What if your employees could be provided with a clinically developed preventative health care program designed to reduce mental and behavioral health problems that they could access 24/7/365 by text or email? What if instead of having to pay for all of these programs, whether you are a Business or a Non-Profit Organization or two (2) W-2 Employees or a Fortune 500 Company, you would be able to reduce your annual Payroll Taxes that would drive over $600 to your bottom line, per Employee per year? And, what if your Employees, on top of all of this, would modestly increase monthly take-home pay? How would all of this be possible? Because the Employer is billed in the second month of service, they are paying the bill out of the Payroll Tax savings in the prior month of service.
This program came about through several Governmental programs. First, the Revenue Act of 1978 allowed Employees to choose between taxable and non-taxable Employee Benefits on a pretax basis, so they could customize their Employee Benefits package.
Secondly, Congress then passed the Affordable Care Act (ACA) in 2010. The ACA offers incentives for Employers to promote Preventative Health and Wellness programs which allow up to 30% of the cost of health coverage to be designated for these Employee Wellness programs, which is effectuated by Payroll Tax deductions to cover all the cost of administering the Health and Wellness programs.
The ACA also created the Preventative Care Management Program (PCMP), which allows employees to enhance their Employee Benefits with a compliant wellness program that reduces the Payroll Taxes for both the Employee and the Employer.
The health and wellness service provider in this equation has the additional responsibility of being a third-party administrator (TPA) for the program. The TPA becomes the outsourcing entity that administers a self-insured medical reimbursement plan (SIMRP) which allows Employers to reimburse Employees for premiums paid to the plan. SIMRPs are not a form of healthcare insurance because employers can offer financial support to employees. In addition, SIMRP carries more risk and administrative work tasks, which the TPA can perform, ensuring that the Employer has to pay the bill.
It is important to note that if an Employer offers their program to their Employees, Employees must “Opt-In” to this program during the “Enrollment Period”.
Also, if a Business or a Non-Profit Organization has a 125-cafeteria Plan in place, it does not displace that existing program whatsoever. This program does not displace any of the Health Insurance programs in place. Moreover, because the Health and Wellness service provider is not looking to replace existing benefit programs, they work alongside, rather than being a competitor of Insurance Agents or Brokers. Employers can reach out to their existing Insurance Agents or Brokers to add the new Employee Benefits, which enriches them.
As an example, if an Employee had monthly gross wages of $3,288, the Employer would likely reduce their annual Payroll Tax for that Employee by about $52 per month, and about $524 annually. And, that Employee would enjoy the “Gift Basket” of new Employee Benefits that the Employer created for them while modestly increasing the take-home pay of the Employee by about $8 per month.
Finally, by adding this new Preventative Health and Wellness program, the Employer can tout these additional Employee Benefits to hire and retain employees while significantly reducing expenses.
