Health Care Collaboration

As early as 2005, Utah realized that health care reform was needed, and proceeded to make massive reforms in the system. In 2008 the critical legislation HB 133 was passed forming what is now known as the Utah Health Exchange.

The Exchange is designed to be a cloud-based marketplace where consumers can shop various health-care options and find what works best for their unique situation. The pilot program was launched in January 2010, and by January 2011 the system was already in place and ready to accept the first small employer enrollees. Based on information released from the State of Utah as of March 7th, the Exchange has successfully enrolled 83 employer groups and 2,534 covered lives.

Basically, the Health Exchange is a contribution program. Employer groups enroll in the Exchange using the broker or advisor they choose to assist them to navigate through the process and assist in educating their employees of their options. Enrollment is essentially done on a web-based platform designed for health care shopping and enrollment.

Rules for Participation To be an eligible small employer, you must have between 2 to 50 eligible employees; at least 75% of them must reside in Utah; and you must fill out an online application, including submission of eligible documents. As soon as an offer is in place, at least 75% of eligible employees must participate. Once you’ve applied, you’ll work directly with your broker or advisor to walk you through the process.

What about a Section 125 Plan? In order to participate in the Utah Health Exchange, employers are required to provide payroll deduction on a pre-tax basis through a Section 125 Plan. Under this arrangement, health care contributions of employees can be completely tax-free.

The major benefit of a Section 125 Plan (also known as a cafeteria plan) is its tax-advantage status. They are deducted pre-tax, meaning that the employee’s taxable income is reduced by the amount of the premium. As a result, the employee has a lower taxable income, and therefore lower FICA and Medicare taxes payable. The employer gets a benefit, too: the lower employee taxable income means a lower employer share of FICA and Medicare taxes, and can also mean lower FUTA and state taxes.

The Default Plan Explained. The employer and advisor must choose a default health plan for his employees, and enroll them in the default plan, although the following exceptions may be considered:

1. The employee chooses their own plan option online with a different plan through the Exchange. 2. The employee waives coverage and can prove health insurance coverage elsewhere. 3. The employee declines to be covered under the health plan.

Whether you have a business in the state of Utah or outside of it, it’s time to give your employees something they can really use, and give your company cost savings in the process! Best of all, this expertise and support for your Section 125 Plan is available to you for just $99 a year! Visit us at http://taxfreepremiums.com to find out just how much tax savings you can gain.