True North Service
www.truenorthservice.com
Customer Profile
True North Service, Inc. (TNS) is a Seattle-based company
with approximately 35 employees. The company provides comprehensive user
experience testing, application quality assurance, content certification, and
monitoring services for applications, media, and games. TNS is heavily involved
with mobile content; performing partner integration, operational services, and
application verification for T-Mobile USA, AT&T, and many other mobile content
providers.
Array Health provides THE healthcare solution
for small business. From the plan selection tool to the all-in-one billing,
Array Health makes it easy for us to provide healthcare coverage for our
employees without having to join an expensive, restrictive group plan.
Dan Deering, President
True North Service
The Challenge
TNS wanted to give its employees easy access to health
insurance and contribute to the cost of coverage but could not offer a group
health insurance plan because of price considerations. Individual health
insurance policies were an attractive option, but the company encountered a
number of problems with offering individual health insurance to employees.
First, individual health insurance generally is neither
tax-exempt nor tax deductible. For people who do not have group health
insurance, their health care expenses (including premiums) are only tax
deductible to the extent that they exceed 7.5 percent of adjusted gross income.
If TNS paid directly for the individual health insurance premiums for its
employees, both FICA and income tax would have had to have been paid on the
contributions.
Second, the company would have to collect and write checks
for each individual health insurance bill each month, creating a heavy
administrative burden for the company. This was not a long-term option for the
fast growing business.
Third, there was no easy way for employees to apply for
individual health insurance coverage without having the company’s insurance
broker come onsite to help them complete paper applications.
Array’s Solution
In November 2008, TNS implemented Array Health for its
employees. Array utilizes a health benefits plan known as a Health Reimbursement
Arrangement (HRA) that companies can use to reimburse employees for medical
expenses, including individual health insurance premium, on a tax-preferred
basis. As a result, TNS does not pay FICA or income tax on company HRA
contributions employees use for the reimbursement of individual health
insurance, and TNS can deduct all utilized HRA contributions.
Array Health provides a consolidated billing service, in
which it aggregates individual health insurance premium bills and presents TNS a
single bill each month for all employees’ premiums.
Moreover, Array Health offers employees an online individual
health insurance application platform, complete with decision-making software
and plan comparison tools that they can use to apply for health insurance.
Key Benefits
- Tax advantages:Employees do not pay income or FICA taxes on the HRA contributions and all utilized HRA contributions are tax deductible for TNS.
- Consolidated billing: TNS receives one bill each month for all the health insurance policies of its employees and only writes one check for all policy premiums.
- Online application platform: Array’s online application
platform makes it easy for employees to apply for individual health insurance coverage.
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