5 things small business owners should know about this year's open enrollment

Often for small business owners, offering competitive employee benefits is crucial to the way they attract and retain employees. Read this blog post to learn more.


As a small business owner, offering competitive employee benefits is a crucial way to attract and retain strong talent. Whether you currently provide them and are planning next year’s renewal, or you are thinking of offering them for the first time, here are five things you should consider before your employees enter the open enrollment period for next year on November 1st:

1. Small businesses don’t have to wait until open enrollment to offer benefits to their employees

While your employees won’t be able to enroll in health insurance plans until November comes along, small business owners don’t have to wait at all to secure health insurance for their employees. The sooner you act, the better, to guarantee that you and your employees are protected. According to recent studies, healthier employees are happier employees, and as a result, will contribute to a more productive workplace. And a more positive and constructive work environment is better for you, your employees, and your business as a whole.

2. Health literacy is important

Whether you’ve provided health insurance to your employees before, or you’re looking into doing so for the first time, it is always worthwhile to prioritize health insurance literacy. There is a host of terminology and acronyms, not to mention rules and regulations that can be overwhelming to wrap your head around.

Thankfully, the internet is full of relevant information, ranging from articles to explainer videos, that should have you up to speed in no time. Having a good understanding of insurance concepts such as essential health benefits, employer contributions, out-of-pocket maximums, coinsurance, provider networks, co-pays, premiums, and deductibles is a necessary step to being better equipped to view and compare health plan options side-by-side. A thorough familiarization with health insurance practices and terms will allow you to make the most knowledgeable decisions for your employees and your business.

3. Offering health insurance increases employee retention

Employees want to feel like their health is a priority, and are more likely to join a company and stay for longer if their health care needs are being met. A current survey shows that 56 percent of Americans whose employers were sponsoring their health care considered whether or not they were happy with their benefits to be a significant factor in choosing to stay with a particular job. The Employee Benefit Research Institute released a survey in 2016 which showed a powerful connection between decent workplace health benefits and overall employee happiness and team spirit—59 percent percent of employees who were pleased with their benefits were also pleased with their jobs. And only 8 percent of employees who were dissatisfied with their benefits were satisfied with their jobs.

4. Alleviate health insurance costs

High insurance costs can be an obstacle for small business owners. A new survey suggests that 53 percent of American small business owners stress over the costs of providing health care to their employees. The 2017 eHealth report reveals that nearly 80 percent of small businesses owners are concerned about health insurance costs, and 62 percent would consider a 15 percent increase in premiums to make small group health insurance impossible to afford. However, there are resources in place to help reduce these costs, so they aren’t too much of a barrier. One helpful way to cut down on health insurance costs is to take advantage of potential tax breaks available to small business owners. All of the financial contributions that employers make to their employees’ premiums are tax-deductible, and employees’ financial contributions are made pre-tax, which will successfully decrease a small business’ payroll taxes.

Additionally, if your small business consists of fewer than 25 employees, you may be eligible for tax credits if the average yearly income for your employees is below $53,000. It is also beneficial to note that for small business owners, the biggest driver on insurance cost will be the type of plan chosen in addition to the average age of your employees. Your employees’ health is not a relevant factor.

5. Utilize digital resources

You don’t have to be an insurance industry expert to shop for medical plans. There are resources and tools available that make buying medical plans as easy as purchasing a plane ticket or buying a pair of shoes online – Simple, transparent. Insurance is a very complex industry that can easily be simplified with the use of the advanced technology and design of online marketplaces. These platforms are great tools for small business owners to compare prices and benefits of different plans side-by-side. Be confident while shopping for insurance because all of the information is laid out on the table. Technological solutions such as digital marketplaces serve as useful tools to modernize the insurance shopping process and ensure that you and your team are covered without going over your budget.

SOURCE: Poblete, S. (15 October 2018) "5 things small business owners should know about this year's open enrollment" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/10/15/5-things-small-business-owners-should-know-about-t/


Choosing the Right Flexible Benefit for Employees

HSA? FSA? HRA? Deciding which employer-sponsored benefits will best suit a company and their employees’ needs can often leave employers lost and confused. Continue reading to learn more.


Trying to decide which of the many employer-sponsored benefits out there to offer employees can leave an employer feeling lost in a confusing bowl of alphabet soup—HSA? FSA? DCAP? HRA? What does it mean if a benefit is “limited” or “post-deductible”? Which one is use-it-or-lose-it? Which one has a rollover? What are the limits on each benefit?—and so on.

While there are many details to cover for each of these benefit options, perhaps the first and most important question to answer is: which of these benefits is going to best suit the needs of both my business and my employees? In this article, we will cover the basic pros and cons of Flexible Spending Arrangements (FSA), Health Savings Accounts (HSA), and Health Reimbursement Arrangements (HRA) to help you better answer that question.

Flexible Spending Arrangements (FSA)

An FSA is an employer-sponsored and employer-owned benefit that allows employee participants to be reimbursed for certain expenses with amounts deducted from their salaries pre-tax. An FSA can include both the Health FSA that reimburses uncovered medical expenses and the Dependent Care FSA that reimburses for dependent expenses like daycare and childcare.

Pros:

  • Benefits can be funded entirely from employee salary reductions (ER contributions are an option)
  • Participants have access to full annual elections on day 1 of the benefit (Health FSA only)
  • Participants save on taxes by reducing their taxable income; employers save also by paying less in payroll taxes like FICA and FUTA
  • An FSA allows participants to “give themselves a raise” by reducing the taxes on healthcare expenses they would have had anyway

Cons:

  • Employers risk losing money should an employee quit or leave the program prior to fully funding their FSA election
  • Employees risk losing money should their healthcare expenses total less than their election (the infamous use-it-or-lose-it—though there are ways to mitigate this problem, such as the $500 rollover option)
  • FSA elections are irrevocable after open enrollment; only a qualifying change of status event permits a change of election mid-year
  • Only so much can be elected for an FSA. For 2018, Health FSAs are capped at $2,650, and Dependent Care Accounts are generally capped at $5,000
  • FSA plans are almost always offered under a cafeteria plan; as such, they are subject to several non-discrimination rules and tests

Health Savings Accounts (HSA)

An HSA is an employee-owned account that allows participants to set aside funds to pay for the same expenses that are eligible under a Health FSA. Also like an FSA, these accounts can be offered under a cafeteria plan so that participants may fund their accounts through pre-tax salary reductions.

Pros:

  • HSAs are “triple-tax advantaged”—the contributions are tax-free, the funds are not taxed if paid for eligible expenses, and any gains on the funds (interest, dividends) are also tax-free
  • HSAs are portable, employee-owned, interest-bearing bank accounts; the account remains with the employees even if they leave the company
  • Certain HSAs allow participants to invest a portion of the balance into mutual funds; any earnings on these investments are non-taxable
  • Upon reaching retirement, participants can use any remaining HSA funds to pay for any expense without a tax penalty (though normal taxes are required for non-qualified expenses); also, retirees can use the funds tax-free to pay premiums on any supplemental Medicare coverage. This feature allows HSAs to operate as a secondary retirement fund
  • There is no use-it-or-lose-it with HSAs; all funds employees contribute to stay in their accounts and remain theirs in perpetuity. Also, participants may alter their deduction amounts at any time
  • Like FSAs, employers can either allow the HSA to be entirely employee-funded, or they may choose to also make contributions to their employees’ HSA accounts
  • Even though they are often offered under a cafeteria plan, HSAs do not carry the same nondiscrimination requirements as an FSA. Moreover, there is a less administrative burden for the employer as the employees carry the liability for their own accounts

Cons:

  • To open and contribute to an HSA, an employee must be covered by a qualifying high deductible health plan; moreover, they cannot be covered by any other health coverage (a spouse’s health insurance, an FSA (unless limited), or otherwise)
  • Participants are limited to reimburse only what they have contributed—there is no “front-loading” like with an FSA
  • Participant contributions to an HSA also have an annual limit. For 2018, that limit is $3,450 for an employee with single coverage and $6,900 for an employee with family coverage (participants over 55 can add an additional $1,000; also, remember there is no total account limit)
  • Participation in an HSA precludes participation in any other benefit that provides health coverage. This means employees with an HSA cannot participate in either an FSA or an HRA. Employers can work around this by offering a special limited FSA or HRA that only reimburses dental and vision benefits, meets certain deductible requirements, or both
  • HSAs are treated as bank accounts for legal purposes, so they are subject to many of the same laws that govern bank accounts, like the Patriot Act. Participants are often required to verify their identity to open an HSA, an administrative burden that does not apply to either an FSA or an HRA

Health Reimbursement Arrangements (HRA)

An HRA is an employer-owned and employer-sponsored account that, unlike FSAs and HSAs, is completely funded with employer monies. Employers can think of these accounts as their own supplemental health plans that they create for their employees

Pros:

  • HRAs are extremely flexible in terms of design and function; employers can essentially create the benefit to reimburse the specific expenses at the specific time and under the specific conditions that the employers want
  • HRAs can be an excellent way to “soften the blow” of an increase in major medical insurance costs—employers can use an HRA to mitigate an increase in premiums, deductibles, or other out-of-pocket expenses
  • HRAs can be simpler to administer than an FSA or even an HSA, provided that the plan design is simple and efficient: there are no payroll deductions to track, usually fewer reimbursements to process, and no individual participant elections to manage
  • Small employers may qualify for a special type of HRA, a Qualified Small Employer HRA (or QSEHRA), that even allows participants to be reimbursed for their insurance premiums (special regulations apply)
  • Funds can remain with the employer if someone terminates employment and have not submitted for reimbursement

Cons:

  • HRAs are entirely employer funded. No employee funds or salary reductions may be used to help pay for the benefit. Some employers may not have the funding to operate such a benefit
  • HRAs are subject to the Affordable Care Act. As such, they must be “integrated” with major medical coverage if they provide any sort of health expense reimbursement and are also subject to several regulations
  • HRAs are also subject to many of the same nondiscrimination requirements as the Health FSA
  • HRAs often go under-utilized; employers may pay an amount of administrative costs that are disproportionate to how much employees actually use the benefit
  • Employers can often get “stuck in the weeds” with an overly complicated HRA plan design. Such designs create frustration on the part of the participants, the benefits administrator, and the employer

SOURCE: London, B. (25 October 2018) "Choosing the Right Flexible Benefit for Employees" (Web Blog Post). Retrieved from https://blog.ubabenefits.com/choosing-the-right-flexible-benefit-for-employees


3 steps to negotiating a better employee benefit annual renewal

Typically, employee benefits are the second-highest expense for employers, coming in second behind employee payroll. Read this blog post to learn how companies can negotiate for a better employee benefit renewal.


Employee benefits are typically the second-highest expense for employers — right behind payroll. But unlike payroll, benefits are difficult to budget for each year because the upcoming annual renewal rate can feel like a total mystery.

Not knowing what the renewal rate will be until the end of the plan year complicates the balance that employers must strike between offering rich benefits employees appreciate at a cost the finance team can live with. It doesn’t have to be that way.

Knowing how to approach the annual renewal with your health carrier, pharmacy benefits manager and other players can help the savvy employer save some money while maintaining the same level of benefits as before. The ticket is planning for the annual renewal all year long, which removes the mystery and leads to a predictable rate.

Here are three steps to negotiating the annual renewal with your carrier.

1. Create a good carrier relationship. A great way to gain control of what happens at the end of the benefit plan year is to set the tone from the beginning. This means outlining expectations before signing a contract and communicating wants and needs throughout the plan period. If you’ve developed a good relationship with your carrier, you should have an easier time coming to an agreement on the annual renewal rate.

Building good carrier relationships extends beyond the carrier you’re currently working with to others in the market. One way to maintain a good relationship is to avoid marketing to all carriers for the best rate before each renewal period. Carriers spend time and money responding to requests for proposal (RFPs); if they respond year after year without winning the business, they may lose interest when you are ready to move your benefits plan.

2. Get plan renewals early. Left unchecked, most carriers hold the benefit plan renewal rate as long as possible (60-75 days before the end of a contract). But receiving your carrier’s initial renewal rate earlier gives you more time to evaluate the renewal and negotiate the rate. (Yes, it’s true — you don’t have to accept the first number the carrier offers.) The best way to ensure your request for an early renewal rate is heard and followed is to discuss it before signing a contract.

By receiving your renewal rate approximately 120 days before the end of your contract, you have enough time to evaluate the rate together with your health and welfare benefits broker and underwriting team and then respond with another offer. And if you feel that another carrier can offer better rates, you can also market your benefits plan and still have time to switch carriers before the contract ends.

3. Offer a fair and reasonable rate. After you receive your annual renewal rate, work with your internal team and your benefits broker to begin negotiations. Importantly, this doesn’t mean countering with a number so low that the carrier finds it untenable and unreasonable. In that case, the insurer may not meet your demand and you’ll be forced to turn to other carrier options without having planned for that possibility.

Instead, respond with a fair and reasonable rate increase backed by data. The goal is to counter offer with a number that creates stability and predictability for renewals in the future.

Learning your renewal rate for each plan year can be stressful, but it doesn’t have to be. Getting information early, negotiating a fair rate and maintaining good carrier relationships can help you create a better annual renewal with better predictability and improved budgeting year after year.

SOURCE: Strain, M (24 October 2018) "3 steps to negotiating a better employee benefit annual renewal" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/3-steps-to-negotiating-a-better-employee-benefit-annual-renewal?brief=00000152-1443-d1cc-a5fa-7cfba3c60000


5 ways employers can leverage tech during open enrollment

How are you leveraging technology advancements during 2019 open enrollment? Technology is constantly changing the way employers select and offer benefits to their employees. Read this blog post to learn more.


Technology continues to reshape how employers select and offer healthcare benefits to employees, putting access to information at our fingertips and creating a more seamless and interactive healthcare experience. At the same time, these advances may help employees become savvier users of healthcare, helping simplify and personalize their journey toward health and, in the process, help curb costs for employers.

The revolution can be important to remember during open enrollment, which occurs during the fall when millions of Americans select or switch their health benefits for 2019. With that in mind, here are five tips employers should be aware of during open enrollment and year-round.

Make sense of big data

Big data is a buzzword, but the applications are only meaningful if employers can make sense of that information. To help with that, employers are gaining access to online resources to help enable them to more easily analyze and make sense of health data, taking into account aggregate medical and prescription claims, demographics, and clinical and well-being information. This can provide an analytics-driven roadmap to help employers implement tailored clinical management and employee engagement programs, which may help improve health outcomes, mitigate expenses and help employees take charge of their health.

Help people understand their options

More than three-quarters (77%) of employees say they are prepared for open enrollment, yet most people struggle to understand basic health insurance terms, according to a recent healthcare benefits company's survey. In fact, only 6% of survey respondents could successfully define all four basic health insurance concepts: plan premium, deductible, co-insurance and out-of-pocket maximum. To support employees during open enrollment, employers can adopt online platforms designed to personalize and simplify the experience to help people select a health plan based on their personal health and financial preferences while encouraging them to select a primary care physician and enroll in programs such as smoking cessation or weight loss.

Encourage your people to move more

An estimated 35% of employers now integrate wearable devices into their wellbeing programs, helping employees more accurately understand their daily activity levels. As these programs become more common, there may be opportunities for cost savings for companies and their workforces. For instance, some wearable device wellness programs may enable people to earn more than $1,000 per year by meeting certain daily walking goals, while employers can achieve premium renewal discounts based on the aggregate walking results of their employees.

Offer incentives to employees who comparison shop for care

More than one-third (36%) of Americans say they have used the internet or mobile apps during the last year to comparison shop for healthcare, up from 14% in 2012, according to a healthcare benefits company's survey. To encourage employees to participate in this trend, some employers are offering financial incentives — such as $25 or $50 gift cards — to employees for using healthcare transparency resources. Healthcare quality and cost varies widely within a city or neighborhood, so encouraging the use of online and mobile transparency resources may yield savings for employers and employees.

Integrate medical and ancillary benefits

Open enrollment is also the time for people to select important ancillary benefits, such as vision and dental coverage. While some people may overlook these plans, offering this coverage as part of an employee’s menu of benefits options may maximize the effectiveness of a company’s healthcare dollars, provide families with added peace of mind and help build a culture of health. Combining medical and ancillary benefits under a single health plan may enable for the integrated analysis of a wide range of data that can facilitate proactive outreach and clinical support for employees, including for people with chronic conditions such as diabetes or to help prevent the development of such conditions.
SOURCE: Madsen, R. (12 October 2018) "5 ways employers can leverage tech during open enrollment" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/list/5-ways-employers-can-leverage-tech-during-open-enrollment

4 FAQs about 2019 Medicare rates

Medicare Part B premiums are expected to be held to roughly a 1.1 percent increase for most enrollees in 2019, according to Medicare managers. Continue reading for answers to the four most frequently asked questions about the 2019 Medicare rates.


Medicare managers announced last week that they will hold increases in Medicare Part B premiums to about 1.1 percent for most enrollees in 2019. For some high-income enrollees, however, premiums will rise 7.4 percent.

Medicare Part B is the component of the traditional Medicare program that covers physician services and hospital outpatient care.

Here’s a look at how the monthly Part B premiums will change, by annual income level:

  • Individuals earning less than $85,000, and couples earning less than $170,000:$135.50 in 2019, from $134 this year.
  • Individuals earnings $160,000 to $500,000, and couples earning $320,000 to $750,000: $433.40 in 2019, from $428.60 this year.
  • Individuals earning $500,000 or more, and couples earning $750,000 or more: $460.50 in 2019, from $428.60 this year.

The annual Medicare Part B deductible will increase by 1.1 percent, to $185.

Another component of the traditional Medicare program, Medicare Part A, covers inpatient hospital bills.

Medicare managers use payroll taxes to cover most of the cost of running the Medicare Part A program. Few Medicare Part A enrollees pay premiums for that coverage. But, for the enrollees who do have to pay premiums for Medicare Part A coverage, the full premium will increase 3.6 percent, to $437 per month.

The Medicare Part A deductible for inpatient hospital care will increase 1.8 percent, to $1,340.

Why are high earners paying so much more for Medicare Part B?

Congress has been increasing the share of Medicare costs that high earners pay in recent years.

For 2018, the top annual income category for Medicare Part B rate-setting purposes was for $160,000 and over for individuals, and for $320,000 and over for couples. Premiums from those Medicare Part B enrollees are supposed to cover 80 percent of their Part B claims.

In the Balanced Budget Act of 2018, Congress added a new annual income category: for individuals earning $500,000 or more and couples earning $750,000 or more. Premiums from Part B enrollees in that income category are supposed to cover 85 percent of those enrollees’ Part B claims.

Who do these rate increases actually affect?

Medicare now has about 60 million enrollees of all kinds, according to the CMS Medicare Enrollment Dashboard.

About 21 million are in Medicare Advantage plans and other plans with separate premium-setting processes.

About 38 million are in the traditional Medicare Part A, the Medicare Part B program, or both the Medicare Part A and the Medicare Part B programs. CMS refers to the traditional Medicare Part A-Medicare Part B program as Original Medicare. The rate increases have a direct effect on the Original Medicare enrollees’ costs.

How do the Medicare increases compare with the Social Security cost-of-living adjustment (COLA)?

The Social Security Administration recently announced that the 2019 Social Security COLA will be 2.8 percent.

That means the size of the COLA will be greater than the increase in Medicare premiums for all Medicare enrollees other than the highest-income Medicare Part B enrollees and the enrollees who pay the full cost of the Medicare Part A premiums.

Why should financial professionals care about Original Medicare premiums?

For consumers who already have traditional Medicare coverage, the Part A and Part B premiums may affect how much they have to spend on other insurance products and related products, such as Medicare supplement insurance coverage.

For retirement income planning clients, Medicare costs are something to factor into income needs calculations.

Because access to Medicare coverage is critical to all but the very wealthiest retirees, knowledge about how to get and keep eligibility for Medicare coverage on the most favorable possible terms is of keen interest to many consumers ages 50 and older. Some consumers may like to get information about that topic from their insurance agents, financial planners and other advisors.

Resources

Officials at the Centers for Medicare and Medicaid Services, the agency that runs Medicare, are preparing to publish the official 2019 Medicare rate notices in the Federal Register on Wednesday. A preview copy of the Part A notice is available here, and a preview copy of the Part B notice is available here.

SOURCE: Bell, A. (16 October 2018) "4 FAQs about 2019 Medicare rates" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/10/16/medicare-posts-2019-rates-pinches-high-earners-412/


Compliance Recap - September 2018

September was a relatively busy month in the employee benefits world.

The Internal Revenue Service (IRS) released draft 2018 instructions for Forms 1094-B, 1095-B, 1094-C, and 1095-C. The IRS also issued an information letter regarding health flexible spending accounts and guidance on the employer credit for paid family and medical leave. The Congressional Research Service published its updated Federal Requirements for Private Health Insurance Plans.

UBA Updates

UBA released one new advisor: IRS Releases Draft Forms and Instructions for 2018 ACA Reporting

UBA updated existing guidance:

IRS Issues Draft 2018 Instructions for Forms 1094-B, 1095-B, 1094-C, and 1095-C

The Internal Revenue Service (IRS) recently released draft instructions for both the 1094-B and 1095-B and the 1094-C and 1095-C and the draft forms for 1094-B, 1095-B, 1094-C, and 1095-C. There are no substantive changes in the forms or instructions between 2017 and 2018, beyond the further removal of now-expired forms of transition relief. There is a minor formatting change to draft Forms 1095-B and 1095-C for 2018. There are dividers for the entry of an individual’s first name, middle name, and last name.

In past years, the IRS provided relief to employers who made a good faith effort to comply with the information reporting requirements and determined that they would not be subject to penalties for failure to correctly or completely file. This did not apply to employers that failed to timely file or furnish a statement.

For 2018, the IRS has stated that it does not anticipate extending the “good faith compliance efforts” relief relating to reporting requirements. Employers should be ready to fully meet the reporting requirements in early 2019 with a high degree of accuracy. There is however relief for de minimis errors on Line 15 of the 1095-C.

Read more about the draft ACA reporting forms and instructions.

IRS Issues Information Letter Regarding Health FSAs

The Internal Revenue Service (IRS) issued Information Letter 2018-0012 to reiterate that employers can include a provision in a heath flexible spending arrangement (FSA) that allows up to $500 in unused amounts at the end of the plan year to be carried over to the next plan year. However, any carryover amount cannot be accumulated in the health FSA over several years.

The IRS also indicates that a health savings account (HSA) would allow unused amounts to be accumulated and used in any later year. Further, the IRS indicates that a heath reimbursement arrangement (HRA) can be structured to allow for unused amounts to be accumulated and used for medical expenses in later years.

IRS Issues Guidance on Employer Credit for Paid Family and Medical Leave

The Internal Revenue Service (IRS) released Notice 2018-71 (Notice) that provides Q&A guidance on the Internal Revenue Code Section 45S employer credit for paid family and medical leave (FML). The IRS clarified several items in its guidance, including:

  • An employer does not need to be subject to Title I of the Family and Medical Leave Act of 1993 (FMLA) to be eligible for the employer credit for FML
  • A description of what the employer’s written policy must contain, including sample “non-interference” language
  • Under Section 45S, paid leave is considered FML only if the leave is specifically designated for one or more FMLA purposes, may not be used for any other reason, and is not paid by a state or local government or required by state or local law
  • An employee does not need to work a minimum number of hours per year to be a qualifying employee
  • Each member of a controlled group generally makes a separate election of whether to claim the credit
  • An employer must file IRS Form 8994, Employer Credit for Paid Family and Medical Leave, and IRS Form 3800, General Business Credit, with its tax return to claim the credit

Read more about the IRS’ Q&A guidance.

CRS Publishes Updated Federal Requirements on Private Health Insurance Plans

The Congressional Research Service (CRS) published its updated Federal Requirements on Private Health Insurance Plans which summarizes federal requirements that apply to the private health insurance market, including a table that indicates whether a particular federal requirement applies to a fully-insured large group plan, fully-insured small group plan, self-funded plan, or individual coverage.

Question of the Month

Q. We recently received a medical loss ratio (MLR) rebate. How should the money be distributed?

A. If the plan document states how a rebate should be used, then the plan administrator should follow the plan document’s terms.

If the plan document is silent on how the rebate should be distributed, then the following general principles apply.

How should the rebate be divided?

Assuming both the employer and employees contribute to the cost of coverage, the rebate should be divided between the employer and the employees, based on the employer’s and employees’ relative share. Employers may divide the rebate in any reasonable manner – for example, the rebate could be divided evenly among the employees who receive it, or it may be divided based on the employee’s contribution for the level of coverage elected.

Employers are not required to precisely determine each employee’s share of the rebate, and so do not need to perform special calculations for employees who only participated for part of the year, moved between tiers, etc.

Using the example that the rebates are based on premiums paid to the carrier for calendar year 2017, the employer may pay the rebate only to employees who participated in the plan in 2017 and are still participating, only to current participants (even though the rebate relates to 2017), or to those who participated in 2017, regardless whether they are currently participating.

Insurers must send a notice to all employees who participated in the plan in 2017 stating that a rebate has been issued to the employer, so employers who choose to limit rebate payments to those who are currently participating should be prepared to explain why the rebate is only being paid to current participants. This might include the fact that since the rebate would be taxable income, the amount involved does not justify the administrative cost to locate former participants and issue a check.

Are former plan participants entitled to a share of the rebate?

Whether former participants should be included in any rebate allocations depends on the type of plan involved. For ERISA plans, there is no requirement that former participants be included or excluded. However, the Department of Labor’s (DOL) Technical Release, in discussing fiduciary decisions regarding distribution of rebates, states that if a fiduciary determines that the cost of including former participants in a rebate distribution approximates the amount of the rebate, the fiduciary may properly decide to allocate the rebate only to current participants. This means that plan fiduciaries should consider whether to include former participants and should make a prudent decision based on all of the facts and circumstances.

For non-federal governmental plans, the interim final regulations specifically require any portion of a rebate that is based on former participants’ contributions to be aggregated and used for the benefit of current participants.

For nongovernmental, non-ERISA plans, the interim final regulations provide that if the rebate is paid to the policyholder (which is only permissible if the policyholder has given the insurer written assurance that meets the requirements of the regulations), the policyholder must allocate the rebate to current participants only, in the same way as a non-federal governmental plan. If the rebate is paid directly to participants by the insurer (because the policyholder has declined to provide a written assurance), the insurer must distribute the rebate equally among those who were participants during the MLR reporting year on which the rebate is based.

How may the employer use the rebate?

The employer may pay the rebate in cash, use it for a premium holiday, or use it for benefit enhancements. The rebate must be applied or distributed within 90 days after it is received.

A cash rebate is taxable income to the employee if it was paid with pre-tax dollars.

A premium holiday should be completed within 90 days after the rebate is received (or the rebate needs to be deposited into a trust).

Benefit enhancements include reduced copays or deductibles (which may not be practical due to the timing requirements) or wellness-type benefits that the employer would not have offered without the rebate, such as free flu shots, a health fair, a lunch and learn on nutrition or stress reduction, or a nurse line.

How should the rebate be provided?

The employer should consider the practical aspects of providing a rebate in a particular form.

Generally, the larger the amount that would be due to an individual, the more effort the employer should make to directly benefit the person (either through a cash rebate or premium holiday). While benefit enhancements are permissible, a large rebate should be used to provide a direct benefit enhancement, such as a reduced co-pay, and not for a general benefit, such as flu shots.

The agencies have not provided any details as to what amount is so small that it does not need to be returned to the employee. (Insurers are not required to issue a rebate check to individuals if the amount is less than $5.00.) A cash rebate is taxable income if the premium was paid with pre-tax dollars, so issuing a check that is very small after taxes should not be necessary. If an employer knows it costs $2.00 to issue a check, issuing a rebate check for $1.00 should not be necessary. However, an employer cannot simply keep the rebate if it determines that cash refunds are not practical – it will need to use the employee share of the rebate to provide a benefit enhancement or premium reduction.

*This information is general and is provided for educational purposes only. It is not intended to provide legal advice.
You should not act on this information without consulting legal counsel or other knowledgeable advisors.


8 keys to developing a successful return to work program

At some point organizations will deal with employees going on leave for various reasons. Successful return to work programs help injured or disabled employees maintain their productivity while they are recovering. Read on to learn more.


No matter the size of your organization, there’s about a 99% chance at some point dealing with employees going on leave. Most HR professionals are well-versed on the logistics of what to do when an employee is on short- or long-term disability — but what sort of culture do you have in place that encourages and supports them with a return to work (RTW)? Developing a positive and open RTW culture benefits not only the organization but the employee and their teams as well.

An effective RTW program helps an injured or disabled employee maintain productivity while recuperating, protecting their earning power and boosting an organization’s output. There also are more intangible benefits including the mental health of the employee (helping them feel valued), and the perception by other team members that the organization values everyone’s work.

See also: Center Stage…Do You Have an Employer Return to Work Program?

Some other benefits of an RTW program can include improvement of short-term disability claims, improvement of compliance and reduction of employer costs (replacing a team member can cost anywhere from half to twice that employee’s salary, so doing everything you can to keep them is a wise investment).

Some of these may seem like common sense, but I’m continually surprised how many (even large) organizations don’t have an established RTW program. Here are eight critical elements of a successful program.

1. Support from company leadership.

No change will occur if you don’t have buy-in and support at the top. Make the case for a defined RTW program and explain the key benefits to leadership. Know what’s driving your existing absences: Is it musculoskeletal or circulatory? What’s the average length of absence? How many transition from STD to LTD? Come in with some of this baseline data and make the case for an RTW program. Having a return to work champion on the senior leadership team is essential to the program’s success.

2. Have a written policy and process.

There are many considerations when developing an RTW program including how it’s being administered, how employees learn more and engage with HR once out, and when they need to notify the company. Unless you have these policies in place, nobody will be held accountable. This also is an important time to bring in your legal consultation to assure you’re compliant with current company policies and municipal, state and federal laws.

3. Establish a return to work culture.

Once you have leadership support, make your RTW program just like any other championed within the organization. Develop clear messaging about what it means to employees, how they can get more information when they need it, steps for engaging with an RTW specialist and other key advantages. Then, disseminate this information through all appropriate channels including e-newsletters, intranet, brochures, posters and meetings.

4. Train your team members.

Educate managers on why an RTW program is important, why they should get behind it, how it impacts the organization, and what it means for both them and the returning employee. This training can be built into your onboarding process so that all new employees are made aware at day one. Having core messaging about the program and clear policies and procedures will assure everyone is singing from the same hymnbook.

5. Establish an RTW coordinator.

Depending on the size of your organization, this may be a part-time or full-time role. It’s essentially establishing someone as the day-to-day owner of work and could be a nurse, benefits coordinator or someone from your HR team. This person will need to work with various department managers (some who may at times be difficult) to define RTW roles, track compliance and measure success.

6. Create detailed job descriptions.

It’s important to have functional job descriptions for all employees which include physical requirements and essential duties. Often, when employees have an RTW, there are specific lifting, sitting or standing requirements. These are all compliance issues that the EEOC will pay close attention to.

7. Create modified duty options.

Some of the strongest pushback I get is from managers who claim there’s no way to modify an employee’s duties. However, when asked about back-burner projects they haven’t gotten to, the same manager will quickly come back with 5-10 tasks. Often, it’s a combination of that employee’s existing duties and some of these special projects which make a perfectly modified list of responsibilities.

8. Establish evaluation metrics.

Senior leaders love metrics, so if you can benchmark on the front end how many people are out and what that equates to in lost time/productivity, you can easily begin to evaluate what having an RTW program brings to the organization. Make your RTW coordinator responsible for tracking this information and share it with not only senior leadership but also managers and even team members. This will help reinforce the importance of the program to everyone.
SOURCE: Ledford, M. (2 October 2018) "8 keys to developing a successful return to work program" (Web Blog Post). Retrieved from https://www.benefitnews.com/list/8-keys-to-developing-a-successful-return-to-work-program

Ready for the sounds of office sniffles?

It can take someone up to 10 days to recover from the common cold. According to a new study by a law firm, Farah and Farah, just 18 percent of full-time workers get enough sick days, between 11 to 15 days, to recover from a cold. Read on to learn more.


It’s not just a matter of whether they feel well enough to work, or whether they have sick days. The boss’s attitude about whether workers should take sick days or not can determine whether they actually do stay home when they’re sick, or instead come to work to spread their germs to all and sundry.

A new study from law firm Farah & Farah finds that even though it can take a person some 10 days to fully recover from a cold, approximately 10 percent of full-time workers in the U.S. get no sick days at all (part-timers don’t usually get them either), while more than 1 in 4 have to make do with between 1 and 5 sick days. Just 18 percent get enough sick time to actually recover from that cold—between 11 and 15 days.

The amount (or presence) of sick time varies from industry to industry, with government and public administration providing the most (an average of 12.1) and both hotel, food services and hospitality and manufacturing providing the least (an average of 5.4 for the hospitality industry and 5.1 for manufacturing). Some lucky souls actually get unlimited sick days, although even then they don’t always use them.

Regardless of industry, or quantity, just because workers get sick days it doesn’t mean they use them. Workers often worry that they’ll be discouraged from using them, with employers who may provide them but not encourage employees to stay home when ill. In fact, 38 percent of workers show up to work whether they’re contagious or not. Sadly for the people they encounter at work, the most likely to do so are in hospitality, medical and healthcare and transportation. Plenty of germ-spreading to be done in those professions!

 

And their employers’ attitudes play a role in how satisfied they are with their jobs. Among those who work for the 34 percent of bosses who encourage sick employees to stay home, 43 percent said they’re satisfied with their jobs in general. Among those who work for the 47 percent of bosses who are neutral about the use of sick days, that drops to 21 percent—and among the unfortunate workers who work for the 19 percent of bosses who actually discourage workers from staying home while ill, just 12 percent were satisfied with their jobs.

When it comes to mental health days (no, not that kind; the ones people really need to deal with diagnosed mental health conditions), fewer than 1 in 10 men and women were willing to call in sick. Taking “mental health days” when physically healthy, however, either to play hooky or simply have a vacation from the office, is something that 15 percent of respondents admitted to.

SOURCE: Satter, M (5 October 2018) "Ready for the sounds of office sniffles?" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/10/05/ready-for-the-sounds-of-office-sniffles/

Original report retrieved from https://farahandfarah.com/studies/sick-days-in-america


5 reasons to offer a student loan repayment benefit in 2019

By the first quarter of 2018, 44 million Americans owed $1.5 trillion in student loan debt. According to the Federal Reserve, this debt surpassed both credit card and auto loan debt. Read on to learn five reasons businesses should offer a student loan repayment benefit in 2019.


With human resources managers across the country working to finalize their 2019 benefits packages this month, many are asking themselves: How can we add more value for our talent and help the company grow? For many employers, the answer is helping employees manage their student loan debt.

Over the years, student loan debt has reached an astronomical sum. As of 2008, college tuition fees rose by 439% from 1982. And by the first quarter of 2018, 44 million Americans owed a total of $1.5 trillion in student loan debt, exceeding both credit card debt and auto loan debt, according to the Federal Reserve. Not only is this an extreme amount of debt, but has also taken an enormous emotional toll, with more than half of college-educated adults (54%) surveyed by Laurel Road in 2018 feeling that they will never make enough money to reach their financial goals.

Fast forward to today, and borrowers are seeking creative ways to tackle their debt and save more. Recently, in a private ruling, the IRS granted Abbott Laboratories, a national healthcare company, the option to contribute to employee 401(k) plans based on the employee’s student loan payments. Other companies — from corporate behemoths to busy startups — have partnered with student loan refinancing companies to offer employees refinancing options that can help them save, often at no cost to the company.

With Americans quitting their jobs at the fastest rate since 2001, keeping employees happy is imperative. And part of keeping millennials happy is to provide practical benefits, not just the fun perks. Employees are looking to foster meaningful relationships with their employers — so looping in student loan repayment benefits can pay off for both the employer and the employee.

So what’s to gain? Here are some of the top reasons employers should consider incorporating student loan repayment benefits into their 2019 benefits package.

1. Recruit, retain and stand out

In a competitive talent landscape, student loan debt relief is a modern benefit that any company can offer to incentivize the younger generation to join their team. In a recent survey conducted by Laurel Road, we found that 58% of millennials would trade an additional vacation day for student loan repayment assistance, showing how valuable meaningful benefits are to this generation. This benefit can be a deciding factor for talent, and a way for employers to attract top-performing talent by offering to support their financial futures.

2. It’s flexible and free

As an employer, you have options to create a student loan program that works for your team’s needs and the company’s bottom line. A lot of this comes from choosing the right lending or refinancing partner that can provide savings to employees. Lenders can offer companies the option to contribute or not and work to tailor the program to the specific needs and interests of the company’s workforce — with some options coming in at no cost to the employer.

3. Eliminate the student loan vs. retirement conflict

Employees with student debt often feel deeply conflicted about whether or not to save for retirement first or pay off their student loan debt. A recent study from Boston College’s Center for Retirement Research found that college graduates with student debt accumulate 50% less retirement wealth in their 401(k) by age 30 than those without. Employees shouldn’t have to choose between contributing to retirement and paying off their student loan debt, as both are necessary to financial health. The student loan relief benefit allows employees to make a dent in both, reducing financial stress.

4. Help employees save

One of the reasons why the student loan benefit is attractive for employees is the significant savings it can lead to. If refinancing is an option, employees have the potential to save thousands of dollars over the life of their loan through a lower loan interest rate and lower monthly payments.

In the long run, the cumulative savings can add up to several thousand dollars or more. Employers should keep in mind that the savings amount will change depending on the financing company you choose to work with. Many can offer employer customers exclusive rates, which leads to even greater savings.

5. Boost morale and productivity

According to another benefits company, 31% of employees surveyed say their money concerns affect their work. Meanwhile, 74% of people feel stress daily about their student loan debt and spend time at work thinking about it, impacting their overall productivity in the workplace. So in addition to the hard savings employees are earning through these programs, they are also rewarded with the soft benefits of reduced stress and anxiety at work.

With student loan debt reaching record highs in recent years, employers have recognized that there’s a crucial need to provide employees with options to help them pay down their student loan debt. And when options like refinancing come at no cost to them, this benefit will likely become more popular. In the future, we can expect more employers to pave the way for student loan repayment programs. Will you be one of the trailblazers?

SOURCE: Schaefer, A. (28 September 2018) "5 reasons to offer a student loan repayment benefit in 2019" (Web Blog Post). Retrieved from https://www.benefitnews.com/list/5-reasons-to-offer-a-student-loan-repayment-benefit-in-2019?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001

U.S. Unemployment Drops to Lowest Rate in 50 Years

The U.S. unemployment rate fell to 3.7 percent in September, the lowest it’s been in 50 years. Read this blog post to learn how this is affecting the U.S. labor market.


Unemployment in the U.S. fell to 3.7 percent in September—the lowest since 1969, according to the Bureau of Labor Statistics (BLS).

The low jobless rate, down from 3.9 percent in August, is further evidence of a strong economy—employers added 134,000 new jobs in September, extending the longest continuous jobs expansion on record at 96 months. The continued gains run counter to economists' expectations for a significant slowdown in hiring as the labor market tightens. Through the first nine months of the year, employers added an average of 211,000 workers to payrolls each month, well outpacing 2017's average monthly growth of 182,000.

"This morning's jobs report marked a new milestone for the U.S. economy," said Andrew Chamberlain, chief economist at Glassdoor. "With good news in most economic indicators today, it's likely the economy will continue its march forward through the remainder of 2018."

Cathy Barrera, chief economist at online employment marketplace ZipRecruiter, pointed out that the jobless rate ticked down for all education levels. "Anecdotal evidence has suggested that employers have experienced labor shortages for entry-level positions, and the decline in unemployment for these groups reflects that," she said. "More of those joining or rejoining the labor force are moving directly into jobs, reflecting the high demand for workers."

The sectors showing the strongest jobs gains in September include:

  • Professional and business services (54,000 new jobs).
  • Healthcare (26,000).
  • Transportation and warehousing (24,000).
  • Construction (23,000).
  • Manufacturing (18,000).

"Retail job losses—20,000 jobs—were widespread, and the leisure and hospitality sector lost 17,000 jobs, largely confined to restaurants," said Josh Wright, chief economist for recruitment software firm iCIMS, based in Holmdel, N.J.

"We can clearly point to a slowdown in retail trade for the dip in [overall] payroll numbers in September," said Martha Gimbel, research director for Indeed's Hiring Lab, the labor market research arm of the global job search engine. "Retail trade had a strong first half of the year but has slowed down in recent months. In addition, recent Hiring Lab research saw a slight dip in the number of holiday retail postings, suggesting that the sector may struggle in months to come."

Prior to September, employment in leisure and hospitality had been on a modest upward trend and the losses last month may reflect the impact of Hurricane Florence.

The Department of Labor said it's possible that employment in some industries was affected by Hurricane Florence which struck the Carolinas in September. Nearly 300,000 workers nationwide told the BLS that bad weather kept them away from their jobs last month.

"That's far below the level in September 2017 amid hurricanes Harvey and Irma, but significantly above the average of about 200,000 over the prior 13 years," Wright said. Upward revisions are likely, he added.

Wages Stubborn but Rising

In September, average hourly earnings for private-sector workers rose 8 cents to $27.24. Over the year, average hourly earnings have increased by 73 cents, or 2.8 percent.

"That's down slightly from the 2.9 percent pace last month, but consistent with a steady upward trend in wage growth we've seen as the job market tightens and more employers face labor shortages," Chamberlain said. "We expect to see that pace continue to rise throughout the holiday season, likely topping 3 percent within the next six months."

Glassdoor has recorded strong wage growth in tech-heavy metropolitan areas such as San Francisco, New York and Los Angeles.

"If the true wage growth rate is at or below 2.8 percent year-over-year, it is disappointing that it is not growing faster," Barrera said. "Given how tight the labor market has been not only with overall unemployment below 4 percent, but particularly so at the entry level, we would expect wage growth to be higher. The labor turnover numbers suggest that mobility is lower than it historically has been in periods where unemployment is very low. This is one reason wages may not be rising as quickly as we'd expect."

Labor Force Participation Stalled?

The nation's labor force participation rate held at 62.7 percent.

"Looking at the labor flows data, the rate of movement of the civilian population into the labor force hasn't moved much in the last couple of years, however, more of those folks are moving directly into employment rather than into unemployment," Barrera said.

Wright noted that the number of new labor force entrants and reentrants going directly to unemployment was just 33,000. "This raises interesting questions—whenever we get a recession, how long will these reentrants and new entrants continue searching for jobs before leaving the labor force?" he asked.

The percentage of the population in their prime working years with a job also held around 79 percent, where it's been for about eight months, Gimbel said, adding that the measure suggests that the number of workers remaining to pull into the labor force may be exhausted.

"The share of the labor force working part-time but who wants a full-time job unfortunately ticked up," she said. "Any remaining slack in the economy may be concentrated in part-time workers who want more hours."

SOURCE: Maurer, R. (5 October 2018) "U.S. Unemployment Drops to Lowest Rate in 50 Years" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/us-unemployment-drops-lowest-50-years-bls-jobs.aspx/