by jeffp | Sep 19, 2014 | Employee Benefits
A successful business and a competitive employee benefits package go hand in hand; you’ll rarely find one without the other. Not only do generous perks attract more job candidates to your company, they also help you minimize employee turnover, improve morale and increase productivity. But don’t stop at paid time off and a 401(k) plan. Consider these voluntary employee benefits you should add today.
Critical Illness/Cancer Insurance – Supplemental critical illness and cancer policies are becoming increasingly popular with American workers. According to LifeHealthPRO, cancer insurance sales increased 2 percent in 2011 over 2010, and sales for critical illness insurance jumped 20 percent. A Hartford study found that Generation Y workers participate in these programs at a higher rate, so they may be a particularly attractive addition to your benefits package if you’re recruiting or employing younger workers.
Accident Insurance – Supplemental accident insurance sales increased 14 percent from 2010 to 2011 according to LifeHealthPRO. With the cost of health insurance under the Affordable Care Act driving many consumers to bronze plans with higher deductibles and out of pocket expenses, accident insurance offers your employees welcome peace of mind should they break a leg skiing or suffer an injury-causing fall at home.
Hospital Indemnity Insurance – If you have a lot of employees with high-deductible bronze-level health insurance coverage, hospital indemnity insurance will help them pay any hospital-related expenses their regular plan does not cover. This can significantly reduce their out of pocket costs for hospital stays, outpatient services and tests such as MRIs and CT scans traditionally performed at hospitals.
Integrated Long-Term Care and Life Insurance – As some carriers have stopped offering standalone long-term care products, others have begun to bundle long-term care and life insurance into one attractive package. The long-term care benefits, which your employees can use for future long-term care, home health care, assisted-living care and adult daycare, are usually bundled with a universal life policy.
Life Insurance and Disability – According to LifeHealthPRO, sales of life insurance increased 1.3 percent in 2011 from 2010. However, according to the Life Insurance and Market Research Association, 56 percent of U.S. households didn’t have an individual life insurance policy in 2010. Employers who offer their workers a supplement life and disability plan have the opportunity to make a real impact on their financial wellbeing.
Dental and Vision – When employers cut back on benefits during the economic downturn, many eliminated the supplemental dental and vision plans they previously offered their employees. However, as consumers’ out of pocket healthcare costs have continued to increase, their desire for these types of benefits has grown. Regardless of their age, your employees are likely to appreciate the opportunity to purchase this type of supplemental coverage again.
Legal insurance – When an employee suffers a personal problem—such as a home foreclosure, bankruptcy or divorce—it can have a negative effect on his or her productivity at work. Some employers are adding supplemental legal insurance to their benefits package to provide their staff with affordable solutions. Coverage varies by plan but generally includes access to a network of attorneys as well as free educational tools and resources.
The unexpected expense of a critical illness, accident, hospitalization, disability or legal difficulty would financially devastate most employees. In fact, according to the most recent MetLife Employee Benefits Trends Study, only 3 percent of workers report having a three-month’s salary cushion of savings to help them through a tough time. Talk to your benefits advisor about adding a few of these supplement insurance products today.
by jeffp | Sep 8, 2014 | Employee Benefits
A required minimum distribution, or RMD, is the minimum amount one must withdraw from an IRA or retirement account each year. RMDs typically kick in after the owner of the account turns 70.5, and if your company offers any sort of employer-sponsored retirement plan (including profit-sharing plans, 401(k) plans, 403(b) plans and 457(b) plans) you could face serious consequences if your 70.5 and up workers fail to meet the RMD requirements.
Consider the following employer RMD responsibilities as well as the steps you should take to protect your invested workers and your plan, from alerting participants who are approaching RMD age to activating the fund withdrawal.
Employers are ultimately responsible for RMDs. Although your employee should make an effort to understand the minimum distribution requirements of the employer-sponsored retirement savings plan, making sure RMDs happen is ultimately your responsibility. You should notify participants age 70.5 or older in advance of the filing deadline each year and, if they fail to file for distribution, you should set the process in motion yourself to protect your company’s retirement savings plan.
Employers must educate their employees. Do your employees know that they’ll pay a 50 percent penalty tax on the distribution amount if they fail to take the RMD? In addition, if they fail to file for their RMD, they will need to submit specific forms to the IRS to amend the situation. While penalty waivers are possible, they require a letter detailing the unforeseen circumstances leading to the error.
Employers face penalties, too. If the employer-sponsored retirement plan fails to distribute an RMD, whether that failure is your employee’s fault or your own, the plan may be subject to consequences such as losing tax-qualified status and elimination of your tax deduction for employer contributions. As soon as you realize you’ve missed a distribution, you must contact the IRS and begin the reconciliation process as outlined by the Employee Plans Compliance Resolution System.
You can correct your mistakes. If you miss an RMD, you can correct your mistake using the IRS’s Self-Correction Program without paying a fee—provided you’ve made an “insignificant operational mistake” or a “significant operational mistake” that you are correcting within the required timeframe outlined by the IRS. You may also choose the Voluntary Correction Program if you prefer written IRS approval of your correction, though the VCP does require payment of a fee.
It’s essential you monitor your employee’s RMDs if you want to ensure your employer-sponsored retirement plan maintains its tax-preferred status. Contact your benefits expert for additional insight on retirement plan RMDs or to discuss benefit administration services you may find helpful.
by jeffp | Aug 26, 2014 | Employee Benefits
If you kept up with the news regarding the Affordable Care Act last year, you likely saw dozens of headlines proclaiming the likelihood that the employer mandate and penalty portion of the President’s signature healthcare law would result in millions of Americans losing their employer-sponsored healthcare coverage. Fortunately, recent data indicates that these dire predictions are unlikely to come to pass—at least in the near future.
A report published by the International Foundation of Employee Benefit Plans, a Wisconsin-based association serving the employee benefits and compensation industry, states that almost 75 percent of employers say they “definitely will” continue to offer their full-time employees group health benefits during the coming plan year. This includes employers with at least 50 full-time employees and more than 100 total employees, the group that must begin providing an ACA compliant health coverage option next year or pay penalties. Employers with at least 50 full-time employees and 50 to 99 total employees must do so in 2016.
The report also stated that ongoing implementation of the ACA has increased the total cost of providing group health benefits by 6.8 percent in 2014. They based this figure on data gathered from 600 U.S. employers of various sizes. To minimize the effect of this increase, many employers have begun to ask participating employees to pay for a greater portion of their healthcare benefits. Ways in which they’ve done so include:
- Increasing the out-of-pocket limits on their chosen healthcare plan. According to the report, these limits have increased 19.6 percent since 2012.
- Increasing their employee’s share of the health insurance premium. Since 2012, employers have asked workers to pay 12.3 percent more of the premium cost.
- Increasing in-network deductibles on their chosen healthcare plan. According to the report, in-network deductibles on employer-sponsored health insurance plans have increased 14.7 percent since 2012.
- Choosing plans with higher copayments or co-insurance for primary care. Since 2012, employers have asked workers to pay 10.9 percent more in primary care copayments and co-insurance.
While the majority is confident that they’ll be able to use these methods to mitigate the rising costs of mandated employer-sponsored coverage in 2015, many are still concerned about the future. Only 55 percent say that it is “very likely” they will continue to offer group health benefits five years from now. And 21 percent predict that the excise tax on high-cost coverage that will take effect in 2018 will have a very costly impact on their business.
Whether you want to explore options for reducing costs while still offering your employees an ACA compliant plan or need to implement this benefit before the 2015 deadline, contact your benefits advisor today.
