executive medical reimbursement plans are dead
It’s no surprise that the world of employee benefits has a lot of myths and misconceptions, especially since ACA was introduced. Take executive medical reimbursement plans for instance. Some wonder, “Is that still allowed?” Let’s dive into the details and explain what it takes to offer a viable executive medical reimbursement plan today.
plans are dead.
You can still offer executive
plans as long as they meet
Having a policy isn’t enough to consider it fully insured in the eyes of the IRS. You need to look beyond the policy at the financial structure. As stated in section 105 of the tax code, a claims-plus-admin-fee arrangement where the employer pre-funds the claims likely does not meet regulatory requirements.* You should evaluate if the plan provider can demonstrate that there is realistic risk transfer to the carrier and risk distribution among groups. If a plan is not fully insured, the risks include:
Ultimate Health by ArmadaCare is a fully insured, full risk-transfer health insurance plan that is designed for your key leaders and complements and enhances your primary coverages. For close to two decades, ArmadaCare has helped companies keep leaders happy, healthy and productive with Ultimate Health’s robust coverage, tax efficiencies,** valued support services and access to a unique executive physical program.
A key component of a competitive executive benefits package, Ultimate Health is a powerful way to help those who drive company performance feel valued and rewarded. In fact, 98.4% of enrolled executive members say it’s the most important or an important benefit. (ArmadaCare Engagement Survey, 2022)
Interested in learning more?
Get in touch with one of our experts. You choose the time that’s best for you, and we’ll do the rest!
*Section § 1.105-11 (Self-insured medical reimbursement plan) further outlines the taxability question:
(a) In general. Under section 105(a), amounts received by an employee through a self-insured medical reimbursement plan which are attributable to contributions of the employer, or are paid by the employer, are included in the employee’s gross income unless such amounts are excludable under section 105(b)….
**This is not local, state or federal tax advice as each person and company is unique. It is recommended that you seek the independent counsel of a professional tax adviser.