Introduction

Thank you for joining me in this on-line discussion. I feel that the next two weeks will be beneficial not only for you as my audience, but will provide me with a great learning experience as well. I have worked in human resources (HR) for the past 8 years and a large portion of my job is in the benefits administration area. I am currently a Team Leader for a local third-party administrator (TPA), Benefit Planning Consultants, and we are responsible for processing claims for Flexible Spending Accounts and Health Reimbursement Arrangements. These two topics will be discussed further as part of this series.
Employers can offer a wide range of benefits to their employees. When potential candidates are searching for a job, it is important that the employer realize that, while compensation is an important recruiting tool, the benefits offered have become almost as important, if not more in some instances.
During the next two weeks, I will discuss many benefits that can help employers increase their recruiting appeal to qualified candidates. These benefits include, but are not limited to:
1) health insurance
2) dental insurance
3) vision insurance
4) life insurance
5) short-term disability/long-term disability
6) health reimbursement arrangement (HRA ties to health insurance)
7) medical flexible spending account
8) daycare spending account
9) time off (including vacation, personal leave and sick days)
10) miscellaneous benefits.

Come back tomorrow for our first discussion on what aspects of benefits administration must be evaluated by employers to help them evaluate their benefit programs in order to make it as mutually beneficial as possible. In the meantime, please feel free to post any questions or comments that you may have. I would welcome any new information or even how your employer administers your benefits. It would be great to hear what works and what does not work for your organization in regards to your benefit package.
I would like to leave you with this question: which benefit is the most important to you and was the benefits package offered to you at the time of the job offer a main (or strong) reason you accepted your current job?

Discussion

Posted 05/03/2007 18:12:41 by Bill Bonds

The most important benefit to me is the healthcare package, particularly if it can provide for some family coverage as well. This seems to be getting worse over the years.

Posted 05/03/2007 21:32:21 by Renee Hiller

I would agree. With the cost of healthcare increasing at an exponential rate each year, it’s hard to find an employer who can continue to afford the continuous increase. I will discuss further some of the options that employers can do to help reduce their cost of health premiums.

Posted 06/03/2007 19:31:40 by Renee Hiller

As I stated yesterday, some of the first issues the employer should consider when setting up a benefits package will be discussed today. First, the employer needs to determine what employees are eligible and when the benefits start for those eligible. Employers usually put a minimum number of hours an employee must work to fit into a category that is offered benefits. In my experience, that number is usually 30 hours. Also, most employers allow for a probationary period to pass before offering the employee benefits. This allows the employer to limit their cost especially if they have high turnover in the first couple of months of employment. It also gives the employer a chance to evaluate the employee before they agree to pay for such benefits. It is also important that these guidelines in addition to the specific benefits are offered are outlined in an employee handbook so these guidelines are clearly communicated to the employees. The employer should determine how they would like to administer the benefits. In my experience, I have seen two ways that benefits can be offered. In the first option, the employer examines the benefits that are offered and determines how much of each benefit that the employer will be responsible for in regards to the monthly premium that is charged by the vendor. Some employers will pay a percentage of the premium with the difference passed on to the employee. Employers may also agree to pay the full premium for anyone that is electing individual coverage. However, if they are adding their dependents (including a spouse or children), that entire increase in premium will be passed to the employee. The second option to offer benefits is through a a cafeteria plan, which is becoming more common today. The employer allocates a certain amount of money per year for each eligible employee that can be used in any way the employee would prefer in regards to the benefits. This allows the employee more alternatives in terms of how to use the money the employer has set aside since each individual’s situation is different. In this case, if they do not use the money, it is forfeited. However, some employers may give some cash incentive if that money is not used in a given year. Come back tomorrow to learn how employees can pay for their portion of their insurance premiums. See you next time!!!

Posted 06/03/2007 20:27:40 by Tracy

I like to look at the healthcare benefits as well as the time-off package. I have always been a firm believer that employees are more productive when they are well-rested and energetic about their work. In many companies time-off is so minimal and I really believe that it hurts employee morale. Do you have any thoughts on what benefits you have found that employees appreciate the most?

Posted 06/03/2007 21:49:58 by Renee Hiller

Great. Thanks for the comments. I would agree…if you aren’t allotted some time to relax and enjoy time with family, you begin to resent your job as it begins to become your life. I have found that flexibility (i.e. time off, flexible schedules) have really become very important to employees. They are more productive if they realize the employer can allow them that flexibility while entrusting the employee to ensure they are getting their work done. I think this empowers the employee to have control over their work while being mutually beneficial to the employer.

Posted 07/03/2007 21:25:56 by Renee Hiller

In my first post, I mention that there is some cost passed on to the employee. This cost is conveyed to the employee as a payroll deduction. When an employee elects to participate in a certain benefit, whether that’s health or dental, the employee MUST fill out an enrollment form. This gives the employer the right to take their portion out of the paycheck. The only time an employer can deduct from an employee’s pay without a written consent from the employee is in regards to taxes and child support orders. There are some benefits that can come out of their check on a pre-tax basis. As I discuss each benefit, I will hit on this topic for each one as well. If the employer intends to offer a pre-tax benefit, the IRS requires that a plan document (Section 125) which governs these types of plans be in place. Most often this type of document is set up and maintained by a Third Party Administrator.

Posted 08/03/2007 19:45:33 by Renee Hiller

I wanted to start with talking about health insurance. In my experience, health insurance is the most needed yet most expensive benefit out there for both employee and employer. There are 2 options that can be offered, an HMO (health maintenance option) and a PPO (preferred provider option). HMO is the best overall for employees as it entails paying co-pays for visits and prescriptions, however, you must go to a primary physician and in order to see a specialist, you must get a referral. Because the liability to the insurance carrier is high if there is a large claim, premiums for this type have become quite high and will continue to increase. The PPO coverage allows you to see a number of physicians in a network but also gives you a chance to see outside network providers without needing referrals. This type of plan most likely comes with a deductible that the employee must meet and then the employee is responsible for a percentage after that. This plan does have a lower premium but can still be quite expensive. The premiums that the employees pay are deducted out of their paycheck and can come out on a pre-tax basis if the employer has a Plan Document in place as discussed earlier. An increasingly popular option for the employer is a Health Reimbursement Arrangement (HRA). Please come back tomorrow so that you can learn more about these plans and how the employer can offer these. Let me leave with this question: how has our employer helped with the increasing cost of healthcare? What options have they introduced to you in regards to health insurance?

Posted 09/03/2007 19:59:34 by Renee Hiller

Health Reimbursement Arrangements (HRA) is a way for the employer to self fund part of their health insurance which in turn helps keep the premium costs down. The HRA is funded by the employer to help the employees pay for part or all of the deductible. Once the deductible is met, the health insurance then kicks in and starts paying their portion. Employers can decide on what type of design they would like. The claims that go toward the deductible are processed and if the company is responsible, a reimbursement check will be given to the employee to help them pay the bill. For example, a common HRA is there is a $1000 deductible with the health carrier. Of that $1000 deductible, the employee is responsible for the first $500. Once that is met, the employer begins to reimburse the employee for the next $500. Employers can process their own claims however, many hire an outside TPA that specializes and knows the regulations of an HRA. This has become increasingly common over the last several years due to the high cost of insurance. It allows the employers to save on their costs while trying to give their employees a consistent plan and limiting their out-of-pocket cost.

Posted 10/03/2007 19:54:59 by Mort Crim

Doesn’t the complexity of HRA programs just add to the frustration of employees with respect to understanding their health benefits? Many times, it is difficult to assess if your portion of health care is correct under these complexities. I’m all for simplification of the process!!

Posted 11/03/2007 17:10:30 by Renee Hiller

I can understand that adding an HRA to the health insurance can lend itself to frustration. However, an HRA is not as complex as it appears. It is merely adding a new layer as to who will be paying the claims that are processed. With an HRA, the processing of claims are outsourced to a third party administrator who understands how the plan works and will provide customer service to those who participate. The participant is responsible to send the TPA their Explanation of Benefits (EOB) from the insurance company and the participant will be reimbursed their amount to help pay the bill they will receive from the provider. Once participants learn the process, they learn how easy it really is and that it is worth it if it will save them money in the long run.

Posted 12/03/2007 21:29:53 by Renee Hiller

The second 2 benefits that are relatively standard for companies to offer are a dental and vision plan. These plans are not usually as complex as health insurance. From my experience, employers offer these benefits, however, the cost of the premiums are usually entirely passed on to the employee. Again, these premiums are eligible to be a pre-tax deduction out of their paycheck. The standard dental plan usually is payable at 3 levels; 100% (preventative i.e. cleanings), 80% (basic i.e. fillings) and 50% (major i.e. crowns). Dental premiums are relatively inexpensive. Vision plans usually cover exams, glasses, contacts and premiums with this plan are even more inexpensive for the participant. Some companies tie the Vision Plan to the health or dental insurance so that the employee will automatically be enrolled in these plans.

Posted 13/03/2007 13:06:13 by Melissa

Some other benefits that are offered at my workplace are Flex 125 plans and Retirement Health Savings. People often get confused about the differences between the two. And I also wondered about the impact of either plan on contributions towards Social Security.

Posted 13/03/2007 19:58:12 by Renee Hiller

Those 2 plans that you are speaking are becoming more popular and are ways the employees can save on their out-of-pocket medical costs. The Flex 125 plans are sponsored by the employer so the employee can use a pre-tax deduction to pay for any out of pocket medical expenses including deductibles, co-insurance, co-pays (RX and office visits), dental and vision expenses, over-the-counter (OTC) medicines like tylenol and many other expenses. There is also an account that can go towards daycare costs for a dependent. These deductions are pre-tax as well. These are very popular plans and does not cost the employee anything. The flex money is sponsored by your employer and the claims are administered by the employer or an outside TPA. Any money left in the account at the end of the year is forfeited. The Health Savings Account (HSA) are different in how they are administered. Anyone enrolled in a High Deductible Health Plan (as indicated by the IRS) can open these type of accounts that will help you pay for medical expenses as well. It’s an IRA-type of an account and your contributions to this account are tax deductible. This account is solely maintained by the participant and the participant is responsible for determining and paying qualified expenses. The money deposited into this type of account is not forfeited and does roll over from year to year. The one thing to note about these is if you have an HSA, you can only participate in a limited Flex Plan which is limited to Dental and Vision Expenses. You can open HSA’s at most financial institutions. Since these contributions are decreasing the amount of taxes you are paying including into social security, it does affect your contribution into Social Security. However, this affect is very minimal. I am not a tax expert so I cannot tell you how this can affect each individual but I have learned from experience that if you are pretty close to retirement, it may not be beneficial to participate in these programs.

Posted 15/03/2007 19:44:52 by Renee Hiller

Not only are benefits such as insurance important, but allowing the employees to take some time off for vacation, sick, etc have become an expected benefit. Employees need the time to spend away with family and employers are realizing its importance. Some employers give a separate bank of time for vacation, personal, or sick days while others lump it into Paid Time Off (PTO). Vacation is not something that is mandatory to offer….however, if it’s offered it must be given to all employees that are eligible (full-time vs. part-time). If vacation is offered, the employee must be paid out any earned vacation when they leave the company. This mandate is different according to state, but it is a law that is imposed by the State of Illinois. Other states allow the employer to forfeit earned vacation if the employee quits without notice, for example. Vacation not only gives the chance to spend time with family, but it has proven to make the employees more productive and happy so they don‘t reach a point where they are burnt out.

Posted 16/03/2007 11:14:02 by John Moore

I am very interested in your comments and the comments of others. I am with Peopull, LLC, a Healthcare Purchasing Group, that brings self-employed individuals and small employers together as a larger group in order to obtain better employee benefit rates. We offer health insurance, medical, dental, vision and disability benefits as well as a mini-medical plan which covers some medical costs but is not as comprehensive as a major medical. We are very interested in other people’s opinions and needs so we can tailor plans that meet those needs

Posted 16/03/2007 21:06:39 by Renee Hiller

I think the type of market you are looking at has a lot of opportunity in today’s health market. Since prescriptions are the highest expense for the average insured person, I would imagine a rich plan that helps with those costs would be beneficial for anyone. I currently work at a company with 47 employees and I do know the limitations to receiving affordable healthcare.

Posted 18/03/2007 17:33:53 by Renee Hiller

Since this is our last day on this topic, I would like to thank everyone who commented and those who kept up with the discussion. As you’ll see, benefits will continue to be a very important aspect to employees whether in a large or small company. As costs rise, more options should come available to help with those costs and to continue to offer an attractive benefits package. If you have any further questions or comments, please feel free to post. Thank you again.