With a new plan year just weeks away, many employers and advisers are bracing for change. Primary plan changes may help to manage health plan costs, but they can also affect recruitment and retention. This is because talent continues to prioritize benefits. In fact, research reveals that nine out of 10 employees would prefer quality healthcare benefits to a pay raise.1 In addition, as employees continue to consider the connection between work and well-being, more employers are considering or expanding benefits that support holistic health and well-being.2
Sure, employers have options when it comes to benefits. But the choices you make regarding what to offer can influence recruitment, retention, productivity and employee satisfaction. In this article, we’ll look at 4 reasons why you should take a closer look at expense reimbursed insurance plans.
What is expense reimbursed insurance?
Expense reimbursed insurance plans sit on top of primary medical insurance plans. A type of employer-sponsored supplemental insurance, these plans offer reimbursement for routine and unexpected healthcare expenses. They are not subject to event-driven qualifications, like most voluntary plans.
Expense reimbursed insurance qualifies as an excepted benefit, which means that ACA nondiscrimination and other rules don’t apply. This means that expense reimbursed insurance plans can be compliantly offered to select employees (minimum of 3 as defined by employer). These plans are gaining in popularity, as employers realize the importance of supplemental insurance to enhance existing core benefits. Let’s take a closer look at the 4 reasons these plans can help employers with key concerns.
Reason #1: Balance Cost and Coverage
Employers make the call on whom to offer expense reimbursed insurance plans—based on role, title, performance and needs as defined by the employer. This makes it possible to strike the right balance between controlling benefit costs and offering robust benefit packages to strengthen recruitment and retention.
With an expense reimbursed insurance plan like Ultimate Health® by ArmadaCare, employers can put a cost-effective primary plan in place for all employees. Then, they can backfill coverage voids for key leaders and employees. Ultimate Health® reimburses every day, routine and unexpected out-of-pocket health expenses, restoring these key employees to pre-ACA “100% coverage” levels.
Reason #2: Reduce Financial Strain
After decades of cost-shifting, employees have seen their out-of-pocket healthcare spending steadily increase. Amid inflation and other financial pressure, costs are projected to increase in 2024 for both employers and employees.3 It’s no wonder that over 90% of employees worry about these rising costs.4
With reimbursement for a wide range of 213(d) expenses, expense reimbursed insurance plans can help reduce the pinch. In addition, specific plans like Ultimate Health® can enhance healthcare coverage far beyond primary plan gaps with robust dental and vision coverage, brand-name formulary, well-being care and much more.
Expense reimbursed insurance is also a more powerful and financially efficient way to reward employees. Ultimate Health is a fully-insured 105(h) plan, which means it offers dual tax efficiency*: premiums are a tax-deductible expense for the business, and reimbursements are non-taxable for enrolled employees. In other words, expense reimbursed insurance plans offer more take-home value than a comparable pay increase or one-time bonus—which means employers can spend less to give more.
Reason #3: Retain and Incentivize
As we noted in the introduction, 90% of employees would prefer better benefits to a pay raise. This makes expense reimbursed insurance a compelling tool for recruitment and retention. And because it can be compliantly carved out by class, employers can use it as an incentive or reward just for key leaders or difficult-to-retain positions.
Ultimate Health® includes time-savers like specialty matching, elective Executive Physicals and emergency travel insurance. These robust benefits help employers keep key employees healthy, focused and productive while also giving them strong reasons to stay with the company.
Reason #4: Tap into Flexibility
Expense reimbursed insurance plans like Ultimate Health® go well beyond ordinary supplemental voluntary plans, which often have disease- or event-driven conditions. With Ultimate Health®, coverage is available where and when needed, even as age-and-stage needs shift year to year.
In addition, these innovative expense reimbursed insurance plans are not tied to the typical benefit plan calendar. Ultimate Health® can be put in place at the start of any month, so there’s no need to wait until the primary health plan renews. This flexibility can help employers meet evolving employee needs or address key issues as they emerge.
Ultimate Health give advisers and employers the ability to address needs like recruitment and retention, employee well-being, financial strain and more with robust benefits employees will love.
Premiums, insurance plans, coverage and availability may vary by state.
*This is not local, state or federal tax advice as each person and each company is unique. It is recommended that you seek the independent counsel of a professional tax adviser.
ArmadaCare’s supplemental health insurance policies are underwritten by SiriusPoint Insurance Company and Transamerica Life Insurance Company. Insurance plans and coverages vary by state. Please contact us to confirm state availability.
1 SHRM, 2021
2 SHRM, 2021
3 Mercer, 2023
4 MetLife, 2023