Individual HSA plans for small groups/employers

Discussion in 'General Insurance Agent Discussions' started by aufan, Oct 11, 2006.

  1. aufan
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    aufan Super Genius

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    I'm getting vague information about whether or not it is a no-no to write individual plans for small groups. In other words, writing say a 5 man group with each person having their own individual plan with the employer paying premiums for for all 5.

    The answer I get is "it's not enforced" or "it's a gray area". The two companies I write for will let you list bill, but the employee has to sign a disclaimer saying, "I am responsible for 100% of my premium".

    Anybody have any insight on this?
     
  2. Golddoor
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    Golddoor Guru

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    Some body correct me if Im wrong, but I believe that is a state law in most states? The employer can not contribute to the list bill if they are on individual plans?
     
  3. STIBROKER
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    STIBROKER The Guy that GREENSKY can't not put on ignore. Moderator

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    that is correct...or the employer can give a preformance bonus at the end of each mo. to the employee...or give them a small raise....
     
  4. BKrocko
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    BKrocko Guru

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    Colorado does not allow list billing. The employer can give the employee a bonus each month to cover it but the bonus is taxed as income.
     
  5. Vailco
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    Vailco Expert

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    I come across this all the time. I actually lost a deal last month. United American was paper billing him monthly. The employer was sending in a check for the employee's individual health insurance, and the employee was sending in the balance for his son. I told him that that was not possible with Assurant, his new provider of choice. I told him that was illegal in CO and that the employer was taking a risk. Neither was willing to change their ways.

    How do you legally get around this? Suggest that the employee pay it all and the employee get a bonus of, say, the same amount as his premium each month?
     
  6. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    It makes it tougher with no list bill, but it can be done.

    Why not have the employer pay the premium to the employee as compensation, then have the employee pay the entire premium?
     
  7. STIBROKER
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    STIBROKER The Guy that GREENSKY can't not put on ignore. Moderator

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    thats what we are talking about......
     
  8. somarco
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    somarco Guru

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    You are trying to fit a square peg in a round hole. Come at it from a different angle.

    If you are setting up an HSA, have the employer contribute to the HSA for each employee that buys the HDHP. Much cleaner that way and usually less expensive. You have essentially set up a money purchase health plan.
     
  9. somarco
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    somarco Guru

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    Mike, you don't seem to have anything to contribute. No one will pay attention to your posts and you don't get any backlink credits from this forum.
     
  10. Full Throttle
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    Whether it works or is legit depends on:

    1. Your specific state DOI rules about the practice.
    2. Risk pool options for unhealthy employees (just because there may be no unhealthy employees now, what about new hires?)
    3. Rules pertaining to how the employees will be reimbursed. You can not just give Bill (age 63) a bonus of $500 to cover his premiums and Diane (age 21) a bonus of $150 to cover her premiums. There has to be a formula to make it equitable. For example, an equal bonus amount for each employee, a bonus based on % of compensation, different bonus per class of employee, ect).

    Here is my quick summary of how this works in practice if you're state allows it and has a realisticly priced risk pool options:

    -For the numbers to work given the above, this is a nich solution, not a common solution.
    -If it does work, this can create a lot of future service work for little compensation. Changing around 125 plan elections every time it renews or the health premiums change, ect.
    -I use this solution mainly when the employer doesn't have a plan right now, but wants to help his employees in some way. Then we talk about a "defined contribution" option.

    A good book on the topic is "The New Health Insurance Solution" by Paul Pfiser (the book title or author name may be off). However, the implementation and practicality are a lot more difficult then the author lets on in the book.
    - - - - - - - - - - - - - - - - - -
    I just noticed the cause of this post being brought to life and I just wasted 5 minutes of my life that I will never get back.
     
    Last edited: Mar 12, 2010
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