premiums

POS

A mix of HMO and PPO features, with a primary care doctor guiding care.

• Referrals are usually needed
• Out of network care is available at a higher cost share
• A middle ground on cost and choice

HDHP with HSA

A higher deductible plan paired with a health savings account.

• Lower premiums
• Employees and employers can add tax advantaged dollars
• HSA contributions stop once someone enrolls in Medicare

QSEHRA

A reimbursement option for very small businesses without a group plan. You reimburse employees for individual coverage up to annual IRS limits.

PEO

Your employees become co-employed through a professional employer organization that bundles payroll, HR and benefits for a fee.

Association and multiple employer plans

Several employers join together to buy coverage as one larger group. Rules vary by state, so I review the sponsor and structure carefully.

Captive stop loss

Self funded employers pool their stop loss risk with others and share the risk and the reward. Usually for larger groups with a long term view.

Section 125 cafeteria plan

Not a funding model, but a smart addition for almost any employer. Employees pay their share of premiums with pretax dollars, which can lower payroll taxes for you.

Dental and vision

Everyday care your employees use the most.

Group life and AD&D

Financial protection for employees families.

Disability income

Short term and long term plans that replace income during illness or injury.

Hospital indemnity, accident and critical illness

Cash benefits that help with out of pocket costs.

Telehealth and employee assistance

Convenient care and support for employees and their families.

FSA, HSA and dependent care accounts

Tax advantaged ways to save for care costs.

Retirement income planning

Planning help for owners and employees who want to prepare ahead.

Small group

Most states define a small group as up to 50 employees, and a few go up to 100. Small groups are generally priced under community or modified community rating.

Large group

Larger groups are typically rated on their own claims experience, which opens the door to level funded and self funded strategies.

Employer mandate

Employers with 50 or more full time equivalent employees must generally offer affordable coverage that meets minimum value standards, and report it to the IRS.

Participation and contribution

Carriers commonly require a minimum share of eligible employees to enroll and a minimum employer contribution. The numbers vary by carrier and state.

Continuation coverage

Federal COBRA generally applies to employers with 20 or more employees, and many states have rules for smaller groups.

Eligibility

Waiting periods, full time definitions and dependent rules should be written clearly in your plan documents.

For the employer

• Money you spend on employee coverage is generally a deductible business expense
• Employer paid contributions are generally not taxed as income to employees
• Keep records of what you pay and what employees pay

For employees: pretax premiums

• A Section 125 cafeteria plan lets employees pay their share with pretax dollars
• That can reduce income tax and payroll taxes for the employee
• It can also reduce payroll taxes for the employer
• A written plan document is required, and the plan must pass IRS testing

Owners and S corporations

Owners are treated differently from rank and file employees.

• An owner of more than 2 percent of an S corporation is generally treated like a partner for health benefits
• Company paid premiums are usually reported as wages on the owner W2, but may not be subject to Social Security and Medicare tax if the plan is set up correctly
• The owner may then take the self employed health insurance deduction
• Sole proprietors, partners and LLC owners have their own rules, so check with your CPA

HSAs, FSAs and HRAs

• HSA: pretax or deductible contributions, tax free growth, and tax free withdrawals for qualified costs
• HSA eligibility requires a qualifying high deductible plan, and the IRS sets yearly limits
• FSA: pretax dollars for qualified costs, with limits, and some plans allow a carryover or grace period
• HRA and ICHRA: employer funded reimbursements that are generally tax free to the employee

Small business tax credit

Some very small employers may qualify for a credit for helping to pay employee premiums.

• Generally for employers with fewer than 25 full time equivalent employees and lower average wages
• Generally requires paying at least half of employee premiums and buying through the SHOP marketplace
• Available for a limited number of years, and not every plan qualifies
• Ask your tax advisor whether you qualify

Reporting and fees

Reporting depends on your size and plan type.

• Employers with 50 or more full time equivalent employees report coverage to the IRS on Forms 1094 C and 1095 C
• Self funded and level funded plans can carry extra reporting, including the yearly PCORI fee on Form 720
• Larger plans may need to file a Form 5500
• Your administrator or advisor can help you stay on schedule

Nondiscrimination rules

Plans that are self funded, and cafeteria plans, can be subject to testing so benefits do not favor highly paid employees.

• Level funded plans may be treated as self funded for these rules
• Ask your administrator how testing is handled
• Failing a test can create tax consequences for highly paid employees

Employer mandate penalties

Employers with 50 or more full time equivalent employees must offer affordable coverage that meets minimum value to full time employees, or a penalty may apply.

• Penalties are assessed by the IRS
• ICHRA and group plans can both satisfy the rule if set up correctly
• I help you check that your offer meets the standard

20 or more employees

The group plan generally pays first for active employees age 65 and older, and Medicare pays second. Many can delay Part B without a late penalty while they stay covered through active employment.

Fewer than 20 employees

Medicare may pay first, so an employee who skips Part B could face large uncovered bills and later penalties.

HSA timing

Once someone enrolls in Medicare, they can no longer contribute to an HSA, so timing matters for employees on an HDHP.

Retirees, spouses and COBRA

Retiree coverage, spouses of different ages and COBRA all interact with Medicare in different ways. I confirm each case.

Taxes and how benefits are treated

In general, the premiums an employer pays for employee health coverage can be a deductible business expense, and employees may be able to pay their share with pre-tax dollars through a Section 125 plan. Owners are treated differently depending on how the business is set up (for example an S corporation owner versus a sole proprietor). Your CPA should confirm how this applies to you.

Small business tax credit

Some small employers that pay a share of employee premiums may qualify for a federal small business health care tax credit. Eligibility depends on your number of employees, average wages and how much of the premium you pay. Ask your tax advisor whether you qualify.

How much do I have to contribute?

Insurance companies often set a minimum employer contribution and a minimum number of employees who must enroll. I explain these rules up front so there are no surprises.

Compliance and employer rules

Rules can depend on your size and state, including the ACA employer requirements for larger employers, COBRA or state continuation, and required notices. I point out which ones may apply, and your attorney or HR advisor can confirm.

Will my employees keep their doctors?

Networks differ by plan. I check the doctors, hospitals and prescriptions your team cares about before you choose, not after.

Renewal increases

Premiums often change at renewal. I review your renewal early, compare alternatives and explain what is driving the change so you can decide with time to spare.

Attracting and keeping good people

Benefits are one of the main reasons employees join and stay. We look at what your team values, not just what costs least.

Time and paperwork

Enrollment, new hires, terminations and employee questions take time. I help with the process so you can run your business.