Why the (.ORG)?

I am sometimes asked why Freedom Benefits uses a .org web site that is traditionally used for nonprofit organizations. The issue was raised by a Yahoo Finance reporter in 2013 and later picked up by the BBB. The short explanation is that it just evolved that way without much consideration.

There are actually three reasons that led up to this:

Freedom Benefits formerly used several different web sites to distinguish between unrelated lines of business. The .org was used as described below as an online industry library, the .net was used to compile insurance listings and the .com was used for the consulting business.

The intention and original use of the .org web site was to host an serve a library of public domain employee benefit documents that could be used by industry professionals n serve to build PR for my own practice. That plan ran into trouble when some abused the service and one professional regulatory organization challenged the service as an unauthorized practice of law. Rather than risk these consequences in the line of “no good deed goes unpunished” I removed the online employee benefits document library. That meant that the .org domain was temporarily idle and unused. Some educational materials under the brand name “Freedom Benefits University” were added in the interim.

Then I accidently lost the .com domain to cybersquatters during a period of medical  disability and refused to pay the ransom to get the domain back. So I mover the consulting services to the .org site.

Small business HRA services

Freedom Benefits offers three levels of service for self-directed small business Health Reimbursement Arrangements:

BASIC: 

Design of an HRA plan through an in-person interview

Recommended sample documents for limited use

ADVISORY:

Answers to benefits questions throughout the plan year

CLAIMS ADMINISTRATION:

Claims administration and preparation of summary report to the payroll administrator

 

The new world of financial planning for small businesses

Financial planning has turned upside down this week for small business owners and most are still spinning to get a grip on the topic. Details of the new Republican road map will emerge over time but it t already clear that unprecedented opportunity to save money through proactive financial planning.

The most immediate areas of change and opportunity are:

  1. federal income taxes – significant tax reductions will be available for the most profitable businesses. These whose tax planning was restricted by the Alternate Minimum Tax will get a new lease on possible tax savings.
  2. employee benefits – fewer regulations will lead to more opportunity for creativity and savings. Freedom Benefits expects to re-introduce a wide range of cost-saving options that were retired with the passage of the Affordable Care Act in 2010.
  3. payroll taxes – adjustments will be needed for most firms and their employees. Fortunately today’s online tools reduce the cost while simultaneously improving the reliability of payroll services.

Health insurance stipend reimbursement

A person using the free OnlineAdviser service sent an email today asking for more information on her employer’s “insurance stipend reimbursement”.

First, this term “insurance stipend reimbursement” is not used by the Internal Revenue Service (IRS) and is generally avoided by employee benefits professionals. The term is not commonly used in my profession because the Affordable Care Act (ACA) includes steep penalties (known as “4980D excise tax penalties“) against employers who reimburse the cost of individual health insurance. The intent of this penalty is to prevent employers from pushing people toward subsidized individual insurance plans (referred to here as “Obamacare” for simplicity) that would drive up the government’s cost. In this context it would be silly of me or any other professional to introduce a term that could raise IRS concern and possibly trigger an employer penalty. IRS officials have repeatedly stated verbally and in writing that the Service is aware that one insurance sales firm – the same firm that has published materials using this term – is misleading insurance agents and small business employers about the risk of ACA. Unfortunately these small firms typically lack the resources to have their own independent employee benefits advisers of the insurance sales representatives. Non-specialized small business tax advisers like CPAs and Enrolled Agents typically avoid offering a professional opinion on employee benefit plan issues like this. The small business employers are not paying their advisers for employee benefits tax advice so the misinformation is classified as a market conduct issue within the insurance sales process. I have no knowledge of any IRS enforcement action taken against that firm or any of the unfortunate employers who might have fallen prey to the false sales rhetoric poised as tax advice.

Second, let’s be clear that the tax penalty risk is entirely between the IRS and the employer. The employee bears none of the tax penalty risk. The employee’s only risk – assuming the employee is enrolled in Obamacare policy – is limited to possible retraction of the amount of the insurance premium subsidy in the event that the IRS later determines that the employee was not eligible for the Obamacare financial assistance. This could happen for a number of reasons. The reason I would be most concerned about is that the IRS might determine that the employer’s “insurance stipend reimbursement” was actually an employer sponsored health plan under their specific definition. In this case, all of the employees eligible for the employer plan could be deemed ineligible for individual Obamacare insurance coverage.

Beyond these two basic points we would next need to look at the plan documentation (assuming that it exists and is available) and the specific payroll practices in use in order to offer a professional opinion on the health plan in question.

I do offer litigation support services to the attorneys of employers and employees who may be misled by improper insurance sales techniques. Hopefully this user’s question doesn’t lead down that path.

Tax preparers on the front line of health insurance sales

The nation’s income tax preparers have been thrust into the front line of the health insurance enrollment battlefield whether they wish to be there or not.

Under new tax rules ushered in through implementation of the Affordable Care Act, these accountants are now charged with the responsibility of explaining the health insurance requirement, the government’s expectation of budget allocated for health insurance, the consequences of not having health insurance, how the subsidy works, what happens with out-of-pocket medical bills, what happens when Obamacare doesn’t work as planned, how to handle employer medical reimbursements, and the list goes on. It is a huge responsibility and significant burden on income tax preparers. Taxpayer clients are generally unaware of these new compliance burdens on the tax preparer and simply wish to see the same tax preparation service provided at nearly the same price as in prior years.

Meanwhile, health insurance agents are no longer compensated for providing this service to consumers and small businesses. The commissions that were formerly built into the premium have been reduced or removed for a majority of the nation’s most popular insurance products. Insurance carriers have taken a deliberate stance that they no longer wish to solicit business through insurance agents.

So the problem is that these tax accountants are not paid for all of this extra work dealing with health insurance issues. Their client contract remains the same – to prepare the tax return.  Neither the government nor the insurance companies – both of whom benefit from the accountants’ efforts – bother to pay the accountants anything for their time.

In addition to individual health insurance issues, many tax preparers uncover additional small business health insurance-related problems for small businesses like potentially huge excise tax penalties. Yet they simply don’t have the time, resources of financial motivation to delve into these issues in order to help clients cope with health care reform.

This caused me to question why tax preparers aren’t receiving any portion of the huge revenue stream currently being generated for health insurance enrollment. There is no simple answer. There are many contributing factors including health insurance company transitions, structure of the navigator system, insurance licensing rules, removal of insurance agent commissions, fear of unintended consequences and a lack of resources.

But is it possible to reallocate some of this insurance enrollment revenue to tax preparers? I’ve had a series of meetings and conversations recently on this issue with marketing executives in the health insurance and employee benefits field. These discussion have evolved into an early-stage business plan. The discussion is ongoing and the Freedom Benefits insurance marketing associates I work with are generally optimistic about the idea. It may be possible to compensate tax preparers for their role as referrors in the insurance enrollment process. It will not be easy and the details are not visible yet. As I see it, this strategy would require a fully accountable multi-carrier referral tracking system for unlicensed referrers – something that is not does not exist in the health insurance marketplace now. My general belief about technology is that is will naturally evolve when there is a market demand.

Would tax preparers be interested? Based on initial response to this single blog post, it seems clear that this is a topic of interest to tax preparers. The next logical step is to gauge tax preparers willingness to become more involved in the health insurance enrollment process. I’m not proposing taking this step on my own but I would support insurance companies that choose this path. I’ll likely be posting more about this as soon as I hear more feedback.

Health insurance for healing arts expenses

Core Health Insurance tends to be the most popular insurance plan of its type for people who want more coverage for ordinary office visits than traditional insurance coverage provides. It is popular because it has no deductible so benefits begin with the first dollar spent. Equally important, it covers the type of medical expenses that people tend to use most often. Yet no single insurance plan is best for all situations.  Those who rely frequently on holistic medicine and healing arts may prefer Value Med Insurance as an alternative. Value Med covers $75 per visit for up to 10 visits per year for any practitioner of the healing arts. There is a 12 waiting period for pre-existing conditions so if you are already under treatment, for example, the insurance won’t begin to immediately pay those bills. Check your state page at www.freedombenefits.net for availability. prcing and other details.

The best deal in employee benefits

The basic goals of any employee benefit plan are: 1) to provide high value relative to the cost and 2) to be easy to use.

With these goals in mind, one of the easier benefits to recommend are discount purchase plans like those offered by Careington. The cost is $10 to $30 per month per employee, depending on options selected. The value realized depends on frequency of use but it is safe to say that one use in a month results in a net savings on the plan.

The most popular at Freedom Benefits are the three options that include telemedicine options. Careington is a market leader with a strong reputation for fairness and customer support. That includes their reliability in honoring a 30 day money-back trial of all of their benefit plans. The easiest way to test the plans is to sign up for a trial and test the plan of your choice.