Voluntary Blue
Voluntary Blue: Health Care Coverage for Non-Eligible Part-Time Employees
Under Massachusetts health care reform, employers with 11 or more full-time equivalent employees must give their qualifying part-time employees not covered by their employer's plan the option if directly purchasing health coverage on a pre-tax basis through an employer's Section 125 plan. Meeting this mandate does not have to be an expensive administrative burden—not with Voluntary Blue.
What is a Premium Reimbursement Account?
A Premium Reimbursement Account (PRA) is similar to a dependent care Flexible Spending Account (FSA). Simply put, it's an account that allows those employees who are not eligible for employer-sponsored health coverage to set aside some of their paycheck on a pre-tax basis to pay for health care premiums. Ready to set up a PRA for your client's employees? please visit Benefit Concepts.
Create Opportunity, Not More Paperwork
Blue Cross Blue Shield of Massachusetts has a partnership with Benefit Concepts, an established administrative services company, to help you set up a special Section 125 plan and Premium Reimbursement Account (PRA). These plans work together simply and easily to enable your part-time employees to pay for their health coverage on a pre-tax basis without creating additional administrative hassles for your organization.
This will not only help you avoid the potential employer penalties that are part of health care reform, but it will also allow both you and your employees to save on taxes as your employees direct some of their paycheck to buy health care on a pre-tax basis.
Additionally, if you offer Blue Cross Blue Shield of Massachusetts coverage exclusively to your full-time employees and have 11 or more full-time employees, we will pay the one-time setup costs to get your solution up and running. You only pay the monthly maintenance fee to Benefit Concepts.
The Benefits of Voluntary Blue
- Simplified administration. Employees submit claim forms for reimbursement directly to Benefit Concepts, taking the employer out of the middle of the transaction
- Reduces employer's taxes. Employees' incomes are reduced by the pre-tax contributions, cutting employer's FICA and federal taxes (see example below)
- No setup costs. If you offer Blue Cross Blue Shield of Massachusetts coverage exclusively to your full-time employees, we'll pay the setup costs
- Compliance with health care reform. Setting up a Section 125 plan with a PRA meets employer requirements and protects employers from the Free Rider provision
- Easy enrollment. Blue Cross Blue Shield of Massachusetts can provide support and open enrollment materials to facilitate employee plan choice and enrollment
- Increases employees' purchasing power. Because employees don't pay taxes on their contributions, the cost of health insurance they purchase on their own is effectively lowered
How it Works
Beginning November 1, 2007, you may contact your Broker or Account Executive to sign up for the Voluntary Blue program. Then you'll work directly with Benefit Concepts to get your Section 125 plan for your part-time employees and your PRA set up. For qualified accounts, we will pay Benefit Concepts the one-time Section 125 and PRA setup fees.
Benefit Concepts will work with you to set up your account, employee salary reduction agreement, and arrangements to transfer the funds your employees have set aside from their paychecks. To see what members will receive, please download a copy of the 
Member Enrollment Kit.
Once your employees have enrolled in health coverage, they'll file reimbursement requests with Benefit Concepts for premiums paid from the account. Validating reimbursement requests, administering payments to employees, and responding to PRA questions will be managed directly by Benefit Concepts, freeing you from the administrative tasks. You will only pay the small monthly maintenance and per-employee fees directly to Benefits Concepts. These are typically offset by your tax savings (see example).
Blue Cross Blue Shield of Massachusetts will provide support and educational materials to help your employees choose their own health plan and determine how much of their paycheck to deposit into the PRA.
If you would prefer to manage the whole process yourself or through another service company, Benefit Concepts will provide an online tutorial to help you set up and administer your PRA.
| Tax Savings Example Employer | |
|---|---|
| Annual estimated per-employee pre-tax premium paid by employer ($200/month) | $2,400 |
| Annual employer FICA payroll tax savings (7.65%) | $183.60 |
| Number of enrolled part-time employees | 50 |
| Total estimated annual employer tax savings | $9,180 |
| Estimated annual fees | $3,150 |
| Annual net savings | $6,030 |
