HSAs vs. HRAs: Things Employers Should Consider

Great article from our partner, United Benefit Advisors (UBA) by Bob Bentley on what employers should know about choosing between HSAs and HRAs.

With health care costs and insurance premiums continuing to rise, employers are looking for ways to reduce their insurance expenses. That usually means increasing medical plan deductibles. According to the latest UBA Health Plan Survey, the average in-network single medical plan deductible increased from $2,031 in 2015 to $2,127 in 2016. But shifting costs to employees can be detrimental to an employer’s efforts to attract and retain top talent. Employers are looking for solutions that reduce their costs while minimizing the impact on employees.

One way employers can mitigate increasing deductibles is by packaging a high-deductible health plan with either a health savings account (HSA) contribution or a health reimbursement arrangement (HRA). Either can be used to bridge some or all of the gap between a lower deductible and a higher deductible while reducing insurance premiums, and both offer tax benefits for employers and employees. However, there are advantages and disadvantages to each approach that employers need to consider.

Health Savings Account (HSA) General Attributes

  • The employee owns the account and can take it when changing jobs.
  • HSA contributions can be made by the employer or employee, subject to a maximum contribution established by the government.
  • Triple tax advantage – funds go in tax-free, accounts grow tax-free, and withdrawals are tax-free as long as they are for qualified expenses (see IRS publication 502).
  • Funds may accumulate for years and be used during retirement.
  • The HSA must be paired with an IRS qualified high-deductible health plan (QHDHP); not just any plan with a deductible of $1,300 or more will qualify.

HSA Advantages

  • Costs are more predictable as they are not related to actual expenses, which can vary from year to year; contributions may also be spread out through the year to improve cash flow.
  • Employees become better consumers since there is an incentive to not spend the money and let it accumulate. This can result in an immediate reduction in claims costs for a self-funded plan.
  • HSAs can be set up with fewer administration costs; usually no administrator is needed, and no ERISA summary plan description (SPD) is needed.
  • The employer is not held responsible by the IRS for ensuring that the employee is eligible and that the contribution maximums are not exceeded.

HSA Disadvantages

  • Employees cannot participate if they’re also covered under a non-qualified health plan, which includes Tricare, Medicare, or even a spouse’s flexible spending account (FSA).
  • Employees accustomed to copays for office visits or prescriptions may be unhappy with the benefits of the QHDHP.
  • IRS rules can be confusing; IRS penalties may apply if the employee is ineligible for a contribution or other mistakes are made, which might intimidate employees.
  • Employees may forgo treatment to avoid spending their HSA balance or if they have no HSA funds available.

Health Reimbursement Arrangement (HRA) General Attributes

  • Only an employer can contribute to an HRA; employees cannot.
  • The employer controls the cash until a claim is filed by the employee for reimbursement.
  • HRA contributions are tax deductible to the employer and tax-free to the employee.
  • To comply with the Patient Protection and Affordable Care Act (ACA), an HRA must be combined with a group medical insurance plan that meets ACA requirements.

HRA Advantages

  • HRAs offer more employer control and flexibility on the design of the HRA and the health plan does not need to be HSA qualified.
  • The employer can set it up as “use it or lose it” each year, thus reducing funding costs.
  • An HRA is compatible with an FSA (not just limited-purpose FSA).
  • Depending on the employer group, HRAs can sometimes be less confusing for employees, particularly if the plan design is simple.
  • HRA funds revert to the employer when an employee leaves – which might increase employee retention.

HRA Disadvantages

  • Self-employed individuals cannot participate in HRA funding.
  • There is little or no incentive for employees to control utilization since funds may not accumulate from year to year.
  • More administration may be necessary – HRAs are subject to ERISA and COBRA laws.
  • HRAs could raise HIPAA privacy concerns and create the need for policies and testing.

Both HSAs and HRAs can be of tremendous value to employers and employees. As shown, there are, however, a number of considerations to determine the best program and design for each situation. In some cases, employers may consider offering both, allowing employees to choose between an HSA contribution and a comparable HRA contribution, according to their individual circumstances.

For a comprehensive chart that compares eligibility criteria, contribution rules, reimbursement rules, reporting requirements, privacy requirements, applicable fees, non-discrimination rules and other characteristics of account-based plans, request UBA’s Compliance Advisor,  “HRAs, HSAs, and Health FSAs – What’s the Difference?”.

For information on modest contribution strategies that are still driving enrollment in HSA and HRA plans, read our breaking news release.

For a detailed look at the prevalence and enrollment rates among HSA and HRA plans by industry, region and group size, view UBA’s "Special Report: How Health Savings Accounts Measure Up", to understand which aspects of these accounts are most successful, and least successful.

See the original article Here.

Source:

Bentley B. (2017 May 12). HSAs vs. HRAs: things employers should consider[Web blog post]. Retrieved from address http://blog.ubabenefits.com/hsas-vs.-hras-things-employers-should-consider


Employees Look to Employers for Financial Stability

Do your employees depend on their pay and benefits for their financial security? Find out in this great article by Nick Otto from Employee Benefit News on what employees depend on from their employers to support their financial well-being.

As the American dream of financial security continues to slip out of reach for many U.S. workers, employers — seen as trusted partners by employees — will need to step up to restore faith in retirement readiness.

Only 22% of individuals described themselves as feeling financially secure, Prudential says in its new research paper, and there is growing acceptance among employers that there is significant value in improving employees’ financial wellness.

Aspirations are modest, says Clint Key, a research officer in financial security and mobility at The Pew Charitable Trusts. Between economic mobility or financial stability, an overwhelming 92% of workers say they want stability.

“Four in 10 don’t have the resources to pay for a $2,000 expense,” he said Tuesday, at a joint financial wellness roundtable sponsored by Prudential Financial and the Aspen Institute in Washington, D.C. More alarmingly, employees don’t have the income to last a month if they were to lose their job.

Still, Key adds, it isn’t so much the number of dollars in the bank, but the peace of minds that savings buy them.

And employers are feeling the repercussions of the growing stressors in the workplace.

“People who are stressed about finances are five times more likely to take time off from work to deal with personal finances,” added Diane Winland, a manager with PricewaterhouseCoopers. “Three to four hours every week go to handling personal finances, and these employees are more likely to call out sick from work.”

The security levers once in place, such as home equity, are going away and it’s becoming much more difficult for workers to handle a financial emergency, she added.

The good news, however, is employers get it, she said. “They understand employee financial wellness is tied to the bottom line and it behooves them to invest in their employees,” said Winland. “The conundrum is how to deploy and what to deploy in their programs. Is it counseling? Coaching? Is it a new snazzy app that comes out. The key is there is no silver bullet.”

So, what is there to do?

Each employer has a unique business model and employee base, and, therefore, faces different challenges when implementing a financial wellness approach, Prudential’s paper notes. “Employers should design financial wellness programs that are informed by insights into the unique financial needs of their employees, successfully educate and engage employees, and help employees take concrete actions to improve their financial health. We encourage employers to discuss financial wellness with their benefit consultants or advisers.”

And, added Robert Levy, managing director at the Center for Financial Services Innovation, just talk to your employees. “They’re open to discussing their financial challenges,” he said, and employers can engage these conversations through numerous ways: surveys, one-on-one talks, focus groups.

Prudential stepping up

To try to change the current unease in financial security, Prudential Tuesday also announced its expansion of worksite tools for employers to enable them to analyze the financial needs of their workforce and offer the employees a personalized interactive experience that includes videos, tools, webinars and articles that empower them to manage their financial challenges.

In addition, Prudential has launched a $5 million, three-year program in partnership with the Aspen Institute — a Washington, D.C.-based, non-partisan educational and policy studies organization — to promote employees’ financial security.

“The investment highlights the need to increase the national discourse about greater economic access for employees as they bear increasing risk and responsibility for their short-term and long-term financial security,” said Prudential.

See the original article Here.

Source:

Otto N. (2017 May 18). employees look to employers for financial stability [Web blog post]. Retrieved from address https://www.benefitnews.com/news/employees-look-to-employers-for-financial-stability


HSAs and Employer Responsibilities

Do you know all the responsibilities an employer will face when dealing with HSAs? If not, take a look at this great article from our partner, United Benefit Advisors (UBA) by Vicki Randall and find out about all the HSA responsibilities facing employers.

It’s no secret that one of the primary agenda items of the new Republican administration is to repeal the Patient Protection and Affordable Care Act (ACA) and to sign into law a plan that they feel will be more effective in managing health care costs. Their initial attempt at a new plan, called the American Health Care Act (AHCA), included an increased focus on leveraging health savings accounts (HSAs) to accomplish this goal. As the plan gets debated and modified in Congress, we do not know whether the role of HSAs will be expanded or not, but they will continue to be a part of the landscape in some shape or form.

HSAs first came into existence in 2003 and they have been gaining momentum as a way to deal with increasing health care costs ever since. If you, as a plan sponsor, do not already offer a health plan compatible with an HSA, chances are you’ve at least discussed them during your annual plan reviews. So, what exactly is an HSA and what is an employer’s responsibility relating to one?

An HSA is a tax-favored account established by an individual to pay for certain medical expenses incurred by account holders and their spouses and tax dependents. Anyone can make a contribution to an eligible Individual’s HSA. This includes the individual’s employer. However, if employers contribute to participant HSAs, employers must:

  1. Ensure their health plan meets high-deductible health plan (HDHP) requirements,
  2. Determine eligibility,
  3. Establish contribution method,
  4. Provide W-2 reporting, and
  5. Confirm employer involvement in the HSA does not create an ERISA plan, or cause a prohibited transaction.

High-Deductible Health Plan Requirements

Plan sponsors should make sure their plan meets certain HDHP requirements before making contributions to participants’ HSAs.

Characteristics of an HDHP

An HDHP is a health plan that has statutorily prescribed minimum deductible and maximum out-of-pocket limits. The limits are adjusted annually for inflation.

For example, for 2017, the limits for self-only coverage are:

  • Minimum Deductible: $1,300
  • Maximum Out-of-Pocket: $6,550

The limits for family coverage (i.e., any coverage other than self-only coverage) are twice the applicable amounts for self-only coverage. The limits are adjusted annually for inflation and, for a given year, are published by the IRS no later than June 1 of the preceding year. In addition, an HDHP cannot pay any benefits until the deductible is met. The only exception to this rule is benefits for preventive care.

Eligibility

Eligible Individuals can make or receive contributions to their HSAs. A person is an eligible individual if he or she is covered by an HDHP and is not covered by any other plan that pays medical benefits, subject to certain exceptions.

Employer Contribution Methods

Employers that contribute to the HSAs of their employees may do so inside or outside of a cafeteria (Section 125) plan. The contribution rules are different for each option.

Contributions Outside of a Cafeteria Plan

When contributing to any employee’s HSA outside of a cafeteria plan, an employer must make comparable contributions to the HSAs of all comparable participating employees.

Contributions Made Through a Cafeteria Plan

HSA contributions made through a cafeteria plan do not have to satisfy the comparability rules, but are subject to the Section 125 non-discrimination rules for cafeteria plans. HSA employer contributions will be treated as being made through a cafeteria plan if the cafeteria plan permits employees to make pre-tax salary reduction contributions.

Employer HSA Contribution Amounts

Contributions from all sources cannot exceed certain annual limits prescribed by the IRS. Although employer contributions cannot exceed the applicable limits, employers are only responsible for determining the following with respect to an employee’s eligibility and maximum annual contribution limit on HSA contributions:

  • Whether the employee is covered under an HDHP or low-deductible health plan, or plans (including health flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) sponsored by that employer; and
  • The employee’s age (for catch-up contributions). The employer may rely on the employee’s representation as to his or her date of birth.

When employers contribute to the HSAs of their employees and retirees, the amount of the contribution is excludable from the eligible individual’s income and is deductible by the employer provided they do not exceed the applicable limit. Withholding for income tax, FICA, FUTA, or RRTA taxes is not required if, at the time of the contribution, the employer reasonably believes that contribution will be excludable from the employee’s income.

Employer Reporting Requirements

An employer must report the amount of its contribution to an employee’s HSA in Box 12 of the employee’s W-2 using code W.

Design and Operational Considerations

Employers should make sure that their involvement in the HSA does not create an ERISA plan, or cause them to become involved in a prohibited transaction. To ensure that contributions will not cause the health plan to become subject to ERISA, certain restrictions exist that employers should be aware of and follow. Employer contributions to an HSA will not cause the employer to have established a health plan subject to ERISA provided:

  • The establishment of the HSA is completely voluntary on the part of the employees; and
  • The employer does not:
    • limit the ability of eligible individuals to move their funds to another HSA or impose conditions on utilization of HSA funds beyond those permitted under the code;
    • make or influence the investment decisions with respect to funds contributed to an HSA;
    • represent that the HSA is an employee welfare benefit plan established or maintained by the employer;
    • or receive any payment or compensation in connection with an HSA.

See the original article Here.

Source:

Randall V. (2017 May 25). HSAs and employer responsibilities [Web blog post]. Retrieved from address http://blog.ubabenefits.com/hsas-and-employer-responsibilities


CenterStage...The Experts Weigh In

5 Main Benefits of Self-Funding

Simply put, a Partially Self-Funded health plan is just an alternative, and often times more effective way of financing your employer sponsored health plan. Outside of “How does it work?” the questions that are most frequently asked are regarding the risks involved with this strategy and limiting the employer’s exposure. It was once thought that partially self-funding your health plan was reserved for only large employers. Employee Benefit Research Institute (EBRI.org) reported that in 2015 there was a 36.8% increase in private sector employers moving to partially self-funding. We don’t see the use of this strategy slowing down any time soon. It’s all about building the self-funded plan the right way in order to reduce the risk, while at the same time creating opportunity for savings.

A well designed self-funded plan built by a knowledgeable advisor will result in healthier employees and money saved over time. The opportunity for nearly all size employers is substantial. Whether your company is large enough to be completely self-funded, or are mid-size and need stop loss, or are smaller and can take advantage of a level-funding type plan, there are self-funding opportunities for all size employers.

In this article, Scott Smeaton shares his insights on what makes self-funded plans beneficial and what Hierl can do to help.

Scott Smeaton, Executive Vice President

“My advice to anyone who is considering moving to a self funded plan from a traditionally funded plan is that it’s not a one year strategy,” said Scott Smeaton, Executive Vice President of Hierl. “Take the time to find a knowledgeable advisor who will help you understand the risks and opportunities with self-funding, and commit to it for at least three years."

1. Financial Control

The most significant benefit of self-funding is the resulting increased financial control. Self-funded plans often times improve cash flow as funds that would otherwise be held by the insurance carrier for unreported or pending claims are free for use. With a self-funded plan, employers have access to detailed reports and documentation of how every health plan dollar is spent. “We’ve all heard the phrase, we can’t manage what we can’t measure”. Self-funded plans provide access to information that we otherwise would not have.

2. Lower Costs

While traditional fully insured plans allow for a guaranteed monthly cost, meaning the premium stays the same month to month, self-funded plans provide greater flexibility where you only pay for what you use. The disadvantage of a traditional plan is that in a year that the claims and administrative expenses are less than the premium an employer paid – none of that money will be refunded back.

With a partially self-funded plan, you will have administrative and stop loss insurance expenses that will be about 20% of your total budget. The other 80% is purely claims. If at the end of the year your claims were lower than expected, the employer realizes the savings. In a year when claims exceed what is expected, we have stop loss insurance to protect the employer and its employees.

“Wellness efforts and self-funded benefit plans can often work hand in hand in reducing your annual health plan costs,” explained Scott. “I often tell employers who are currently fully insured and have experienced low claims cost that if you believe you can have a positive impact on the health and wellbeing of your employees, then a self-funded plan will be perfect for you because you will be rewarded for wellness efforts and initiatives.”

3. Increased Flexibility

Self-funded plans provide employers the flexibility to design a health benefit plan that addresses specific employee needs as well as company objectives. When compared to traditional plans, self-funded plans allow you to choose your own partners and plan designs. Whether it’s the provider network, the prescription benefit manager, utilization management or centers of excellence manager, vendors can be hand selected from national provider networks to incorporate in the program.

A fully insured plan is required to meet state mandates, state premiums taxes, and ACA taxes among other expenses. Self-funded plans are not subject to the state mandates and either avoids or minimizes many of the taxes.

4. Control Over Plan Design

A downside of traditional plans is being required to select an off-the-shelf plan that your insurance carrier offers.

“One of the things we are doing with our self-funded plans is designing our plans in a way that drives employees to seek out the highest quality but lowest cost providers within their provider network. Provider discounts are great, but there’s even more savings to be gained by creating incentives to seek care from these highest quality, lowest cost providers within that network. Employees are beginning to understand the importance of being better healthcare consumers and it’s paying off. When this happens, it’s only in a self-funded environment that you see the maximum savings from these efforts,” said Scott.

5. Information Management

Self-funded plans provide convenient, secure access to all the necessary information needed to effectively manage plan structure. With a self-funded plan, you can:

  • Track and report data regularly: tracking data allows monthly or quarterly patterns to be detected and acted upon accordingly. Proactive data tracking helps employers stay on top of what is coming next.
  • Utilize predictive plan modeling: past and current claim data can be used to analyze risks and forecast costs allowing for spending waste to be eliminated.

How can Hierl help?

If an employer is moving to a self-funded plan for the first time, Hierl walks clients through a simple process beginning with a risk tolerance analysis to be sure that the plan design keeps the client within their comfort level. From there, Hierl assists with finding a product and design that meets a client’s specific needs. Whether this is a level-funded plan, a captive self-funded plan that limits exposure, or a stop-loss plan that will refund any excess premium at the end of the year, an expert will help determine the best plan for the employer and their employees.

Hierl’s Self-Funded Renewal 101

Here’s an example of the process Hierl guides fully insured clients through as they transition to selffunding. For more information or assistance reach out to an expert at Hierl today.

  • 9-6 months before renewal - Hierl walks clients through all the components of how self-funding works (Self-Funding 101).
  • 6-7 months before the renewal - Hierl facilitates interviews with TPA (Third Party Administrators) in order to select the TPA that best meets the client’s goals and objectives.
  • 5-6 months before renewal - Hierl provides benefit modeling to illustrate self-funding plan design and financial projections in order to compare it to the current fully insured plan.
  • 2-4 months before renewal – Implementation and enrollment is completed.

To download the full article click Here.


Millennials are Saving for 'Financial Freedom,' not Retirement

Did you know that more millennials are skipping saving money for their retirement? Take a look at this interesting article by Marlene Y. Satter from Benefits Pro on how millennials are focusing on saving for their lifestyles instead of retirement.

Well, at least millennials are saving.

According to the Spring Merrill Edge Report from Bank of America Merrill Edge, 63 percent of millennials are socking it away in the name of financial freedom: the amount of savings or income they need to live the lifestyle they want.

GenXers and boomers, on the other hand, are saving up to get out of the workplace—with 55 percent of them working toward that goal.

Younger people are apparently being driven by FOMO—or fear of missing out, with their top goals a dream job ((42 percent, compared with 23 percent of older workers) and traveling the world (37 percent, compared with 21 percent of older workers).

Millennials have also relegated marriage and parenting lower down on the priority list, with just 43 percent looking forward to wedding bells, compared with 51 percent.

Those aren’t the only things they’re focusing on. That FOMO mindset is also driving millennials to spend now on traveling (81 percent), dining out (65 percent) and exercising (55 percent). Interestingly, however, they’re still managing to save more than older generations, with 36 percent stashing more than 20 percent of their annual salary.

Of course, that doesn’t mean that everyone is doing a bang-up job of saving money; overall, 42 percent of respondents are saving less than 10 percent of their salary, and 7 percent don’t save at all.

And many lack confidence in being able to cope with “what-if” scenarios: 71 percent are not very confident they could hit financial goals in the event of a divorce (although just 5 percent are planning for the possibility), 64 percent don’t think raising a family goes hand in hand with financial success, and just 23 percent are saving for a family; and 48 percent are not very confident about achieving their goals if they outlived their significant other.

They’re apparently not all that sanguine about financial wisdom, either with 48 percent believing that financial education should be a requirement. Not a bad idea—particularly since 29 percent of respondents believe that, in the future, 401(k)s will not be the “gold standard” in retirement investing.

See the original article Here.

Source:

Satter M. (2017 May 19). Millennials are saving for " financial freedom" not retirement [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/05/19/millennials-are-saving-for-financial-freedom-not-r?ref=hp-top-stories


Helping Your Employees Protect Against Identity Theft

Are you doing enough to help your employees protect themselves from identity theft? Make sure to take a look at this article by Irene Saccoccio from SHRM on what employers can do to protect their employees from identity theft.

Social Security is committed to securing today and tomorrow for you and your employees. Protecting your identity and information is important to us. Security is part of our name and we take that seriously.

Identity theft is when someone steals your personally identifiable information (PII) and pretends to be you. It happens to millions of Americans every year. Once identity thieves have your personal information they can open bank or credit card accounts, file taxes, or make new purchases in your name. You can help prevent identity theft by:

  • Securing your Social Security card and not carrying it in your wallet;
  • Not responding to unsolicited requests for personal information (your name, birthdate, social security number, or bank account number) by phone, mail, or online;
  • Shredding mail containing PII instead of throwing it in the trash; and
  • Reviewing your receipts. Promptly compare receipts with account statements. Watch for unauthorized transactions.

It is important that your employees take the necessary steps to protect their Social Security number. Usually, just knowing the number is enough, so it is important not to carry your Social Security card or other documents unless they are needed for a specific purpose. If someone asks for your employees’ number, they should ask why, how it will be used, and what will happen if they refuse. When hired, your employees should provide you with the correct Social Security number to ensure their records and tax information are accurate.

If your employees suspect someone else is using their Social Security number, they should visit IdentityTheft.gov to report identity theft and get a recovery plan. IdentityTheft.gov guides them through every step of the recovery process. It’s a one-stop resource managed by the Federal Trade Commission, the nation’s consumer protection agency. You can also call 1-877-IDTHEFT (1-877-438-4338); TTY 1-866-653-4261.

Your employee should also contact the Internal Revenue Service (IRS), and file an online complaint with the Internet Crime Complaint Center at www.ic3.gov.

Don’t let your employees fall victim to identity theft. Advise them to read our publication Identity Theft and Your Social Security Number or read our Frequently Asked Questions for more information. If you or an employee suspects that they’re a victim of identity theft, don’t wait, report it right away!

See the original article Here.

Source:

Saccoccio I. (2017 May ). Helping your employees protect against identity theft [Web blog post]. Retrieved from address https://blog.shrm.org/blog/helping-your-employees-protect-against-identity-theft


Advisers Seek a Tech Solution to Financial Wellness

Have you been looking for a new solution to increase your client's investment into their financial well-being? Check out this great article by Cort Olsen from Employee Benefits Advisors on how advisers are using technology to help their clients invest in their financial wellness.

With many employers taking advantage of wearable wellness devices such as Fitbits and Apple Watches, advisers and consultants say they would like to see a similar platform that will efficiently monitor a person’s financial wellbeing.

“For physical wellness there are health assessments like biometric screenings to gather information and then there is the wearable data that tells people where they need to be to stay on track with their health goals,” says Craig Schmidt, senior wellness consultant for EPIC Insurance Brokers & Consultants. “The difference with the financial piece is that there isn’t a way to track users’ spending habits or monitoring their retirement funding to make their financial status more budget friendly.”

While Schmidt says he has not been able to find a platform that monitors financial status at such a personal level, John Tabb, chief product officer of Questis, has put together a platform that manages to gather data and make suggestions on what employees should be focusing their investments on such as paying off student loan debt or investing in their Roth IRA.

Tabb estimates that there are roughly 30 companies that call themselves financial wellness firms but adds that none of them are “holisitic.” “Not to say that they are not good, but there are only a handful of companies that can allow advisers at financial institutions to utilize their platform as a tool,” he says.

Saving for retirement vs. paying off student debt
Shane Bartling, retirement consultant for Willis Towers Watson, says they have developed a program with their clients that addresses gaps in the market and increases the value of the overall lineup of financial well-being services offered by employers generally around retirement readiness.

“As a result of requests from clients and the needs we have identified with our consulting work, we have built out a technology solution to compliment the line-up of other resources that clients have available,” Bartling says. “We wanted to find the indicators of poor financial wellbeing in the workforce, how to measure it and then how do we engage the parts of our workforce that are going to see the highest value from the resources we are providing.”

The WTW program offers clients an initial assessment from an adviser to determine where employees are struggling the most with their finances. “There is a way to look at behaviors employees are signaling when they are in a poor financial situation,” Bartling says. “They begin to do things like using loans, taking hardship withdrawals and then ultimately you see issues like wage garnishment tend to pop up on the radar and are opting out of the 401(k).”

SoFi has expanded its business focus from student loan refinancing firms into the workspace by helping employers offer a student loan repayment benefit.

“Looking at the employee benefits space today, student loans are generally a pretty big hole in most employers benefit offerings,” says Catesby Perrin, vice president of business development at SoFi. “The main stays of employee benefit offerings are healthcare and 401(k), which we all know are essential, but in many respects don’t address the most pressing financial concerns of the largest demographic in the workforce, which are millennials.”

Perrin adds that 401(k) and other forms retirement saving is imperative for everyone in the workforce, however retirement is not a top priority for millennials due to other financial stressors that are taking place in their day-to-day lives.

“As great as a 401(k) is and how important it is intrinsically, if you have $500 or $800 a month due in student loan payments, which is totally plausible for somebody coming out of undergrad today, the 401(k) is a total luxury,” Perrin says. “Most employers are not doing much about student loan problem, so we are offering two primary benefits today for employers… a student loan refinancing benefit and a benefit set for employers to help pay down the principle balance of their employee’s loan.”

Alternative tech gaining traction
One option is the increasing popularity of mobile push notifications. Ayana Collins, wellness consultant out of EPIC’s Atlanta office, says she is seeing a greater response from users who utilize these alerts on their smartphones to view wellness tips and strategies that they may not read if they are delivered in the form of an e-mail.

“Employees receive thousands upon thousands of e-mails and one more e-mail coming from HR or from a wellness company may not be opened,” Collins says. “If they receive a push notification from their mobile phone they are more likely to check out what financial wellness tips we are sending to them.”

Privacy invasion?
Meanwhile, new legislation determining how wellness plans are regulated has sparked a renewed interest in finding a streamlined financial wellbeing platform.

Shan Fowler, senior director of employer portfolio and product strategy at Benefitfocus, says legislation such as the Employer Participation in Repayment Act and the Preserving Employee Wellness Programs Act, will help fuel the creation of a financial wellbeing platform.

“Financial regulation is very similar to healthcare regulation,” Fowler says, “due to so many branches that are contingent with legislative support. Seeing bipartisan support for this national epidemic [has me feeling] very optimistic.”

However, employees may not be as enthusiastic. Many workers are concerned about the level of data employers could have access to, seeing it as an invasion of privacy, Fowler adds.

“I think you need to put yourself into the shoes of the employee and ask if I want my company to have access to my personal information,” he says. “That speaks to that very fine line employers have to walk of having their employees’ best interests in mind, but not going too far into a ‘big brother’ mentality.”

Tabb says that while the Questis platform does offer individual advice on financial direction based off an initial assessment, the data collected is stored in an aggregate form that protects employees’ personal information from being viewed by their superiors or colleagues.

“If the employer wants some data, they are going to pay for it to help them make decisions, but it is all on an aggregate level,” Tabb says. “There is certainly a perception that needs to be addressed to ensure employees that their data is safe and that nothing is being shared with their employer that does not need to be shared.”

Both Bartling and Perrin also say their platforms offer data to employers only in an aggregate form to give them an idea of how many employees are utilizing the benefit and also the projected success rates, but when it comes to the personal finances of each individual employee, security is in place to ensure private financial information is protected.

EPIC’s Collins says no matter what branch of wellness an employer invests in, whether it be financial, physical or mental, there needs to be a reason behind the technology that they are using. If there is no payout for the employee, there will be no demand to carry the program.

“There has to be a ‘so what’ behind it,” Collins says. “If the employer is just doing a simple challenge with nothing behind it, people are not going to gravitate toward it, because it doesn’t create a moment where the users discover an improvement to themselves. That is the whole point behind wellness.”

See the original article Here.

Source:

Olsen C. (2017 May 11). Advisers seek a tech solution to financial wellness [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/advisers-seek-a-tech-solution-to-financial-wellness


Is Your Wellness Program Compliant with the ACA, GINA and EEOC?

Great article from our partner, United Benefit Advisors (UBA) by Valeria S. Tivnan.

Workplace wellness programs have increased popularity through the years. According to the most recent UBA Health Plan Survey, 49 percent of firms with 200+ employees offering health benefits in 2016 offered wellness programs. Workplace wellness programs’ popularity also brought controversy and hefty discussions about what works to improve population health and which programs comply with the complex legal standards of multiple institutions that have not really “talked” to each other in the past. To “add wood to the fire,” the Equal Employment Opportunity Commission (EEOC) made public some legal actions that shook the core of the wellness industry, such as EEOC vs. Honeywell International, and EEOC vs. Orion Energy Systems.

To ensure a wellness program is compliant with the ACA, GINA and the EEOC, let’s first understand what each one of these institutions are.

The Affordable Care Act (ACA) is a comprehensive healthcare reform law enacted in March 2010 during the Obama presidency. It has three primary goals: to make health insurance available to more people, to expand the Medicaid program, and to support innovative medical care delivery methods to lower the cost of healthcare overall.1 The ACA carries provisions that support the development of wellness programs and determines all rules around them.

The Genetic Information Nondiscrimination Act of 2008 (GINA) is a federal law that protects individuals from genetic discrimination in health insurance and employment. GINA relates to wellness programs in different ways, but it particularly relates to the gathering of genetic information via a health risk assessment.

The U.S. Equal Employment Opportunity Commission (EEOC) is a federal agency that administers and enforces civil rights laws against workplace discrimination. In 2017, the EEOC issued a final rule to amend the regulations implementing Title II of GINA as they relate to employer-sponsored wellness program. This rule addresses the extent to which an employer may offer incentives to employees and spouses.

Here is some advice to ensure your wellness program is compliant with multiple guidelines.

  1. Make sure your wellness program is “reasonably designed” and voluntary – This means that your program’s main goal should be to promote health and prevent disease for all equally. Additionally, it should not be burdensome for individuals to participate or receive the incentive. This means you must offer reasonable alternatives for qualifying for the incentive, especially for individuals whose medical conditions make it unreasonably difficult to meet specific health-related standards. I always recommend wellness programs be as simple as possible, and before making a change or decision in the wellness program, identify all difficult or unfair situations that might arise from this change, and then run them by your company’s legal counsel and modify the program accordingly before implementing it. An example of a wellness program that is NOT reasonably designed is a program offering a health risk assessment and biometric screening without providing results or follow-up information and advice. A wellness program is also NOT reasonably designed if exists merely to shift costs from an employer to employees based on their health.
  2. Do the math! – Recent rules implemented changes in the ACA that increased the maximum permissible wellness program reward from 20 percent to 30 percent of the cost of self-only health coverage (50 percent if the program includes tobacco cessation). Although the final rules are not clear on incentives for spouses, it is expected that, for wellness programs that apply to employees and their spouses, the maximum incentive for either the employee or spouse will be 30 percent of the total cost of self-only coverage. In case an employer offers more than one group health plan but participation in a wellness program is open to all employees regardless of whether they are enrolled in a plan, the employer may offer a maximum incentive of 30 percent of the lowest cost major medical self-only plan it offers. As an example, if a single plan costs $4,000, the maximum incentive would be $1,200.
  3. Provide a notice to all eligible to participate in your wellness program – The EEOC made it easy for everyone and posted a sample notice online at https://www.eeoc.gov/laws/regulations/ada-wellness-notice.cfm. Your notice should include information on the incentive amount you are offering for different programs, how you maintain privacy and security of all protected health information (PHI) as well as who to contact if participants have question or concerns.
  4. If using a HRA (health risk assessment), do not include family medical history questions – The EEOC final rule, which expands on GINA’s rules, makes it clear that “an employer is permitted to request information about the current or past health status of an employee's spouse who is completing a HRA on a voluntary basis, as long as the employer follows GINA rules about requesting genetic information when offering health or genetic services. These rules include requirements that the spouse provide prior, knowing, written, and voluntary authorization for the employer to collect genetic information, just as the employee must do, and that inducements in exchange for this information are limited.”2Due to the complexity and “gray areas” this item can reach, my recommendation is to keep it simple and to leave genetic services and genetic counseling out of a comprehensive wellness program.

WellSteps, a nationwide wellness provider, has a useful tool that everyone can use. Their “wellness compliance checker” should not substituted for qualified legal advice, but can be useful for a high level check on how compliant your wellness program is. You can access it at https://www.wellsteps.com/resources/tools.

I often stress the need for all wellness programs to build a strong foundation, which starts with the company’s and leaders’ messages. Your company should launch a wellness program because you value and care about your employees’ (and their families’) health and well-being. Everything you do and say should reflect this philosophy. While I always recommend companies to carefully review all regulations around wellness, I do believe that if your wellness program has a strong foundation based on your corporate social responsibility and your passion for building a healthy workplace, you most likely will be within the walls of all these rules. At the end, a workplace that does wellness the right way has employees who are not motivated by financial incentives, but by their intrinsic motivation to be the best they can be as well as their acceptance that we all must be responsible for our own health, and that all corporations should be responsible for providing the best environment and opportunities for employees to do so.

See the original article Here.

Source:

Tivnan V. (2017 May 9). Is your wellness program compliant with the ACA, GINA  and EEOC? [Web blog post]. Retrieved from address http://blog.ubabenefits.com/is-your-wellness-program-compliant-with-the-aca-gina-and-eeoc


Compliance Recap May 2017

Make sure to stay up-to-date with the most recent rules and regulations from May regarding healthcare legislation thanks to our partners at United Benefit Advisors (UBA).

May was an active month in the employee benefits world. On May 4, 2017, the U.S. House of Representatives passed a bill titled the “American Health Care Act of 2017” (AHCA) to repeal and replace the Patient Protection and Affordable Care Act (ACA).

The Internal Revenue Service (IRS) released its Employer Shared Responsibility affordability percentage indexed for 2018. The U.S. Citizenship and Immigration Services (USCIS) issued redesigned permanent resident cards and employment authorization documents. The USCIS also issued a warning about phone scams targeting immigrants. The Occupational Safety and Health Administration (OSHA) announced that it will delay electronic submission of injury and illness records.

The IRS released dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018. The IRS released guidance confirming that health flexible spending arrangements (health FSAs) cannot reimburse Medicare premiums. The IRS also released a memo regarding tax treatment of benefits paid under an arrangement that combines a self-funded fixed indemnity heath plan and wellness program.

The Centers for Medicare & Medicaid Services (CMS) announced that it will end the Federally Facilitated SHOP Exchange (FF-SHOP) at the end of 2017. The U.S. Department of Labor (DOL) issued an advisory opinion on an employee welfare benefit plan maintained by an association of employers. The U.S. Supreme Court declined to take an opt-out arrangement case, leaving intact a lower court’s decision that opt-out payments must be included in overtime calculations under the Fair Labor Standards Act (FLSA).

UBA Updates

UBA released three new advisors in May: • House Passes AHCA Bill in

  • House Passes AHCA Bill in First Step to Repeal and Replace the ACA
  • Frequently Asked Questions About Employees’ Reduction in Hours
  • What Qualifying Events Trigger COBRA?

The House Passes AHCA Bill in First Step to Repeal and Replace the ACA

On May 4, 2017, the U.S. House of Representatives passed House Resolution 1628, a reconciliation bill aimed at "repealing and replacing" the ACA. The AHCA will now be sent to the Senate for debate, where amendments can be made, prior to the Senate voting on the bill.

It is widely anticipated that in its current state the AHCA is unlikely to pass the Senate. Employers should continue to monitor the text of the bill and should refrain from implementing any changes to group health plans in response to the current version of the AHCA.

IRS Releases Employer Shared Responsibility Affordability Percentage Indexed for 2018

The Internal Revenue Service (IRS) released its Revenue Procedure 2017-36 that sets the required contribution percentage to determine whether employer-sponsored health coverage is affordable at 9.56 percent for calendar year 2018.

USCIS Issues Redesigned Green Cards and Employment Authorization Documents

The U.S. Citizenship and Immigration Services (USCIS) began issuing the new Permanent Resident Cards (also known as Green Cards) on May 1, 2017. The new cards incorporate enhanced graphics and fraud-resistant security features. These new cards are also part of an ongoing effort between USCIS, U.S. Customs and Border Protection, and U.S. Immigration and Customs Enforcement to enhance document security and deter counterfeiting and fraud.

The new Green Cards and Employment Authorization Documents (EADs):

  • Display the individual’s photos on both sides • Show a unique graphic image and color palette:
    • Green Cards will have an image of the Statue of Liberty and a predominately green palette
    • EAD cards will have an image of a bald eagle and a predominately red palette
  • Have embedded holographic images
  • No longer display the individual’s signature

Also, Green Cards will no longer have an optical stripe on the back.

Some Green Cards and EADs issued after May 1, 2017, may still display the existing design format as USCIS will continue using existing card stock until current supplies are depleted. For more information about the Green Card application process, please visit USCIS.gov/greencard.

USCIS Issues a Warning on Phone Scam Targeting U.S. Immigrants

U.S. immigrants have been targeted by a phone scam that appears as if it is from the Canadian government’s Immigration, Refugees, and Citizenship Canada (IRCC) call center (1-888-242-2100). Recipients of these calls are advised to hang up immediately and check their status by:

  • Making an InfoPass appointment at http://infopass.uscis.gov, or
  • Using myUSCIS to find up-to-date information about their application, or
  • Calling the USCIS National Customer Service Center at 1-800-375-5283.

Scam email or phone calls should be reported to the Federal Trade Commission at http://1.usa.gov/1suOHSS. Suspicious emails may be forwarded to the USCIS webmaster at uscis.webmaster@uscis.dhs.gov. The USCIS will review the emails received and share them with law enforcement agencies as appropriate. Visit the Avoid Scams Initiative at www.uscis.gov/avoid-scams for more information on common scams and other important tips.

OSHA Proposes to Delay Electronic Submission of Injury and Illness Records

In 2016, the Occupational Safety and Health Administration (OSHA) announced that certain high-risk employers of 20 or more employees and employers with 250 or more employees must electronically file Form 300A for workplace illnesses and injuries that occurred in calendar year 2016.

OSHA recently posted a notice on its website stating that “OSHA is not accepting electronic submission of injury and illness logs at this time and intends to propose extending the July 1, 2017 date by which certain employers are required to submit the information from their completed 2016 form 300A electronically.” It should be noted that the requirement to keep records has not changed; only the method in which they are submitted is under scrutiny.

IRS Releases 2018 Amounts for HSAs 

The IRS released Revenue Procedure 2017-37 that sets the dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018. For

For calendar year 2018, the annual contribution limit for an individual with self-only coverage under an HDHP is $3,450, and the annual contribution limit for an individual with family coverage under an HDHP is $6,900. For

For calendar year 2018, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.

IRS Releases Information Letter to Confirm that FSAs Cannot Reimburse Medicare Premiums

The IRS released its Information Letter Number 2017-0004 to confirmed that a health flexible spending arrangement (health FSAs) cannot reimburse Medicare premium expenses. The IRS cited its Publication 969 which states that an FSA cannot reimburse health insurance premium payments. Because Medicare premiums are premiums for other health coverage, Medicare premiums are not FSA-reimbursable expenses.

IRS Releases Memo Regarding Tax Treatment of Benefits Paid by Self-Funded Health Plans

On May 12, 2017, the IRS released a Memorandum to address the taxability of benefits paid under an arrangement that combines a self-funded fixed indemnity heath plan and wellness program. The IRS specifically refutes the claim that these arrangements provide nontaxable cash payments to employees and employment tax savings for the employer and employees.

The IRS concluded that benefits paid under a such an employer-provided self-funded health plan should be included in an employee’s income and wages if the average amounts received by the employee for participating in a health-related activity predictably exceed the employee’s after-tax contributions.

CMS Plans to End SHOP Exchange

On May 15, 2017, the Centers for Medicare & Medicaid Services (CMS) announced that it will issue rules to essentially end the Federally Facilitated SHOP Exchange (FF-SHOP) at the end of 2017.

Under the rules that CMS intends to propose, HealthCare.gov will continue to make FF-SHOP participation eligibility decisions for small employers regarding the Small Business Health Care Tax Credit, but the FF-SHOP will stop handling SHOP functions, such as processing premium payments or handling employer or employee enrollment, for SHOP plans taking effect on or after on January 1, 2018. CMS intends to allow employers to directly enroll with insurers offering SHOP plans or through FF-SHOPregistered brokers or agents.

DOL Issues Advisory Opinion on Employee Welfare Benefit Plan Sponsored by a Group of Employers

On May 16, 2017, the Department of Labor (DOL) issued its Advisory Opinion to address whether a membership-based organization could fall within ERISA’s definition of “group or association of employers” who sponsor an ERISA employee welfare benefit plan.

Based on the facts presented to the DOL, the DOL concluded that the organization’s membership is comprised of employers engaged in the same industry and that the employers have a genuine organizational relationship unrelated to the health plan through their membership in the organization. The DOL determined, based on the proposed arrangement’s facts, that the participating member employers would be a bona fide group or association of employers under ERISA and that the health plan would be an ERISA employee welfare benefit plan.

U.S. Supreme Court Declines to Take Opt-Out Arrangement FLSA Case

Last year in court case Flores v. City of San Gabriel, the 9th Circuit Court of Appeals (which covers several western states including Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) determined that when an employer pays cash to an employee for opting out of its health plan, the payment must be considered part of the employee’s “regular rate of pay” under the Fair Labor Standards Act (FLSA). This means that the adjusted rate of pay must be used in calculating compensation for overtime hours.

The City of San Gabriel appealed the 9th Circuit’s decision to the U.S. Supreme Court. On May 15, 2017, the Supreme Court declined to take the case, essentially leaving the decision intact.

Practically speaking, if an employer is in one of the states covered by the 9th Circuit and if the employer calculates compensation for overtime hours, then it should consider this additional FLSA aspect to offering cash in lieu of benefits.

To download the full compliance alert click Here.


3 HSA Facts Employers Need to Know

With the passing of the AHCA, HSAs are on the verge of changing as we know it. Take a look at this informative article from Benefits Pro about what changes to HSAs means for employers by Whitney Richard Johnson.

Health Savings Accounts offer employers a way to help employees with health care costs without being as involved as they might be with, say, a Flexible Saving Account. But what are some other advantages?

And what are employers' responsibilities? Although employers will want to research more indepth about HSAs, here is a quick look at some basic HSA questions and answers:

#1: What are the advantages to an employer of offering an HDHP and HSA combination?

The benefits of offering employees an HDHP and HSA vary dramatically depending upon the circumstances. A major strength of offering an HSA program is flexibility.

Employers can be very generous and fully fund an HSA and also pay for the HDHP coverage. Alternatively, employers can also use the flexibility of the HSA to allow for the employer to reduce its involvement in benefits and put more responsibility onto the employee.

Generally, employers switch to HDHPs and HSAs to save money on the health insurance premiums (or to reduce the rate of increase) and to embrace the concept of consumer driven healthcare. The list below elaborates on strengths of HDHPs and HSAs.

Lower Premiums. HDHPs, with their high deductibles, are usually less expensive than traditional insurance.

Consumer-driven health care. Many employers believe in the concept of consumer-driven healthcare. If an employer makes employees responsible for the relatively high deductible, the employees may be more careful and inquisitive into their health care purchases. Combining this with an HSA where employees can keep unused money increases employees’ desire to use health care dollars as if they were their own money – because it is their own money.

Lower administration burden. Given the individual account nature of HSAs, much of the administrative burden for HSAs is switched from the employer (or paid third-party administrator) to the employee and the HSA custodian as compared to health FSAs and HRAs. This increased burden on the employee comes with significant perks: more control over how and when the money is spent, increased privacy, and better ability to add money to the HSA outside of the employer.

Tax deductibility at employee level. The ability of employees to make their own HSA contributions directly and still get a tax deduction is advantageous. Although it is better for employees to contribute through an employer, an employee can make contributions directly. An employer may not offer pretax payroll deferral or it may be too late for an employee to defer. For example, an employee that decides to maximize his prior year HSA contribution in April as he is filing his taxes can still do so by making an HSA contribution directly with the HSA custodian.

HSA eligibility. Becoming eligible for an HSA is a benefit that also stands on its own. Although not all employees will embrace HSAs, savvy employees that understand the benefits of HSAs will value a program that enables them to have an HSA.

#2: What are the employer responsibilities regarding employee HSAs?

If an employer offers pretax employer contributions, then the employer has the following responsibilities:

Make comparable contributions. If the employer is making a pretax employer contribution (nonpayroll deferral), it must do so on a comparable basis.

Maintain Section 125 plan for payroll deferral. If the employer allows pretax payroll deferral, then the employer must adopt and maintain a Section 125 plan that provides for HSA deferrals. This includes collecting employee deferral elections, sending the deferred amount directly to the HSA custodian, and accounting for the money for tax-reporting purposes.

HSA eligibility and contribution limits. Employers should work with employees to determine eligibility for an HSA and the employee’s HSA contribution limit. Although it is legally the employee’s responsibility to determine his or her eligibility and contribution limit, a mistake in these areas generally involves work by both the employer and the employee to correct. Mistakes are best avoided by upfront communication. Also, the employer does have some responsibility not to exceed the known federal limits. An employer may not know if a particular employee is ineligible for an HSA due to other health coverage but an employer is expected to know the current HSA limits for the year and not exceed those limits.

Tax reporting. The employer needs to properly complete employees’ W-2 forms and its own tax-filing regarding HSAs (HSA employer contributions are generally deductible as a benefit under IRC Section 106).

Business owner rules. Business owners generally are not treated as employees and employers need to review HSA contributions for business owners for proper tax reporting.

Detailed rules. There are various detailed rules that fall within the responsibility of the employer that are too numerous to list here but include items such as: (1) holding employer contributions for an employee that fails to open an HSA, (2) not being able to “recoup” money mistakenly made to an employee’s HSA, (3) actually making employer HSA contributions into employees HSAs on a timely basis, and (4) other detailed rules.

#3: How do employers switching from traditional insurance to HDHPs explain the change to employees?

Although there is no certain answer to this question, a straight-forward and honest approach to the change will likely work best.

Changing from traditional insurance to a high deductible plan with an HSA can be significant because employees likely face a higher deductible (although traditional health plan deductibles have been increasing to the point they are close to HDHPs).

Often the largest obstacle to the change is that employees feel something is being taken away from them. An employer that can show that the actual dollars contributed by the employer are level, or increased, versus the previous year helps a lot – especially if the employer makes a substantial HSA contribution for employees.

If the employer is making the change to reduce its health care expenses, then the employer will have to explain and justify that change to employees to get employees’ support for the change (e.g., the business is in a tough spot due to a difficult economy, etc.).

Depending on the facts, the change will likely be an improvement for some employees and HSA eligibility provides benefits to all employees. Some specific benefits include the following:

Saving money. The HDHP is generally significantly less expensive. Depending upon the circumstances, this fact often saves not only the employer money but also the employee. Highlighting the savings will help convince employees the change is positive. Although an actual reduction of the employee’s portion of the premium expense may be unlikely given increasing health insurance premiums, explaining that without the change the employee’s portion of the premium would have increased by more will help reduce tension.

Tax savings. The HSA enables tax savings. For some employees these tax savings are significant.

Control. HSAs give individuals control over their money and accordingly their doctor and treatment choices.

Flexibility. An HSA is very flexible and allows for some employees to put aside a large amount and get a large tax benefit. For those that prefer not to do so, the HSA allows that as well. Plus, even better, the HSA allows employees to change their mind mid-year. If an employee believes they are not going to need any medical services, the employee needs to contribute only a minimum deposit to an HSA. If it turns out that the employee does incur some medical treatment, the employee can contribute at that time and still get the tax benefits. Employees are often frustrated by HSA rules because of some confusion, but when explained that the rules are very flexible they appreciate HSAs more.

Distribution reasons. HSAs allow for more distribution reasons than FSAs: namely to pay for health insurance premiums if unemployed and receiving COBRA, to pay for some health insurance premiums after age sixty-five, to use for any purpose penalty-free after age sixty-five, to carry forward a large balance, and more.

See the original article Here.

Source:

Johnson W. (2017 May 11). 3 HSA facts employers need to know [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/05/11/3-hsa-facts-employers-need-to-know?kw=3+HSA+facts+employers+need+to+know&et=editorial&bu=BenefitsPRO&cn=20170514&src=EMC-Email_editorial&pt=Benefits+Weekend+PRO&page_all=1