What Are Common Employee Benefits
There are certain benefits that are required by law for all employees, regardless of their class or number of labor hours. Benefits that are required by law include: unemployment insurance, family and medical leave , workers’ compensation, time off for military service and other required service, withholding taxes and disability contributions where required by state law, according to Entrepreneur.
While not required, many employers provide beyond the minimum benefits in order to remain competitive. A benefits package can be leveraged to attract and retain talent, which can be critical in certain industries. Common benefits that are not required by law include retirement plans health, dental and life insurance and paid vacations. Only employers with over 50 full-time employees are expected to provide health coverage to 95 percent of employees or face a penalty. Benefits beyond those required by law are considered to be part of an employee’s total compensation.
Who Is Helped By The New Qsehra Reimbursement Rules
For employees who work for small businesses that don’t offer health insurance, the availability of premium subsidies in the exchanges depends on income, along with family size and the cost of coverage in the applicant’s area. In general, subsidies are available in most cases if the applicant’s household income doesn’t exceed 400% of the poverty level.
If you’re currently receiving a premium subsidy in the exchange and your employer begins reimbursing premiums under a QSEHRA, the exchange subsidy would be reduced by the amount of the employer reimbursement.
But if you’re not eligible for a premium subsidy in the exchange , a QSEHRA could directly benefit you if your employer decides to take advantage of that option.
This article outlines various situations in which a QSEHRA benefit can be helpful, harmful, or neutral to an employee’s financial situation.
Health And Worker Productivity
The existing studies found little evidence that workers with health coverage are absent less often than are workers without coverage. For example, the Rand Health Insurance Experiment found that the effect of insurance coverage on work loss days was small and insignificant . Similarly, despite years of research outside mainstream economics , there is almost no direct evidence regarding the effect of health insurance coverage on morale and worker productivity and the firm’s performance. In those fields, although the link between employment practices and productivity is widely recognized, the linkages between productive behavior and psychosocial job structure have remained unclear in the eyes of many observers . However, there is compelling research demonstrating that health insurance has a powerful influence on access to health care, the timeliness of care, the amount and quality of care received, and fundamental health . People without health insurance are less likely to seek medical care, less likely to get it, and, as a result, more likely to be in worse health and have higher death rates than are people with insurance coverage . Uninsured persons have a much greater risk of health decline and death, with several studies showing them to be 1.2 to 1.5 times more likely to die than are insured persons .
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Open The Office In Phases
If the employees are hesitant to re-join the office immediately, employers can take it slow. They can open the office in phases.
Start with teams whose work is compromised while working from home for example, the IT department. Offices have better computer systems in place than residences many employees work on sub-optimal systems at home.
Alternatively, the employers should open the office for the top management and gradually work their way down the hierarchy. Knowing their team leaders and colleagues attend work regularly can be assuring. It can prepare the employees mentally for their return.
The employees also observe the care taken to ensure their safety, thus gradually getting more confident about returning to the workplace.
It Saves You Money At Tax Time
Employer health-care premiums are tax exempt, which can greatly reduce or even erase your tax obligations. Your contributions are also tax deductible, meaning you can write off the cost of employer-sponsored contributions during tax season. By offering employee health insurance, you may also qualify for the Small Business Health Care Tax Credit.
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Importance Of Offering Health Insurance For Employees
In a tight labor market, a potential employer’s benefits package can be one of the top determining factors for individuals juggling multiple job offers. Many large companies offer health insurance, but a 2017 Paychex survey noted that 43 percent of companies with less than 100 employees offer this benefit as well. Health care was the most commonly offered benefit, according to those surveyed. Employees also ranked health and dental plans among the most important benefits for increasing morale, along with monetary bonuses and additional paid vacation time.
Why Do Workers Want Employment
Workers want health insurance for themselves and their families in order to protect against the catastrophic costs of serious illnesses and to ensure access to medical care. For those without the time or income to save for it, insurance may be the only way to obtain medical care that would otherwise be unaffordable . Although it is possible for individuals to purchase insurance on their own, the high cost of private individual coverage, barriers to access to that coverage, and steep transactions costs help account for the value of group coverage to workers and thus explain why, in the absence of any viable alternative, workers demand coverage through their employers.
Employment-based coverage is far less expensive than individually purchased coverage, for several reasons. First, through pooling, employers can reduce adverse selection and administrative expenses. These cost advantages are significant, especially for large firms. Moreover, employers are able to offer relatively inexpensive health insurance because most people covered by employment-based plans are in good health. Those people who are most expensive to insurethe elderly and people with serious disabilities and chronic conditionsare typically covered by public programs such as Medicare and Medicaid, thereby reducing the cost of employment-based insurance .
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Myth : Employers Must Cover The Same Percentage For Single And Family Coverage
Busted. An employer’s contribution does not have to be the same for single employee coverage and family coverage, and often is not. When it comes to national averages, employers typically cover about 82 percent of single employee premiums and 70 percent of family premiums.3
Among small firms , about one-third of workers contributed more than 50 percent of the total family premium.
If I Stick With My Employer
In most cases, sticking with your employer-sponsored coverage for your health insurance will be your cheapest option. Most employers contribute towards your monthly premium costs, meaning you might not be able to beat that price. Especially since some employers might even contribute up to 100% of your monthly costs for your health insurance premiums.
Unless your employer offers health insurance that does not meet the minimum standards outlined in the ACA, you wont be able to qualify for any subsidies for your monthly premiums on the Marketplace. So while an Obamacare plan may seem cheaper on the surface, a quality employer-provided plan might be more affordable when you look at the big picture.
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Small Business Health Care Tax Credit
Small businesses, on the other hand, have no requirements to offer any health insurance coverage to employees. However, if a small business opts to offer health insurance coverage to employees, it may qualify for the Small Business Health Care Tax Credit. To be eligible for the credit, your small business has to meet the following criteria:
- You must have less than 25 full-time equivalent employees
- The average wage you pay employees must be less than $51,600 per year
- You have to pay at least 50 percent of the cost of the employees health insurance premium.
Small businesses can apply for the tax credit when filing their income taxes.
Is My Employer Required To Provide Medical Benefits To My Spouse Domestic Partner Or Dependent Children
Much like employers are not required by law to provide health and welfare benefits to employees, they are equally not required to provide those benefits to spouses, domestic partners or dependent children. If, however, an employer voluntarily provides spousal benefits through an insurance provider or health maintenance organizations , the employer must also provide those same benefits to registered domestic partners of the covered employees. Thats because AB 2208 requires equal treatment of spouses and registered domestic partners in all aspects of insurance coverage.
Note: AB 2208 applies to insurance providers and HMOs who supply insurance to an employers employees, but does not apply to employers who self-insure, who are not required to provide equal domestic partner coverage to their employees.
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What Health Benefit Options Are Available For Small Businesses
Although small businesses dont need to offer health insurance, many opt to do so to keep their employees happy and healthy and to attract new workers. Here are some of the most popular health benefits options available to small businesses:
- Traditional group health insurance: The federal government offers SHOP, the Small Business Health Options Program, which gives small employers the option to provide health and dental coverage to their employees. SHOP is available to businesses with one to fifty employees you can apply online.
- QSEHRA: The Qualified Small Employer Health Reimbursement Arrangement is a health benefit plan funded by employers that reimburses employees for their health care expenses from a monthly tax-free health care allowance. It allows businesses to set their own budgets but still offer coverage.
- Integrated HRA: With an integrated HRA, small businesses offer employees a group plan in combination with a monthly allowance for health care expenses. The group plan for an integrated HRA usually involves a high-deductible policy.
- Health insurance purchasing co-op: Health insurance purchasing co-ops are regulated at the state or local level. These co-ops allow small businesses to come together and collectively purchase health insurance for their employees. The regulation and availability of purchasing co-ops varies from state to state.
Offering Health Insurance To Employees: An Implementation Guide
Health insurance remains the most popular employee benefit, with over 70% of private companies offering it. So if youre thinking about offering health insurance to help attract and retain workers, you probably have lots of questions about how to get started. Thats natural since there are so many factors to consider when designing your employee benefits.
Complete Payroll Solutions is a health insurance broker to thousands of small and mid-sized companies. We know health insurance can be an important benefit for your workers, but it can also be overwhelming to understand all the rules and requirements when it comes to starting a group plan. To help you understand whats involved in implementing a health insurance benefit, here well discuss:
- Do I have to offer health insurance to employees
- Do I have to make health insurance available to all employees
- Can I start a plan at any time during the year
- Whats involved in setting up a health insurance plan
- How long does it take to implement a health insurance plan
- How much does it cost to offer health insurance to my employees
After reading this article, youll have the information you need to decide if offering health insurance to your workers is the right choice for your business.
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Evidence Of The Effects Of Health Insurance
Are employers perceptions of the value of health and health coverage consistent with the evidence from empirical studies? Is health coverage associated with measurable gains in health and productivity? Is absenteeism reduced? Do the benefits of health coverage justify its costs? The existing empirical research can shed some light on these questions, but it is hardly conclusive. Substantial gaps in research remain.
Suggestions For Future Research
Additional research is needed to better document the value of health and health insurance coverage to employers. However, since almost all large firms offer health insurance to at least some of their employees, there is no easy way to demonstrate that not offering health coverage adversely affects firms performance. One way to proceed is to take advantage of differences in health plan offerings across large firmsdifferences in the proportion of workers made eligible for coverage, the share of premiums paid by workers, the availability of dependent coverage, the generosity of coverage, and the liketo determine how these differences affect workers take-up and firms performance.
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What Are Contribution And Cost
Since group health insurance plans are a form of employer-sponsored coverage, this means that a business is required to share the cost of health insurance with employees. Typically, this cost-sharing element of health insurance requirements refers to a small business splitting monthly premium costs with workers.
In most states, employers are required to contribute or pay for at least 50 percent of each employees health insurance premiums, although this depends on the state the business is located in.
Continuing Impact Of The Affordable Care Act
The Affordable Care Act includes an employer shared responsibility provision, stating that in general, employers with an average of 50 or more full-time equivalent employees during the preceding calendar year must offer adequate and affordable health insurance. If this insurance is not offered to full-time employees and their dependents, the company may face the potential of a tax penalty.
Companies falling under the 50-employee threshold that wish to offer a health plan to employees should also be aware of programs offered in conjunction with the Affordable Care Act. Many of these programs are aimed at small businesses with the intention of helping them find and offer affordable health benefits. Eligible small businesses can purchase health and dental care coverage through the Small Business Health Options Program . A small business health care tax credit is also available to eligible businesses offering health care to employees.
While the employer mandate still stands, the individual mandate penalty is reduced to $0 beginning in 2019. However, a few states have established their own individual mandate. Although these policies generally do not directly impact an employers need to offer health insurance, an individual mandate at the state level may lead to an increased demand from the workforce to have coverage through their employer.
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Reporting Information On Health Coverage By Employers And Insurance Companies
The health care law requires the following organizations and some other parties to report that they provide health coverage to their employees:
- Certain employers, generally those with 50 or more full-time and full-time equivalent employees
- Health insurance companies
Learn more about these reporting requirements from the IRS.
Myth : Employers Are Required To Give Equal Benefits To All Employees
Busted. It’s okay to provide employees with different health insurance benefits as long as its based on work-related characteristics things like tenure, full- or part-time status, exempt/nonexempt status.
In fact, companies in competitive industries often base benefits on length of service wherein higher earning, long term employees may pay a smaller contribution towards their health benefits than entry-level employees, who shoulder a disproportionate amount of their health insurance costs.
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Health Insurance From An Employer
In the U.S., a majority of people under the age of 65 have health insurance coverage through an employer-sponsored health plan either from their own job or through a family member, such as a spouse or parent. However, not all employers offer health insurance to their employees. With most job-based health insurance plans, the employer pays a portion of the premiums, and an employee’s contribution is paid on a pre-tax basis.
Plan Setup And Administration
Administering a health plan can be time-consuming and complex, especially for the first year or two. Compliance with the Affordable Care Act, budgeting, and finding a program administrator are just a few of the many tasks associated with implementation. Integrating your benefits and HR function into one user-friendly platform is often a cost-effective and efficient solution, even for smaller companies. A third-party administrator that specializes in health care plans can also help your company remain in compliance with the many rules and regulations surrounding the Affordable Care Act and other health insurance requirements. Administrative tasks to be outsourced may include:
- Tracking benefits eligibility
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Determine The Types Of Plans Youd Like To Offer
Once you select an insurance company, you will need to determine which types of network types you want to offer your employees. There are HMOs, PPOs, POSs, or Open Access plan types.
An HMO is typically the least expensive type, but it limits members to only in-network providers the carrier has pre-negotiated prices with, and members often must obtain a referral to see in-network specialists. Members can still use out-of-network providers, but they will have to pay out-of-pocket for everything other than emergency care.
PPOs are more flexible, enabling members to choose providers without a referral, but often at a higher cost than choosing in-network providers. PPOs are typically more expensive than HMOs.
A POS plan stands for Point-of-Service, and it is a combination of an HMO and PPO. It requires referrals from a primary care physician to see a specialist, and it allows for out-of-network care at a higher cost.
An All-Access plan is new to the game, pioneered by Sana. With an All-Access plan, members can see any provider they want, even specialists, without a referral or higher premiums or deductibles. Sana negotiates pricing with providers based on Medicares schedule of prices, plus an additional set premium. Shrinking provider markups reduces the cost of care, which can then make premiums more manageable.