by jeffp | Nov 6, 2015 | Employee Benefits
While a solid benefits package will help your company attract and retain top talent, setting one up incorrectly can subject you to fines and even criminal prosecution. Benefit planning is a complicated undertaking, and it’s all too easy for busy business owners to make mistakes. Consider the following potential legal pitfalls you need to avoid.
Required Benefits
The law requires all employers to provide their employees with time off to vote, serve jury duty or perform military service. You must also comply with workers’ compensation requirements, pay state and federal unemployment taxes, contribute to a short-term disability program if one exists in your state, and comply with the Federal Family and Medical Leave Act (FMLA), which covers maternity and adoption leave as well time off for serious personal and family medical conditions. In addition, you must withhold FICA taxes from your employee’s paychecks and pay your own portion of FICA taxes for each worker. Failure to provide any of these required benefits may subject your business to fines or criminal prosecution.
Government Scrutiny
Health insurance and retirement plans are among the benefits deemed most important by employers. They’re also subject to government regulations. For example, the Employee Retirement Income Security Act (ERISA) regulates employers who offer pension plans to their workers. It imposes a wide range of requirements, including employer-paid insurance to protect retirement benefits.
The Health Insurance Portability and Accountability Act (HIPAA) amended ERISA to impose requirements on group health plans. It increased employee access to health insurance benefits by limiting preexisting condition rules. The more recent Affordable Care Act requires all employers with more than 50 employees to offer health benefits to every member of their staff working full time hours or pay significant penalties. Implementation of the employer sponsored insurance portion of the new regulation was set for January 2014, though the government recently postponed it.
Audits
If you haven’t designed your employee benefits program appropriately, don’t think it will go unnoticed. The IRS is notoriously aggressive in their audits, as is the U.S. Department of Labor. Any discovered errors are subject to penalties. You may also need to repay any associated tax benefits your company has received.
Common Errors
According to benefits professionals, the most common mistake employers make is excluding employees from the plan. Regulations for voluntary benefits vary so it can be challenging for employers to determine which workers must be offered the opportunity to participate. Another common error is failing to enroll new employees in healthcare or supplementary insurance plans during the ‘open enrollment’ period—a fixed time after hire during which you may make changes without incurring additional costs. This is often the fault of poor administration by the employee responsible for the details—for example, when a small business puts a bookkeeper or office manager in charge of benefits.
Whether you have 20 employees or 200, don’t try to build a benefits plan without consulting a qualified advisor. You can reduce your costs by conducting preliminary research—including what your employees want and what your competitors are offering—on your own. Then hire a benefits consultant to walk you safely around potential legal pitfalls.
by jeffp | Oct 22, 2015 | Employee Benefits
According to the American Benefits Council, 401(k) plans are the most popular type of employer-sponsored retirement plan in the nation. In fact, 99 percent of employers who responded to the Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey indicated they now sponsor a defined contribution plan. A WorldatWork survey even found that 88 percent of companies offering a 401(k) with a matching benefit continued to match employee contributions during the recent recession.
While 401(k) plans can produce meaningful retirement benefits, the overall success of any organizations’ employer-sponsored retirement plan is determined by its quality. It’s important to benchmark your program regularly against market norms for many reasons, including the following:
Benchmarking is required by law – Employers must monitor the cost of any 401(k) program they offer according to the Department of Labor. A benchmarking report will include an analysis of all the fees associated with the program, enabling you to compare them to market norms.
Benchmarking is usually free – Your 401(k) benefit advisor should be able to create a benchmarking report or contract with a third party to produce one for you free of charge. Worst case scenario, you can enlist the assistance of an independent third-party provider to conduct the benchmarking process for a reasonably small fee.
Benchmarking protects your employees – Benchmarking reports should include information on 401(k) plan complexity, participant (employee) fees and participant (employee) success in addition to a detailed accounting of employer fees. Unreasonable fees charged to plan assets (participant accounts) by investment managers, administrators and record keepers can quickly eat into retirement earnings. Even 1 percent in unnecessary costs can suck hundreds of thousands of dollars out of plan balances over time.
Benchmarking protects your company – A lack of due diligence can lead to expensive audits and even lawsuits. According to the Department of Labor, 75 percent of the 401(k) plan audits conducted last year resulted in fines, penalties or reimbursements. Several groups of 401(k) plan participants have been successful in securing legal victories over their employers for failure to address excessive fees associated with their retirement program. Maintaining a file of 401(k) benchmarking reports illustrates your intention of exercising due diligence in regards to administrative and investment management fees and expenses.
Benchmarking has become a standard – Retirement plan fees are continually changing. If you want to stay on top of the costs associated with your employer-sponsored 401(k) program, annual benchmarking is definitely time well spent.
In addition to regular benchmarking you may want to periodically request bids from at least three 401(k) service providers or ask your benefits plan advisor to do so. Analysis of competitor bids will allow you to make an informed decision on the quality of the retirement plan you’ve sponsored for your employees and make adjustments as necessary.
by jeffp | Oct 8, 2015 | Employee Benefits
We all know that unhealthy lifestyle choices increase the prevalence of chronic disease in our society as a whole as well as within our nation’s workplaces. Employees who are sedentary, practice poor nutrition or use tobacco products are more likely to suffer from dangerous conditions such as diabetes, heart disease and cancer. Not only do these diseases decrease quality of life and lead to premature disability and death, they also cost employers money.
When employees are unhealthy, productivity suffers. Chronic illness increases absenteeism and reduces performance, a powerful one-two punch to any business bottom line. Fortunately, workplace wellness programs can help employers mitigate losses. Through preventative education and incentives, these programs encourage workers to adopt healthier diets, find time to exercise, and make other important lifestyle changes to improve their health. They also have a direct impact on job satisfaction.
Many Employers Offer Wellness Programs
In a study sponsored by the U.S. Department of Labor and the U.S. Department of Health and Human Services, nearly half of U.S. employers reported offering some type of workplace wellness program. Among them, 80 percent included nutrition and weight loss counseling in their offerings. Seventy-seven percent offered smoking cessation assistance. All of these activities had a positive impact on business profitability. In fact, according to a study conducted by Aflac, 61 percent of employers report increased profitability due to their workplace wellness programs.
Wellness Programs Impact Employees
Research has shown that employees who work for companies offering wellness programs are more satisfied with their jobs. In one survey, 67 percent of respondents said an employer-sponsored wellness program shows the company cares about them. Sixty-seven percent also responded that they’re more likely to recommend the workplace to other job seekers as a result.
In addition, the Department of Health and Human Services’ study revealed wellness programs regularly result in statistically significant improvements in exercise frequency, weight control and smoking reduction—enhancing employee quality of life both inside and outside the office.
Employers Should Make the Most of Workplace Wellness Programs
Hiring and retaining top-notch employees is a concern for employers in many industries. A competitive benefits package often makes the difference when a candidate is considering multiple offers or a current employee is contemplating a job change. Fortunately, many professionals view a workplace wellness program as a valuable addition to the traditional benefits bundle.
Of course, employers must first ensure these professionals are aware that such a program exists at their organization. In the case of new hires, this can be accomplished by outlining the program in job advertisements as well as discussing it with candidates. According to a study by Virgin Health Miles/Workforce Magazine, 87 percent of employees consider wellness packages when choosing an employer.
Employers should also regularly review their organizations’ wellness offerings with current employees. Seventy percent of workers feel workplace wellness programs have a positive impact on their work culture. An employee who enjoys the culture of his or her workplace is more likely to be satisfied by the job at hand.
Finally, consider including incentives in your workplace wellness program to boost participation. In the Workforce Magazine survey, 78 percent of respondents indicated that rewards are important. Sixty-one percent reported the availability of incentives was the key reason they chose to participate in a wellness program.
If you’d like to learn more about workplace wellness, creating a wellness program, or increasing participation in your current program, consult your benefits advisor.
by jeffp | Sep 21, 2015 | Employee Benefits
Salary alone is not enough to recruit and retain your industry’s best professionals. A comprehensive benefits package is necessary as well. Most employers know this, and they spend billions of dollars a year on benefit offerings as a result. However, the recruitment and retention value of any benefits program is wholly dependent on employee participation. An outstanding package, complete with all the bells and whistles, is essentially worthless if few of your employees elect to enroll.
Fortunately, there’s a simple key to maximizing participation rates; communication. Here are four keys for effective employee benefit communication
Think: EARLY
Don’t wait until new employee orientation to introduce the value of your company’s benefits package. Mention the benefits offered in your job postings. Talk more about them when interviewing prospective new hires. When you make an employment offer, reiterate them once again. If your top candidate is entertaining more than one opportunity, you can bet he’ll consider your benefits package.
Think: OFTEN
A recent survey conducted by one insurance company found that a mere 32 percent of employees are comfortable making decisions about benefits offered by their employers. Regular communication about your company’s benefits package can increase awareness, understanding, and as a result, participation. Don’t rely on annual open enrollment periods alone. Consider a monthly benefits newsletter, quarterly benefits lunch-and-learns, and webinars employees can access at any time to learn more.
Think: CLEARLY
Jargon-filled booklets about health insurance, life insurance and retirement plans are real employee turnoffs. In various surveys, employees have suggested that easier to understand documentation would improve their utilization of the benefits offered by their employer. They’d also like documentation personalized to their needs and opportunities to meet face to face with benefits experts.
Think: VALUE
Your employees know exactly how much compensation to expect in each paycheck, but they probably have no idea how much their benefits are worth—even if they’re participating in the program. Don’t focus on individual offerings but on the total value of your company’s benefits package. This will include employer-paid taxes, commuter-assistance programs, voluntary insurance, vacation time, sick days and training opportunities as well as your employer-sponsored health plan, pension fund or 401(k) matches.
Employees who understand their benefit options and appreciate the value of the package offered are more likely to participate—maximizing enrollment levels. However, effective benefits communication is also essential if you want to retain your best employees. One recent survey found that 59 percent of workers would move on to a job with slightly lower pay if they believed it came with better benefits. Implement the suggestions above and talk with your benefits provider to make the most of your employee benefits program.
by jeffp | Sep 4, 2015 | Employee Benefits
The Patient Protection and Affordable Care Act—also known as the ACA—was signed into law more than five years ago, requiring dramatic changes to the plans employers can offer their workers, how information on those plans are communicated, how eligibility is determined, and much more. It is only natural to believe that changes of this magnitude play a significant role in shaping employer-sponsored health benefits trends.
A recent report by the ADP Research Institute took a look at the plans offered by nearly 200 large employers—defined as those with 1,000 or more employees—between 2011 and 2015. After careful analysis, they identified several trends and key metrics of note—all at least partially attributable to the ACA. We’ve summarized the most interesting for you below, though you can review the entire report for yourself on the ADP Research Institute website.
Health Benefit Eligibility and Participation
In 2015, 93 percent of full-time employees were eligible for employer-provided benefits, up from 91 percent in 2011. This is possibly due to employers complying with ACA requirements and offering benefits to more of their workers. However, despite higher eligibility, only 75 percent took advantage of the health plan. As such, overall participation remained steady at 69 percent.
As might be expected, the highest participation rates were found among employees in the oldest age groups. In 2015, nearly 74 percent of eligible workers aged 60 or older participate in their employer’s health plan. Nearly 75 percent of those between the ages of 50 and 59 participated, while a little over 72 percent of those between 40 and 49 enrolled in the health benefit offered. Participation was lowest (37 percent and 69 percent respectively), among eligible workers 26 years old and younger and those aged 26 to 39.
Health Benefit Premiums
Researchers considered data on the premium costs of full-time employees at large employers in which both the employees and employers contributed to payment. The average monthly premium ($870 in 2015) rose slightly more than 2 percent each year between 2011 and 2015, resulting in an aggregate increase of 9.4 percent across all industries and demographic groups. Surprisingly—given the dire predictions of some pundits prior to ACA rollout—this is much lower than the double-digit increases seen in previous decades.
Employer contributions towards premiums declined an average of 0.7 percent from 2011 to 2015. The average total employer contribution in 2015 was $650, or about 75 percent of the monthly premium.
Whether you’re a small employer or a large organization, including an ACA-compliant health plan in your benefits package is essential if you want to attract and retain the best talent in your industry. Give us a call today for a benefit program review or additional assistance.
