Ancillary Benefits
Some employers opt to provide Ancillary Benefits for their valued employees. Ancillary policies cover medical expenses that are not covered by typical health insurance policies. Employees who have special needs for dental and vision care may seek out and be partial to employers who offer those ancillary policies. Other ancillary policies include voluntary life insurance, short term disability insurance and long term disability insurance.
Annuity
A contract with an insurance company and an insured, usually an individual, where the insured pays the insurance company a lump sum and the insurance company guarantees to distribute the money back out to the insured over time. Annuity payments can be guaranteed payments, lifetime payments or a combination of the two. If the insured outlives their payments, the remaining payments will pay out to a named beneficiary.
Business Continuation
Business owners should prepare their business in the case of death or disability of a key employee, owner or partner in a company. Many times owners seek counsel from attorneys and CPA’s to draft agreements as to how the company is going to be sold, how much it will be sold for or how it will be passed on. Life insurance and disability insurance are used to fund these agreements.
Buy-Sell Agreements
A contract between business owners to buy out a disabled or deceased owner’s share of the business. The amount and terms are agreed upon in a contract and typically life insurance and disability insurance are used to fund the sale of the portion of the business owned by the deceased or disabled owner.
COBRA
Named for the Consolidated Omnibus Budget Reconciliation Act of 1986, COBRA requires companies with 20 or more employees to offer continued health insurance coverage to former employees who left for any reason other than “gross misconduct” for 18 months, and longer in some cases. COBRA coverage can be extended to family, and the former employee is responsible for paying the full premium plus administrative fees.
Deductible
The amount of expense that the insurer must pay out-of-pocket before the insurance company will begin to pay.
Dental Coverage
Dental insurance provides insurance coverage and can help save money on routine cleanings, filling cavities, root canals, bridges, dentures, dental caps and dental surgeries.
ERISA
The Employee Retirement Income Security Act of 1974 is a federal law that sets minimum standards for pension plans in private industry. ERISA protects employees, guaranteeing that the funds placed in retirement plans will be there when they retire. ERISA does not require employers to establish pension plans, however it does strictly regulate employers who do.
Flex Spending Accounts
Flexible Spending Accounts are similar to a Health Savings Account in that they allow for pre-tax contributions to a medical savings account by the employee. Paying into an FSA reduces the taxable income the employee pays and also reduces the payroll taxes the employer pays.
Funds in FSAs can be used to cover medical expenses that are not covered with other health insurance plans, making them popular complementary policies. FSA funds can be used to pay deductibles, copayments and coinsurance payments. There is a maximum allowable amount that an employee may contribute to an FSA, however, if an employee has more than one FSA participating employer they may contribute the maximum allowed for each employer.
The “Use it or Lose it Rule” is a significant difference between Flex Spending Accounts and Health Savings Accounts. Funds contributed to an FSA must be used within the plan year, which may include a grace period if the employer offers one. Failure to use the FSA funds results in a loss of the pre-tax income to the employee. The employer advantage to participating in an FSA program is the reduced payroll tax liability. Employers are charged a monthly account maintenance fee that is far less expensive than the taxes that would have been paid if the income were paid to the employee.
FMLA
The Family and Medical Leave Act entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.
Group Medical Insurance
Group health insurance is an employee benefit wherein the employer and group of employees share the costs for the insurance. The advantage of group health insurance is in the buying power – a group can access better policies at better rates than can an individual. Companies that offer group health plans have higher employee retention and a healthier work force than those that don’t.
Health Maintenance Organization (HMO)
A Health Maintenance Organization provides a range of services, including preventative care, for a set premium fee. You may choose a general practitioner as your primary care provider within your HMO who will coordinate your care and services. Your chosen provider then refers you to specialists within the program when necessary. HMO programs require a monthly premium and copayments for some visits and services.
Health Savings Account (HSA)
A Health Savings Account complements a high deductible health insurance policy by allowing tax-free savings for medical expenses now and in the future. An HSA is great for the client who wants coverage for a catastrophic event but doesn’t anticipate regular medical expenses. HSAs are attractive for small businesses who want to provide a group medical plan but need a lower cost program. Contributing to an HSA reduces taxable income for employees and provides funds for some medical costs that wouldn’t normally be covered under other plans, such as corrective lenses.
IL State Continuation (mini-COBRA)
Illinois requires small businesses employing between 2 and 19 employees to offer COBRA coverage for 9 months while dependents can qualify for up to 2 years.
Key-Person Insurance
A business continuation plan in which the company is the owner and the beneficiary on a life insurance policy written on a key employee. A business wants to make sure that if the key person dies or become disabled, they are able to protect themselves against lost earnings or sales that resulted from that person’s death or disability
Life Insurance
A contact between an insured (the one holding the insurance policy) and an insurer where the insured agrees to pay a premium and in the event of death the insurer agrees to pay out a sum of money to the named beneficiary. There are two types of life insurance: Term and Permanent. Term Life Insurance is designed to last for a specified number of years and Permanent Life Insurance is designed to last forever. Life insurance proceeds generally pay out tax free to the beneficiaries.
Long Term Disability Insurance
Long Term Disability income insurance is the better purchase if you are concerned about a serious disability affecting your financial future. While it is more expensive than short term disability insurance, the long term disability policy will potentially pay for a lifetime, providing financial security and peace of mind in the face of debilitation.
Medicare Supplement
A supplemental health insurance policy that a Medicare beneficiary can buy to provide coverage on expenses that are not covered by Medicare. This is also know as medigap insurance.
Permanent Life Insurance
Life insurance that is meant to last for the lifetime of the insured. Permanent life insurance carries a cash value and the cash value can be withdrawn from the policy. Many people use the cash value within the Permanent life insurance to supplement retirement incomes or to make major purchases.
Preferred Provider Organization (PPO)
A Preferred Provider Organization negotiates discounts with health care providers and facilities, creating a PPO network. You may choose to see any doctor you wish, whether or not they are participating in the PPO network. When receiving services from a PPO provider, you will make a copayment for service, whereas a visit to a non-PPO provider may also require co-insurance where you pay a percentage out of pocket in addition to your copayment. Generally PPO programs also have deductibles which must be met before the policy begins to pay for your services.
Short Term Disability Insurance
Short Term Disability income insurance is generally less expensive than a Long Term Disability policy because it pays for a shorter period of time, usually 3 months to 2 years. A Short Term Disability policy has a shorter waiting period than a Long Term Disability policy, and pays until the payee receives a maximum benefit.
Term Life Insurance
Life insurance that is only guaranteed to pay out for a specified number of years. Usually Term Life Insurance is written for 10, 15, 20 and 30 years. Term life insurance does not have any cash value.
Universal Life Insurance
A type of permanent life insurance that has a flexible premium has a specified death benefit that can be changed over time and also carries a cash value that earns interest. The cash value can be withdrawn by the insured; however, a certain cash value level must be maintained to support the death benefit.
Vision Coverage
Vision or Optical insurance coverage can help save money on routine eye exams, prescription lenses, frames and contacts, as well as offering discounts on corrective vision procedures such as LASIK.
Voluntary Life Insurance
Your employees may wish to provide additional coverage for their families in the event of an unexpected death or life changing event. Voluntary Life Insurance provides supplemental funds at a time when your employees may need them the most.
Whole Life Insurance
A permanent life insurance policy that is guaranteed for the entire life of the insured. Whole Life Insurance has a set premium and a specified death benefit that cannot be changed. Whole Life Insurance has a cash value that will equal the death benefit when the policy reaches maturity (usually age 95 or 100).
