Is Innovation Health Benefits Compliant?

Yes, Innovation Health Benefits is a qualified Section 125 plan set up as a self-funded employer-sponsored plan, fully funded by employees through pre-tax payroll deductions. The deducted amount represents the maximum claims for the policy year. The third-party administrator (TPA) holds the funds in a custodial account and pays claims as they occur according to the plan document and the schedule of benefits. Claims are defined as payments made to providers, facilities, pharmacies, or employees.

Claims to employees are triggered when an applicable CPT code is matched with a corresponding explanation of benefits (EOB). Examples include preventive examinations, biometric screenings, health risk assessments, and chronic medication fulfillment. Claims made to employees are neither taxable nor considered ordinary income. The employee premium is actuarially set to cover the claim risk on the plan while achieving a desired medical loss ratio (MLR). Any potential surplus left in the claim account at the end of the plan year and the runout period is considered a plan asset to the employer.

Can we begin participating in the program at any time?

Yes, you can start participating in Innovation Health Benefits at any time. Every month you wait means potential FICA savings per employee are lost!

How much does Innovation Health Benefits cost?

Innovation Health Benefits is funded by the tax savings created, resulting in net savings! There are NO OUT-OF-POCKET COSTS for employers or employees.

Does this program duplicate coverage with my primary health plan?

If an employee’s primary health plan is ACA-compliant, it will cover preventive services. One of the goals of Innovation Health Benefits is to drive healthcare utilization away from an employee’s primary health plan, facilitating better and faster care for less money. By optimizing healthcare benefit usage, we collectively achieve lower healthcare costs. Employees not on the company health plan can still participate.

Consider this: the more employees use their primary health plan, the higher the claims, which directly affects premium costs. By spreading healthcare costs to other coverage and benefits, we can reduce healthcare expenses and enhance benefit utilization.

Does Innovation Health Benefits meet the definition of Minimal Essential Coverage (MEC)?

Innovation Health Benefits meets the MEC definition for the individual mandate but may not suffice from an employer’s perspective. Please contact us to discuss employer MEC options.

Will Innovation Health Benefits cover name-brand prescriptions?

Innovation Health Benefits covers a comprehensive list of generic and name-brand prescriptions at 100% (see the formulary list). It also provides significant discounts on prescriptions not on the list. Additionally, the Stayhealthy Rx Card helps find the lowest prices on a range of prescription and over-the-counter medications.

Why does my paycheck look different?

Employees will notice additional line items on their paycheck due to participation in Innovation Health Benefits. These items reflect a pre-tax premium contribution and a post-tax premium for a specific benefit. Comparing paychecks with and without the plan shows that Innovation Health Benefits increases net take-home pay every month.

How private is my personal information?

Your privacy is a top priority. We are fully committed to keeping your personal information safe and secure, adhering to full HIPAA compliance.

How will I know when I need to participate?

Employees will receive monthly notifications and emails with important information about their plan benefits and health improvement tips.

What happens if I do not participate?

Innovation Health Benefits is voluntary, so employees are not required to participate. If an employee opts out, they can join the plan at the next year’s enrollment. For those who choose to participate but forget, assessments can be completed anytime throughout the plan year quarter plus an additional 30-day grace period. If an employee misses a month of questions, their HR department may be notified, prompting a reminder.

What types of benefits are covered under “Preventive Care”?

Innovation Health Benefits covers the services required under ACA guidelines for preventive care.

Can I unenroll from the plan at any time?

Since Innovation Health Benefits is set up through a Section 125 Cafeteria Plan, IRS Sections 125 rules and regulations apply. Unless an employee experiences a Qualifying Life Event, they must remain enrolled until the end of the plan year.

How can Section 125 Cafeteria Plans help reduce workers’ compensation insurance costs?

Section 125 Cafeteria Plans can help reduce workers’ compensation insurance costs through several mechanisms:

• • Reduction of Taxable Wages: Contributions to a Section 125 Cafeteria Plan are made on a pre-tax basis. This lowers the wages subject to federal income tax, Social Security tax, and Medicare tax. Since workers’ compensation premiums are often calculated based on total payroll, reducing taxable wages can directly decrease premium costs for workers’ compensation insurance.
  • Decreased Payroll Taxes: By lowering taxable income, both employers and employees benefit from reduced payroll taxes. This results in significant savings, which can help offset the cost of workers’ compensation insurance. Employers save on payroll taxes, including Social Security and Medicare taxes, leading to an overall reduction in payroll expenses.
  • Improved Cash Flow: Reduced payroll expenses due to lower taxable wages and payroll taxes can enhance the employer’s cash flow. This improved cash flow can be used to manage and potentially lower workers’ compensation premiums by investing in better safety programs or negotiating better rates with insurance providers.
  • Enhanced Employee Benefits: Offering a Section 125 Cafeteria Plan can lead to a healthier and more satisfied workforce by providing access to benefits like health insurance, dependent care, and flexible spending accounts. A healthier workforce can result in fewer workplace injuries and claims, thereby reducing workers’ compensation costs over time.

These combined effects make Section 125 Cafeteria Plans an effective tool for employers to manage and reduce their workers’ compensation insurance expenses.

What are the advantages of a Cafeteria Plan governed by Section 125 of the Internal Revenue Code?

A Cafeteria Plan governed by Section 125 of the Internal Revenue Code offers several advantages:

• • Tax Savings: Employees benefit from lower taxable income, which reduces their federal and state income taxes as well as Social Security and Medicare taxes.
  • Flexibility: Employees can tailor their benefits to their specific needs and circumstances, choosing from a variety of options.
  • Cost Savings for Employers: Employers save on payroll taxes due to the reduction in employees’ taxable income, leading to overall cost savings.
  • Attraction and Retention: Offering a Cafeteria Plan can help attract and retain employees by providing a more comprehensive and customizable benefits package.

When did Section 125 indemnity benefit plans become fully insured products offered by major insurance carriers, and what are some key historical milestones in their development?

• • 1978: Section 125 plans were introduced, allowing for health benefits to be offered on a pretax basis.
  • 2010: The Affordable Care Act was launched to improve access to health coverage for individuals nationwide.
  • 2014: Wellness benefits were added to the ACA, allowing for the payment of specific wellness program activities.
  • 2018: Section 125 indemnity benefit plans became fully insured products offered by major insurance carriers.

These milestones illustrate the evolution and enhancement of health benefits, leading to greater accessibility and coverage options for employees.