Michael Gazzara

Wednesday, 23 March 2005 09:37

Mini-meds -- max returns

There is nothing mini about the big problem of providing health insurance to seasonal, part-time workers and low-income employees.

But now there is a medical health insurance plan -- at an affordable price -- for your employees who cannot afford standard packages. Furthermore, thanks to little-known tax advantages, these "mini-med" plans are a way to offer much-needed insurance to the uninsured within your work force at no cost to your employees or you.

Companies already using mini-med plans for their part-time, seasonal employees and low-income workers include PepsiCo, Burger King, Eckerd RX, Clark and Applebee's. What should you know about mini-meds and whether they are appropriate for you?

The benefits of mini-meds

Although less comprehensive than traditional PPO or HMO insurance products, mini-meds provide a wealth of coveted benefits. Most plans feature first-dollar coverage, with no pre-existing conditions or limitations. Covered services may include reimbursement for inpatient and outpatient hospital care, visits to doctors and specialists, surgical benefits, lab and X-ray services, even much needed prescription drug coverage.

Some mini-med plans provide coverage including life and disability insurance, as well as dental benefits.

As important, mini-meds serve as a viable preventive care insurance choice for employees and their families, and help reduce lost productivity due to preventable illness.

Tax advantages render mini-meds free

Mini-meds are significantly less expensive than other insurance options -- average monthly costs range from $20 to $150, depending on a plan's design. Additionally, employees may benefit from the little-known IRS Earned Income Tax Credit (EITC) program, which can make mini-med plans a benefit available at no cost.

An outgrowth of the 1990 Omnibus Budget Reconciliation Act, the EITC is a tax benefit for low- and moderate-income workers.

Families earning less than $34,458 and that have two or more children are eligible to receive a tax credit up to $4,300 per year. Families earning less than $31,338 with only one child are eligible for $2,604 per year.

Even families without children can earn a credit of $390, which means the EITC program could easily subsidize the entire cost for those who qualify.

Mini-med plans can be funded on a noncontributory, contributory or voluntary basis, although most often are paid for using the latter two. Premiums may be payroll-deducted through Section 125, providing both the employee and employer tax savings typically associated with Section 125 of the IRS Code.

Mini-meds close the insurance gap

Estimates tell us that 27 million full-time employees and 37 million part-time workers are uninsured; the former represents one out of every four full-time workers. Additionally, a study conducted by Blue Cross/Blue Shield of Ohio reported that 94 percent of insured employees use less than $1,000 of medical benefits per year.

The large majority of these services would be covered under most mini-med plans. Furthermore, with the EITC tax credit reaching up to $4,300, mini-meds can easily become a free health benefit for employers to offer.

By incorporating mini-meds into their suite of health benefits choices, employers stand to gain from tapping into and retaining this potential applicant pool of uninsured but valued workers.

Mini meds, max returns

I have met with hundreds of employers looking to provide sensible solutions, strategies and answers concerning their benefit plans. Mini-meds have provided many in the brokerage and consulting community the opportunity to narrow the gap between the uninsured and the insured.

Savvy employers structure their benefit programs in a way that allows them to recruit and retain the best employees. Adding a mini-med plan can increase the value of their overall benefits program at potentially no additional costs to employees. Not only does it provide a well-received benefit, it builds goodwill and helps reduce turnover.

The uninsured are more susceptible to major illness because preventive measures are not available. By providing some level of health insurance, employers create a healthier work force, resulting in less time lost due to preventable illnesses. Ultimately, that means increased productivity.

MICHAEL GAZZARA is vice president for Corporate Synergies Group Inc., a full-service employee benefits brokerage and consulting firm in the Philadelphia region. He has been a benefits consultant for more than 14 years, specializing in short- and long-term strategic planning for clients. For more information on what benefits service brokers offer, go to www.corpsyn.com or call Corporate Synergies at (877) 426-7779.