Park City, Utah (PRWEB) November 23, 2013
Today, Zane Benefits, the number one online small business health benefits solution, published new information on defined contribution premium tax credits.
According to Zane Benefits’ website, a common question is "does offering a pure defined contribution health plan disqualify employees from the individual premium tax credits?" The answer is no.
Employees who receive a healthcare allowance through a pure defined contribution plan can still access premium tax credits, as long as they meet other eligibility criteria based on household size and income.
This is because, set up correctly, a pure defined contribution healthcare allowance is not an "eligible employer-sponsored plan". Therefore, offering a defined contribution healthcare allowance to employees does not disqualify them from the individual premium tax credits.
As of 2014, significant tax credits are available to help employees buy individual health insurance coverage through the new state health insurance marketplaces.
If an employee is eligible for these tax credits, the premium they'll pay for coverage will be capped at 2% - 9.5% of their household income.
Employers can take advantage of these individual premium tax credit savings, and continue to offer employees a valuable health benefit, by offering a pure defined contribution plan. Employees purchase policies on the marketplace, access the individual premium tax credits, and are reimbursed for the non-subsidized portion of their premium - up to the amount of their healthcare allowance. With this model, both the business and employees save a combined 50% on health insurance costs.
For businesses with less than 50 FTE employees, a pure defined contribution plan combined with individual health insurance is a no-brainer.
Businesses with 50+ FTE employees should conduct a cost analysis to compare the cost and benefits of (1) offering group health insurance, (2) offering nothing, or (3) accepting any applicable tax penalties and offering pure defined contribution health plan.
About Zane Benefits
Zane Benefits was founded in 2006 to provide a revolutionized SaaS (Software-as-a-Service) administration platform ("ZaneHealth") for defined contribution health care. The flagship software provides a 100% paperless administration experience to small businesses and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about Zane Benefits, visit http://www.zanebenefits.com.