There are many reasons to offer benefits to employees as they help to attract and retain talent, improve and maintain employee health and productivity, provide tax advantages to the employer and employee, boost employee morale and engagement, improve company culture and provide access to networks and ancillary products that would be unaffordable or unavailable on an individual basis.

If you are currently offering employee benefits or are considering it, there are many options available to you.  Some key considerations are the type of group health plan, compliance requirements, plan design and cost, employee education and engagement, tax advantages, and ongoing plan management.

Group Health Plan Funding Options:

• Fully Insured/Community rated Plans: These plans are priced based on the employee’s age and zip code. The carrier assumes all risk for employee claims.
• Self-Insured Plans: The employer assumes the risk for employee claims and uses a third-party administrator to process claims.  The majority of companies utilizing this type of plan are large companies with over 500 employees.  In companies with 100-499 employees, approximately 40-60% are self-insured.  Only 10-15% of small companies are self-insured.
• Level-Funded Plans: These plans are a hybrid that allow for a fixed payment by employers on a monthly basis which provides funding for a claims fund, a stop loss policy and administrative costs.  Employer liability is protected by the stop loss policy and the run-out period.  Plans are similar to fully insured plans and oftentimes offer preferable designs and pricing.  Underwriting will be used to set rates either by utilizing individual applications, Artificial intelligence or GRX quoting, which assists the carrier in evaluating the general health of the group.  Average or above average health groups typically see 20-50% better pricing than fully insured plans.

Compliance Requirements:

There are many compliance requirements that are mandated by the Affordable Care Act (ACA), Employee Retirement Income Security Act (ERISA), the Department of Labor (DOL), the Internal Revenue Service (IRS) and Consolidated Omnibus Budget Reconciliation Act (COBRA).  It’s very important to work with a broker that can help you understand the requirements as well provide guidance and assistance on the reporting and disclosures provided to your employees and outside regulatory agencies to assure compliance requirements are met.

Plan Design and Cost:

There are many variables to consider when designing a benefits package such as networks, types of products offered, and contribution strategies.  A knowledgeable broker/advisor can review all the options with you.

Networks:  Some carriers will offer more limited HMO networks in addition to national networks to help save on premium costs.  PPO and POS networks are national networks.

Types of Products Offered:  There are many employee benefits that may be offered to employees aside from basic health insurance.  These benefits may be offered as 100% employer paid, 100% employee paid or a combination of both.  Offering employees additional benefits such as those listed below will generally allow the employee to receive a better quality benefit at a reduced cost than they could procure on their own.

• Dental
• Vision
• Life
• Short term disability
• Long term disability
• Critical Illness
• Cancer
• Accident
• Legal help
• Pet insurance
• Executive plans
• Gap plans

        Contribution Strategies:  Most medical carriers will generally require 50% of all eligible    employees to participate in the medical plan with a few exceptions.  Thought should be given to     the amount the employer will contribute to the employee and their dependents with           consideration given to attracting employees, motivating healthy choices and participation in the   plan.  With all other lines of coverage, the contributions may be made by the employer,   employee or both.  Rates are typically better if the plan is employer sponsored.

Employee Education and Engagement:

Employees should receive clear communication to insure they understand their benefits, including coverage details, out-of-pocket costs, and how to use their plan.  Open enrollment should be made available to them and their dependents on an annual basis.  Lastly, employees should understand what tools and resources are available to them like online portals, HR support, and broker assistance.

Using a broker that utilizes Benefit Administration software will help employer’s stay compliant with all notices and disclosures that should be available to employees.

Tax Advantaged programs:

Employer contributions to health insurance benefits are deductible to the employer and tax free to the employee.  There are many other tax advantaged options available as part of the medical plans offered or that may be added such as:

• High Deductible Health Plans (HDHP) – these plans have less expensive premiums and allow for tax free savings and growth on contributions made by the employer and/or the employee to a Health Savings Account. The health plans operate just like a non-HSA plan, but do not have any first dollar coverage aside from preventative care and few other exceptions.  Any copays offered are typically applied after the deductible is met.
• Health Reimbursement Accounts (HRA) – employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount.
• Flexible Spending Accounts (FSA) – benefit that allows employees to set aside pre-tax money from their paycheck to pay certain health care and dependent care expenses.
• MERPS – reimburses employees for out-of-pocket medical expenses incurred by employees or their dependents.
• Pre-tax plans – allows employee contributions to benefits to be made on a pre-tax basis thus reducing the cost of those benefits.

Ongoing Plan Management:

Annual reviews should be done to adjust benefits based on employee needs and to control costs.  Alternate quotes may be needed to insure competitive pricing along with a review of contribution strategies and plan design.

Providing benefits to your employees is a worthwhile endeavor as they will feel more appreciated when they know their employer values them enough to make healthcare and other benefits accessible to them.  While it may seem complicated and expensive, working with the right advisor will help mitigate your concerns.