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Colorado Businesses May be Forced to Pay Increased Premium Rates

Sunday September 14, 2008
Can employers be forced to offer health insurance to their employees? The answer seems to be yes. Last year, a law mandating health coverage for all took effect in Massachusetts, shifting much of the burden to employers. Now more states are taking a look at how things have progressed and are considering similar legislation to increase health employee benefits.

In Colorado, an initiative will be on the ballot this fall allowing voters to choose whether they want Amendment 56 passed. If passed, employers with 20 or more employees would be required to offer some sort of health care coverage to their employees. The specifics of this law would force employers to pay a minimum of 80% of the premium cost for employees and a minimum of 70% of premium costs for employee dependents. Employers could either provide health insurance through an insurer’s group plan or through a new state authority that will contract with private plans.

For businesses with employees in Colorado, this is something to watch carefully. With premiums rising every year, paying upwards of 80% may be a cost-prohibitive option. Now may be the time to review the plans available to see what’s the best fit quality-wise and price-wise.

Health Coverage for Most

Thursday September 11, 2008
When thinking about what type of benefits are important, it starts to become obvious that health insurance coverage is one of the top employee benefits to offer. According to a recent survey by the Employee Benefit Research Institute, just over 62% of the population under age 65 had some sort of health coverage through an employer. After hearing about employers cutting coverage over the last decade, this is certainly for potential employees.

The downside for employees is that the rising cost of coverage is not lower or equivalent to salary hikes. While the coverage is good, the flip side is it can be cost-prohibitive. This is leading many employers to revaluate their cost share structure, and perhaps shift some of the cost to employees, if they choose not to change to a lower cost plan.

For the average employer, this means looking at the type of coverage offered to potential and current employees. With more and more companies offering health care benefits, employers should look at what their industry offers and try to match or exceed to hire and retain the best staff possible.

Retirement Account Penalties After Age 70

Monday September 8, 2008
If you offer your employees a 401(k) plan, here’s something else you should let them know. Anyone who does not withdraw money from their retirement account by age 70 ½ are subject to taxes on the account amounts. This doesn’t mean retirees have to withdraw all their money. They just need to withdraw a required minimum distribution, or RMD. If not, they can face a hefty penalty, of as much as 50 percent.

This rule not only applies to 401(k)s but to IRAs as well.

This isn’t widely known, nor is it broadcast in places where seniors with these accounts would easily find this information. Banks and financial institutions are supposed to let account holders know this information, but often it’s buried in with other information. So how do we let seniors know about the RMD?

There are a couple of things you can do. Once an employee retires, you can send them a letter letting them know about TMD and their responsibility to withdraw a portion of their retirement money every year. Additionally, if you offer a group Medicare plan, RMD notices can be sent with Medicare information, though you need to be careful which notices you bundle it with. Medicare follows HIPA compliance rules, and you have to be careful not to jeopardize a current or former employee’s personal health information. Alerting everyone to the penalties for not withdrawing retirement money can help them save on being taxed.

Keeping Up with Compensation

Friday August 22, 2008
While employee benefits are truly appreciated by employees, sometimes it really does come down to compensation. With a sinking American economy, it can be tempting to cut raises for the upcoming year. But with inflation at the highest rate it’s been in years, employee salaries just aren’t going as far.

You may be thinking of keeping salaries trim but according to Watson Wyatt, companies are planning to raise pay an average of 3.5%. This still doesn’t keep up with inflation, which rose 5% in June alone. For now, with the weakening economy, many workers are staying put. As long as pay cuts aren’t taking place, workers are willing to put up with a raise that doesn’t quite match the cost of living.

The one thing to keep in mind is not to cut back too much. Your staff knows what employee benefits and compensation is available to them. Once the economy starts to recover, workers that feel that they are getting the short end of the stick won’t be as willing to stick around as workers who know their company went out of the way to offer them a decent raise with a good employee benefits program. Don’t fall into the pitfall, thinking your employees will stay with you indefinitely. If you can afford it, try to keep ahead of the compensation and employee benefit trend.

Pay What You Weigh

Wednesday August 20, 2008
Well, it's not exactly pay what you weigh, but officials in Alabama are cracking down on obesity by adding a sort of penalty on health insurance. This comes in response to a recent study naming Alabama second obese state in the nation.

State employees are now expected to spend the next year slimming down and getting fit. According to the new rules, Alabama state employees will get tested for blood pressure, cholesterol, glucose levels and obesity in 2010. If tests find extreme levels, workers will be required to enroll in a wellness program. If they refuse to join the wellness program or their health doesn't get better, they'll be expected to pay a $25 a health insurance monthly premium for an employee benefit that is now free for state employees.

With the weight in America going up, more and more insurance companies are instituting wellness programs to bring down weight and promote a healthier lifestyle. Some are charging companies higher premiums due to weight, with companies passing this charge on to employees. The question now is will companies take the initiative and start charging employees based on their BMI? And if they do, what legal reprucussions will this have?

Health Care Costs Up 10% for 2009

Monday August 11, 2008
It’s inevitable. Health care costs are rising. But just how much are they rising? According to a recent study by Aon Consulting Worldwide, health insurance costs this year will rise more than 10 percent in 2009. While this is less of an increase than this year’s, it still affects companies' bottom lines.

Health insurance companies are raising their cost for several reasons. A growing aging population, prescription drugs and technology costs are just part of it. Another part is plan members’ need for services. But with different programs such as disease management and other wellness initiatives, costs are not rising as fast as they would without these preventive motions.

So what choices do employers have? As mentioned in the previous employee benefits blog post, many companies are taking action by revaluating what plans they offer. In the case of health insurance, it may mean offering employees an HMO instead of PPO, or a more basic HMO plan, or even a consumer driven health plan with lower premium costs.

Rising Employee Benefit Costs Hitting Governments

Thursday August 7, 2008
With employee benefits costs going up, companies are revaluating what’s important, and making cuts and shifting costs as necessary. Usually this is limited to private companies, but with costs increasing at such a high percentage, especially medical and prescription drug costs, now organizations known for their great employee benefits are feeling the crunch.

Non-profits and governmental agencies, long known for their superior employee benefits, are starting to follow the example of private companies. They are looking to cut their benefits and pay a lesser percentage of premiums. Just today, Nevada announced they intend to cut domestic partner coverage, reduce benefits and increase employee-paid premiums.

With costs rising the way they are, how much of the burden will shift from employers to employees? Employee benefits are expensive. In Nevada, state costs amount to $626 a month for current employees and $410 a month for retired state employees.

For smaller businesses with a slim profit margin taking on this expense, this is not necessarily an affordable amount. By choosing a lower cost health plan like an HMO, having employees pick up a decent percentage of the premium and considering programs like a tax choice disability, you can help minimize your businesses employee benefits cost.

Disability and Fraud

Wednesday August 6, 2008
What happens when you slip and fall and are no longer able to do your job? Normally in this situation, if you are unable to return to work, you’d file for short term disability. And that’s just what Albert Arroyo, a Boston firefighter did. According to his physician’s records, Arroyo was “totally and permanently disabled” and could qualify for departmental pension.

Yet a video surfaced a couple months later, showing Arroyo competing and placing in the top 10 in the Pro Natural American Championships bodybuilding competition. How can someone who is unable to work and qualifies for short term disability compete and place well in a physical competition, using the same skills they’d use on their job?

With short term disability, there are no legal requirements similar to FMLA, that prohibit employers from prying into employees’ lives to find out whether they indeed qualify for that benefit. Short term disability coverage should require a reputable physician’s note saying the employee is unable to work. You can check on your employees but there’s a fine line between being concerned and becoming too intrusive. The latter can end up backfiring, especially if your employee is a valued one. It can also get back to other employees and make them mistrust management.

The good news is that if you do find an employee is taking advantage of their disability coverage, it’s fairly easy to get rid of them once you have proof. By adding a complete detailed description of what’s expected in the employee handbook, you can avoid further hassles down the line when the employee claim they weren’t informed. Unfortunately for the Boston Fire Department, they won’t have as easy a time getting rid of an employee who committed fraud, as they would if they were a private company.

Giving Employees Flex Time Can Help the Bottom Line

Monday August 4, 2008
Common business sense says giving employees a flexible schedule to pursue personal issues and progress can hinder productivity. It’s thought that workers who work odd hours will pursue other interests and won’t help the company’s bottom line. In an economy that’s already suffering, why hurt productivity even more?

Quite the contrary. Giving employees flextime is not just a considerate perk these days; it can actually help companies, especially small businesses, become more productive. According to the Associated Press, small companies willing to give workers a flexible schedule that meets everyone’s needs will benefit by attracting and retaining employees.

Flextime is not for every company or every position, but for the ones it would fit, it’s worth considering implementing a flextime policy. When you give your staff the flexibility to take care of personal items outside of work hours, they are freer to focus on their day job. They are also more willing to go that extra mile to reward their company in turn.

Who Pays Disability?

Saturday August 2, 2008
Who pays for short term and long term disability insurance? If you’re an employer, it’s pretty much your choice. As an employer, you can opt to pay for your employee’s disability insurance, have them pay for it or share the cost. No matter what your choice is, there will be tax implications for your employees, should they need to go on disability.

As discussed in this article, employees are taxed on disability coverage they receive if it’s employer-paid but not taxed on disability coverage they receive if they pay the premiums through a Section 125 cafeteria plan. While you think that an older workforce is more likely to go out on disability, younger people are just as likely to suffer an illness or injury that leaves them unable to work for an extended time period.

Knowing what your workforce wants, how much they can afford and how much you can afford in benefits can help you decide what’s the best decision for you and your company.

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