A Welfare Benefit Plan (WBP) may be designed to provide post retirement medical reimbursements to the owner of a business, and its employees. Employer contributions to a WBP are tax-deductible when paid to the plan, while plan assets accumulate on a tax-free basis. Eligible employees are not taxed on employer contributions and may receive reimbursement for qualifying post-retirement medical benefits on a tax-free basis.

U.S. healthcare costs continue to rise at an alarming pace, and the cost of long-term care facilities currently comprise the greatest expenses for Medicare and Medicaid. High healthcare expenses can have serious consequences for the private citizen and our nation as a whole, as more and more individuals find that they are unable to pay their medical bills. Yet, increased government involvement in the U.S. healthcare system may not provide for equal access to medical services and benefits that we may need or desire.

A WBP allows you to customize a plan that works best for your situation. The employer has a great deal of flexibility in Plan design, allowing control over features including: establishing Plan eligibility, determination of benefit levels, retirement age and eligibility requirements. For instance, the WBP can provide benefits to all employees and spouses, while requiring certain age and service eligibility requirements. The Plan may also limit employee participation by age or length of service. In most WBP arrangements, the business owner serves as Plan Trustee and Administrator, while Plan valuation, administration, claim processing, documentation and appropriate Internal Revenue Service filings are provided by a third party actuarial firm.

As clients assume a growing burden for health care costs, financial advisors should incorporate these growing health costs into their client’s financial portfolio. Successful planning for our retirement years is more than just an accumulation of one’s wealth. It involves protecting our wealth and securing an adequate income stream, while also planning for and protecting against sickness, medical expenses, loss of income and death. A WBP can help to ensure that a client is able to pay for rising medical expenses, and has the freedom to elect medical services on their own terms.

A single employer WBP provides a medical reimbursement account for each owner and employee, so that savings, investments and retirement assets can be insulated from protected against, rising medical costs in a creditor-protected structure. The Affluence Group team will work with you and your clients to design a Welfare Benefit Plan in the most attractive, efficient manner possible.