Abstract
Problem Addressed
Rising health care costs are causing many employers to increase plan deductibles and other employee out-of-pocket costs. Such moves to control overall health care expenses can have a reverse effect when it comes to retaining and attracting mission-critical employees. Studies have shown that expanded coverage is high on the list of benefits that are highly valued by executives.
Many employers solved this problem for a time by turning to medical reimbursement options, but the medical reimbursement landscape has been affected by the enactment of the Patient Protection and Affordable Care Act (PPACA). Sweeping most executive-focused plans into new health care reform requirements, the law forced the majority to operate under grandfathering status or to exit the market altogether. New discrimination provisions that now extend to fully insured group health plans, while temporarily not enforced, have had a detrimental effect on the majority of such programs, leaving employers to question what viable options remain for them to offer to their executive population.
But the problem is not limited to attracting and retaining top talent with the right benefit package. Because these employees are vital to business success, they need additional protection. After all, a health issue in the family can quickly affect individual productivity and performance and possibly the performance of the company. Studies have shown that health concerns can cause productivity reduction by as much as 70%, which with a key executive can trigger costly operational problems.
Innovation
The innovation is a qualifying supplemental executive medical reimbursement plan (EMRP). Since such plans are excepted benefits, these plans are not restricted by PPACA, COBRA or ERISA. That means these plans remain a viable solution to be carved out by employee class. A well-designed EMRP can provide a broad coverage of expenses, including IRS 213 guidelines of medical necessity as well as important health and preventative care such as orthodontia and LASIK surgery. Plus, a fully insured EMRP can be a win-win for the employee and employer since it will not be included in his/her taxable income but still qualify as a tax-deductible business expense. 1
In addition, an EMRP with clinical services can help minimize the impact of a medical concern on the family and the business, as well as acknowledge company demands on executive time, focus and sacrifice. An EMRP should do more than offer tax protection: it should provide resources to immediately manage medical conditions, offer information and education on conditions and treatments and provide objective and rapid identification of, and priority access to, leading physicians to assist in achieving the best possible medical outcomes and recovery times.
Return on Innovation (ROI)
Employers recognize the value of excepted supplemental medical reimbursement plans to support business success. Some employers make it part of their benefits plan design by moving to higher deductible base plans while supplementing coverage for their key employees. Others use this solution as an important aspect of their total rewards strategy, realizing that comprehensive health benefits have proven to be highly valued by executives and their families. Some are making this type of plan part of their compensation strategy, substituting the ERMP for salary increases to provide a far more meaningful, tax-protected impact.
The U.S. Department of Labor Field Assistance Bulletin No. 2007-04 provides safe harbor information pertaining to the types of plans that are defined as excepted, supplemental health insurance plans by the Public Health Service Act.
Invitation to Share Innovative Ideas
If you have an innovative practice or idea that could benefit employers or employees, please consider sharing the idea with The Innovators’ Corner, by sending a note to:
Thomas A. Ference
Human Resources Mining & Distribution Co.
Email: