1. Taking Advantage Of The Pre-planning Phase

Begin by clarifying your business’s objectives. You can then evaluate benefit plan designs. Whether it’s health savings accounts, consumer-directed plans, reimbursement accounts, or so forth, the important point is to determine what options best fit your business’s goals and employee pool.

Other considerations during the pre-planning period should include your budget for benefit administration costs, what and how technology will be utilized to make the enrollment process as efficient as possible, and whether the administration of benefits will be outsourced or done within your business.

2. Developing And Fine-tuning A Project Plan

Your project plan should be clearly defined and stipulate the following elements:

* The dates for the enrollment period.

* What resources are at your disposal and how they are to be allocated.

* A checklist of all tasks.

* How much lead-time will be needed for the addition of new employees and, if applicable, changing vendors or carriers.

* The training schedule for customer service reps and benefit staff members.

Additionally, it’s always prudent to have a contingency plan in place and to directly oversee the development of the project plan at each stage.

3. Educating Employees On Maximizing Benefits

A 2010 MetLife Employee Benefits Trend Study showed that employees remain extremely interested in communications with their employers regarding financial advice, retirement planning, and other benefit options. In fact, the overwhelming percentage of employees feel that communication has become a very important piece of the enrollment process.

Employers should provide their employees with the education they need to make wise health care decisions and the tools necessary for them to successfully navigate the health care system. There are a number of ways you can accomplish these goals, such as benefit calculators, health and wellness fairs, in-service meetings, direct mail benefit information, and online benefit tools.

It’s also important for employers to communicate the overall value of offered benefits to employees. Your employees should be informed about trends in the insurance industry, whenever you add more value to their health care plan, and how much you are contributing for the offered benefits.

4. Foresee The Tasks To Follow Open Enrollment

Employers should foresee and properly plan for the tasks that will need to be accomplished during the post-enrollment period. If not properly planned for, these tasks can create just as many problems as those that need to be done before and during the open enrollment period. Make sure to address the following points:

* ID card distribution

* payroll (payroll feed schedule, timing of the last payroll period, and payroll deduction automation)

* quarterly audit schedule with the carrier

* follow-ups on carrier inaccuracies

* starting a plan for the next year

The Patient Protection and Affordable Care Act (health care reform) limited the ability of health plans to cover over-the-counter (OTC) drugs, permitting reimbursement from flexible spending accounts (FSAs) and health reimbursement accounts (HRAs) beginning January 1, 2011, only when OTC drugs are purchased with a prescription. In a departure from guidance issued last fall, the Internal Revenue Service has announced that debit cards linked to FSAs and HRAs can continue to be used to pay for prescribed OTC drugs, so long as certain procedures are followed.

These procedures are set out in IRS Notice 2011-5. According to this guidance, after January 15, 2011, FSA and HRA debit cards may continue to be used to purchase OTC medicines or drugs at drug stores and pharmacies, at non-health care merchants that have pharmacies (such as grocery stores with a pharmacy), and at mail-order and Web-based vendors that sell prescription drugs, so long as all of the following conditions are met:

1. Prior to purchase-

a. the prescription for the OTC medicine or drug is presented (in any format) to the pharmacist,

b. the OTC medicine or drug is dispensed by the pharmacist in accordance with applicable law and regulations pertaining to the practice of the pharmacy, and

c. an Rx number is assigned.

2. The pharmacy or other vendor retains a record of the Rx number, the name of the purchaser (or the name of the person for whom the prescription applies) and the date and amount of the purchase in a manner that meets IRS recordkeeping requirements.

3. All of these records are available to the employer or its agent upon request.

4. The debit card system will not accept a charge for an OTC medicine or drug unless an Rx number has been assigned.

5. All other requirements for use of debit cards associated with health plans are followed.

So long as the above procedures are followed, the debit card transaction will be considered fully substantiated at the time and point of sale.

OTC drug purchases made at other vendors that have health-care-related merchant codes (such as hospitals and physicians), and purchases made at “90% pharmacies” (pharmacies for which 90% or more of gross receipts in the prior taxable year were for tax-code-qualified medical expenses), are permitted under a less stringent set of requirements.

Importantly, for other merchants that sell OTC drugs, but which are not covered in the notice (such as a grocery store or convenience store without a pharmacy), an FSA or HRA debit card cannot be used to purchase OTC drugs. Employees need to be aware of this limitation, as well as of the conditions that now must be met to use debit cards for any OTC medication purchases, to ensure that health plan-related debit cards are used properly.

All successful companies face the challenge of attracting and retaining the best employees. Even in an economy with widespread workforce reductions and a job market that favors employers, salary freezes, bonus eliminations and benefits cutbacks make it more difficult to motivate employees and maintain their loyalty. Though disgruntled employees may stay on board for as long as tough economic times persist, when conditions improve they’ll begin to get their resumes in order and explore other opportunities. That’s one reason why it’s important to maintain a competitive benefits package, even during times when employees aren’t actively looking for new employment.

However, with employers feeling the economic pinch as much as employees, funding a comprehensive benefits program might not be within all companies’ budgets. When the economy forces benefits cutbacks, voluntary benefits can play an important role in filling gaps and helping a company maintain competitive benefits offerings.

Suppose, for example, rising health plan costs force you to choose between allocating limited benefits budget dollars to the health and dental plans along with a significant cost increase to employees, or directing all of these dollars to the health plan and eliminating the dental plan. A voluntary benefits program gives you another option: Continuing to offer employees access to a dental plan, but on a voluntary basis. Employees will pay the full premium, but at a discounted rate since the plan is offered on a group basis. They also have the convenience of payroll deduction, and the option to pay premiums pre-tax, a money-saving measure that would not be available to them if they’d had to purchase the coverage on their own. The group pricing and tax-savings potential give employees access to benefits coverage that they otherwise may not have been able to afford.

Whether the pre-tax savings opportunity is available will depend on the type of voluntary benefit-for example, while dental, vision and supplemental medical premiums can be paid for with pre-tax dollars, certain types of life insurance and products like group auto insurance, group homeowners insurance and group legal cannot. But even when pre-tax payment is not available, employees will likely gain substantial savings from the discounts of group purchasing.

Along with the types of benefits mentioned above-dental, vision and supplemental medical, and group auto insurance, group homeowner’s insurance and group legal-common voluntary benefits offerings include supplemental life insurance, disability insurance, and financial planning.

In addition to filling gaps in coverage, voluntary benefits also are a great way to be responsive to the varying needs of today’s diverse workforce, and enable your company to offer employees access to an array of benefits that few employers would be able to finance on their own.

Since it’s important to offer voluntary benefits that are most likely to be well-received by employees, look both at what coverage gaps exist in your company’s core benefits program, and at employee demographics to determine which voluntary benefits offerings are most appropriate. Employee focus groups and employee surveys also can be useful information-gathering tools in selecting the voluntary benefits that would be the best fit for your workplace.

Click on the Contact Us in the main menu in order to discuss how we can help you to communicate with your employees.

Effective communications can have as much impact on employees’ satisfaction with their benefits as the actual benefits offered or the amount of money a company puts into a benefits plan. This finding, from a study by the Prudential Insurance Company, illustrates one way for companies to contribute toward positive employee morale, even when economic factors necessitate benefits cutbacks or restructuring.

The study looked at a number of variables that affected employees’ perceived value of their benefits. The effectiveness of communications topped the list, followed by a company paying all or most of the cost of benefits and then by a company offering a range of benefits. According to the study, how employees perceive the value of their benefits directly influences how important benefits are to employees when selecting a job or when deciding whether to stay with a current employer. This is because effective communications help employees to not only understand, but also appreciate, the benefits they have or those that are available to them. Thus, the study validates the positive connection between employee benefits and an employer’s recruitment and retention efforts.

A separate survey from Watson Wyatt Worldwide dramatically shows the impact of benefits communications: Companies with above average benefits but ineffective communications had a 25% employee satisfaction level, while those with below average benefits but effective communications had a 76% employee satisfaction level. Stated another way, it can be better for a company to provide fewer benefits but explain them well, than to provide an expansive-and costly-package of benefits that employees don’t really understand.

Keep the following considerations in mind when assessing your benefits communications-

• Written communications should be in simple and understandable, yet engaging, language. Employees will respond best to communications that they can directly relate to, so use specific examples or modeling tools to help employees select benefits and understand how the benefits can work for them.
• Recognizing that different individuals learn in different ways, use various media at your disposal for your communications. Go beyond written communications to also include emails, meetings/seminars, announcements, posters that highlight images and graphics, interactive web tools, and video conferencing.
• Communicate throughout the year, not only during open enrollment. Use non-enrollment periods to highlight particular features of your benefit plans, perhaps focusing on one each month. This enables you to hone in on benefits or plan features that are particularly useful or unique, and that perhaps get overlooked during the frantic activity of annual enrollment. Such features might include wellness features in the company health plan, modeling tools available through the 401(k) plan, the advantages of pre-tax employee contributions, changing benefits during the year in response to a family status change, etc.
• Help employees understand how the company’s benefits offerings are particularly relevant to them. For example, if your company offers voluntary benefits, employees are likely to have broad choices that go well beyond the one-size-fits-all approach to employee benefits. Highlighting the convenience, access and cost-savings features of workplace voluntary benefits can help employees see how advantageous such offerings can be to them.
• Communicate the full value of your benefit’s program by providing regular benefit statements. Reminding employees of their total compensation is a great way improve your employees’ perception of existing benefit programs.

If the prospect of embarking on a benefits communications campaign seems daunting, a company’s benefits provider can be a valuable resource for communications ideas and strategies, along with actual communications materials. Don’t hesitate to turn to your benefits providers to see what services are available.

Don’t underestimate the value of communications and education as a way to strengthen your company’s benefits package. As the research above indicates, dollars spent on communication and education can be as valuable an investment as dollars spent on the benefits themselves.

Click on the Contact Us in the main menu in order to discuss how we can help you to communicate with your employees.

IRS code allows for employers to implement a pre-tax Section 125 Cafeteria Plan as an employee benefit.  This plan allows for unreimbursed insurance expenses to be paid pre-tax.  Examples include insurance premiums, doctors office co-pays, prescription co-pays, eye exams, eye glasses, contact lenses, laser eye surgery, orthodontics, and more…

Cafeteria Plan – Another Feather in Your Benefits Cap Implementing a Section 125 Cafeteria Plan will strengthen your benefits program, save your company FICA taxes, and save participating employees 25% to 40% in taxes (depending on their income tax bracket).  What other benefits can you implement that strengthen your benefits package and you can do so with little or zero out-of-pocket dollars?

If your employees are paying any portion of the monthly insurance premiums, then to save FICA taxes, implement a Premium Only Plan (POP).  A POP allows for employees to pay their portion of the group insurance premiums on a pre-tax basis and is a good start to saving taxes for you and your employees.  You will save FICA taxes while saving your employee 17% to 40% on dollars they’re already paying.

With a POP there is no real ongoing administration as you’ll use payroll to take care of the dollar flow’s.  Discrimination testing is a requirement that will need to be performed at least once at the beginning of each plan year to ensure your plan is in compliance.

To take your pre-tax 125 plan to the next level means implementing the Flexible Spending Accounts (FSA).  Generally, there are two FSA accounts including a Medical FSA (medical / dental / vision) and a Dependent / Elder Daycare FSA.

These FSA accounts will allow for the unreimbursed out-of-pocket expenses to be paid on a pre-tax basis.  Examples include dependent daycare, office co-pays, prescription co-pays, eye exams, eyeglasses, contacts, orthodontics, and more.

These flexible spending accounts (FSA) are an easy way to supplement any gaps in your existing benefits program, save money for you and your employees, and is a great morale booster.

If you’re a small employer that doesn’t have a dental or vision plan because of costs.  Implementing the FSA will at least allow for your employees who have these types of out-of-pocket expenses to pay them on a pre-tax basis.  Wouldn’t it make your employees happy to be able to save 17% to 40% on a $5,000 orthodontic expense for a family member?  That would equal a $1,250 tax savings for an employee in the 25% tax bracket.

The FSA accounts are where the administration hassles of receiving claims, verifying claims as eligible expenses, answering employee questions, reimbursing claims, etc. are seen.  Which may lead you to consider outsourcing your ongoing administration through a qualified third party administrator.  If you’ve only got a few participants in the FSA in-house administration is something you can probably handle, but with monthly minimum administrative fees outsourcing is pretty economical.

Partnering with a qualified Cafeteria Plan Administrator such as BusinessPlans, Inc. will allow your employees to access their individual account information 24-hours a day, seven days a week from anywhere in the world.  As an employer, you also gain 24-hour Internet access.  You may query reports and check the status of your plan around the clock when you want and need your plan information.

Every organization has limits on the resources it has available for use.  Outsourcing will allow your company to focus and redirect its resources; most often people resources, from non-core activities to profit gaining activities.

Looking for employee communication solutions

Communicating with your employees has never been more important than it is right now.

The current economic climate is leaving many to wonder about their and your future.

Employee compensation is about a lot more than what you pay your employees.

Utilizing personalized employee benefit statements help you communicate the total value of your employee benefits program to your employees and open their eyes to their “hidden paycheck”.

Industry studies show while employers spend an average of 40% over payroll on benefits, most employees have no idea what benefits they have or how much those benefits are worth.

You’re spending thousands of dollars to provide your employees with statutory and fringe benefits – shouldn’t you be getting your money’s worth?

Be sure to checkout the benefit statement samples at myBenefitStatements.com

Outsourcing with a Section 125 Plan Administrator vs. Administering In-house

You can make an argument for either outsourcing Cafeteria Plan Administration or administering internally.  I wanted to take a moment to discuss this very debate and shed light on why an employer should outsource with a qualified Section 125 Administrator.

Outsourcing has been a valuable strategic management tool for decades.  But in today’s highly competitive and ever widening global marketplace, more emphasis is being placed on the advantages that outsourcing can give an organization.

The driving force behind the decision to outsource is the ability to allow your organization to focus on what you do best: core competencies, delivering a quality product or service.  Outsourcing allows you to redirect focus to your revenue driven processes and not on back-office cost center functions.  Outsourcing will allow your organization to be more efficient, more effective, and reduce overall costs.

Outsourcing opens up the doors for your organization to gain access to top-level professionals in your non-core areas, state of the art technology, industry defined best practices, and stay up to date on compliance and legal updates.

Partnering with a qualified Section 125 Administrator such as BusinessPlans, Inc. will allow your employees to access their individual account information 24-hours a day, seven days a week from anywhere in the world.  As an employer, you also gain 24-hour Internet access.  You may query reports and check the status of your plan around the clock when you want and need information.

In essence, offering self-service to your employees gives them the feeling of control while at the same time reducing the company’s cost for personnel wages, technology, and supplies and boosting employee morale.  This is a win-win situation for you and your employees.

Under Section 125 of the IRS code, an employer may sponsor a plan for its employees which will allow them to pay for group health premiums, other qualified insurance premiums, unreimbursed medical costs, child and dependent care costs with tax-free dollars!

A Premium Only Plan (POP) allows for employees to pay their portion of the group insurance premium on a pre-tax basis and is a good start to saving taxes for you and your employees.  Implementing a Premium Only Plan is fairly easy.  Essentially, an employer needs to set up the plan with proper documentation, notify & educate employees, and perform non-discrimination testing.

There are restrictions by the IRS in who can sponsor and participate in a pre-tax 125 plan.

Any employer can sponsor a cafeteria plan for its employees, regardless of size.

Eligible employers include corporations (“Subchapter S” or “Subchapter C”), partnerships, non-profit organizations, government entities, limited liability companies (LLC), limited partnerships (LLP), and sole proprietorship.  Businesses that are under a controlled group may also sponsor a single plan for all of their employees.

Only employees of the sponsoring employer can participate in a cafeteria plan.  Examples of individuals that are NOT eligible to participate in a cafeteria plan include:

* Self-employed individuals (but they can sponsor a plan)
* Partners in a partnership (but the partnership can sponsor a plan)
* A more than 2% shareholder in a “Sub-chapter S” corporation
* An owner of a “Sub-chapter C” corporation can participate in the plan but is limited to only elect 25% of the total contributions in the plan.  For smaller companies this can be a very small amount.

A Section 125 Cafeteria Plan is a very broad benefit.  In simplest terms one may break down such a plan into three basic levels which include a Premium Only Plan (POP), Flexible Spending Accounts (FSA), and a full-blown Cafeteria Plan that uses “credits or benefit bucks” also referred to as a Consumer Driven Health Care (CDHC) or Defined Contribution Plan.

A Premium Only Plan (POP) allows for employees to pay their portion of the group insurance premium on a pre-tax basis and is a good start to saving taxes for you and your employees.

Taking your 125 plan to the next level includes implementing the Flexible Spending Accounts (FSA).  Generally, there are two FSA accounts including a Medical FSA (medical / dental / vision) and a Dependent Daycare FSA.  These FSA accounts will allow for the unreimbursed out-of-pocket expenses to be paid on a pre-tax basis.  Examples include dependent daycare, office co-pays, prescription co-pays, eye exams, eyeglasses, contacts, orthodontics, etc…

A full-blown Cafeteria Plan / Consumer Driven Health Care (CDHC) plan that utilized “credits or benefit bucks” simply allows the employer to provide employees with a limited number of employer sponsored credits, which the employee then decides where they’d like to apply these credits within the menu of benefit options within the company’s benefit program.  Employees may then supplement with their own dollars to buy additional benefits or increase levels of coverage.
Plan Document for your Section 125 Cafeteria PlanSection 125 Cafeteria Plan Document

Partnering with a qualified Section 125 Cafeteria plan administrator will provide an up-to-date plan document and set up.

For example, myCafeteriaPlan.com provides employers outsourcing their ongoing administration with:

* Up-to-date Plan Document
* Summary Plan Description (SPD) master copy
* Corporate Resolution
* Customized Forms (enrollment, change of status, termination)
* Legal Review
* Attorney Opinion Letter
* Discrimination Testing
* Signature-ready Form 5500, if needed
* Powerful and easy-to-understand employee education

Their documentation and plan set up incurs a one-time fee, as they do not have a yearly renewal fee.  Once an employer signs with myCafeteriaPlan, they will simply pay the ongoing cost of administration.  Ongoing administration is determined by the total number of participants, NOT accounts.  As the number of participants increase, the cost per participant will decrease.

Contact BPI at 800.865.6543 to discuss setting up your pre-tax 125 cafeteria plan today!