Q&A about ODASC’s new health insurance plan, the ODA Wellness Trust

The Ohio Dental Association Services Corp. (ODASC)’s new health insurance plan, the Ohio Dental Association Wellness Trust, is now in effect. The plan is available to all members and their staffs. Below are some common questions ODA members have been asking about the new plan.

What is the Ohio Dental Association Wellness Trust?

The Ohio Dental Association Wellness is a private, dentist-owned, self-funded health benefit plan, developed by Ohio Dental Association member dentists for ODA member dentists and their staffs to provide high quality health insurance at affordable rates. The plan launched in March 2015 with 1,200 contracts. The majority of the people who have signed up with the Wellness Trust have expressed their confidence and support in the plan.

Why did ODASC create the Wellness Trust?

Because of regulations under the Affordable Care Act (ACA), the ODA’s previous health insurance plan has not been renewed. The ODA needed an alternative plan and created the ODA Wellness Trust to replace the old plan, which will end this summer.

The Wellness Trust is a self-insured plan, which allows participants to avoid some of the regulations and requirements of the Affordable Care Act. This plan has been exclusively developed for member dentists and their staffs to help battle the increasing cost of providing health care benefits and to provide access to health care plans outside the ACA.

Creating a self-insured plan has many benefits, including the ability to design plan and deductible options, choose networks and features and keep costs low by avoiding the state insurance premium tax and many of the ACA’s mandated taxes.

How does ODASC envision the Wellness Trust would be able to keep premiums down?

Offices that choose to purchase health insurance in the marketplace will be mixed in with the population at large, which could have an effect on the cost of premiums. ODASC’s experience has been that dental professionals generally live healthier lifestyles, which lead to lower health care costs. Because of this, dentists who join together in a restricted group to create a self-insured plan like the Wellness Trust will see lower health insurance premium rates than if their rates are mixed in with the general population. The plan also realizes savings from the state premium tax exclusion.

What is different about the ODA Wellness Trust?

The ODA Wellness Trust is an employer plan. Traditionally many dental offices and small businesses have offered their employees individual policies and paid a portion of the premium. Because of recent changes with the ACA and IRS, employers can no longer use pre-tax dollars to pay for insurance premiums of individual insurance plans. The Wellness Trust is an employer plan, which means premium costs can be purchased through a payroll deduction. An employer plan must be offered to all full-time employees.

Isn’t that expensive?

While the employer must offer an employer plan to all full-time employees, the employer is not required to make any contribution toward the premiums. The employer can if they so choose pay a percent or flat dollar amount for each employee, but it is not required.

Why would an office set up an employer plan if it is not going to pay any of the premiums?

Simply put, because of the tax benefit for the employer and employees. Health insurance premiums purchased through a payroll deduction can be paid with pre-tax dollars. The employee gets a tax break on the premiums of a least 15 percent.  By paying for health insurance with pre-tax dollars, the employee does not pay federal, state or social security taxes on the cost of his or her insurance. The employer saves the social security matching tax too.

Can dentists just purchase individual policies for their staff instead of establishing an employer group?

Because of a recent change in the regulations, employers can only pay for their staff’s individual health benefit in the form of a payroll increase. Both the employer and the employee would incur payroll taxes on this additional amount.

Paying directly for an employee’s individual health insurance plans puts the employer out of compliance with IRS regulations and may subject the employer to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.

If an office already has an employer plan, why should it switch to the ODA Wellness Trust?

Because there is a potential cost savings. Self-insured plans are not subject to the state premium tax, which is about a 3 percent savings. According to the National Association of Self-Insured Plans, a typical self-insured group can expect to save more than 10 percent versus traditional health insurance. Additionally, because the plan is restricted to dental professionals who typically lead healthy lifestyles, the ODA Wellness Trust will likely see lower health insurance premium rates than the general population.

How would an office go about offering an employer plan such as the Wellness Trust?

When an employer sponsors an employer plan, it needs to be offered to all full-time employees. The employer can decide the minimum number of hours employees must work to be considered full-time, and that minimum must be between 25 and 30 hours per week.  Employers also can set the insurance start date as of the first of the month following employment or wait up to 90 days after a new employee’s start date before he or she is eligible for insurance. Employees are not required to enroll in the plan, but must sign a waiver if they choose to purchase health insurance elsewhere. Employers must also decide how much, if anything, they will contribute to employees’ premiums.

When should offices with an active employer plan apply to enroll in the ODA Wellness Trust?

In most cases it is best for the current enrollees if the employer applies several months before the end of the year in order to coordinate with the participants’ annual plan deductibles. If employees have not accrued any deductible credits, an office can apply at any time.

Can only the dentist participate in the Wellness Trust?

Yes. If none of the dentist’s staff would like to participate in the plan, the dentist can still participate. The dentist must obtain waivers from all staff members who do not participate. If a dentist is an independent contractor, he or she is also eligible to participate in the Wellness Trust (as long as he or she is an ODA member).

How can I learn more?

For more information on the specifics of the ODA Wellness Trust and to enroll in the plan, visit www.oda.org/insurance or call an ODASC representative at (800) 282-1526.

This article is intended to provide general information and should not be construed as providing tax or legal advice. Dentists should always seek the advice of their own legal and/or tax advisors regarding their own specific circumstances.