- 596
Sometimes it's fun when the numbers work out any you can really help people. I came across a small business this morning with five IFP policies, all extremely low $300 deductible plan, and with an uncompetitive carrier, paying $51,000 AV for all five people.
Savings:
1. No Sect. 125 plan in place, the whole portion is being taxed. Meaning the business will save 7.5% on their half of the FICA on all $51,000 or $3825 per year. The employees will save the same $3825 on their half of the FICA, plus on income taxes off the $51,000. If everyone is in the 30% tax bracket between state and federal taxes, that's another $15,300. That's a total of $22,950 between the employees and the business just by putting in a Sect. 125 plan. That's huge on it's own.
2. By raising the deductible to $2000-100% from the $300-80%, that will free up $27,700. They can put in an HRA to reimburse the employees up to the full deductible, effectively giving them 100% coverage, even better than they have currently. The total deductilbe for everyone is $14,000, so even if everyone in this fairly healthy group maxed out their deductible, the business has a guaranteed savings of $13,700 and they give their employees better coverage.
3. Plus, whatever portion of the $14,000 in deductibles the business agrees to reimburse as needed that goes unused stays with the business. A conservative estimate with this group is a likely additional savings of $10,000.
So in all, the business and employees are guaranteed to save a minimum of $36,650, but it will likely be over $47,000. I also get to write about $20,000 in AV from the health premiums, plus they want a group dental plan, and I'm going to look into their life insurance coverage as well. The funny part is when I stopped out this morning, they told me they usually screen their calls and I just happened to call at the right time. If they hadn't taken my cold call three weeks ago, they would likely be out $47,000.
Savings:
1. No Sect. 125 plan in place, the whole portion is being taxed. Meaning the business will save 7.5% on their half of the FICA on all $51,000 or $3825 per year. The employees will save the same $3825 on their half of the FICA, plus on income taxes off the $51,000. If everyone is in the 30% tax bracket between state and federal taxes, that's another $15,300. That's a total of $22,950 between the employees and the business just by putting in a Sect. 125 plan. That's huge on it's own.
2. By raising the deductible to $2000-100% from the $300-80%, that will free up $27,700. They can put in an HRA to reimburse the employees up to the full deductible, effectively giving them 100% coverage, even better than they have currently. The total deductilbe for everyone is $14,000, so even if everyone in this fairly healthy group maxed out their deductible, the business has a guaranteed savings of $13,700 and they give their employees better coverage.
3. Plus, whatever portion of the $14,000 in deductibles the business agrees to reimburse as needed that goes unused stays with the business. A conservative estimate with this group is a likely additional savings of $10,000.
So in all, the business and employees are guaranteed to save a minimum of $36,650, but it will likely be over $47,000. I also get to write about $20,000 in AV from the health premiums, plus they want a group dental plan, and I'm going to look into their life insurance coverage as well. The funny part is when I stopped out this morning, they told me they usually screen their calls and I just happened to call at the right time. If they hadn't taken my cold call three weeks ago, they would likely be out $47,000.
