Zane Benefits ??????

[RayNY]

Does the Section 105 plan regulation supersede the ACA regulations?

 

[yorkriver1]

Bonus question: the consensus I have seen on what *is* compliant for disbanded plans, employer gives grossed up salary increase to employee in the amount to cover the employer contribution for their share of employee premium. To be an allowable option, the raise can not have the contingency that the employee must spend it on a health policy. Correct?

 

[Ann H]

Bonus question: the consensus I have seen on what *is* compliant for disbanded plans, employer gives grossed up salary increase to employee in the amount to cover the employer contribution for their share of employee premium. To be an allowable option, the raise can not have the contingency that the employee must spend it on a health policy. Correct?

Correct. If the employer wants to help with the premium for IFP plans just:

1. Make it a taxable wage (non-discriminatory)
2. Don't tell the employees how they must use that money. It's their money.

 

[yorkriver1]

Non discriminatory is an interesting concept for small groups that have had age based rates. I have been asked to work on individual rates for a small employer needing to cut costs, so disbanding. Employees were mostly satisfied with their options, concerned about how employer contributions would work.
I just thought of this question. If the payroll deductions were pre-tax, how could the grossed up pay account for the reduction in taxable income? Or not.

 

[G.Gordon]

I struggle with this concept myself. I have two staff members I want to help with insurance, but my wife/partner will not color outside of the law.

1. Gross them up to pay for health insurance: They are 25 years in age difference. The pay grossing up would have to be lopsided or overkill for one or way under the mark for the other.
2. We just added the second one, last year we didn't compensate at all for the only girl's insurance, we opted for fully funding an HSA account to provide first dollar coverage and a stash of cash to be used for healthcare expenses. We might have to take this path again for both with no clear legal path to "help" with the cost of their insurance.

 

[scagnt83]

Non discriminatory is an interesting concept for small groups that have had age based rates.

Good point

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I just thought of this question. If the payroll deductions were pre-tax, how could the grossed up pay account for the reduction in taxable income? Or not.

It would be impossible to precisely account for the tax deduction. You could accurately account for FICA (6%). But the deduction will affect employees in different ways when it comes to FIT. Many low to moderate income earners see little to no benefit from the deduction. But the higher income earners do see a benefit. But the exact benefit will vary from person to person since household income/deductions/filing status/etc. will vary from person to person.

So the best way to account for that would be to adjust for the 6% FICA. And then give an increase of maybe 2%-4% for the FIT.

I would guess that it will just come down to how generous the employer wants to be (or can be). If they want to reduce costs, I doubt they will want to pay an extra 10% over what they are planning to pay. jmo

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I struggle with this concept myself. I have two staff members I want to help with insurance, but my wife/partner will not color outside of the law.

1. Gross them up to pay for health insurance: They are 25 years in age difference. The pay grossing up would have to be lopsided or overkill for one or way under the mark for the other.
2. We just added the second one, last year we didn't compensate at all for the only girl's insurance, we opted for fully funding an HSA account to provide first dollar coverage and a stash of cash to be used for healthcare expenses. We might have to take this path again for both with no clear legal path to "help" with the cost of their insurance.

Was it the young one that was just hired or the older one? You can legally justify paying a more senior person and also a more experienced person a higher wage. Unless the young employee is your rain maker, I think you could easily justify increasing the older employees wage. Document the action and say that it is based on experience or seniority or both.

I would increase the older employees wage if justifiable.
Then pay an equal bonus to both that can be used for insurance or health care.
And fund the HSA accounts to some extent as well.

This method would still be fair. If you got true group health, you would be on age based rates anyway. Whatever % of the premium you pay will end up being more for the older employee. So spending extra on that employee via salary is really no different than spending extra on them via insurance. Just make sure that there is an appropriate reason to give the older one a raise.