Result Driven Impact

Medical Reimbursement

Company Profile

Rite Plumbing Contractors (RPC) was founded in 1992 as an S-Corporation operating out of the owners’ home. RPC began doing business primarily as a maintenance and service provider, but now generates a majority of its income from new commercial and residential construction projects. In the years since it was established RPC has grown to be the largest plumbing contractor in the local area. Throughout its growth, RPC has added 2 additional owners and now employs 35 staff members. With years of success and profitability, the company is able to provide employees with many benefits, including health insurance.

  • INDUSTRY- Service
  • SPECIFIC- Plumbing & HVAC
  • ANNUAL GROSS REVENUE- $3 Million
  • OWNER STRUCTURE- S-Corp with 4 owners
  • EMPLOYEES- 35

Business Situation

  • RPC is a highly profitable company and is concerned about the rising cost of providing health benefits to its employees.
  • RPC has been utilizing a self-funded health care plan for three years and has received favorable underwriting each year.
  • Since implementing a self-funded plan, the company has not exceeded 75% of expected claims and receives consistently favorable underwriting
  • RPC would like a way to create a savings fund in the event of a high claims year occurring.
  • It would also like to increase its deductible based on its consistent favorable underwriting.

DETAILS OF THE MEDICAL ALLIED REINSURANCE PROGRAM (MARC)

  • The MARC is for business owners considering implementing a self-funded plan or already operating one
  • SRA offers strategies to maximize the benefits and minimize the risks by empowering the employer to build a tax-deferred reserve with in a medical reimbursement 831(b) Plan; a small reinsurance company tailored to health claims reimbursement.
  • SRA is an insurance administrator and its primary role is to ensure that its clients’ medical reimbursement plan operate in accordance with federal and state guidelines.
  • In addition to ensuring compliance, SRA provides administrative services to the medical reimbursement policy that include incorporation, claims processing, annual corporate filing, and other related services.

Resolution

SRA successfully implemented a strategy that would allow RCP to purchase a reimbursement policy for health insurance premiums. SRA also created and administers a MARC with the same ownership structure as RCP. SRA’s Protected Self-Funded Plan & a medical reimbursement 831(b) Plan allowed the owners to create a tax-advantaged savings by utilizing tax efficiencies only available through this program

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