Expense reimbursed medical insurance is a type of employer-paid supplemental benefit that provides broad, additional coverage for out-of-pocket medical expenses in the form of reimbursements up to the specified limit. While you may know about this type of supplemental insurance in theory, it may be harder to know when to use it in practice. Let’s look at 4 signs that a company should be utilizing expense reimbursed insurance.
Struggling to Fill Coverage Gaps
As you know, coverage gaps are growing in nearly all primary medical insurance plans. Expense reimbursed insurance is the best way to fill those gaps.
Voluntary insurance, another type of supplemental insurance, is often used as a gap filler, but unfortunately voluntary insurance coverage is limited to a defined scope, like a hospital stay or expenses for cancer treatment. Any medical expenses outside of the narrow area won’t be covered.
Expense reimbursed insurance, however, works to fill various types of gaps, like everyday prescription or co-pay expenses and the more unexpected expenses, like hospital stays. Expense reimbursed insurance is a true medical gap filler, not just a “sometimes” gap filler.
Recruitment and Retention Issues
In today’s tight talent market, job candidates have a plethora of opportunities to choose from, and if a company’s benefits aren’t appealing enough, there’s always somewhere else to turn!
Expense reimbursed insurance can be a secret weapon in this area. Expense reimbursed insurance qualifies as an excepted benefit, which means that it isn’t subject to ACA nondiscrimination or other rules. In turn, that means that these types of supplemental plans can be layered onto the primary just for those hard to recruit and retain talent groups!
It gives coverage an added boost and gives the employer control over the best way to structure their benefits to reach their talent management objectives.
Health Accounts Too Limited
Health accounts, like HSAs, are another way to provide additional funds toward medical expenses that aren’t covered by the primary plan. Another plus: they offer tax-savings.
But health accounts have limits that aren’t always enough. The money also must be in the account at the time of service, and, depending on how the account is set up, there’s no guarantee that will happen. And finally, health accounts provide money for medical expenses, but they aren’t real insurance. So, employees are still open to risk.
Expense reimbursed insurance has coverage levels that range from $5,000 to $100,000, so finding the right fit for each company’s benefits structure is easy. Plus, it’s real insurance, so the coverage will be there when needed! And finally, 105(h) allows premiums to be tax deductible for employer and benefits to be non-taxable for employees.*
Leadership/Executives Unhappy and Unhealthy
Many strategic leaders remember the days of 100% plans and are unhappy with their current health coverage. Expense reimbursed insurance is another way to reach that goal. Some plans provide up to $50,000 or $100,000 of coverage for everyday expenses and expenses not typically covered by the primary plan, like LASIK and nonformulary Rx.
Another issue many executives face is being more open to health risks because of the nature of their jobs, but due to the high pressure, they are less likely to take time off to deal with the issues at hand. This can lead to a huge lack in productivity and a significant blow to the company’s bottom line. These robust expense reimbursed insurance plans may incorporate additional health support services to make it easier for company leaders to get and stay healthy.
*This is not local, state or federal tax advice as each person and company is unique. It is recommended that you seek the independent counsel of a professional tax adviser.