Health & Welfare Trusts

Health and Welfare Trusts are legal vehicles that employers use to fund pre-determined amounts of employee benefits in a tax efficient way.  There are numerous reasons why a business may consider a Health and Welfare Trust in lieu of or in addition to traditional health/dental alternatives.
  • Currently paying Health/Dental Expenses personally
Many self-employed individuals/businesses do not currently have any program in place for employee health & dental expenses. A Health and Welfare Trust can provide a mechanism to have these healthcare expenses paid from a far more tax-efficient place without the company having to qualify or put in place a traditional employee benefit plan.
  • Have investigated Insurance but frustrated with premium required versus benefits
Many self-employed individuals/businesses have investigated health/dental coverage but did not pursue it for any of the following reasons:
  • Company was too small to have real “purchasing power” with the insurance companies
  • Company was too new or in an industry where insurers not interested in providing benefits
  • The majority of their workforce had coverage through spousal plans
  • Their workforce wanted control over where they could use funds without being restricted by co-insurance or low maximums in each category (ie. dental, vision care, chiropractic etc)
A Health and Welfare Trust program can address many of these issues as it does not restrict where the allotted dollars per employee are utilized and can even be used to run through the deductibles, co-insurance and amounts beyond the maximums in a spouse’s plan.
  • Want to reduce/eliminate potential increases in Health/Dental Insurance Premiums
Since a Health and Welfare Trust is not insurance in the traditional sense, some employers are drawn to the concept of “fixing” their health/dental funding. Employers under a Health and Welfare Trust program know that they will not receive rate reviews/increases annually based on their employee usage.

Often these employers will use the program on its own or perhaps as a means of complementing component of their plan (dental, health) that may be seeing heavy usage and rate pressure. The program can also be used to run through amounts that were not covered under another plan, such as the deductibles, coinsurance amounts, and amounts beyond the maximums.