Medical Coverage Options for Small Business

[Guest lmccormick]

Opinions please! We have a small business that currently offers no health insurance benefits due to the high cost of a group plan in our state (FL). All of our employees are retired military and don't need coverage or have it through their working spouses.

We do have an HRA that provides a small benefit for medical and dental costs not covered by a health insurance plan. We also have a section 125 plan for those who wish to set aside their own funds tax free for medical reimbursement purposes.

We'd like to be able to reimburse employees for their privately obtained health insurance expenses. In other words have them get their own individual plans and submitt a claim that we will reimburse. How is the best way for us to do this? Should we pay their premium bill directly? Have them submitt the claim after paying it themselves? If we offer this to one do we have to offer it to all? Is it better to establish it officially as part of a plan (HRA or 125) ?

How can we do this legally and fairly?

[GBurns]

If " All of our employees are retired military and don't need coverage or have it through their working spouses." is correct, Why would there be any "privately obtained health insurance expenses"??

[Guest lmccormick]

We don't want to limit ourselves to only employees who don't need coverage (it's just what we happen to have now). We have a hard time even qualifying for group coverage due to their participation rules and our small size. If you have 5 employees and only 1 has a need for insurance they won't give it to you because they have a minimum number of participants required or they won't let more than a certain percentage opt out...

So individual plans are really our only option...sorry for not being clearer. I guess I though you'd know I meant this would be for future employees.

[GBurns]

You should follow the guidelines set out in Revenue Ruling 61-146. It shouldl be set up as a separate section 106 MERP.

Do a search on the Cafeteria and the Health Plans Forums for previous discussions.

[Guest lmccormick]

Gburns,

Do you mean a section 105 MERP? Isn't that the section governing HRA accounts as well? I am learning.

We have an HRA for all employees but it currently only covers unreimbursed medical expenses (not premiums). Could we create another plan document specifically for premiums? If so --since all employees are suppose to be treated the "same" how could we establish the premium reimbursement plan for only certain employees (those who need the coverage)?

We contribute to all the employee's HRA accounts currently (the one we have for unreimbursed medical expenses). If we set one up for premium reimbursements only...don't we have to offer the same benefit to everyone?

Edited to add:

Now I've found the section 106 you mentioned and the revenue ruling. So I can just reimburse the employee for their insurance premium costs under this decision? Do I even need any sort of plan document? It doesn't seem to be so.

[Guest jamescagney2000]

I have a company that has a FSA - started in Jan 1, 2005. Their health plan renewed on May 1st. They want a HSA arrangement. Can they change the FSA to a limited Purpose FSA or are they locked in the 2005 year?

JC