If you are planning on giving extra pay to your employees and cancelling your group health coverage, there are some important things you need to understand before doing so. While there is value in giving employees more choice when it comes to their health benefits, there are a few ways you can improve the transition from group to individual insurance.
The following are the 3 things to ask before cancelling your current group health coverage:
Before we get into these things, here’s a quick review a few key concepts that help Remodel Health make this transition more seamless:
Customizable, but Equitable
Individual products have individual prices based on individual people. Remodel Health’s solution helps keep your extra pay custom, yet compliant. This ensures each individual receives help based on their unique needs, while still remaining fair among all employees.
Taxable, but Flexible
Keeping the extra pay taxable ensures flexibility of choice for employees. If they want to forgo the Individual Marketplace, they can also use these dollars toward spouses’ plans or sharing ministries. For some, the extra wage may even make them eligible for advanced premium tax credits. However, knowing how much of an impact the extra wage will have on the employee’s taxes can be difficult. Remodel Health’s solution uses proprietary algorithms to help employers better account for and improve any negative tax impact.
1. How do advanced premium tax credits work?
Advanced premium tax credits provide what feels like a discount on insurance. In the Individual Marketplace, a person’s household data can make them eligible to receive tax credits, which can then be used toward individual plans.
Upon enrollment, the carrier submits the insured tax payer’s data to the IRS and receives tax credit dollars on their behalf. The money goes toward reducing their monthly premium amount. At the end of the year, the carrier provides tax documents to the recipient that should be included with annual tax filings.
Remodel Health’s solution helps account for tax credits to ensure no one loses out on this benefit.
2. What if the extra pay for healthcare isn’t enough?
Tax credit discounts on individual insurance products will vary depending on the employee’s income. Those who receive higher wages will be eligible for less tax credit discounts. Vice versa, employees with lower wages will be eligible for more tax credits — and possibly even better plan designs.
Because extra pay is considered taxable wage, employees can add to their healthcare budget if so desired. This means employees can upgrade their plan using their own money. Providing extra pay instead of a group health plan allows each individual to find what works best for them.
Remodel Health’s solution helps employers choose how much extra pay they should provide and helps employees find the best way to spend those additional dollars.
3. Where to find individual health insurance options?
Healthcare.gov has information on guaranteed issue plans and details on tax credit eligibility. Be aware: the application process can oftentimes feel lengthy and cumbersome. Additionally, it is very important to properly evaluate all plans to balance cost and risk.
Remodel Health’s software seamlessly integrates wage increases with our proprietary plan shopping experience, complete with filtered-views to sort through all options. Additionally, RH provides personal, non-commissioned benefits coaches to help employees find their best plan option and answer all of their questions along the way!
Ready to evaluate your options?
Our expert benefit consultants are available to provide you with a free savings projection for your team. Or, you can run your numbers through our Savings Estimator Tool for a free estimate. Whether through alternative group options, individual coverage HRAs, or using wage increases, Remodel Health is dedicated to helping you care better for your team while still cutting costs.
Reach us at [email protected] to get connected today!
Important Notice: Remodel Health does not intend to provide specific insurance, legal, or tax advice. Remodel Health always recommends consulting with your own professional representation to properly evaluate the information presented and its appropriate application to your particular situation.