How does this weird insurance plan work?
August 28, 2020 9:45 PM   Subscribe

A friend just got a job offer with a small business that has a really weird insurance plan. It's called the "Transcend Benefits Plan." She sent me the video and honestly to me it sounds like some kind of scam. Can anyone explain to me how something like this would work? It seems like you buy really expensive life insurance and then you get benefits somehow?

Here's video they sent her and they have a website but I still don't understand how this is supposed to work. I asked her if if it's just extra benefits, because the website mentions life insurance and AFLAC type plans, but she said she was told this is how their health insurance works too.

She's supposed to have a meeting with the insurance rep sometime soon but is concerned they will just try to sell her on this without explaining it clearly. If it matters, she lives in Missouri.
posted by possibilityleft to Work & Money (16 answers total) 3 users marked this as a favorite
"Schemes" (used neutrally) like to are common in India, it was super weird to me too. Obviously it's not a replacement for real health or life insurance. But with a reputable bank and FDIC backing this could be legit. My in-laws did one where you pay in 1000 a month for ten years and then get it back for the next ten years with a bonus at the end. The logic is that is not as good a return rate as investing but it is a nice way to spend while you have it and get a nice lil kickback for future-you. Obviously.... I am not your financial planner, do with this info what you will.
posted by athirstforsalt at 10:10 PM on August 28, 2020

My guess is this is not a real job offer at all, but a scam to sell the insurance.

I think she should get in touch with the state insurance commissioner, and/or the state attorney general.
posted by jamjam at 10:17 PM on August 28, 2020 [13 favorites]

It seems like they help companies set up false-front cafeteria plans and then just give the money back to their employees instead of funding a health insurance plan. Then the tax "savings" is used to buy whole life insurance. Which is a product that the vast majority of people do not need and which will earn the Transcend Benefit plan salesman a hefty commission, plus they charge an admin fee.

On preview yeah, is this "job" to sell Transcend Benefit Plans?
posted by muddgirl at 10:19 PM on August 28, 2020 [3 favorites]

Response by poster: The job is to work in a bakery so I don't think it's a scam job, but this really threw her (and me) for a loop.

So am I understanding this correctly that basically it's not going to be health insurance at all? Possibly just a discount plan? She needs to ask specific questions about coverage it sounds like.
posted by possibilityleft at 10:27 PM on August 28, 2020

I am not a lawyer, accountant, or anything else relevant, but I certainly wouldn't go near this. "Defined benefit plan" is a term I'd associate with a pension fund--are these people effectively setting up a "pension" (deliberate use of scare quotes) and giving the employees distributions immediately, rather than at retirement? Then funnelling those "distributions" back into insurance premiums? Presumably because there's some tax advantage to the employer for contributing to a pension vs. contributing directly to insurance benefits (life and/or health)?

The "Transcend Benefits" website is pretty unimpressive.
posted by equalpants at 10:30 PM on August 28, 2020

Their chart shows $800 withheld pre-tax, then $776 reimbursed to the employee "post-tax". I suppose the $24 difference could be a health insurance premium, but that's awful low.
posted by muddgirl at 10:38 PM on August 28, 2020

Recommend doing a Google search for the company's president, there is at least one interesting public record.
posted by equalpants at 10:43 PM on August 28, 2020 [2 favorites]

Also... I didn't go to their website or research them at all so please take my international context with 1000 grains of salt.
posted by athirstforsalt at 11:54 PM on August 28, 2020

Best answer: Equalpants: The "Transcend Benefits" website is pretty unimpressive.

That's an understatement. Their "benefits store" page has icons for the following health-insurancy-sounding products:

*Short Term Health Insurance
*24-Hour Accident
*Critical Illness
*Medicare Supplements
*Cancer Coverage

None of them are linked to anything, they're just apparent placeholders for coverages they might aspire to offer, or want you to believe they offer.

The icon for life insurance is linked to a get-an-estimate page from another company. (" We could dazzle you with the details of our “algorithmic underwriting,” but basically we use fancy math to get you crazy-low rates.")

The Telemedicine link offers access to docs by phone or internet for $10/month.

The Dental Coverage icon links to yet another company's page offering 'affordable dental and insurance coverage.'

The Disability icon links to yet another company offering 'accidental temporary total disability' insurance.

Additional icons for Covid-19 Information, Home Office In A Box (?!), and Home & Auto are also not linked to anything.

So am I understanding this correctly that basically it's not going to be health insurance at all? Possibly just a discount plan?

It is neither health insurance nor a discount plan.
posted by jon1270 at 5:07 AM on August 29, 2020 [3 favorites]

Best answer: Good lord. Ok a few things:

1. This video is to sell this scheme to employers, not to employees. Either the bakery done goofed and sent her the wrong video, or even worse and more likely, they themselves do not understand the benefits they are offering.

2. Your friend should absolutely decline this piece of crap.

3. Your friend needs to ask the bakery "does this benefit plan meet the employer healthcare coverage mandate outlined by the ACA?" If it's a small bakery less than 50 people this does not matter, but it's worth asking. (Spoiler, the answer is no, by the way, but the bakery's response to this will be interesting.)

4. Depending on income your friend will need to either apply for Medicaid or a marketplace plan to get insurance.

The only benefit this thing offers is to reduce the tax liability for the employer. Employee too I guess but I am making an assumption that very few people are getting rich working at a bakery, so the employee's tax rate is probably pretty low anyway and scamming on tax withholding by messing with this bullshit isn't worth your time. If you need cash in hand it's easier to set your withholding low on your W4 and let it shake out at tax season.
posted by phunniemee at 5:40 AM on August 29, 2020 [11 favorites]

Best answer: Sorry, the dental insurance icon links to a company selling 'affordable dental and *vision* insurance coverage.'

Also notice that the video describes a (likely legally dubious) scheme to avoid withholding income tax on a portion of income by reserving it as a 'qualified contribution,' blowing some of that on doubtful 'benefit' products, and returning the rest to the employee as a 'plan distribution.' This can only defer the taxes, not avoid them. At best it just means you'll be deep in the hole when April 15th rolls around.

TBG's own home page actually says, "We selected the best products available to people who don’t have... knowledge of insurance."

In short, your friend shouldn't touch this company with a 10 foot pole.
posted by jon1270 at 5:41 AM on August 29, 2020 [4 favorites]

Does her State have an Insurance Commissioner? If so, send this info to them and see if an associate can offer any clarifying information.
posted by mightshould at 1:38 PM on August 29, 2020 [3 favorites]

Your friend wants to contact the Missouri Department of insurance. Their consumer hot-line is 800-726-7390. She may want to directly contact someone in Market Regulation Life and Healthcare Section at 573-751-3365. That's right up their alley. There have been so many of these so-called "insurance" schemes popping up lately it's been like playing whack-a-mole for the regulators.
posted by Floydd at 2:20 PM on August 29, 2020 [1 favorite]

I'd like to make a Transcend Dental/Medicaid pun.
posted by Performing Without Annette at 4:27 PM on August 29, 2020 [2 favorites]

Best answer: I work in the health insurance industry and can confidently say that this is absolutely not a health insurance plan.

If your friend signs up for this, they'll still have to go out and buy health insurance through the health insurance marketplace, and pay for it directly--not via pre-tax paycheck deductions, which is one of the major benefits of employer-provided health insurance--from whatever dubious, amount-not-guaranteed "Benefits Allowance" distributed by this weird-ass setup.

If the overall setup weren't already a red flag to me, this would be: "Easier to get Needed Coverage - Receive guaranteed issue Life, Critical Illness and GAP Insurance, plus choose the other benefits you want such as Short-Term Disability, Cancer, Dental and Vision." That is a long list of things that aren't a legit long-term (or even medium-term) health insurance policy.

This combines the worst parts of legitimate tax-advantaged health savings plans like HSAs & FSAs with Whole Life Insurance, which is competely unnecessary for most people.

If the company is over 50 EEs, the ACA requires them to provide health insurance that meets minimum essential requirements that this does not meet. If that's the case, I'd run away from both the "insurance" AND the job, because either the company knows their obligations and is skirting them, or they don't know, which indicates they're too dysfunctional to be trusted to do things like pay accurately and on time, and handle workers' comp claims and HR issues fairly.

It's much more likely that this is a smaller company that can't afford to offer health insurance and thinks they're doing the right thing by trying to offer SOMETHING. But there are other options that are much less scammy than this.

If your friend really wants this job, or doesn't really have other options, they're likely better off looking for another insurance solution outside of work, like, being on a parent or spouse/domestic partner's insurance as a dependent, enrolling in a High Deductible Health Plan (HDHP) + a Health Savings Account (HSA).
posted by rhiannonstone at 9:00 PM on August 30, 2020

Response by poster: Thanks to everyone who were able to nail down the weirdness (and possible illegality) of this weird "insurance plan." I talked to my friend and sent her a link to this thread and she felt much more confident in turning down these benefits and taking the job. She's going to get her own insurance elsewhere.
posted by possibilityleft at 6:10 AM on August 31, 2020 [1 favorite]

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