by admin | Sep 21, 2021 | Employee Benefits, Open Enrollment
When the autumn leaves fall and the weather turns cooler, we know it’s time to start thinking of open enrollment. Open enrollment season can be a confusing time. As you begin your research into which plan to choose or even how much to contribute to your Health Savings Account (HSA), consider evaluating how you used your health plan last year. Looking backward can help you plan forward to make the most of your health care dollars for the coming year. Here’s what you need to know about your workplace benefits to maximize them:
1). Know the Open Enrollment Dates
It is up to you to make sure you take advantage of the open enrollment period. Be sure you know when your company has open enrollment because it can be your only time to adjust benefits for the coming year.
2). Evaluate Your Current Benefits
Before open enrollment starts, review the benefits you currently are receiving. Your pay stub can be an excellent resource to find this information; you should be able to find the benefits you are paying for under the deductions or withdrawals section. Standard deductions might include medical insurance, dental insurance, 401(k) contributions, life insurance, vision insurance, long- term disability insurance, health savings account or flexible spending account contributions, and accidental death and dismemberment insurance. Review those deductions to make sure you know what you’re paying for and whether you actually used the benefits.
3). Ask These Questions to Decide What Benefits You Need
Everyone’s situation is different, but most employees should have at least medical, dental and vision insurance and make contributions to a 401(k) or similar workplace retirement savings account.
When evaluating your benefits package, consider what your needs will be or what life changes you can expect for the coming year:
- Do you have a medical condition that requires ongoing care such as diabetes or heart disease?
- Are you trying to get pregnant or are expecting a baby?
- Are you getting married (or divorced)?
- Is your child turning 26 and can no longer be covered under your health insurance?
- Does your significant other have coverage, or will you need to include your partner in your health coverage?
- Are you on track for retirement, or do you need to save more? Don’t forget to take advantage of your company match in your retirement account. This is free money for the future.
All of these are essential questions to ask yourself during the open enrollment season because they can make a difference in what benefits you choose to elect. As you browse the different options, analyze the type of treatment and the amount of treatment you have received in the past. You cannot foresee every expense but focusing on the trends will help you make a sound decision.
4). Compare Out-of-Pocket Cost
Much like health networks, out-of-pocket costs are crucial when choosing the right plan for you and your family. Most health benefits summaries should highlight the amount you will pay in out-of-pocket expenses, including the pocket limit.
Your goal in comparing out-of-pocket costs is to narrow down the plans that pay a higher percentage of your medical expenses and offer higher monthly premiums. These types of plans are suitable for you if:
- You need emergency care frequently
- You are planning to have surgery soon
- You often see a primary care physician
- You have a pre-existing condition or have been diagnosed with a chronic disease like cancer or diabetes
- Your household income is sufficient to cover the monthly premiums
5). Do the Math
People focus on the monthly premium, but you also need to look at the deductible. For instance, if you have a choice between a lower silver plan premium of $345 a month for a plan with a $5,500 deductible, and a higher gold plan premium at $465 a month with a $1,750 deductible, you’re better off with the second plan if you anticipate needing more than $1,500 in medical care. With the second plan, your total annual cost for the premium and deductible comes to $7,330, a $2,310 savings over the lower premium plan.
6). Look at Out-of-Pocket Costs
The deductible is just one out-of-pocket expense; you also have copayments and coinsurance. The three together are your maximum out-of-pocket costs. Under the Affordable Care Act, the maximum out-of-pocket limit is $8,550 for a single person and $17,100 for a family policy.
7). Utilize Tax-Free Benefits
Flexible spending accounts (FSAs), health savings accounts (HSAs), and dependent care spending accounts provide wonderful tax advantages because contributions are made with before-tax income. They can be used to pay for deductibles, prescriptions and health-related costs that are not covered by your insurance (braces, eyeglasses, etc.). At the end of the year, you lose any money left over in your FSA so it’s important to plan carefully and not put more money in your FSA that you think you’ll spend. However, with an HSA, funds roll over from year to year which makes it a great way to save for future medical costs.
8). Review the Provider List
Most health plans today have “in-network” providers. If you see those doctors and visit those hospitals, you pay less out of pocket than if you go outside the network. So, if you want to keep your own doctor and go to a certain hospital, make sure they’re on the provider list.
When it comes to choosing the best workplace benefits plan for you, education is your most significant defense against making substantial financial mistakes, including not taking full advantage of your employer’s benefits. If you have questions about any of the benefits offered, ask your HR department for help or clarification. And remember, looking backward on your past habits and expenses can be an important tool to help you plan forward for next year.
by admin | Aug 10, 2021 | Employee Benefits, Open Enrollment
Amid the economic panic last year, workers were unwilling to sacrifice job security for a new work environment. Many workers felt it was foolish to re-enter the job market during a shut down. However, in 2021, employers have experienced high turnover rates and experts are now predicting a “turnover tsunami” in voluntary departures and resignations. Current projections estimate that 3.3 million Americans will leave their jobs by December in search of new ones.
Turnover is expensive: the processes of recruiting, hiring, on-boarding and training cost extensive time but is also a considerable investment. When an employee leaves, the company not only loses a valuable resource but also has to re-distribute duties to other team members in the interim of finding a replacement. The team members who absorb the additional responsibilities reach their own tolerance thresholds.
Employers are always looking for ways to sweeten the attain and retain talented employees. For any job offer, salary will remain a crucial aspect but benefits also play an important role in overall employee compensation. This year more than ever, employers have a unique opportunity to show employees how valued they are and may convince those who are seeking a new job to remain through their benefits. So, what are some of the top benefits employees are looking for right now?
This staple benefit is of the utmost importance to job candidates and typically includes coverage for their families. In fact, 46% of U.S. adults said health insurance was the either the deciding factor or a positive influence in choosing their current job. And 56% said that employer-sponsored health coverage is a key factor in deciding to stay in their current job.
The most common type of retirement benefits is the 401(k) plan. This allows employees to deduct a certain percentage of each paycheck to put towards retirement savings. Some businesses choose to match the employee’s deduction or up to a certain percentage.
Employers can offer short -term disability (STD) or long-term disability (LTD) insurance to their employees. If an insured employee is injured or has a lengthy illness, the benefit pays them during the period of time they are unable to work. STD pays a portion of an employee’s salary if temporarily become sick or are unable to work. LTD payments are paid to employees who have a permanent illness or injury preventing them from performing their duties.
Life insurance and accidental death & dismemberment insurance (AD&D) are important as employees look to the future and want reassurance in protecting their families.
Employers should also consider some perks that have become increasingly sought after. Perks are something that is in addition to the employee’s salary and benefits package that may sway an employee to value one employer over another. Some of the most valued perks in 2021 are:
Wellbeing and mental health provisions have taken on a new significance in the last 12 months. Employers can offer an Employee Assistance Program (EAP) which helps employees to solve problems – whether those relate to finances or other non-work stresses. But employers are also offering more comprehensive mental health services such as counseling or therapy. 48% of employees indicated they had experienced high levels of stress over the last year and are looking for support for stress, burnout, and other mental health issues.
- Flexibility/Remote Work Options
Remote work and flexibility have always been popular among employees but their importance soared in light of the pandemic. Flexibility has been a key factor in providing for employees who have had changes in their life such as caring for a chronically ill loved one or those who suddenly had virtual school for their children. In fact, 76% of workers said they would be more willing to stay with their current employer if they could work flexible hours.
This past year has served as a reminder that employee’s lives don’t just revolve around work. With pets and children crashing our Zoom calls, and other responsibilities – including eldercare and childcare – on many worker’s minds, it’s evident that employees have other responsibilities and priorities that distract us from work. During the pandemic, one in four women considered leaving the workforce or scaled back their work role because of added family caregiving pressures.
Many employees don’t understand the benefits they chose during open enrollment – which means some employees may be looking for a new job for benefits or perks they already have! Now more than ever, it is critical for employers to start communicating early about open enrollment. Getting the word out about open enrollment and available benefits will help employees weigh the advantages of guaranteed perks and benefits with searching for a new job. Giving employees more time to understand their benefits is crucial to employee retention and contentment.
by Johnson and Dugan | Aug 6, 2021 | Benefit Plan Tips, Tricks and Traps, Employee Benefits, Hot Topics, Human Resources, IRS
Many employees have the option to choose between their employer’s plan and another program where they meet the eligibility requirements (i.e., spouse’s, domestic partner’s, or parent’s plan). A Cash in Lieu of Benefits program, or cash-out option, offers an incentive for those employees to waive the employer coverage and instead enroll in the other plan. The incentive is in the form of a cash payment added to their paycheck. Properly implementing a Cash in Lieu of Benefits program is crucial, as unexpected tax consequences could occur otherwise.
Overview
The Internal Revenue Service (IRS) requires a Section 125 plan be in place to be a qualified cash-out option. If the plan is not set up under an IRC Section 125 plan, the plan will be disqualified and employees who elect coverage under the health plan will be taxed on an amount equal to the amount of cash they could have received for waiving coverage.
The IRS has ruled that when an option is available to either elect the health plan, or to receive a cash-out incentive, then the premium payment to the insurance company becomes wages. The reasoning is that when an employer makes payments to the insurance company where the employee has the option of receiving those amounts as wages, the employee is merely assigning future income (cash compensation) for consideration (health insurance coverage). Therefore, the payment is treated as a substitute for the health insurance coverage. By setting up an IRC Section 125 plan, the employer is offering a choice between cash and certain excludable employer-provided benefits, without adverse tax implications.
Plan Set-up
There must be a Plan Document in place and nondiscrimination requirements must be followed, including annual nondiscrimination testing, in order to be a qualified Section 125 plan. To meet nondiscrimination rules, Cash in Lieu of Benefits must be offered to all employees equitably. To be sure an employer is not over incentivizing employees to drop the plan, which could impact the nondiscrimination participation requirements, the monthly cash benefit should not exceed $200-$300.
When a Section 125 plan already exists (Premium Payment Plan, Health Care Spending Account, Dependent Care Spending Account), the plan can be amended to add the cash out feature. Where no Section 125 plan is in place, it is standard to have an attorney provide this service. It is important to note that, although the Section 125 plan protects the employees electing coverage from taxation, the cash-out incentive is an after-tax benefit.
As always with any IRS-qualified plan, proper documentation is essential. An employee should only be allowed to waive coverage when there is another plan available, and proof of enrollment is provided. If there is a subsequent loss of that coverage, HIPAA Special Enrollment Rights will allow entry onto the plan, and the cash-out incentive will cease.
Considerations
Cash in Lieu of Benefits funds cannot be used to purchase individual health coverage. For companies over 20 lives and Medicare is secondary coverage, the plan should not be structured to incentivize employees over 65 to opt out of the employer plan to enroll in Medicare.
Another factor to consider is the impact to employers considered Applicable Large Employers (ALE) and subject to the affordability determination and reporting under the Affordable Care Act (ACA). An ALE is an employer averaging 50 or more full-time plus full-time equivalent employees for the preceding 12 months. If a cash out option is offered without an IRS qualified Cash in Lieu of Benefits plan, the payment must be included in the affordability calculation.
There are also Fair Labor Standards Act (FLSA) implications. Any opt-out payments made by an employer to an employee must be included in an employee’s regular rate of pay and therefore is used in calculating overtime compensation for non-exempt employees.
These considerations should be reviewed with a tax expert and/or ERISA attorney to determine if a Cash in Lieu of Benefits program is the right option for your organization. These professionals, along with a Section 125 Plan Administrator, can provide the necessary guidance to ensure the program will satisfy compliance requirements. For further information on this topic, please contact your Johnson & Dugan team.
By Jody Lee, Johnson & Dugan
by ckistler | Apr 8, 2021 | Employee Benefits, Group Benefit Plans
According to WebMD, the eyes are the most highly developed sensory organs in your body. They report that more of your brain is dedicated to the sense of sight than to all of the other senses combined. So, it makes sense that you would do all that you can to protect and care for these important organs. Vision insurance can be a great asset as you work keep your eyes healthy.
What is vision insurance?
Vision insurance is an insurance product used to reduce the costs of eye-related care, eye products, and eye surgeries. Group vision plans are typically purchased through employers, associations, or government programs like Medicare or Medicaid. Sometimes, vision plans are part of a value-added benefit that is linked to the subscriber’s health insurance. Plan subscribers usually receive free eye care, like annual eye exams, and a fixed discount on eye wear in exchange for a monthly premium. This type of coverage is recommended for people who need vision correction devices, who have a family history of eye issues, or for those who have a higher risk of eye disease, like diabetics.
What is a vision discount program?
Different from vision insurance, a vision discount program gives users discounts on eye exam services and products. The monthly premium is lower for discount programs but does not generally include free annual eye exams like vision insurance does. When the user buys into the discount program, they become a member of a large group for whom the program administrators have negotiated lower costs. Discount programs are most useful for those without pre-existing eye conditions.
What are the benefits of having vision coverage?
As mentioned before, your eyes are the most complex sensory organ in your body. Because of this, they are important to keep healthy and in good working condition. Vision coverage allows the user to have annual eye exams. At these exams, the optometrist determines if you need corrective lenses to improve your eyesight by means of glasses or contact lenses. The doctor will also check for eye diseases. Exams can even detect hidden medical conditions like brain tumors, rheumatoid arthritis, high blood pressure, or thyroid disease. If a medical condition is detected, the optometrist will refer the patient to a medical doctor for further tests and treatment.
Vision insurance and discount programs play a huge part in keeping your eyes healthy. Through regular eye exams, not only are your eyes evaluated, but the health of the rest of your body is, too. By scheduling eye exams, you are also able to obtain corrective eye wear that allow you to see clearer and without eye strain. Healthy vision is a benefit you don’t want to lose!
by ckistler | Feb 11, 2021 | Employee Benefits
Employee Assistance Programs (EAP) are company-sponsored programs that provide assistance to employees for a variety of personal issues that may be hindering or adversely affecting their work performance. Typically offered through third-party administrators, EAPs can provide their services online or via telephone and can sometimes be a part of the employee’s healthcare plan, however it is not a replacement to the healthcare plan.
Examples of EAP Services
There is an assortment of services that EAPs offer to employees. All these services have a central purpose: aid the employee so that their personal problems are resolved, and their work performance is unaffected. For example, Karen has been struggling during the COVID-19 pandemic with depression. To sooth her anxiety, she has begun drinking every day. It’s gradually escalated to the point where she is late to work, has frequent absences, and is missing deadlines. She knows she needs to talk with someone who can offer her alcohol abuse resources. She accesses her company sponsored EAP.
Here are some other common services included in EAPs:
- Alcohol and substance abuse counseling
- Health and wellness counseling
- Child or elder care resources
- Legal aid
- Marital and family counseling
- Financial counseling
Benefits of EAP Services
There are a number of benefits to the employee and the employer when the EAP is utilized in the workplace. First, utilizing the EAP service is completely voluntary. Second, the services are provided free of charge to the employee. Third, the counselor that speaks with the employee is entirely confidential. This allows the employee to be completely honest without feeling a threat that the employer would retaliate on anything said in a session.
Utilizing your company’s EAP not only provides services and care to you and your family, but it also benefits your company. No longer carrying the burden of your personal problems solo, an EAP counselor can give you sound advice and steps to follow to achieve success when tackling a problem. Employers will benefit by there being no disruption in the workflow of their employee due to overwhelming personal issues. Access your EAP and attack those personal problems today!
by Johnson and Dugan | Feb 14, 2020 | Employee Benefits, Human Resources
City and County of San Francisco Minimum Compensation Ordinance
Any company with 5 or more employees and contracts with the City and County of San Francisco needs to be aware of the wage law that has been in effect for several years, and the recent amendment that now includes stricter enforcement. The Minimum Compensation Ordinance (MCO) covers most City service contractors as well as tenants at the San Francisco International Airport. The law generally requires covered employers to provide to their covered employees:
- No less than the MCO hourly wage in effect:
For contracts entered into on or after October 14, 2017, the minimum hourly compensation rates effective July 1, 2019 are:
- $17.66/hour – For-Profit entity
- $16.50/hour – Non-profit entity
- $16.50/hour – Public entity
For contracts in effect prior to October 14, 2017, the minimum hourly compensation rates effective July 2, 2019 are:
- $15.59/hour for work performed within the City of San Francisco (SF Minimum Wage)
- $10.77/hour for work performed outside of the City of San Francisco
Rates are subject to change, refer to the OLSE website for the most current information: www.sfgov.org/olse/mco
- 12 paid days off per year (or cash equivalent)
Time off allowed for vacation, sick leave, or personal necessity, and part-time employees are allocated paid days off on a prorated basis.
- 10 days off without pay per year.
Days off of for part-time employees are allocated on a prorated basis. The PTO accrual rate is 0.04615 hours per hour worked and can be used as vacation or sick leave. PTO hours are vested and can be cashed out at termination.
Other requirements:
- The employer must post the Minimum Compensation Ordinance poster in a location where employees can read it easily.
- Employees must be provided a Know Your Rights form for signature.
Failure to meet the requirements could result in penalties, with a look-back period of 10 years when a complaint is filed. If you are not in compliance and want to avoid penalties, there are options to minimize your liability. Any audit based on a complaint will include a review of your employee handbook and your payroll records.
To review the November 21, 2019 amended rules, Click Here.
