The NOWPlan is an insurance plan that qualifies as an employee benefit plan and enables employees to recapture the taxes they paid on out-of-pocket medical, dental, vision and child care expenses and at the same time your company can use those expenses as a payroll tax deduction which increases your bottom line, all at no cost to your company. Companies that use the plan highly recommend it.
Employer Q & A
Q. Does it cost money to setup the plan?
A. No, all legal paperwork to setup the plan is provided at no cost. Any future costs to your company is deducted out of money saved so there is no reduction in your profits, in fact, your profits are increased using the plan.
Q. Can owners of the company participate in the plan?
A. As the plan was created by congress for employees only, owners and partners cannot participate in the plan, the only exception is if your corporation is a C corporation.
Q. Is this an FSA plan?
A. FSA is a savings plan with limits whereas this plan is an insurance plan which falls under the same tax code as an FSA but does not have the limits of an FSA plan. With an FSA plan the employee sets aside money to be used tax free for future health expenses. With the NOWPlan the employee spends money on health needs and then files a claim to recapture the taxes paid on the medical expenses. Because FSA amounts are a guess of future medical expenses there is an annual dollar limit to those expenses. With the NOWPlan there is no guessing as the claims are filed after the expense has been incurred so there is no annual dollar limit.
Q. Can’t employees just file their medical expenses at the end of the tax year when they file their tax return?
A. Yes, but they must deduct 7.5% of their Adjusted Gross Income from their medical expenses before they can claim a tax deduction whereas with the NOWPlan they can claim 100% of all their medical, dental and vision expenses.
Q. How does this plan save us money?
A. Right now your company does not benefit from any medical or child care expenses your employees may have but by employees being able to claim those expenses as a payroll tax deduction it reduces your gross payroll so that just like your employees you don’t have to pay payroll taxes on the amounts claimed as a deduction.
Q. Does this take much additional time when doing payroll?
A. No, once a month you receive a report listing the claims of your employees and it takes just a few minutes to enter the data. If your payroll is setup to receive comma- separated values (CSV) then the information can be loaded automatically.
Q. Can employees join or terminate the plan whenever they want?
A. When the plan is first setup employees have a chance to enroll, however, it is not required. Once the enrollment is closed then employees can only sign up during your yearly open enrollment time. New employees can sign up when they are hired. Employees can only terminate the plan during open enrollment unless they have a Qualified Life Event (QLE) such as marriage, divorce, death of family member, change of income and other qualified life events. A form is available for the employee to claim a QLE.
Q. Will our HR department/person have to learn a lot of new information for us to effectively use the plan?
A. No, in fact we encourage HR people to refer all questions/problems to us as we are the best qualified to respond and it will result in the quickest results.
Q. Are we involved in submitting employee claims?
A. NO, all claims must be sent directly to us without your company being involved. There is a problem of liability if you have access to employee medical data. All claims are protected under strict HIPPA guidelines.