Financial

CA Physical Therapy Office Offers Insurance for the 1st Time

Many physical therapy companies understand the importance of taking care of their team's physical and mental health and value quality and comprehensive health coverage. But for these small businesses, offering a group health plan can often feel too complicated, expensive, or restrictive. That's where Liferaft can help.

February 2, 2023

The Problem

Many physical therapy offices are small, boutique outfits, often with less than 15 employees. For these small businesses, offering group health insurance can feel too complicated, expensive, or restrictive. Employers who want to provide multiple plan options at an affordable price point have little to no plans to pick from on the group market.

Plus, many group plans insist on strict plan participation restrictions, requiring up to 75% of eligible employees to enroll in a plan.

Liferaft has been working with physical therapy offices across the country to help them to get started offering health insurance for the first time. Our flexible and affordable Health Reimbursement Arrangements make it simple, inexpensive, and tax-advantaged to start offering health benefits to your team.

A Client Example in California

A small physical therapy business in California wanted to offer health benefits to their team, but when looking at the group health market, they found plans to be expensive and come with restrictive participation requirements. In addition, some of their employees had coverage available through their spouses, which would make them unable to meet the 75% participation requirement of most group plans. Ideally, they wanted to offer multiple plan options, but in the group market, that seemed impossible.

Until discovering Liferaft's Health Reimbursement Arrangement. Liferaft proposed three different affordable and high-quality plans to the employees, and each could choose their desired plan level and type. The plans were more affordable on the individual market, allowing the employer to cover 100% of their employees’ monthly premiums. The Liferaft HRA made this simple and quick to set up.

Your guide to flexible & affordable benefits — download now.

Group health can be complex, restrictive, and costly. Liferaft offers something different.

Liferaft's 2023 Whitepaper on HRAs is the most comprehensive guide available, giving you what you need to determine if an HRA makes sense for your business.
You will automatically be redirected to your whitepaper download after submission.
What you get in your guide:
• What is an HRA?
• HRA Requirements & Features
• Eligible HRA Expenses
• When an HRA Makes Sense
• Different HRA Types
• States Where HRA Works Best

The Plan

With a Liferaft Health Reimbursement Arrangement, the California-based physical therapy company could offer their employees benefits for the first time. All their current employees chose the Blue Cross Blue Shield Silver PPO plan, but they were comforted that any new employee would be welcome to pick any available healthcare plan that best fits their needs.

The cost savings available on the individual market allowed the employer the budget flexibility to reimburse each employee's monthly premium in full, totaling only $33,320.40/year.

States Where a Liferaft Health Reimbursement Arrangement Makes Sense

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.

How it Works

With support from the Liferaft team, this physical therapy company set up a Health Reimbursement Arrangement for employees and their dependents. Though they all chose a Blue Cross Blue Shield PPO Silver plan, they had the option to select any health insurance plan on the individual exchange they saw fit. As a result, the company now reimburses its employees for their monthly premiums at an affordable rate. 

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.

  • Design your benefit: Decide how much tax-free money to offer each month, which expenses should be eligible for reimbursement, or offer various benefits to different employee groups.
  • Employees purchase qualifying expenses: Allowances can be used for qualifying medical expenses and healthcare services, including prescription glasses, healthcare premiums, physical therapy, and more.
  • Employees reimbursed: Our user-friendly 100% digital experience makes it easy for you and your employees to submit a claim and get reimbursed for eligible expenses.

Frequently Asked Questions

Are Health Reimbursement Arrangements considered income?

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.

What happened to unused funds? Do they roll over?

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!

What are some disadvantages of an HRA?

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.

Which employees are eligible for a Liferaft Health Reimbursement Arrangement?

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.

Book your consult with Liferaft

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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