Section 125 Cafeteria Plans

Our unique Full Scale Core and Option Plan allows employees to choose from, not only the plans offered by one carrier, but from multiple carriers. Both employer and employee realize tax benefits because employees pay their portion of premiums with pre-tax dollars. Their taxable income is reduced, so employees pay less in taxes and have more take home pay. Employers pay less in federal payroll taxes.

NationalHR can also set up Flexible Spending Accounts (FSAs) for your employees to help pay out-of-pocket, un-reimbursed expenses like co-pays and deductibles. Employees decide how much of their salary should be set aside in an FSA, and that amount is automatically deducted from pre-tax dollars, once again, lowering taxable income, increasing take home pay, promoting choice in how their medical dollars are spent and reducing the employer’s portion of payroll taxes.

Frequently Asked Questions - Full Scale Core and Option Cafeteria Plans

Q: What do employees really want when it comes to health insurance?
A: The obvious answer is affordable premiums. But employees want more than that. And to keep your best ones, you’ve got to give them what they want. In many cases, they simply want the comfort of having “their own doctor,” year after year, with no interruption. NationalHR has found a way to allow employees to keep their doctor, and at the same time, hold the line on premiums. We call it the Full Scale Core and Option Cafeteria Plan.

One of the ways we do it is to take advantage of a New Jersey law that says insurers must allow policies to exist side-by-side. That means that employers can offer employees a choice from a number of companies. So theoretically, one employee can choose Horizon Blue Shield, while another chooses Aetna and still another chooses Amerihealth. That's the Full Scale Core and Option Cafeteria Plan. And you can only get it from NationalHR.

Q: Isn’t it really complicated to have more than one medical carrier?
A: It would be if you didn’t have NationalHR as your liaison. In addition, all company invoices appear on one bill, to streamline the process even further. With NationalHR, you’ll have one point of contact, and one health insurance bill.

Q: I have a wide range of employees. Healthy and sick, some in their 20s, 30s and upward. How can I address all their health benefit needs?
A: This is exactly why our Full Scale Core and Option Cafeteria Plan is so popular. Designed by NationalHR, this system not only satisfies all your employees, but controls costs as well.

Q: How do you communicate all this complicated information to employees?
A: Through a combination of materials and meetings that are produced and presented in down to earth, easy-to-understand language. Once onboard, we’ll also offer your employees a password protected personal entry website, available to them 24/7 for any questions that come up. We’ll gladly set up a convenient time to get together and share our information with you.

Q: Why should I work with NationalHR as opposed to any other broker out there?
A: Our clients tend to think of us as their “benefits engineer” rather than their “broker.” Not only do we offer them creative ways to promote employee satisfaction, we also hold the line on premium increases for both employers and employees. There’s a lot of behind the scenes work that goes on to make that happen, and many brokers out there aren’t willing to do it. Not only are we happy to do what’s necessary, we’re experts at it.

Why are Medical Prices Going Up So Fast?

There are a number of reasons – but not the prices charged by providers.

The insurance company covers all the care we might need in a given year for a fixed premium.  The problem that exists is that we need more and more care each year.

Experts blame many factors.  The epidemic of obesity in America makes many illnesses more severe and more expensive.  The birthrate is down, causing the average age of our workers to be up.  The cost of illness rises with age.

Technology – we can do many more things now, and provide many more medications which were not available just a few years ago.  People who would now be dead are walking among us – but they are expensive.

Our legal system creates a situation in which much care is, according to Medicare, not necessary for the course of a given illness.  Medicare estimates that 30% of all care does not have a direct bearing to recovery or patient satisfaction.

What is the difference between various types of medical plans?

HMO

• You must use your provider network
• Generally, you must name a primary physician whose job it is to monitor all your care.  He is your quarterback.
• You need referrals from your primary care physician in order to obtain care from a specialist, hospital, or other provider.

Point of Service

• Operates just like an HMO while you are in network
• However, you can receive care out of network while paying a calendar year deductible and co-insurance

PPO

• Similar to Point of Service, except you do not need to name a primary physician, and referrals for specialty care are not necessary

Open Access

• May be either an HMO or Point of Service
• You must name a primary physician, but do not need referrals to seek specialty care

In terms for cost, from least expensive to most expensive, the plans run as follows:

            HMO
            Open Access HMO
            Point of Service
            Open Access POS
            PPO

What are the highlights of New Jersey’s Small Group Insurance Law?

The law covers employer group plans when there are 2 and 49 eligible employees.  An eligible employee is considered one who works at least 25 hours per week on a permanent basis.

Underwriting is not allowed; all plans are guaranteed issue.  Rates can only be based on age, sex, and location.

Pre-Existing Conditions are only allowed for groups of between 2 and 5 eligible employees, late entrants in larger plans, and only if the individual has had greater than a 62-day gap in his/her medical coverage.

Participation.  The law states that 75% of the eligible employees must be covered by a group plan somewhere.  Somewhere may include the spouse’s employer, Medicare, Kids Care, or other program.

Side by Side Rule.  Insurance companies must allow themselves to co-exist with their competitors if an employer so chooses.  The rates for each company are based on the segment of the population which chooses that company.

As a small employer, how can I control my medical cost?

The most important thing to do is to control the population that selects benefits.  How you set up the plan determines your level of cost control, and is more important than the bidding done by your broker.

Next, control the plans that are purchased.  Again, how you set up your plans will determine your cost.

Bidding the plans each year has much less impact on your cost than your internal setup.  NationalHR will show you how to properly set up your plans to create cost control and improve employee satisfaction at the same time.

How can I avoid alienating my employees while controlling cost?

NationalHR has used the work pioneered by this nation’s largest corporations, creating Full Scale Core and Option Cafeteria Plans.  If you use all the tools available under cafeteria plans, set the plan up properly, and communicate properly, you will be able to be ahead of your competitors.

NationalHR will show you how to do it.

What expenses are eligible under Flexible Spending Accounts?

In general, almost everything needed for medical, dental, or vision care is eligible.  Under your group plan, the insurance company pays for a much more restrictive list of items, and has reasonable and customary limitations.  This is not true under FSA’s.  The list of eligible services, as denoted by IRS Publication 502 applies.  See www.irs.gov/pub/irs-pdf/p502.pdf.

Some examples are travel and parking costs, over the counter drugs as long as they are for an illness or condition, Lasic surgery, and all dental care except teeth whitening.  Capital expenses like air conditioning costs for allergy or asthma sufferers, mold removal, and even hot tubs for those with orthopedic conditions are all eligible.

Examples of things which are not covered are purely cosmetic items, preventive medications like vitamins, and personal use items such as toothpaste and shampoo.

The bottom line is that almost all of us have significant expenses in this area and we are not taking advantage of the tax deductions available to us.  To use FSA’s will create significant savings for both employer and employee.

Why should we have Flexible Spending Accounts (FSA’s)?

Save taxes.  If you do not have FSA’s, employees are paying income tax and Social Security on items they are now buying.  And, the employer pays Social Security tax and other employer tax burden items on this expenditure.

With FSA’s, the employees can save as much as 40% on their expenditure and the employer can save as much as 10% on the collective expenditure of all of the employees who participate.

Aren’t FSA’s complicated?

No, not with NationalHR.  Employees merely set aside a pro rata income share, which is banked for future claims. 

The employee faxes or mails his eligible bills to NationalHR and receives reimbursement.

As with any benefit, there are some rules and regulations.  A NationalHR representative will show you how much everyone can save with this valuable tool, and how inexpensive it is to use NationalHR for this benefit.