Frequently Asked Questions

This plan is not an FSA or HSA, it is a self-funded indemnity plan. Like an FSA/HSA, the claims funding of the Managed Health Plan is on a pre-tax basis, creating a tax savings for the employee and employer. Unlike an FSA/HSA, the Managed Health Plan provides medical benefits at a zero net cost for the employee and employer. 

No, this plan does not require any changes or replacement of any plans your company provides or offers. It is supplemental to them. However, if a company does not currently have a plan or is looking to replace their current Minimum Essential Coverage (MEC) plan, The Managed Health Plan does qualify as a MEC plan under the Affordable Care Act.  

No. The Managed Health Plan can be implemented on the 1st day of any month. 

There is a $50 per month, per employee fee paid by the employer. This fee is for Third Party Administration (TPA) of the plan and plan indemnification. The gross tax savings for the employer is $91.80 per employee, per month. After the $50 is paid, the employer will realize a $41.80 net payroll tax savings per employee, per month.

The enrolled employees pay an after-tax, $120 per month plan premium. The premium is paid for by the tax savings the employee sees as a result of the reduction in gross income. However, most employees will see an increase in net pay ($125 average increase) even after the premium is paid. Only employees who see a net zero cost for the plan will be automatically enrolled.

The IRS Chief Counsel Memorandum #201719025 clarified this issue. In short, it states that if an employer pays the plan premium or the employee pays the premium in pre-tax dollars, the benefit received would be taxable. However, if the plan premium is paid with after-tax dollars, the benefit received is tax-free (click HERE to view the IRS memo and legal analysis). 

The government could always change any of its rules, but in this case it would be counterintuitive to what they have already mandated. Prevention of illness is always less costly than treatment of illness. Lack of prevention of illness in a person's younger years will manifest in illness in their later years. The government will bear the lion's share of these costs in Medicare. For this reason, wellness was a requirement for Minimum Essential Coverage (MEC) under the Affordable Care Act. 

One of our goals was to address all possible risk scenarios that a company may perceive and eliminate them. We have accomplished that. Your plan is 100% indemnified which will cover any tax liability, fines, or penalties as a result of the Managed Health Plan, if it were to occur. Thus, there is no financial risk to your organization associated with the plan. 

No. Managed Health currently administers over 1000+ companies and approximately 50 are getting added every month. The plan has been in existence for over seven years and the IRS has yet to challenge the plan at all. However, if your company were the first to be challenged, Managed Health would bear the expense and defend the plan on your behalf. Again, there is no financial risk to your organization. 

There has not been an occurrence where claims have exceeded the self-funded account. However, the Managed Health Plan is backed by and reinsured by Sirius Pointe. If there were such an occurrence, Sirius Pointe would cover the overage, negating any liability a company may have relating to excess claims. Sirius Pointe is an A rated, publicly traded company (NYSE: SPNT) with $3.5B in assets. 

Yes. IRS Chief Counsel Memorandum 201719025, analysis by Alston & Bird LLP, and Reymann Law Group, PA are all available.