What are ancillary benefits? Ancillary benefits, also called supplemental benefits, are benefits that are not part of your core health insurance. Benefits like dental, vision, disability, life, accident, critical illness and others. These benefits are dental, vision, disability, life, accident, critical illness and others. These benefits can be contributory or voluntary.
Who pays for ancillary benefits? There are two versions of ancillary benefits – voluntary and contributory. Voluntary benefits are offered by an employer and paid for entirely by the employee. With contributory benefits, the costs are shared between employee and employer.
Do I need to offer benefits? If you are a small employer with fewer than 50 employees you are not required to offer health insurance. If you have more than 50 employees “play or pay” penalty comes into effect. This means that if you don’t offer health insurance (minimum essential coverage) you are subject to a penalty.
Why should I offer health insurance? Improve employee morale, Retain employees and help hire in new ones, Improve productivity by improving employee health, Potential tax benefits (talk to your financial or legal advisor). If you’re a small business you may have access to more carriers and plan designs in the group marketplace vs. the individual marketplace, giving you and your employees more options.
Are there different types of health plans and what are they? There are lots of options (and lots of letters) available to an employer who is looking to offer health insurance benefits to their staff. These include HMO, PPOs, EPOs, HDHPs, HSAs, and STM Plans Health Plan. We’ll explain each below.
- Health Maintenance Organizations (HMO) – HMO’s generally have a more limited number of providers who are considered “participating” or “in network.” Each person is required to choose a Primary Care Physician (PCP) from the available participating providers and all care is coordinated through the PCP. HMO’s do not include coverage for care received from non-participating (or “out of network”) providers.
- Preferred Provider Organizations (PPO) – PPO’s provide the most choice in where to receive care. The participating provider network is generally the largest and coverage is also available for care received from out of network providers. A Primary Care Physician is not required. Care received from in-network provides generally costs much less than care received from out of network providers.
- Exclusive Provider Organizations (EPO) – EPO’s are similar to PPOs but they do not cover care received from out of network providers.
- High Deductible Health Plans (HDHP) – These plans typically have higher deductibles and total out of pocket costs than other plan designs. Most benefits are subject to the deductible, including office care and prescription drugs. Certain preventive (wellness) services are covered in full and not subject to the deductible. HDHPs can also be coupled with Health Savings Accounts (HSAs).
- Health Savings Accounts (HSA) – HSA’s are savings accounts that are owned by the employee and can be used to pay for out-of-pocket medical expenses. Dollars deposited into the HSA may be made “pre-tax”. Dollars withdrawn from the HSA to be used to pay for qualified medical expenses are generally not subject to taxation.
- Short Term Medical Plans (STM) – STM’s are like PPOs in coverage and networks. A key difference is that coverage is available only for a short, defined period of time (typically 60 days). These types of plans can generally be purchased at any time during the year. Importantly, these plans may not meet Affordable Care Act rules and therefore an individual enrolled in one of these type plans may be subject to health care reform individual mandate penalty.
How much does health insurance cost? There are multiple factors involved with answering this question. Typically the employee and employer share the cost of group insurance and there are many ways to structure plans to manage costs. The best way for us to answer this question is to call one of our agents in the Benefits Department and talk about your specific situation.
How much do I, as the employer, have to pay when offering health care? The employer portion of health insurance that you pay varies depending on your business’s size and the type of coverage. All carriers do require a minimum percentage of the premium to be paid by the employer, but it varies from one carrier to another. Please give us a call to discuss your options.
If my employee is married and the spouse has coverage, what’s my responsibility? There are many ways to handle this. Employers are not required to pay premiums for spouses and some employers impose a surcharge on employees whose spouse has access to coverage elsewhere.
Do I have to offer coverage to family members? Employers are not obligated to offer coverage to spouses, but they do need to offer coverage on dependent children. Employers are not obligated to pay premiums for dependents. But remember, one of the main reasons for offering health insurance is peace of mind. When employees know their families are protected too, this offers a strong comfort level.
How can I save money when offering health insurance? There are a number of different plan options such as high deductible plans partnered with Health Savings Accounts (HSA’s), minimum essential coverage plans (MEC’s), and others. There are pros and cons to all plans, give us a call and we can discuss which one would work best for you.
Is the employee share of the premium pre or post-tax? The employee’s contribution to their health insurance premium can be pre-tax. This can be set up through payroll deduction and offers employees a way to reduce their tax burden by reducing their taxable income. You will want to speak with your accountant to ensure your pretax plan is set up properly.
Are employer contributions to health insurance premiums tax deductible? Generally yes. We recommend you review this with your financial or legal consultant.