Resources

FAQ's

Why use a broker?

Today’s complex healthcare environment offers a wide range of insurance programs along with rapidly changing regulations. It’s a full-time job staying current with the evolving healthcare industry. That’s why employers rely on brokers.

It’s a broker’s job to keep abreast of legislation to make sure his or her clients are in compliance. It’s a broker’s job to be proactive and alert his or her clients to changes that could save money, enhance benefits, or compromise compliance. And it’s a broker’s job to understand, in detail, the advantages and disadvantages of every single program option available today.

With this knowledge, brokers steer their clients to plans that deliver the best benefits for the most affordable price. for companies and employees.

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What is COBRA Health Insurance?

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) guarantees continued insurance coverage for a specific amount of time after a job loss or other qualifying event.

COBRA allows employees to participate in their former company's group health insurance until they find alternative health insurance or their COBRA benefits expire.

Former employees may also be eligible for COBRA benefits if they voluntary resign or their hours are reduced. COBRA benefits are also available for the spouse and dependent children for 36 months in the event of a divorce or legal separation, the employee becomes entitled to Medicare, or the death of employee or loss of dependent child status (child may still obtain benefits even after he or she becomes independent).

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What is Group Health Insurance?

Group health insurance is one insurance policy covering a group of people. Usually a company establishes a group health insurance plan to cover its employees, but chambers of commerce, trade associations and religious groups also organize health care for their members.
Advantages:

  • Group plans are generally less expensive.
  • Many employers cover part or all of the insurance premiums.
  • There are no physical exams or health history forms to complete.

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What is HMO Health Insurance?

A Health Maintenance Organization (HMO) is a healthcare system that provides health insurance for medical services and treatments. Participants enrolled in HMOs pay a fixed monthly fee for their healthcare, which is considered a pre-payment to the provider. In return, the participant receives medical services for a nominal co-payment.

Each HMO has a network of doctors who participate in the system. All HMO participants choose a primary care physician (PCP) from the HMO network. The PCP is the first person to call for medical attention and also gives referrals for specialized care and further medical treatment.
Advantage:

  • The low cost of participating in HMO health insurance is the obvious advantage.

Disadvantages:

  • Most HMOs have an extensive network of participating physicians, but not all physicians participate in HMOs. Participants may only visit doctors within the system.
  • Typically participants are required to obtain a referral from their PCP for visits to specialists.

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What is an Individual Health Insurance Plan?

An individual health insurance plan covers one person or family. Though costly and sometimes difficult to obtain, an individual insurance policy is better than not having health insurance coverage at all.
Advantages:

  • Provides coverage for basic medical care, unexpected illness, and serious injury that could otherwise ruin a family’s finances.

Disadvantages:

  • The premiums for individual insurance policies are higher than for group insurance. (If a person is not eligible for a group insurance policy through work, he or she may want to see if any local organizations offer group insurance.)

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What is PPO Health Insurance?

A Preferred Provider Organization (PPO) is a group of doctors and hospitals that work under one umbrella (called the PPO) to provide discounted medical services. Members obtaining care within the network have lower copays and deductibles.

The insurance companies entice people to join the PPO by offering financial incentives. These incentives may include greater discounts for medical services performed by in-network doctors, lower deductibles, and lower co-payments.
PPO participants pay for services and are reimbursed a percentage of the cost later. The reimbursement depends on the healthcare policy, rate agreement, and whether the provider is within the PPO network.
Advantages:

  • Participants may visit any doctor. (In or out of Network)
  • Participants are not required to select a primary care physician.
  • Participants do not need referrals to see specialists.

Disadvantages:

  • There is a larger upfront, out-of-pocket expense with PPOs.
  • Participants receive higher reimbursements and lower co-payments as enticement to select doctors within the PPO network.

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What is EPO Health Insurance?

Exclusive Provider Organization (EPO) health insurance is the same as Preferred Provider Organization (PPO) health insurance, except participants in EPO plans must utilize providers in the EPO network.
Advantages:

  • Participants are not penalized for visiting doctors outside the network.

Disadvantages:

  • There is a larger upfront, out-of-pocket expense with EPOs.

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What is an HRA?

Health Reimbursement Arrangements (HRAs), also known as "health reimbursement accounts" and "personal care accounts," are employer funded arrangements that reimburse employees for qualified medical expenses. Employers pay for HRAs entirely. Employees do not contribute to the accounts.

HRAs are open to employees of companies of all sizes.

An HRA provides health care coverage until the funds are used up. So if you have a $500 medical expense, your HRA will cover the full amount if the funds are available in the account.

Former employees, including retirees, have continued access to unused reimbursement amounts. But HRAs stay with the originating employer and do not move with the worker to new jobs.

Advantages:

  • Employers are the sole contributors to the accounts.
  • Open to companies of all sizes.
  • Funds roll over from year to year and are available to former employees.

Disadvantages:

  • HRAs are not portable.

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What is an FSA?

A flexible spending account (FSA) is a benefit plan established by an employer to reimburse employees for specific medical expenses. The employee contributes money to the account through an automatic salary reduction. These deductions reduce the worker’s net income, so he or she pays less income and Social Security tax, and thereby increases his or her take home pay. The employee can then use the funds to pay for medical bills. Employers may contribute to these accounts as well.

During open enrollment each year, employees decide how much to contribute to the account for the year. ( While many companies limit FSAs to $2,000-$3,000, the government does not place an upper limit on the accounts.) The employee is not allowed to change the amount or drop out of the plan during the year unless there is a dramatic change of family status. At the end of the year, leftover money may not be carried over to the next plan year—so it is best to use it up.
Advantages:

  • FSAs reduce tax liability which increases take home income.

Disadvantages:

  • Remaining funds are forfeited if not used by the end of the plan year.
  • Funds do not roll over from year to year.
  • Employees may not drop out of the plan in the middle of the year.

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What is an HSA?

Health Savings Accounts (HSAs), or medical savings accounts, are savings accounts created to pay for unreimbursed health care expenses. These accounts can accumulate tax-deferred interest like individual retirement accounts (IRAs). The money is deducted on a pre-tax basis--so it lowers the employee’s taxable income and overall taxes paid.

The account holder owns and controls the money in the fund and both the employee and the employer can make contributions. To be eligible, the employee must be covered by a high-deductible health insurance plan and must be either be self-employed or work for a company with 50 or fewer employees.

Health savings accounts are rolled over from year to year and are portable—that is, they can be moved, regardless of employment status.

The money in HSAs may accumulate interest, which is not taxed unless funds are withdrawn for nonmedical expenses. Any amounts used for purposes other than to pay for “qualified medical expenses” are taxable as income and subject to an additional 10% tax penalty.

The maximum contribution to an HSA for a single person is 65 percent of the deductible on the employee’s health plan and 75 percent of the deductible for family coverage.
Advantages:

  • HSAs lower participants’ taxable income.
  • The funds earn interest tax-deferred.
  • Accounts can be carried over from year to year.
  • HSAs are portable.

Disadvantages:

  • Non-medical withdrawals are subject to income and penalty taxes.
  • Maximum contribution amounts apply.

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What is a POP?

A Premium Only Plan (POP) allows employees to have their insurance premiums deducted from their pay before taxes are calculated and deducted. By reducing taxable income, POPs increase net take home pay and save the employer FICA and Medicare taxes on these premium dollars.

POPs are available to employees of regular corporations, S corporations, limited liability companies ( LLCs), partnerships, sole proprietors, professional corporations, and not-for-profits. Those who are not eligible for POPs—including the sole proprietor, partner, members of an LLC (in most cases), or individuals owning more than 2% of an S corporation—may still benefit from the savings on payroll taxes by offering the plan to their employees.

Premium Only Plans may be started any time, but the best time is during open enrollment when group health insurance plans are renewed.

Advantages:

  • Increase take home pay by reducing taxable income.
  • Reduce FICA and Medicare taxes.

Disadvantages:

  • Not available for sole proprietors, partners, and members of LLCs.

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