New insurance concept: the self-insured medical reimbursement plan

ZaneBenefits is the leader in helping to self-administer employer reimbursement for employee medical expenses. In fact, they are the one of the few companies that will do this. This is one of the most controversial concepts out there. Zane believes that this is a legal approach to reimburse medical expenses for the employees from a tax free standpoint.

This self-insured medical reimbursement plan is often associated with:

• Section 105 medical reimbursement plans
• Health care reimbursement plans
• Integrated health reimbursement arrangements

If this approach violates Affordable Care Act requirements, then an employer could be subject to thousands of dollars in fines.

Zane has constantly argued that its self-insured medical reimbursement approach is legal with both the Internal Revenue Service and the ACA. The reason this concept is so controversial is because of politics. The current administration is worried that we could see an abandonment of employer-sponsored health insurance plans, which would shift coverage to the individual market. If an employer can give tax-free money to employees to purchase health insurance, the marketplace could see an erosion of the employer health plan.

How Zane’s approach works is this:

• The employer sets an allowance for the employee for medical spending
• The employee pays for their own individual health plan
• Zane reimburses the employee up to this allowance

Is ZaneBenefits’ approach really what the ACA had in mind?With the ACA, there are unintended consequences for small group health plans. If your current group health plan is non-ACA compliant, and it moves to an ACA compliant plan, you may see a 55% rate increase. These rate increases are a direct result of the removal of underwriting requirements. Most Indianapolis small groups may not be able to afford the rate increases that are coming under the ACA. We will see a drop of small group health coverage, and it has already occurred.

Using this type of approach to benefits can save huge amounts of money. There is still risk, since this concept is not widely accepted.

Questions about this or any other small group health plan approach? Contact Nefouse & Associates, or call us at (800) 846-8615.