by jeffp | Aug 21, 2018 | Employee Benefits
If companies want to remain competitive and attract talent, they need to offer both good salaries and good benefits too. In the US, where healthcare isn’t free and living costs are on the rise, employee benefits are increasingly attractive to young new hopefuls. Alas, despite the best intentions of employers to provide their workers with benefits, changing tax laws are making it difficult for some HR departments to adapt or find the funds for employee benefits.
So how exactly have employee benefits been affected by tax reform in 2018? Let’s take a look at some examples!
Employer deductions
Employers cannot claim deductions for qualified transportation fringe benefits anymore, and this includes commuting. Employer deductions are now completely prohibited, apart from when they are essential to the security of their employees. For employers, this means that they could look into sponsor transportation plans which are paid on a pre-tax model. In general, however, businesses will be forced to closely examine their expenses and restructure some logistical systems in order to reduce their tax liability.
Cycling reimbursements
Bicycle reimbursements are not tax-free anymore under the new reform. Under the new system, employees who cycle to work are no longer protected from the tax man. This is sad news for cycling enthusiasts, who are good for both the sustainable energy crisis and the national obesity crisis.
Engagement activity deductions
As of 2018, employer deductions for granular-level engagement activities are no longer allowed. This means that engagement activities for low-level employees will become more pricey, necessitating enhanced support and planning in order to offset the increased costs.
Food, beverages, and meals
Employers are only able to partially deduct expenses spent on drinks, food, and meal options for their workforce, meaning that costs are likely to rise for employees. Under the 2018 tax reform, only 50% of food and drink costs can be deducted, and this includes costs arising from things such as on-site cafeterias.
Recognitions and rewards
There is now a line drawn between cash and non-cash rewards, with deductions for employers only being limited to tangible property such as a gift voucher for a computer store or something similar. This means that any rewards given to employees which are not “tangible property” will no longer be deductible, leaving employers and employees alike with increased tax bills. Non-tangible rewards are things such as cash, coupons, vacations, hotels, meals, and event tickets. This could cause employers to become less enthusiastic about certain types of employee rewards.
Paid medical leave and family leave
According to the new regulations, employers offering at least 2 weeks of annual paid medical and family leave will now receive a tax credit for doing so. This applies to their full-time employees who qualify for the leave, and the paid leave must ensure that the employee at hand receives a minimum of 50% of their normal salary. This is great for mid-level employees, who are very likely to qualify for such benefits according to guidelines. Employers who give out these benefits can claim 12.5% of the paid leave as tax credits, with that figure increasing by 0.25% for every 1% of salary that the employer pays over the 50% minimum.
The bottom line
This recent tax reform certainly has its pros and cons depending on who you ask. Although a bunch of employer tax deductions have been reigned in, there are now tax credits which inadvertently boost employee morale and aim to help companies retain funds in the form of tax credits. In addition, although some employees may enjoy non-tangible rewards from their employer, this new focus on tangible rewards is likely to mitigate the risk of fraud and disappointment going forward.
Of course, these reforms will trickle their way into companies very differently, but any company worth its salt will be able to adapt and ensure that the most crucial employee benefits will continue to be offered despite changes in the tax structure.
Are you an employer who’s looking to adapt your benefits system to work in tandem with the latest tax regulations? Speak to a member of our helpful team today for bespoke advice!
by jeffp | Aug 15, 2018 | Employee Benefits
Data shows that more and more employers are shifting toward consumer-directed health care, as employers offering a minimum of 1 HDHP (high-deductible health plan) has increased by over 20% since 2016. This is due to employers continually offering HDHPs in addition to more old-school health plans, as employers strive to give their employees more choices regarding their healthcare expenses going forward. An employees’ circumstances and demographics can greatly affect their desire for certain health plans, meaning that employers need to offer a diverse range in order to fulfil employee needs and sustain morale.
Despite this need for employers to offer diverse and competitive packages, they need to ensure that they can manage these costs and be able to offer these plans to employs on a long-term basis. Although more affordable options are becoming available to employers as the desire for consumer-driven healthcare increases, some companies are struggling to offer their employees such packages.
More employees are using HSAs
HSAs (health savings accounts) are being used by more employees than ever before, with usage growing by 60% among those who are eligible. The most eager group to adopt HSAs appears to be millennials, whose participation has almost doubled since 2017, highlighting exponential increasing in adoption among younger employees especially.
Reports have also shown that high-earners aren’t concerned about HDHPs with higher deductibles, as HDHPs consistently fare well among employees with high incomes. Statistics show that HDHP-enrolled people earn 7% more than those enrolled in PPO systems.
Rising premiums
Despite rising premiums, the reduced out-of-pocket risk these come with is making things much easier for employees. Although most employees are seeing their premiums go up, for example, most of these will also be subject to lower deductibles in 2018 and beyond. PPO subscribers with family coverage plans can expect a 9% decrease, while single-coverage plan holders can expect a 7% decrease.
Voluntary benefits
Many employees have needs greater than their own basic health care, and voluntary benefits can help to address this. For example, one may desire accident insurance or hospital indemnity insurance, in addition to insurance covering areas such as identity theft and pet health. Employers have offered 56% more identity theft protections in the last 2 years, while pet insurance offerings have gone up by 80% in the same timeframe.
Are you an employer or employee looking for advice as consumer-directed healthcare becomes more popular? Speak to a member of our well-informed team today!
by jeffp | Jun 11, 2018 | Employee Benefits
2018 has seen the prediction of many employee benefit trends that it’s essential to know about, whether you’re an employee or an employer of a small to large sized business. These trends include changes that may need to be made to finances in response to the new tax bill, customization of benefits, and the introduction of more wellness programs.
Here are five of the top employee benefit treads you need to know about in 2018:
- Service Automation
Automation is a big thing in 2018, and many businesses are jumping onboard the train and better automating their business. As technology has advanced, automation tools, like chatbots, have made it much easier for businesses to streamline their processes. Expect to see a rise in chatbot use, as it helps to solve problems in the workplace and even streamline the employee recruitment process.
- Tailored Benefits
Instead of offering employees a range of benefits that they don’t really need, many businesses are looking to create a tailored benefit plan, on top of the required benefits, like those stipulated in the Affordable Care Act (ACA). Not only do personalized benefits retain existing employees, but they help to attract new employees.
Tailored benefits for employees could include:
- Medical care or childcare on-site
- Dry cleaning services
- Memberships to off-site or on-site gyms
- Free lunches
- Reforms for Tax
The response from businesses in regard to the new tax bill is very likely to vary, but the likelihood is, there are going to be a number of businesses that start offering their employees more benefits. The trend has already been set by major businesses, like Walmart, who are introducing additional benefits for maternity and paternity plans.
There are a number of ways that you can offer your employees better benefits, including:
- Extra health benefits like coverage for dental and vision
- Improved health care budgets
- Higher retirement plan match rates
- Wellness Programs
Wellness programs have already been implemented and improved in many businesses, but the trend seems to be stronger than ever. The discounts available for employees that take part in wellness programs have certainly helped with this popularity, although businesses need to make sure they are protected against lawsuits and potential liabilities.
It’s highly likely that more lawsuits are going to crop up in the remainder of 2018, covering the ongoing issues with wellness plans and the sharing of certain employee health information.
- Reform for Health Care
It’s very likely that health care will go through another set of changes in 2018, and that means that more changes to your business might be needed. Some of the major employee benefit trends of 2018 are likely to be centered around the health care laws that are going to affect all businesses.
Need advice on lawsuit protection and business insurance, or healthcare reform and health insurance? Get into contact with us today, and make sure you know where you stand with insurance and employee benefit trends.
by jeffp | Jun 5, 2018 | Employee Benefits
When a business has to lay off employees, for whatever reason, it’s essential that they give extra consideration to the older employees of their workforce. There are a number of key things that employers are not allowed to do in relation to older employees, including:
- Specifically targeting older workers when reducing the workforce
- Terminating employment on the grounds of age
- Giving workers no choice but to sign waivers for age discrimination claims
These rules are governed by the Older Workers Benefit Protection Act (OWBPA). But what exactly is the OWBPA, and what do employers and employees need to know?
What Is the Older Workers Benefit Protection Act?
OWBPA is an Age Discrimination in Employment Act (ADEA) amendment and is designed to protect employees over the age of 40 from age discrimination. This includes all cases of:
- Hiring new employees
- Terminating employee contracts
- Work duties
Under OWBPA, to prevent older workers from vulnerability in the working environment, they’re entitled to additional benefits, like no pressure to sign waivers and severance pay. Understanding OWBPA and ADEA rules are crucial to protect the rights of employees and businesses in every industry sector.
The OWBPA applies to workforce reductions, involuntary terminations, exit incentive plans, voluntary departures, insurance provisions, and early retirement plans.
OWBPA and Worker Layoffs
In order to terminate the employment of an employee over the age of 40, a business has to make sure that they provide other grounds for termination that are not related to age. The employer must also provide extra worker considerations when laying off older workers – to prevent issues arising with OWBPA and ADEA.
The regulations are given an even greater weight when an event arises that means more than one employees layoff occurs at once – known as group termination. Age discrimination waiver claims will need to be signed and severance pay information provided, even in cases where group reductions occur with a considerable time in between.
The employer will also need to share essential information with employees, so that the employee can decide for themselves if they wish to agree to the age discrimination waiver. This information includes:
- Eligibility and time limit of the offer
- Age of employees retained
- Age and title of employees terminated
OWBPA and Claim Release
When terminating the employment of an employee over 40, and drafting their release, the employer must follow set rules for a valid claim, including:
- Contemplation Time – 21 days to consider and 7 days to revoke for individual termination and 45 days to decide for group termination.
- Legal Consultation – Employers should suggest employee legal consultation.
- Written Release in Simple Language – Employers must write the release in a way that is easily understandable.
- Accurate Information – All information provided should be clear and not misleading in any way.
- ADEA Reference – Employees must refer to the ADEA.
- Voluntary Consent – Release should be signed completely voluntarily.
Additional consideration must then be given to benefits given, that are more than the current entitlement of the employee. Examples of benefits, include:
- Reimbursement
- Expenses for Relocation
- Severance Pay
- Health Benefits
- Notice Pay
- Services for Outplacement
- Additional Bonuses
- Extra Vacation Pay
OWBPA is essential in protecting the rights of all parties involved in employment termination. If you’re worried about employment termination as the employee or employer, and need help understanding the provision of insurance benefits, or where you stand with insurance, then please contact us today.
by jeffp | Apr 29, 2018 | Employee Benefits
It appears that cost management is of increasing importance to employers, with employers being willing to experiment with new ways of stemming expenses. There has been a growth of group captives in recent years, whereby employers keep their self-funded plans with group stop-loss insurance. This stems the risk and allows the self-funding of smaller groups.
Although the interest in self-insured captive insurance has grown, there remains to be confusion surrounding the arrangements. The president and founder of Roundstone LLC, Mike Schroeder, outlined 5 common misconceptions in an EBA article recently. Among the misconceptions, it is commonly believed that these captives result in higher costs than fully insured renewals; self-funding them is too complex; and that some businesses are too small to see any real benefits to them.
Mick Rodgers, EBA’s 2017 Adviser of the Year, also reshaped health insurance for his firm, which has a dozen employees serving 256 employers group with 16,530 lives. Rodgers then made 4 healthcare purchasing coalitions, consisting of more than 11,000 members from 64 middle-market employers. The employers had headcounts from 100 to 500 employees, hailing from 35 different states. At a mere $7,065 PEPY as of 2016, their health benefits were 41% less than the US average of $11,990 PEPY.
Healthcare reform efforts go on
Healthcare reform shows no signs of slowing down, with a constant “will they won’t they” situation seeming to surround healthcare reform all through 2017. The Senate didn’t pass GOP legislation, though the industry is still searching for an alternative to the Affordable Care Act’s requirements regarding reporting.
President Trump’s tax reform bill includes a repeal of the individual mandate. This has made employers rather worried if healthy employees decide not to purchase health coverage, as the employers may see potentially adverse selections. The individual mandate’s repeal has worried many business groups, with business groups worrying that it may cause the health insurance marketplace to become volatile and unstable. It may also move costs towards stable health insurance customers and employers too.
Trump signed an executive order in October which ordered federal agencies to take certain actions as a result of federal rule-making. Association health plans could potentially be created by small employers grouping together, allowing them to buy insurance together, rather than via Obamacare. Trump’s executive order also encourages the expansion of low-cost, short-term, limited insurance plans, in addition to using tax-advantaged accounts to pay off healthcare-related expenses.
Employer groups continued to call for the repeal of supposedly harmful ACA taxes throughout 2017. The US Chamber of Commerce and the ERISA Industry Committee wish to see the repeal of the Cadillac tax and the Health Insurance Tax, as these are two notoriously disliked provisions of the Affordable Care Act.
As governments change and power is constantly shifted back and forth in the White House, healthcare plans can inevitably hang in the balance. If you wish to remain abreast of the latest situations (and get great advice) then get in touch with us!
