a premium repayment plan is a way for employers to help employees in their health insurance costs. So what about other types of medical expenses such as deductibles, prescriptions and dental care? Employees can use their premium payment plan for other medical expenses not covered by insurance?
Read on for what types of medical expenses of a premium payment plan can be used for.
Note - This question was raised during our recent webinar work redemption premium may tax free for you If you want to download the on-demand webinar and slides, click here.
What is the premium payment plan?
Before we get into what types of employees can use their medical expenses reimbursement plan premiums to cover, let's get on the same page about what a repayment plan the premium is.
a premium payment plan is an arrangement of the employer to reimburse employees for individual health insurance. The most common way to do this is with a repayment plan free of tax (a "section 105 reimbursement system for health care.")
However, employers can also use a taxable allowance. In this article, we refer to a repayment plan premium tax free
Related :. 5 Resources to understand how premium refund Works
Which medical expenses can be reimbursed
A repayment plan premium tax free may reimburse employees for :?
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health insurance premiums until their available allocation
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[1945007servicesdesoins] unlimited preventive basis (usually already covered by health insurance employee plan)
A franchise bonus repayment plan tax can not reimburse employees for:
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Out-of-pocket medical expenses (except for preventive care basic)
Why employees can not use the money on out-of-pocket medical expenses?
If you're familiar with Health Reimbursement Accounts or MERPs (vehicle insurance reimbursement popular disease before adoption the Affordable Care Act), you might be surprised that a premium payment plan can not cover medical expenses out of pocket.
Why?
It all comes down to new reforms placed on group health plans . Under the Affordable Care Act, a group health plan (including a repayment plan premium tax free) has no right to impose limits on essential health benefits and should cover the health care basic preventive services without cost sharing.
expenses like doctor visits and prescriptions, for example, are essential health benefits. By reimbursing these types of expenses out of pocket until a certain monthly or annual amount, the plan would be to place a limit on essential health benefits.
health insurance premiums are allowed to be reimbursed up to a monthly or yearly amount, because, by definition, the premiums are not a health benefit essential. An annual limit can be placed on this type of expenditure.
Conclusion
A repayment plan premium tax free can be used to reimburse employees for health insurance premiums and care of basic prevention services. It can not however be used for other medical expenses out of pocket, such as visits and doctor's prescriptions. This plan design ensures compliance with the new reforms of the Affordable Care Act.
What questions do you have on the premium refund? Download the webinar to learn more, or leave a question below and we will be happy to respond.
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