A CostPlus Solution

This is a cost effective and tax efficient method of providing benefits to certain classes of employees (owners, managers, executives, etc.). It also applies to non-incorporated self-employed individuals (with some financial restrictions). Providing freedom of choice, it can be used to supplement an existing benefits plan or to replace certain elements.

CostPlus is a term, which describes the practice of self-insuring certain claims and processes for maximum savings. It allows businesses to realize substantial savings by properly determining the correct balance between insured and self-insured employee benefits.

Portions of Health care and Dental and Vision Care are ideal for the CostPlus program.
Under CostPlus, all claims costs and expenses are deductible by the company including an administrative fee (usually 10%). On the other hand, if the company reimbursed the individual directly, the benefit amount would be taxable to the employee

How does it work?

  • The administration and claims adjudication of the program runs exactly the same as a traditional insured plan. Enrollment of key employees takes place to facilitate the initial changeover.
  • Only when the benefit is utilized, a billing is provided which breaks down all charges, by benefit and by employee. Full financial and claims reporting are provided showing the status of your account and where the claims payments are going.
  • No additional responsibility is assigned to you because the CostPlus provider is adjudicating claims.
  • Employees need not see or likely even know the plan is being funded differently. As far as they are concerned, it will run like any other group insurance program.
    ü For business owners and key executives, if desired, CostPlus can be used by the company to provide tax-effective reimbursement of expenses not covered by the insured plan.

What does it cost?

In most cases there is an annual administrative cost of $100 and beyond that – nothing.
Unlike a traditional group insurance plan where the usage is estimated and you are billed in advance, with CostPlus there is no cost until the plan is used and charges are put through.

  • Then you pay the cost, plus the administration fee (typically 10%) and any applicable taxes.
  • The total is then expensed as a group insurance premium making it tax deductible.
  • You are then reimbursed for the original charge. And there is no taxable benefit to the employee.

So the net cost is only the 10% fee plus taxes to make the whole transaction cost effective and tax efficient.

Contact us today to find out how we can make CostPlus work for you.