A good employee benefits program can help your business recruit and retain the best employees. How does your benefit program measure up to your competitors’—in our area and in your industry? We can evaluate your existing benefits and design a program that achieves the best balance of attractiveness to employees and cost to you.
Group Health Benefits
In survey after survey, employees rank health benefits as one of the most important things they look for in a job. Most employers offer health insurance, finding the favorable tax treatment benefits both the employer and the employees.
Did you know that employers with as few as two employees can buy group health insurance to cover employees and, if you choose, their dependents? We can tailor health coverage solutions for groups of any size. We work with the best health insurers doing business in our area and will work with you to find a solution that meets your needs and budget.
- Preferred provider organizations (PPOs)
- Health maintenance organizations (HMOs)
- Point-of-service (POS) plans
- Consumer-driven health plans, including health savings accounts
- Voluntary (employee-paid) health insurance
You can read more here about small vs. large groups and the various types of plan, including HMOs, high deductible and self-insured plans.
Small vs. Large Group Health Plans
The number of full-time equivalent employees determines whether you fall into the small group market or large group market. Small group plans cover groups with 2-50 employees.
Small group plans cover groups with 2-50 lives
The Health Insurance Portability and Accessibility Act (HIPAA) requires insurers to write small group plans on a guaranteed issue basis. This means the insurer must cover the group, no matter what health conditions employees might have. Plans exclude coverage for a particular employee’s pre-existing health condition, but HIPAA limits that exclusion to no more than 12 months (18 months for late enrollees).
Large group health plans cover groups with 51 or more employees
Regardless of the size of your group, we can help you find a plan designed to provide the benefits your employees need to stay healthy, while controlling premium costs.
Group Health Plan Types
Preferred provider organization (PPO) plans
PPOs are the most common type of health plan today. A PPO contracts with a network of doctors; plans typically reimburse a higher percentage of fees for in-network doctors. Members can use non-network providers but will have higher copayments. Plans usually include features to avoid unnecessary health expenditures, such as requiring pre-authorization for elective procedures or a primary care physician’s referral for visits to specialists. Most plans also include wellness or disease management benefits designed to keep your employees healthy and control your claim costs.
Health maintenance organization (HMO) plans
An HMO requires members to use physicians within the HMO’s network; HMOs typically do not pay anything for out-of-network treatment, except in case of emergency. HMOs give your employees less flexibility in provider choice, but often cost less and involve lower out-of-pocket payments than other plans.
Point-of-service (POS) plans
POS plans combine features of HMOs and PPOs. Most POS plans require members to choose a primary care physician from within the POS network, but allow them to use out-of-network specialists with a referral from a primary care physician. Co-payments will be higher for out-of-network services.
Consumer-driven health plans
So-called consumer-driven plans aim to control healthcare costs by giving individuals more control over healthcare expenditures and by rewarding the ones who use their healthcare funds wisely. Most employer-provided consumer-driven health plans consist of a high-deductible health plan (HDHP) with a health savings account (HSA); however, health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs) can also be considered consumer-driven plans. Special rules apply to these plans under the Affordable Care Act; we can help you ensure your HRAs and FSAs comply with the ACA.
High-deductible health plans (HDHPs) with a Health Savings Account (HSA)
Only individuals with an eligible high-deductible health plans and no other health insurance can have an HSA. Either an employer or employee can fund an HSA. Employees can use account balances to pay for qualified health expenses; funds can accumulate from year to year.
This healthcare funding choice offers advantages to employers and employees. Employer contributions to an HSA are not considered taxable income; employee contributions are tax deductible. Withdrawals used for eligible medical expenses are not taxable to the employee; employees can also withdraw funds for other purposes (subject to a tax penalty). Funds accrue year to year and are owned solely by the employee.
Employees open and manage their own accounts, relieving employers of administrative duties. Employers or employees may deposit funds into the account (subject to maximums), giving employers flexibility. An HDHP might cost less than the employer’s existing group health plan. Please contact us for more information.
Self-Insured Health Plans
Larger employers might want to consider self-insuring. Self-insured employers pay for each claim, out of pocket, as it is incurred. This differs from a fully insured plan, in which the employer pays a fixed premium to an insurance carrier, which pays covered claims on the employer’s behalf. Typically, a self-insured employer will set up a special trust fund to pay claims and purchase special “stop loss” insurance to cover catastrophic or unusual losses.
Self-insuring isn’t for every employer, but it does offer a number of benefits. Federal law (ERISA) governs self-insured plans, so they do not have to comply with varying state health insurance regulations and benefit mandates. You can customize benefits to meet the specific needs of your workforce, as opposed to purchasing a “one-size-fits-all” insurance policy. You don’t have to pre-pay for coverage, improving cash flow. You maintain control over health plan reserves, enabling you to maximize interest income. And in most states, your plan won’t be subject to premium taxes.
Some self-insured employers also administer their own health plans, but many enlist the services of a third-party administrator (TPA), which can provide expertise not readily available in most HR departments. Our benefit specialists can help you determine if self-insuring makes sense for your firm.
Health Savings Options
In addition to health insurance, employers can choose from a variety of health savings options to either supplement or replace an insured or self-insured health plan. Any size employer can use these options.
Health reimbursement arrangements (HRAs)
An HRA is an arrangement funded solely by an employer that offers employees and eligible dependents tax-free reimbursement for qualified medical care expenses, up to a maximum dollar amount for a coverage period. Employees can generally roll over unused account balances to reimburse expenses incurred in later years.
The Affordable Care Act considers an HRA a “group health plan,” so it must comply with the ACA’s provisions affecting group health plans. Effective January 1, 2014:
- Employers can no longer use HRAs as a standalone medical plan. Employers can still offer HRAs, but only when integrated with a group health plan that complies with the ACA’s rules on annual benefit limits.
- Employers can use standalone HRAs for two purposes: 1) to reimburse retirees who buy their own health plans, or 2) to pay for “excepted benefits,” which include, among other things, accident-only coverage, disability income, certain limited-scope dental and vision benefits and certain long-term care benefits.
Healthcare flexible spending accounts (FSAs)
Also known as Section 125 Plans, FSAs let employees use pre-tax dollars to pay for healthcare expenses, reducing their taxable income and reducing the employer’s payroll. Employees elect how much of their salary to contribute, although most employers cap contributions. Unlike HRAs, FSAs are “use it or lose it” plans. As with HSAs, FSAs must integrate with a qualified group health plan or the market reforms will apply. Because individual coverage bought on the health insurance exchanges will no longer meet the definition of a “benefit,” employees cannot use funds in FSAs to buy individual coverage on the health insurance exchanges. Premium-only plans (POPs) used to buy other individual coverage or employees’ share of premiums for an employer-sponsored group plan might still comply with the law; consult a benefits expert for guidance.
Contribution limits for FSAs went into effect for plan years beginning on or after January 1, 2013. In 2014, the contribution limit stands at $2,500 per year; limits for future years will be indexed for inflation. The contribution limits apply to employee salary reduction contributions for healthcare expenses alone; they do not apply to employer nonelective contributions or to contributions for dependent care expenses.
Health Savings Accounts (HSAs)
HSAs are tax-sheltered accounts from which consumers may pay HSA-specific qualified medical expenses. In order to enroll in an HSA, an individual must have a qualified high-deductible health plan, or HDHP, and no other health insurance. HSAs may be funded by contributions from employers, employees or both; however, the employee opens and administers his/her own account. An HSA must be held at a qualified financial institution. Employees retain control of their HSA accounts. Unspent balances roll over from year to year and follow the employee to subsequent employers.
Employers can elect to contribute to employees’ HSAs. he IRS considers employers’ contributions to an HSA qualified medical benefits, so they are excluded from employees’ gross income. The maximum contribution amount depends on whether the individual has single or family coverage under his/her HDHP. Individuals over the age of 55 are entitled to an additional $1,000 “catch-up” contribution.
Life insurance is the foundation of any benefits program. According to the Bureau of Labor Statistics, 51 percent of all employees in private industry had access to life insurance through their employer.
Group Term Life Insurance
Most employers provide their employees life coverage through group term life policies. Group life is written on a “guaranteed issue” basis, so all eligible employees can obtain the basic coverage amount, regardless of their health status, as long as they sign up during the enrollment period.
Some group plans offer additional enhancements, such as allowing employees to convert their coverage to an individual policy if they leave the employer. Individuals who want higher limits can usually buy additional coverage if they pass medical underwriting.
You can read more here about different ways to offer and use life insurance, whole life and term insurance and the varieties of term insurance.
Term and Permanent Life Insurance
Many insurance experts advise purchasing life insurance equal to five to eight times the individual’s income. Offering group life insurance to your employees allows even employees with medical conditions to buy some life insurance protection.
There are two categories of life insurance: term and permanent.
- Term life insurance provides pure death benefit coverage at group rates. Most employers offer term insurance in their basic benefits package. It provides financial protection for a specific time (one to 30 years), and gives a death benefit but no cash savings.
- Permanent life insurance, or cash value, programs provide some additional benefits, including the tax-deferred accumulation of cash.
Term Life Insurance
Term life insurance comes in several varieties:
- Renewable. Policy owners can renew coverage at the end of their policy term without having to submit new medical information, though the premium rate will generally rise with each renewal.
- Convertible. A convertible policy allows the insured to convert term coverage into a permanent policy without providing evidence of insurability (usually a medical exam), in exchange for a higher premium, which remains fixed after conversion.
- Level. Level-premium policies have a fixed premium for a certain number of years (usually 10 or 20), while the death benefit remains unchanged. Although the rate locks in for the policy period, it can jump considerably upon renewal.
Permanent Life Insurance
Permanent life insurance provides lifelong protection and includes a savings element that grows on a tax-deferred basis and may become substantial over time. Premiums are generally higher than for term insurance, but they remain fixed.
All permanent insurance has a face value and a cash value. The face value is the money that will be paid at death, while cash value is the amount of money currently available to the policyholder. Permanent life offers other benefits—once their policy builds sufficient cash value, owners can withdraw some of their cash value, obtain a loan using the cash value as collateral or use the cash value to pay premiums.
The different types of permanent life policies include:
- Whole or ordinary life. The face amount of the policy is fixed, while premiums remain level and must be paid on a regular basis. It offers a death benefit and a cash value, which is like a savings account that grows based on insurance company-paid dividends.
- Universal or adjustable life. More flexible, owners can pay premiums at any time, in virtually any amount, and may change the amount of the death benefit, although an increase usually requires a medical examination. After accumulating sufficient funds in the cash value account, policy owners may alter premium payments, a useful feature if your economic situation suddenly changes.
- Variable life. This policy combines death protection with a savings plan. Cash value will vary with the performance of the underlying investments, although some policies do guarantee a minimum death benefit.
- Variable-universal life. Policy owners have the investment risks and rewards of variable life insurance, coupled with the ability to adjust the premiums and death benefit available under universal life.
Group Voluntary Life Insurance
Life insurance is one of the most popular voluntary benefits. Employers can use voluntary life insurance as the company’s primary life insurance benefit, or to supplement basic employer-provided term insurance coverage.
With voluntary life insurance programs, the insurance carrier has responsibility for program implementation, communication, enrollment and administration.
Life Insurance in Business Continuity Planning
Life insurance guards the financial health of your business as well as of your employees. Key employee life insurance protects the company from financial loss due to the untimely death of a key employee.
Life insurance-funded buy-sell arrangements can guarantee that designated successors have the money available to buy your share of the business and your heirs receive a fair value.
Vision disorders cost U.S. businesses an estimated $8 billion annually in lost productivity. How much do they cost your company? With costs starting at as little as $5 per month per employee, vision benefits pay big dividends in improved morale, health and productivity.
Employers can provide vision benefits through group vision insurance or a discount vision plan.
Group vision insurance works like other employer-provided qualified benefits. Most plans cover exams, glasses, contact lenses and more. You can also opt to include dependent coverage as well as coverage for popular vision-correction services, such as LASIK.
A discount vision plan is not insurance, but gives members discounts on eye care services from participating providers. Members (or their employers) pay an annual membership fee and receive a card that entitles them to discounts.
No-cost benefits with voluntary plans! You can structure your vision benefits to be either employer-paid or voluntary, in which participating employees pay the entire cost. A voluntary plan gives your employees the advantage of group pricing and convenient payroll deduction payments, at absolutely no cost to your firm.
You can read more here about the details of the plans and what’s covered.
An estimated 11 million Americans have uncorrected vision problems, ranging from refractive errors (near- or far-sightedness) to sight-threatening diseases such as glaucoma or age-related macular degeneration. Vision insurance encourages people to take care of their vision and health. Regular eye examinations can also identify other health conditions, such as diabetes, that can affect the eyes even before the individual experiences noticeable symptoms.
Vision insurance plans have a yearly deductible for each enrolled member, and a co-payment each time a member accesses a service. Vision insurance generally covers the following basic services:
- Annual eye examinations, including dilation
- Eyeglass frames
- Eyeglass lenses
- Contact lenses
- LASIK and PRK vision correction at discounted rates.
For those who don’t have employer-provided medical benefits, many individual medical plans offer vision coverage as an add-on. You can also buy a separate individual vision insurance policy.
Voluntary Group Vision Insurance
Group vision insurance costs vary for employers, depending on the size of the company and how the program is designed. Typically, vision plan premiums range between $5 and $15 per employee per month, depending on benefits selected.
A voluntary vision insurance plan gives your employees the advantage of group pricing and convenient payroll deduction payments, at absolutely no cost to your firm. Vision benefits are by far one of the most popular voluntary benefits among both employers and employees!
As with employer-paid group vision insurance, a voluntary plan covers annual eye examinations, eyeglass frames and lenses and contact lenses. Plans can also offer discounts on LASIK and PRK vision correction.
Discount Vision Plans
A discount vision plan gives members access to discounts on eyecare services at fixed discounted rates after an annual premium or membership fee. The participant pays the total bill, less the applicable discount, at the time of service. Members must use eyecare providers who agree to discount fees. Unlike insurance plans, discount plans do not contract with providers, who may decline to accept the card at any time. For those who do not have vision insurance, however, a discount vision plan can offer valuable savings.
For the vast majority of workers who do not have not have individual disability insurance, accidental death and dismemberment (AD&D) benefits can provide their families added peace of mind at very little cost—as little as $5 per employee per month.
AD&D insurance pays a set benefit if a covered employee dies in an accident. It also pays a portion of the death benefit if he/she suffers loss of use of an extremity, hearing or sight due to accident. You can provide AD&D benefits either as an addition, or rider, to your group life policy, or you can buy a separate group AD&D policy. You can also offer AD&D as a voluntary benefit.
AD&D also pays a portion of the death benefit if you lose or suffer the loss of use of an extremity, hearing or sight due to accident. This makes AD&D valuable protection for the vast majority of people who do not have individual disability insurance. AD&D insurance can provide their families protection from certain types of disabilities for very little cost.
You can read more here about “double indemnity” and some of the main features of AD&D.
Unintentional injury ranks as the fifth leading cause of death among all Americans. AD&D policies provide a set payment, typically $100,000, to beneficiaries of people who die from injuries suffered in an accident.
AD&D coverage doesn’t help just the family of a deceased, however. The “dismemberment” part of the policy’s name comes from the fact the policy also pays a benefit if an insured loses a limb or its use in an accident. The extent of benefits payable depends on the extent of loss. For example, a policy might pay half of the death benefit to the insured for the accidental loss of one hand or arm or one foot or leg. If the insured lost two or more limbs (combination of arms and legs), the policy would pay the entire face value (death benefit) to the insured.
AD&D policies may also cover the sudden loss of vision or hearing. The same principles apply. If an insured loses one eye (or its use), the policy would pay one half the benefit. If he/she loses both eyes, then the insured will receive the entire face value of the policy.
You can obtain coverage in a separate AD&D policy, or by simply adding coverage to term life policies you already have in place through an accidental death and dismemberment rider. With an AD&D rider, the insurance company will pay a “double indemnity.” This means if a covered accident caused the insured’s accidental death, the beneficiary would receive the life policy’s death benefit, plus a benefit under the AD&D rider.
AD&D policies do not cover death by any form of illegal or crime-related activities. Policies also don’t cover death by suicide or death by a malfunction of the body. And because they don’t cover death from illness, an AD&D policy is no substitute for life insurance coverage. Nevertheless, AD&D policies provide a valuable benefit for people who use their bodies to earn their livelihood.
Long-Term Care Insurance (LTC)
When you think “long-term care,” you probably think of elderly people in a nursing home. But 40 percent of the people receiving long-term care services are between the ages of 19 and 64.
With nursing care costing an average of $75,000 annually (more in urban areas), long-term care needs can stretch the finances of almost any family.
Long-term care insurance (LTC) can help your employees pay for the cost of nursing home and other long-term care for themselves or for an elderly dependent. Most group LTC plans are voluntary, or employee paid. Voluntary long-term care insurance offers employers a way to reduce absenteeism and improve productivity, loyalty and morale.
You can read more about the what LTR covers, the different options and what to look for in a LTC policy.
A study by the U.S. Department of Health and Human Services says that people who reach age 65 will likely have a 40 percent chance of entering a nursing home. About 10 percent of the people who enter a nursing home will stay there five years or more.
What LTC covers
LTC policies vary widely. However, they all cover non-medical custodial care services excluded by medical insurance (including Medicare and Medicare Advantage). Coverage kicks in when the insured cannot perform two or more “activities of daily living,” such as eating, toileting, transferring, bathing, dressing or continence, or when he/she becomes cognitively impaired due to senile dementia or Alzheimer’s disease.
Employers can choose from three basic options:
- True group plans. True group plans have several advantages: 1) As “guaranteed issue” plans, they will cover even employees who have a disabling or potentially disabling condition. 2) Employees can convert their coverage to an identical individual plan ¾at group cost ¾when leaving the group. 3) Employers can offer a select set of identical benefits to all employees, no matter which state they live in. Many insurers also allow insureds to select optional benefits, which usually require medical underwriting.
- Modified guaranteed issue. Modified guaranteed issue plans require no medical underwriting, but employees must answer one or more questions that eliminate disabled or very sick workers from the group. For groups with low participation, rates for modified guarantee issue plans are generally less than true group rates. Because modified guaranteed issue programs issue individual policies, the employee can keep the policy and rates when he or she leaves the group.
- Individual plans with group discounts. These are identical to plans that are offered to the public but the premiums are discounted from five to 15 percent for the group. The employee can choose any of hundreds of benefit options, since everything is medically underwritten.
Most employers offer LTC on a voluntary (employee-paid) basis. Even without a contribution from the employer, long-term care insurance through the workplace can give employees the advantages of group insurance over individual policies, including discounted premiums, along with the convenience of payroll deduction payment.
What to look for
- Guaranteed renewability and inflation protection: To qualify for tax advantages, LTC plans must offer these features, although insureds can elect not to buy inflation protection.
- Coverage for home healthcare: Many disabled individuals do not require nursing home care, but simply need help with activities of daily living. A policy that provides benefits for home healthcare can help the insured stay in the comfort of his/her own home.
- Employers can deduct premiums paid toward tax-qualified group LTC coverage as a business expense. Employer contributions do not count toward the employee’s taxable income, except for contributions made through a flexible spending arrangement or cafeteria plan, which must be included in taxable income.
- Under a voluntary group or individual policy, insureds can include LTC premiums they pay with other unreimbursed medical expenses, subject to a cap that increases with age. Benefits received from LTC policies generally do not count toward taxable income, as long as the benefits do not exceed an insured’s actual long-term care expenses.
By age 45, an individual has a 50 percent chance of having at least one disability that lasts 90 days or more. In fact, workers have a higher chance of suffering a long-term disability than of premature death during their career. Disability benefits protect your employees from a catastrophic loss of income when a disability makes them unable to work, or unable to work full-time.
Disability benefits generally fall into one of three categories:
Paid sick leave. No law requires employers to provide paid sick leave, but many provide up to two weeks’ paid sick leave per year or give employees “paid leave banks,” which they can use for any reason.
Short-term disability (STD) insurance. This is the most commonly found type of group disability insurance. STD plans typically have a waiting period of 0 to 14 days before a covered individual will receive benefits, and they provide benefits for a maximum of six months to one year.
Long-term disability (LTD) policies usually begin paying benefits 30 to 180 days after the disability occurs, once the covered individual has exhausted sick leave and short-term disability benefits.
Usually, group plans have very streamlined or no underwriting requirements so employees do not have to answer a lot of health questions. Your less-than-healthy employees will find it easier to obtain coverage through the group market than through individual policies. In addition, group coverage usually costs less than an individual policy.
You can read more here about policy details, limits for highly paid individuals and tips for getting the most out of disability plans.
The National Association of Insurance Commissioners (NAIC) says that a male U.S. worker at age 35 faces a one-in-five chance of a disability taking him off his job for 90 days or more. For a 35-year-old woman, that risk increases to one in three.
Most working adults don’t have the savings needed to pay their expenses if they were unable to earn an income for 90 days or more. Disability income insurance replaces a portion of an insured’s pre-disability income when they cannot work or cannot work full-time due to a disability.
The most effective disability benefit plan designs coordinate sick leave, short-term disability (STD) and long-term disability (LTD) benefits, so that once the insured exhausts sick pay and STD benefits, LTD benefits begin immediately. Disability income insurance replaces only a portion of lost income to give disabled individuals some incentive to return to gainful employment after a disability.
Short-term disability (STD) insurance.
This is the most commonly found type of group disability insurance. STD plans typically have a waiting period of 0 to 14 days before a covered individual will receive benefits, and they provide benefits for a maximum of six months to one year.
Long-term disability (LTD) policies
usually begin paying benefits 30 to 180 days after the disability occurs, once the covered individual has exhausted sick leave and short-term disability benefits.
The typical group long-term disability policy will begin paying benefits when a worker cannot work due to a disability lasting longer than the specified “elimination period.” For most group policies, the elimination period is somewhere between 90 and 365 days. Better plans pay benefits until the disabled individual returns to gainful employment or reaches age 65, whichever comes first. Many LTD plans also offer partial or residual disability benefits to help offset earnings lost while the employee transitions back to full-time work.
Both STD and LTD policies replace only a portion of an insured’s salary, typically 60 percent, up to the monthly maximum benefit. Most group policies have a maximum monthly benefit $5,000, which does not include bonuses or dividends. In addition, most insurers will coordinate benefits from a group policy with benefits from any individual disability policies the employee might own, so he or she will not collect more than 80 percent of pre-disability pay.
Many group LTD policies use two different definitions of disability, depending on how long a claim lasts. These policies use a “modified own occupation” definition of disability during the first two years. This definition considers an insured disabled when “… unable to perform the material and substantial duties of your occupation, and [you] are not engaged in any other occupation…” After two years, the definition of disability becomes more restrictive. Exact definitions vary, but most require the insured to be unable to perform any of the material and substantial duties of any occupation for which he or she is “reasonably qualified” by education, training or experience.
If a policy does not provide partial or residual disability benefits, an insured must navigate changing disability definitions, accepting no work other than their own occupation during the first two years, and then taking any job for which they are qualified after that.
Higher Limits for High-Income Individuals
Individual disability income insurance plans offer higher monthly benefits and enhancements that are not available in group plans. Higher-income people should consider supplementing any group disability program with individual coverage.
Employer-Paid or Voluntary LTD?
Under an employer-paid LTD plan, employees do not include the employer’s contribution to premiums in their taxable income. However, any benefits they receive will be included in taxable income. Voluntary coverage has the advantage of providing your employees benefits tax-free, if they used after-tax dollars to buy coverage.