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How to Optimize Your Benefits Strategy with Carve-Out Coverage

Expense reimbursed insurance is a type of supplemental health insurance that is used for a variety of reasons, from expanding coverage to retention to tax-efficiency.  What’s so great about this kind of supplemental insurance is that it has the flexibility to meet each company’s unique goals and challenges. Let’s look at a few scenarios of how companies can leverage this type of insurance to optimize their benefits strategy.

Turnover Troubles

The tight talent market is causing turnover issues within all industries.

In this scenario, a healthcare company was having a difficult time holding onto a very important group of employees: their senior nurses. They were leaking millions in turnover costs, despite having a competitive primary health plan. They needed something special to set them apart in the industry. But unfortunately, they couldn’t afford to boost benefits for the entire workforce.

Enter expense reimbursed insurance. This type of supplemental plan can be carved out by employee group as chosen by the employer. This enabled them to give a targeted benefits boost to just their senior nurses without going over budget. They implemented three different coverage levels to create a loyalty program where the longer a senior nurse stays with the company, the more coverage he or she is eligible for.

This benefits strategy was a worthwhile investment in the senior nurses, and the cost was much less than the millions they were spending in turnover costs.

Get More Out of Health Benefits

Shrinking coverage is another major issue plaguing the healthcare industry.

This scenario is about a small business whose owners were really feeling the effects of that limited primary coverage. Their out-of-pocket expenses were very high, and they were looking for a solution to add more coverage. As owners, they weren’t eligible for the HRA that they offered the rest of the company.

They layered expense reimbursed insurance on top of their primary plan for just the owners and a few other key employees. This allowed the owners to expand their coverage and switch their high out-of-pocket expenses over to a tax-deductible business expense.

Compensation Alternative

Recruitment issues are also a byproduct of the tight talent market. And, as important as competitive compensation is, it will undoubtedly land you in a bidding war if that’s the only differentiator since another company with deeper pockets can always offer more money.

This scenario deals with a financial services company that needed to bring in a team of cyber-security specialists. With the competition for IT talent so fierce, a sign-on bonus just wasn’t cutting it. By utilizing expense reimbursed insurance, the company was able to provide a carve-out benefits strategy solution.

The company took the money that it had been investing in sign-on bonuses and put it toward a mid-level expense reimbursed insured plan for the cyber-security team. Because the premiums of the plan were a tax-deductible business expense and didn’t incur payroll taxes, it actually cost the company less than the sign-on bonuses did. And instead of a one-time cash bonus that could be offered by any of their competition, expense reimbursed insurance provided the new employees with a potential $25,000 of annual health insurance value.

Benefits Strategy Optimization

To find out more about how supplemental expense reimbursed insured plans can help you optimize benefits strategy, solve pressing issues, and provide powerful carve-out coverage, access a recorded webinar that covers:

  • ArmadaCare’s carve-out expense reimbursed insured products
  • Real case studies on how the plans were used
  • Your questions at the end
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.
2018-04-25T18:15:37+00:00