Recently, Tom Quigley, an insurance industry veteran and National Benefit Consultant at ClaimLinx, joined the podcast Strategic Wealth Strategies to share insights on how businesses can drastically cut their healthcare expenses while improving employee benefits. With over 30 years in the industry, Tom has mastered the art of using tax laws and financial strategies to help companies reduce their insurance costs, sometimes by as much as 50%.
A Smarter Approach to Healthcare Costs
Tom introduced the concept of a Medical Expense Reimbursement Plan (MERP), a strategy established under Section 105(b) of the Internal Revenue Code. “It allows the employer to fund things without buying insurance and allows them to write it off as a business expense,” Tom explained. This method not only benefits employers but also gives employees better coverage at a lower cost.
One of the most surprising aspects of Tom’s strategy is that companies don’t necessarily have to change their healthcare providers. Instead, he restructures how they pay for insurance. “It’s just a math problem,” Tom emphasized. “Business owners are allowing HR departments to make emotional decisions instead of mathematical ones. And all I do is show them how to let math work in their favor.”
How ClaimLinx Gets Paid
One question many business owners have is: How does ClaimLinx make money? Tom clarified that he works on a commission basis, earning a percentage of the savings he generates for businesses. “There’s no net cost to the employer,” he said. “They’re saving thousands, sometimes hundreds of thousands, and in some cases, millions of dollars.”
The Problem with Traditional Health Insurance
Tom didn’t hold back when discussing why traditional health insurance is so costly. He pointed out that insurance carriers and brokers are often incentivized to keep costs high. “Some larger agencies get a 5% bonus on premium,” Tom revealed. “If they have a billion dollars in premium, that’s $50 million in bonuses. Why would they want to cut costs when they’re making that kind of money?”
Another major issue is that most business owners don’t realize how their employees’ benefits compare to market alternatives. Host Alan Porter explained, “I’ve had employees send me their new job’s insurance details, thinking they were getting a great deal, only for me to show them that their take-home pay was actually lower because of higher insurance costs.”
Alternative Strategies to Reduce Costs
One of the most intriguing strategies Tom discussed was how businesses could legally rework their contribution structures to maximize tax benefits. “If your company has fewer than 50 employees, there’s no legal requirement for you to provide an affordable plan. You can restructure contributions in a way that allows employees to qualify for tax subsidies, ultimately reducing costs for both the employer and employees.”
He also touched on ways individuals, including solopreneurs and retirees, could benefit. “If you structure your finances correctly, you could qualify for a zero-cost health plan through the Affordable Care Act,” he explained.
Why Business Owners Need to Rethink Their Approach
Tom’s biggest message to business owners was clear: Stop treating health insurance as a fixed cost and start seeing it as a strategic opportunity. “If you’re in a business with 10 to 50 employees and not saving at least 50% on insurance costs, you need to have your head checked,” he joked.
The key takeaway? Employers need to think outside the box when it comes to health benefits. With the right strategy, they can offer better coverage to employees while saving significant amounts of money.
For those interested in learning more about ClaimLinx’s innovative approach, click here to start a conversation or read his latest book. “Just make sure to put it down after one glass of wine,” he quipped.
If you’re a business owner tired of overpaying for insurance, it might be time to take a fresh look at your options. After all, as Tom says, “Math doesn’t lie.”
