According to the Minnesota Department of Commerce, 2023 rates are increasing as much as 17% in one year for small group health plans. Business owners in Minnesota are looking for ways to provide their employees with the same level of coverage at a more affordable price point.
Liferaft has been working with Minnesota-based businesses to transition them to Liferaft’s Health Reimbursement Arrangements—giving their employees the flexibility to choose the plan that makes the most sense for them, while also saving businesses thousands in annual cost.
Here’s a closer look at how a recent Liferaft client is saving $144,000 a year by switching to a Health Reimbursement Arrangement.
A 35-employee digital media company based in Minnesota was offering their team major medical coverage through Blue Cross through a group broker. A few of their employees had major expenses last plan year and they were notified that their rates were going up.
They were already paying $26,500 per month, $318,000 a year to provide quality health coverage for their employees. With a Liferaft Health Reimbursement Arrangement, they are now paying $14,500 per month, $174,000 a year without sacrificing the quality of their coverage.
That is a savings of $144,000 a year!
With support from the Liferaft team, this business set up Health Reimbursement Arrangement for employees, spouses, and children covered with major medical. Each employee selected a plan from MNSure, the Minnesota state exchange. Our team recommended plans available from the two top-rated insurance companies in Minnesota, and employees were able to select HSA-compatible, high-deductible and traditional co-pay plans—depending on their personal family situation, budget, and preference.
The company has continued to offer HSA and FSA accounts in conjunction with the health reimbursement arrangement. Employees have been able to choose the plans that work best for them, while saving the business thousands toward their bottom line.
A Liferaft Health Reimbursement Arrangement is fully customizable based on what makes the most sense for your organization. Our team will handle all the paperwork to properly set up your account—making it easy for you to benefit from all available tax advantages.
While a Liferaft Health Reimbursement Arrangement has many different use cases, it can be particularly effective in providing major medical insurance in states where the rates for health insurance on the state’s exchange are cheaper than group health insurance rates.
Through the Health Reimbursement Arrangement, employers can reimburse the individual for their own health insurance premiums rather than paying for a group plan. The chart below shows the states that have the most significant cost differences when comparing individual versus group plans.
When moving to a Health Reimbursement Arrangement for your company’s major medical insurance, the Liferaft team will analyze your employee census and make a unique plan recommendation for each employee. Plan recommendations will consider each employee's specific location, age, family circumstances, and the plan’s provider network quality. This guidance will allow employees to confidently choose the best possible coverage for their needs and budget.
According to the IRS, employer-issued reimbursements are not considered income and are exempt from federal income and payroll taxes. This is one of the significant tax benefits of distributing employee benefits through a Liferaft Health Reimbursement Arrangement.
One of the central values of a Liferaft Health Reimbursement Arrangement is flexibility, and the answer here depends on the employer’s specific policies. Some companies may have a "use it or lose it" policy regarding account funds, meaning that any funds not used by December 31st will be forfeited and cannot be carried over into the new year. Other employers allow employees to roll over a certain amount of money from one year to the next. Put plainly—it’s up to you!
Because the funds in a Liferaft Health Reimbursement Arrangement are employer-funded, the employer owns the money in the account even though it is for the individual to use. If the person leaves the company or their job is terminated, the account funds stay behind with their former employer. Employers can offer a retirement account that allows former employees to utilize funds after leaving the company.
Additionally, different employers often have different rules for reimbursement, which can be a problem for employees if they switch companies. Aside from mandatory requirements like COBRA continuation, ERISA and HIPAA, plans can vary widely.
Liferaft Health Reimbursement Arrangements can be offered to any employee, as long as each job class is treated equally. This means you can easily provide benefits to part-time and seasonal employees. However, depending on what type of expenses you plan on reimbursing, there are specific IRS requirements. After learning about your business and goals, Liferaft will make a plan recommendation for the most tax-advantaged, affordable way to structure your account.
Our team knows the ins and outs of the health insurance marketplace and will guide you towards the solution that make the most sense for your business and your team. Come with questions! Our experts are happy to dig into the details to get you the clarity you need.
During the call, Liferaft will run a cost-benefit analysis on your company's current healthcare spending and show you different ways you can save—without sacrificing plan quality. After your consult, Liferaft will design a unique plan for your employee's health insurance, including suggested plans and accounts, plan policy documents, and the annual budget.
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