QUESTION: What can a broker offer to clients looking to enhance their benefits package for top executives?
For nearly three decades, companies used executive medical reimbursement plans to recruit and retain executives and key personnel. Following the introduction of the Patient Protection and Affordable Care Act in early 2010, the majority of these plans almost went the way of the dodo last year. Luckily, on Dec. 22, 2010, the IRS issued Notice 2011-01 delaying the effective date of the new health care reform which would require insured health plans to meet the same nondiscrimination rules that apply to self-funded plans under Section 105(h).
So, the executive medical reimbursement plans haven’t gone away. This is great news for brokers and for companies in highly competitive industries where losing key executives would be detrimental to company growth and development. These types of plans repay insured executives and their dependents for many out-of-pocket medical expenses not covered by their health plan. Examples of these include:
- Co-insurance amounts
- Dental care and orthodontia
- Annual physicals and preventive care
- Vision care costs (including eyeglasses and contact lenses)
- Treatment for nervous/mental disorders
- Drug and alcohol abuse
Executive medical reimbursement plans offer tremendous value to both employers and employees. As an employer can select which employees to offer the plan without penalty, it can be used as a strong recruitment tool for top executives. Aside from the benefit of being non-taxable, the following are all ways these plans can provide value to employees:
- Act as a replacement for employee funded FSA or HSA Accounts
- Fill gaps in an employee’s underlying major medical plan
- Cover the healthcare needs of an employee’s family
- Simplify the overall claims process
- Provide optional enhanced coverage for vision, dental and executive physicals
Executive Medical Reimbursement Plans ultimately have recruiting and retention benefits for key executives, tax advantages for both the employer and employee, and can fill gaps that may be apparent in healthcare under future health care reform. With plan maximums ranging from $5,000-$100,000 annually, they are a benefit worth considering — as an excellent foot in the door with new clients or a way to bring value to current clients.
If you’re a broker with tough questions, I’m here to provide unbiased answers and feedback to help you take the next step in adapting your business. Feel free to leave your question in the comments.
Fleet is president of AmWINS Group Benefits, a wholesale broker of comprehensive group insurance programs and administrative services. He can be reached at firstname.lastname@example.org.
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