Compliance Wellness Program
Saving Your Business and Employees THOUSANDS of DOLLARS in Taxes
Businesses across the United States are struggling to stay afloat during the COVID-19 pandemic and are looking for ways to reduce costs. Blue Chip Benefits can help you save you and your employees money by implementing a Compliance Wellness Program. The ERISA qualified Self-Insured Medical Expense Reimbursement Plan (SIMERPTM) focuses on the benefits of an employee wellness plan grouped with an employer sponsored medical plan.By combining these plans and pre-taxing them under a Section “125” Cafeteria Plan, it creates a tax savings for each participating employer and employee.
The wellness plan document specifies the benefits provided as part of the employee wellness program. All benefits are 213(d) compliant, which allows the pre-taxing of the wellness premium and the reimbursement of that premium.
Cafeteria Plan
The wellness program uses a Section 125 Cafeteria Plan that is funded under 106(a), allowing the pre-taxing of 213(d) compliant medical expenses.
SIMERPTM The SIMERPTM, as defined in 26 CFR 1.105-11, is used to reimburse participating employees dollar-for-dollar; 26 CFR 1.105-11 explains that reimbursement is not based upon claims, but rather on the benefits of the wellness plan.
Participants
Employees’s teax savings averages $1,200 to $1,800 annually and may be used to purchase an annuity or other applicable benefits.Clients
The employers saves an annual $500 in FICA-direct net profit, per enrolled employee.Guaranteed ROI
Data analysis has proven that each participant saves an average of $1,400 in claims costs per three-year period.Compliance Wellness Program
Why is the reimbursement not taxed?
Reimbursement guidelines are spelled out in plan documents. The employee wellness program allows reimbursement that specifies how much, when, and who is eligible. The plan is always paired with an ACA approved medical plan. Any reimbursements for medical care (as defined under §213(d)) provided by the program are excluded from the employee’s gross income under §Code 1.105-11(i) and 104(a)(3).
I’ve heard employee wellness plans are taxable?
Not all employee wellness programs are created equal. This compliance wellness program has used professional ERISA counsel to make sure every aspect of the “participatory” program is 100% compliant.
How will my personal taxes be affected?
Because of the drastic changes in the tax code effective in 2018, everyone’s tax refunds are going to be affected. This program may cause minimal adjustments to your tax refund but the tax code updates are where the main changes will occur. We recommend using www.irs.gov to calculate your personal situation.
Where in the IRS code does it explain how this program is compliant?
Wellness: IRS §106(a) – ERISA IRS §213(d) – ADA, IRS §105-11. HIPAA: IRS §125 IRS§105.11 – IRS §104(a)(3)
Medical: IRS §213(d)ACA
Pre-Tax: IRS §213 (d) IRS §106(a) IRS §125
Post-Tax: IRS §213 (d) IRS §105 (b)1.105.11(i) 104(a)(3)
We encourage you to specifically look at the Self-Funded Medical Expense. Reimbursement Plans as defined under 1.105-11.
What products can be used with the tax savings (wellness reserve) dollars?
Annuities and/or approved insurance products can be purchased with your tax savings. Blue Chip Benefits will provide you with information on available products.
Do the wellness reserve dollars need to be used in their entirety?
It is recommended that all wellness reserve dollars be used to purchase an annuity or insurance products because any cash reimbursement could be taxable.
When did these type of employee wellness programs become legal?
The Affordable Care Act (ACA) includes the “health-contingent” model and the “participatory” wellness model. The regulations and guidelines for these models were developed by the Departments of Treasury, Labor, and Health and Human Services. These regulations and new wellness models went into effect on January 1st, 2014 when the ACA went into effect. Since the “activity” based wellness model that had been the main type of wellness program since the 1970’s was put as a sub-category under the “health-contingent” model, the “activity” based model now has more guidelines and regulations. These were defined more clearly in three additional IRS Chief Counsel memos that came out in 2016 and 2017.