No one foresees needing disability benefits. But, should a problem arise, the educated and informed employee can plan for the future by purchasing disability insurance to help cover expenses when needed. Watch this short video to learn more!
According to recent estimates by Fidelity Investments, a couple will incur an estimated $280,000 worth of medical expenses after turning 65 years of age. They estimate this cost every year and when they publish it, I can’t help but have an anxiety spike as I ponder the reality of that number. Even if they are off and have over-estimated by 50%, the remaining number is still very hard for me to swallow. And, as anxiety has habit of doing, it sends me into panic mode and I scramble to reevaluate my retirement planning in an attempt to ward off the eventual doom and gloom that has settled on the far horizon of my life.
After a few deep breaths, I settle down and remind myself that I have a health savings account (HSA) that I have faithfully been contributing to over the past several years and that I plan to continue contributing to as long as I am eligible to do so. HSAs are a great way to plan for medical expenses, either in the future when you retire, or now when you or a member of your family incurs qualified medical expenses. Here’s the run down on how they work.
HSAs are a savings account option that allows individuals that are covered by a high deductible health plan (and that are not covered by any type of insurance other than a high deductible health plan), to set aside a certain amount of their income on a pre-tax basis to pay for medical expenses that arise. Unlike health flexible spending accounts that are similar in that individuals can set aside pre-tax dollars to pay for qualified medical expenses, funds put into an HSA are not forfeited at the end of the year if you don’t spend them. Said differently, HSAs don’t have the “use it or lose it” component. If you don’t use it, you keep it, and if you do that year after year, the balance in your HSA can grow exponentially!
An HSA works essentially like this. Each year the government sets a maximum amount that qualified individuals are able to put into an HSA on a pre-tax basis. For 2018, this amount is set at $3,450 for individuals that have single coverage under a high deductible health plan (HDHP) or $6,900 for individuals with family coverage under an HDHP plan. Then, these funds can be used to pay for qualified medical expenses that are incurred. This would be for out-of-pocket expenses that aren’t covered by their health plan such as copays, deductibles or qualified expenses not covered by the plan.
The concept for HDHPs is that they are a type of consumer-driven health plan that results in individual consumers having more “skin in the game,” leading them to be more conscientious consumers of health care, thereby helping to control the rising costs of health care. To assist individuals to pay for the higher costs they are responsible for prior to meeting the higher deductible, the government was willing to also have more skin in the game by forfeiting tax dollars and allowing HSA contributions to be made on a pre-tax basis to pay for these costs. Employers who allow employees to contribute to HSAs on a pre-tax basis also benefit by reducing the amount of FICA taxes that they are required to pay.
The goal of the HSA was not only to help pay for these higher, pre-deductible expenses, but also to provide a mechanism for individuals to save for medical expenses once they reach retirement. After all, discussions and debates continue regarding whether or not Medicare will continue to exist in the years to come.
If you contribute to an HSA and then use those funds for qualified medical expenses, you pay no taxes on those funds. In essence, you are lowering your expense by the amount of taxes you save. If, however, you dip into your HSA to pay for non-qualified expenses, then you are subject to taxes on those funds plus a 10% tax penalty.
Some individuals balk at contributing to an HSA because they feel they will not incur qualified medical expenses in the coming year. Other individuals limit their HSA contributions to the amount of qualified medical expenses they expect to incur in the coming year. Still others try to contribute the maximum amount each year regardless of what they anticipate their costs being. Why?
In addition to contributing dollars on a pre-tax basis, many banks that offer HSAs also offer investment options for those accounts, so that you can increase your funds through investments on top of the on-going contributions that you deposit. And, this investment growth is also available to you on a tax-free basis as long as the funds are used for qualified medical expenses! I find this refreshingly reassuring as I peek into my account and see that it is growing, and it not just because I’m dumping money into it. So max-funding an HSA and investing those dollars allow you to earn even more dollars on top of the pre-tax dollars. I look at this as free money!
Because of this growth potential, leaving funds in the account even when you do have qualified medical expenses can be an advantageous investment maneuver. What? Not use the funds when you have a qualified expense? Yep. You are not required to take funds out of your HSA at the time that a qualified expense occurs. You can leave that money in your HSA and, as long as you keep your receipts showing that you paid for those qualified expenses, you can wait to reimburse yourself for that expense at any time in the future, even if you are no longer covered by an HDHP when you decide to reimburse yourself. You see, although you are only eligible to contribute to an HSA when you are covered by an HDHP, you can take the money out for qualified expenses at any time in the future. I love this option. I put as much money into my HSA as I can, and as long as I have the funds in my personal operating account, I pay for qualified medical expenses with that money. I save all of those receipts and if in the future I’m short on money in my operating account for whatever reason, I can then reimburse myself for prior qualified medical expenses from my HSA. If I never need to do this, good for me; I leave the funds in the HSA and I continue to reap investment growth. There’s that free money again!
But what if I reach retirement and I’m still healthy? What if I manage to accumulate $140,000 in my HSA and I end up NOT having $140,000 in medical expenses? Will I encounter a “use it or lose it” option at this point? Nope. If I’m fortunate enough to be healthy with minimal medical expenses after turning 65, the funds in my HSA can operate exactly like my 401(k). Meaning, if I withdraw the funds for non-medical expenses after turning 65, those funds are subject to taxes, but they are no longer subject to the 10% tax penalty that I would have incurred if I used the funds for non-medical expenses prior to turning 65. And, just like a 401(k), the anticipated tax rate after I turn 65 is expected to be lower so I won’t pay as much in tax as I would have if I had taken those funds in my paycheck back when I was younger. Although my goal is to contribute to both my 401(k) and my HSA, I try to max-fund my HSA first and then I fund my 401(k) with as much as I can after that. Why? Because, once I reach 65 my HSA performs just like my 401(k) if I choose to spend the dollars on non-medical expenses. However, if I do have medical expenses, the funds I take from my HSA to pay for those expenses are “tax-free.” If I had to use money from my 401(k) for medical expenses, that money would be taxed!
By Vicki Randall
Originally Published By United Benefit Advisors
While there’s plenty of talk about work/life balance, many employees want to feel human while at work, too. Being able to bring their whole selves, according to “3 Ways to Create a More Human Workplace,” from Workforce, is an essential piece of a welcoming, inclusive workplace environment.
Putting employees first as a defined company value means helping team members feel connected, valued, and like their work is having an impact. Supporting employee well-being improves everything from engagement to loyalty.
Small changes, like building breaks into the day, as well as larger wellness initiatives are some of the best investments in resources, time, and money a company can make in both its people and its bottom line.
As companies think about the customer experience more and more, it’s also a smart idea to think about the employee experience. One-off opportunities or programs to check the wellness box, for example, are less powerful than a holistic experience. Employers should consider whether their employees would enthusiastically recommend a friend apply for a job, and craft a workplace experience that makes that a reality.
That whole person, whole experience approach also applies when building a diverse and inclusive workplace. Recruitment and hiring are often the talked about steps, but it’s as critical to think about the employee experience after the job starts.
Beyond the overall workplace environment, employers can strive to make the workplace a more inclusive space, according to “6 Steps for Building an Inclusive Workplace,” from the Society for Human Resource Management. After successfully hiring a diverse workforce, employers need to support and retain talented individuals.
It starts at the top, with education for leadership on topics ranging from inclusion to unconscious bias to training on how to best accommodate an employee with a disability. Creating a dedicated council or committee to act as intermediaries between executives and employees, clear employee goal setting, and regular reviews are just a few next steps.
Giving dedicated time, space, and opportunities (both organic and organized) to share about individuals’ background and opinions can help employees feel connected and seen in their workplace. Ensuring diversity is supported in both action and physical space—whether a meditation or prayer room or a space for nursing mothers—is essential. Likewise, celebrating culture and identity can also be a powerful connective tool.
Even the way day-to-day work happens showcases how inclusive a company is. Employers can learn what employees need and want by making time to listen part of the day. Rotating meeting times and checking on technology needs for remote workers are small choices a company can make to show it cares about its individuals.
And, ultimately, keeping inclusivity top-of-mind and visible for everyone helps foster a culture of expectations. Having leadership and management communicate goals and measure progress for an inclusive workplace ensures everyone knows inclusion is valued.
By Bill Olson, VP, Marketing & Communications at United Benefit Advisors
Originally posted on www.ubabenefits.com
Summer internships offer students opportunities to gain real-world experience and hands-on career development. Conversely, internship programs give employers access to highly motivated and educated young workers and give junior managers more experience training and supervising. There are benefits for everyone involved.
However, there are some potential legal and administrative pitfalls that many employers overlook. One of the largest issues is determining what interns should be paid – or not paid.
The Department of Labor issued new guidance on January 5, 2018, that gives employers more flexibility in deciding whether to pay interns. A seven-criteria test is now used to determine if an internship may be unpaid, but the biggest change is that not all factors need to be met – no single factor is decisive, and the determination is made on the unique circumstances of each case.
If the job training program primarily provides professional experience that furthers a student’s educational goals, a student may not be considered an employee entitled to compensation. However, if students are doing work usually done by employees and are not receiving training and close mentoring, they should be paid wages. If there is any doubt, the best approach is to pay the student.
However, while it’s now legally permissible to classify more interns as unpaid, there are still compelling reasons to pay interns even when the internship does meet the criteria for unpaid status.
Unpaid internships tend to exclude students from lower- and middle-income backgrounds, who cannot afford not to work at paid jobs during the summer. In addition, they may need to pay up to several thousand dollars for course credit, in addition to coming up with funds for housing, clothing, and transportation related to the internship. This can put internships out of reach for some of the students who can benefit from them the most.
Unpaid internships may devalue the work paid employees are doing. After all, interns are working alongside regular employees — often doing some of the same tasks — and not being compensated for that work. This may send the message to employees that their work, or time, is not valued.
Unpaid internships can create a negative impression of your company. Customers or the community may see you as taking advantage of these students, which is not the message you want to portray. It’s a good community relations move to offer youth paid opportunities.
The work the unpaid intern is doing may actually be work that should be compensable. Improperly classifying an internship and not paying the student could result in wage claims that include back pay, penalties, and fines. To mitigate those risks, once again, the best approach is to pay the student.
Hiring summer students is a great way to help youth learn what it takes to be successful in business while helping employers get special projects completed. Plan ahead and structure your program so that your summer internship program is a great experience for everyone.
by Rachel Sobel
Originally posted on thinkHR.com
Did you know that you can save time and money on your prescription drugs by simply signing up for a discount card online? With savings as much as 80% off, these discount cards keep your health care costs down even when the prices of prescriptions are sharply rising. At no cost to the patient, discount drug programs negotiate the price of medicines with pharmacies and then pass the savings on to the consumer. These programs give subscribers a personalized discount card to be used at any pharmacy. While the discount card cannot be used in conjunction with health insurance, the consumer may see that the cost of their medicine is actually LESS with the card than it is with their insurance.
Another benefit to the consumer is that these programs will publish at which pharmacy you can find your medicine. This is especially helpful to the person who has specialty drug prescriptions. For example, Rebekah is prescribed a specialty drug for pain and neuropathy due to Multiple Sclerosis. This drug is not commonly stocked in pharmacies and so many times, she has had to wait for them to order it. By using the discount drug program, Rebekah is able to see which pharmacies have her medicine in stock and the estimated price.
So where do you start? Here are a few discount drug programs to investigate costs and providers for your prescriptions:
Being a savvy consumer can save you money! Shop around to find the best cost for your prescription drugs and save time by locating the pharmacy that has your meds in stock. Discount drug programs are a great resource so do your research and find one that fits your needs.
When evaluating employee benefits, essentials such as health and dental plans, vacation time and 401(k) contributions quickly come to mind. Another benefit employers should consider involves subsidizing learning as well as ambitions. Grants and reimbursements toward advanced degrees and continuing education can be a smart investment for both employers and employees.
Educational benefits are strongly linked to worker satisfaction. A survey by the Society for Human Resource Management revealed that nearly 80 percent of responding workers who rated their education benefits highly also rated their employers highly. While only 30 percent of those rating their higher education benefits as fair or poor conversely rated their employer highly.
These benefits are popular with businesses as well. In a survey by the International Foundation of Employee Benefit Plans, nearly five of six responding employers offer some form of educational benefit. Their top reasons are to retain current employees, maintain or raise employee satisfaction, keep skill levels current, attract new talent and boost innovation and productivity. Tax credits offer additional advantages. Qualifying programs offer employers tax credits up to $5,250 per employee, per year.
At the same time, companies should offer these benefits with care as they do pose potential pitfalls. Higher education assistance can be costly, even when not covering full costs. Workers taking advantage can become overwhelmed with the demands of after-hour studies, affecting job performance. Also, employers would be wise to ensure their employees don’t promptly leave and take their new skills elsewhere.
When well-planned, educational benefits will likely prove a good investment. Seventy-five percent of respondents to SHRM’s survey consider their educational-assistance programs successful. To boost your employee morale, skill levels and job-satisfaction scores, consider the benefit that may deliver them all, and more.
Find out more:
IFEBP: Why Educational Assistance Programs Work
EBRI: Fundamentals of Employee Benefit Programs