Managing employee benefits is an important and costly endeavor for employers. Periodically reviewing your benefits program is an important step in the benefits management process to determine if it is meeting the organization's objectives and employees' needs. Changes in the business climate, the economy, the regulatory environment and workforce demographics all create dynamics that affect benefits offerings. View our annual employee benefits benchmark report to learn more.
Employers should carefully review their benefits program, consider how their organization’s circumstances have changed and propose items of consideration for their benefits to-do list. Here are seven common questions that employers should answer and evaluate:
- Is your organization a “large employer” subject to ACA employer shared responsibility? Further, is your organization a “large employer” per your state’s fully insured group health plan market?
Generally, employers that averaged 50 or more full-time employees plus full-time equivalents in calendar year 2017 are subject to ACA shared responsibility for all of calendar year 2018. However, confusingly, in most states the threshold to be considered a large employer for group health insurance contracts is an average of 51 or more full-time employees plus full-time equivalents in the previous calendar year. How do the rules work in your state? Make sure to finalize your calculations and determine your status for both employer shared responsibility and your state’s group health insurance market.
- Is it time to self-fund the group medical plan?
The financial headwinds faced by fully insured plans have never been greater. Fully insured premiums are laden with the roughly 4% ACA premium tax (aka the Health Insurer Annual Fee), state premium taxes, the cost of various state-mandated benefits, and often robust retention and pooling point charges. Thus, employers sponsoring group fully insured health plans should consider if moving to a self-funded contract, including so-called level-funding contracts, could be advantageous. Given the varying state regulations, state stop-loss minimums, organizational risk tolerance, reserve requirements and other variables, there is no one-size-fits-all answer to this question. Especially good times to perform a comprehensive self-funding evaluation are when your company crosses over from small group to large group and/or when meaningful claims experience becomes available from your fully insured vendor.
- Is it time to self-fund the dental and short-term disability plans?
For most employers of size sponsoring plans that are not 100% employee paid (aka not voluntary), the answer to this question is simply “yes.” Run the math and make your decision. Employers may also consider using external trends and benchmarking data to evaluate the effectiveness of the benefits plan or a full-fledge needs assessment on a recurring basis.
Discover how employers are adding value to their benefits plans with short-term and long-term disability coverage.
- Does benefit eligibility for life and disability vary by class?
For start-up companies, it’s not uncommon to offer better group life and disability benefits to certain classes, including management and executives. However, as employers grow, the budgetary and cultural reasons for doing so can quickly diminish or go away. A quick litmus test is simply asking yourself if the continuing benefit discrimination still makes sense. Regardless if these benefits vary by class, is your group life plan compliant with the Section 79 nondiscrimination rules? Double-check with your attorney, accountant and benefits consultant.
- Who is the health savings account trustee (i.e., the bank)? Is it linked to the health insurer?
If your organization sponsors a qualified high deductible health plan (HDHP), you likely allow employees to contribute to an HSA pre-tax through your Section 125 plan. Is the bank you selected still the best fit? Is the bank tied to your fully insured group health vendor? If yes, if you change your group health vendor, are your employees allowed to maintain the HSAs with this trustee with no fee changes? Should you consider moving to a quality standalone HSA vendor?
This benchmark report indicates that enrollment in HDHPs increased in 2017. Click here to learn more.
- Does your firm employ anyone in California, Hawaii, New Jersey, New York, Rhode Island or Puerto Rico?
Most employers headquartered in these states (and territory) are acutely aware of the state disability requirements. However, given the advent of liberal telecommuting policies, it’s becoming more common for employers without physical locations in these states to employ individuals in them. If you answered yes to this question, double-check your compliance with the state disability requirements. Your disability insurer or administrator can assist.
- Is your firm required to file health and welfare Form 5550s? If so, who is handling the filings?
Generally, employers subject to ERISA that sponsor benefit plans that, cover 100 or more participants at the beginning of the plan year are required to file health and welfare 5500s and the related schedules. Most multiple employer welfare arrangements (MEWAs) must file. It’s very easy for health and welfare Form 5500 filing requirements to fall through the cracks. While U.S. Treasury’s penalties for non-filers are substantial, Treasury doesn’t keep track of who is required to file and thus doesn’t individually remind employers of this requirement. Further, this requirement doesn’t seem to be on the checklist of most auditors and accountants. Employers should review all enrollment counts of all plans at the beginning of each year and consult with their accountant, attorney and benefits consultant on the filing requirement and next steps.