Finding Balance When Your Gain is Their Loss
To address rising healthcare cost and coverage limitations, the government enacted the Patient Protection and Affordable Care Act (ACA) in March 2010. But the Internal Revenue Service later added a deceptively simple yet critical provision to the IRS code— Section (§) 162(m)(6).
In exchange for the increased revenues, for-profit health insurers must now lower their annual compensation deduction per employee from $1 million to $500,000, thus increasing revenue to the federal government to offset ACA costs and affecting serious change to executive compensation.
In effect, Section 162(m)(6) also drives up compensation expenses at for-profit health insurers on their most valuable employees, namely physicians and senior management.
In our white paper, we explain how the provision works, then lay out two solutions to assist for-profit health insurers to soften the blow of § 162(m)(6) without compromise to attracting and retaining essential physicians and executives. Otherwise, for-profit health providers would need to persuade a physician to voluntarily forego future compensation increases, or to reduce his or her salary to stay below the $500,000 ceiling.
What would encourage anyone to lower their compensation without restoration of the loss? Not an NQDC nor most other executive benefit solutions. But two well-proven solutions promise to surprise you: a SERP (supplemental executive retirement plan) or a split dollar plan, known as a loan regime split-dollar life insurance arrangement. Which approach is right for your company and team? Let us help you make an informed decision.
As soon as you can, read “How ACA Section 162(m)(6) Impacts Company Revenue and Executive Compensation—Finding Balance When Your Gain is Their Loss.” Take it on a lunch break. Gain new-found insight on creating a 162 plan. You’ll be on your way to solving a significant conundrum in your business: Greater revenue or lost compensation. Read on, please.