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- Extensive Knowledge
Correctly determining whether expenses meet the criteria under Code Section 213 for reimbursement requires extensive knowledge, thereby, avoiding the risk of non-compliance due to improper reimbursements.
- Confidentiality (Employee Privacy Act)
- Once an employer knows an employee’s health history, how can an employer dismiss a marginal employee without the employee claiming discrimination? A lot of thought needs to be given if an employer is involved in knowing their employees’ medical information.
- The ramifications of having an employee assist in paying claims are enormous. When an employee discovers another employee has access to their health information, they can and would sue the employer (and win) for the loss of their civil rights
- Employer/Employee Relationships
When the employer must deny a reimbursement request, it can generate an adversarial situation between the employer and the employee, which is not desirable.
- Code Compliance
The principal requirements to qualify under Section 105 are to adopt a written plan document, participants must be employees, expenses to be reimbursed must not be subject to reimbursement under any health insurance policy, claims must be substantiated, and the plan must meet the non-discrimination requirements specified under the Code. If the employer plan is not in compliance, then all or part of the medical benefits paid for the benefit of employees will be taxable to that employee, and the employer penalized and fined.
- Cost Effective
Employers MUST have a plan document in place in order to reimburse the employees. If not, an employer must 1099 each employee for those benefits they receive. The cost to have a benefits attorney draft a document could cost $1,500 to $2,000. An administrator will provide the plan document and employees SPD at a much less cost.
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