Month: May 2016

You probably know – healthcare is expensive. Health plans seek to cover as many expenses as possible, BUT there are exceptions to every rule. Exceptions in the form of out-of-pocket expenses. So how can you help employees manage these additional costs with HRAs? 

HRAs are powerful. Why? Take clownfish, for example. As we all learned in Finding Nemo, they live in sea anemone [uh-nem-uh-nee]. Both species survive and thrive due to a symbiotic relationship. Marlin and Nemo receive protection and shelter while the anemone receives nutrients from the clownfish. It’s a win-win situation.

The same goes for HRAs. HRAs are tools that benefit both employees and the business by creating a supplemental healthcare fund that is tax-free. Below, we have included a guide with everything you need to know in order to implement one successfully.

Table of Contents

What are HRAs?
HRA Requirements
Benefits to HRAs
Types of HRA Plans
HRAs and HIPAA
HRAs and FSAs

Let’s start at the beginning. What does HRA actually stand for?

Health Reimbursement Arrangement or a Health Reimbursement Account (aka HRA for short ?), An HRA is a benefits program that is funded by the employer and approved by the IRS.

So what does an HRA do that actually helps a small business?

Here it is: the best part about HRAs is that they provide a tax advantage to save money on healthcare costs for employees and employers.

For a step by step process:

1. Employer puts money into an employee account (this is the HRA).
2. For out-of-pocket expenses, an employee is able to withdraw tax free money from this account.
3. Employees enjoy additional healthcare coverage, and employers benefit from gaining tax deductibles and providing the best options for employee retention.

HRAs let employers contribute a specific amount of pre-tax dollars to an employee’s account to cover any medical expenses that do not fall under their current insurance plan. It is not health insurance, but a supplement to your current benefits package.

When do HRAs work best?

Like gourmet cheese and fine wine, HRAs pair well with high deductible plans. If you do not currently offer high deductible plans, the choice to offer them is a simple move and also reduces costs for you. High deductible plans have lower premium costs, which means these savings can be used as HRA contributions.

HRAs sound great – any reason why we can’t have one?

The two requirements of an HRA are: 1) the HRA cannot be funded via salary reduction and 2) benefits are provided once medical expenses are verified. This means reimbursements only occur after medical expenses are incurred.

HRA funds are also eligible to rollover from plan year to plan year. However, it is up to you as the employer to determine how you would like to manage these accounts (i.e. are funds available year to year or are funds forfeited at the end of every health insurance plan year?) One big advantage for allowing carryover is that employees are able to access HRA funds when they retire.

The lowdown behind HRA benefits:

Employer Benefits

• All contributions made to an employee’s account are 100% tax deductible
• High flexibility and choice as to what HRA funds can be used for, including coinsurance, copays, etc.
• Ability to effectively manage benefits cost 

Employee Benefits

• Contributions from the employer are 100% tax free
• HRAs can be used to cover an employee when they retire, as well as any dependents and spouses
• Lower health insurance premiums

Types of HRA Plans

For Specific Expenses: HRAs can be specified to cover certain expenses exclusively, including dental, prescription medications, vision, etc. For specific expenses, you as the employer have the ability to choose which areas of healthcare these funds are eligible to cover. Remember, employees should substantiate medical claims with information such as the name of the service provider, the date of the appointment, and the total amount for care.

Uninsured Expenses: HRAs can cover all out of pocket expenses. This ranges from deductibles, dental, vision, prescription, and more. Uninsured expenses can be incurred by both your employees as well as their dependents.

Deductible: Any expenses that fall under your deductible are eligible for reimbursement. This plan typically does not include copayments.

HRAs are also eligible for annual rollover, meaning any unused balances transfer from year to year. Utilizing an HRA creates a win-win situation for you and your employees as everyone benefits and everyone can save money.

HRAs and HIPAA

HIPAA rules apply to HRAs (backlink to Jessica’s article on HIPAA). In regards to privacy, plans cannot discriminate against any employees in terms of fund allocation and access to said funds.

HRAs and FSAs

You can offer your employees access to a Flexible Spending Account (FSA) along with an HRA. Different than HRAs, FSAs are employee-funded rather than employer-funded. An FSA lets employees cover out of pocket medical expenses with pre-tax dollars. Unlike an HRA, FSA funds are determined through employee salary reduction.

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By taking advantage of the benefits of HRAs, you can build better relationships in the workplace and live happily ever after.

Spoiler Alert: Finding Nemo has a happy ending, too.

Most of us are familiar with TED Talks. Technology, Entertainment, and Design (aka TED): conferences and talks meant to “stir your curiosity,” as the website says. And they do. The great thing about TED Talks is that they bring together thought leaders from all kinds of industries to share experiences and knowledge to spark great ideas in us, which can further be used in small business.

Music mogul and entrepreneur Russell Simmons always said to “surround yourself with people smarter than you.” So even if we don’t know these thought leaders personally, TED gives us the opportunity to learn from the best of the best.

Here’s a list of the best TED Talks for any small business:

1. Seth Godin: the tribes we lead

Entrepreneurs everywhere are familiar with Seth Godin. A world renowned (no exaggeration here) marketer, he discusses the power of people (or tribes) in building brand awareness and spreading the message of what’s so awesome about your small business. He purports that people are the key to mass marketing. However, the key here is that it’s not a “massive” (pun intended) amount of people that is necessary to reach the actual masses.

Think about it: when we go back to the real concept of tribes, it is no more than 10 to 50 people. But this small group believes in something so fiercely and passionately that it sparks a belief in others as well. It’s not so much herd mentality as it is the power that every individual person has to effect change. And Godin lets you in on how to do that for your small business.

In a nutshell: Focus on the connection with your customer.

2. John Gerzema: the post-crisis consumer

John Gerzema is a branding machine. He’s helped design strategies for some of the biggest brand names, including United Airlines, Coca-Cola, and BMW. In his talk, he goes over the cultural changes that have occurred since the 2008 financial crisis. And how these changes have caused consumers to alter their buying behavior.

For small business, it is important to know how customers are spending their money. And where they are spending it. Having this key information helps you understand which outlets and distribution channels you can use to propel your small business forward. From Gerzema’s talk, you will learn how to stand out from the crowd. You know, take the road less traveled – as the brilliant Robert Frost once wrote.

In a nutshell: It’s not so much about your product or your service, but how that product or service will solve a problem. 

3. Simon Sinek: How great leaders inspire action

“How do you explain when others are able to achieve things that seem to defy all of the assumptions?” Author Simon Sinek opens his talk by asking the audience this question. It’s probably at this point you’re thinking: there’s clearly no simple answer.

Here’s the thing about Sinek: for years, he has studied leadership and the characteristics that some of our most influential leaders have. And how this allows them to inspire others. It’s grounded in psychology and biology. But again, understanding how to impact the human decision making process means you have the opportunity to inspire them. Inspire them to buy your product, invest in your company, start a revolution. You know the drill. Watching Sinek’s talk will give you the ability to understand patterns of success. And how you can implement those patterns in your own life.

In a nutshell: The why you do what you do is much more important than what you actually do.

4. Amy Cuddy: Your body language shapes who you are

We’ve all dreamt of being a superhero at some point, haven’t we? Would you settle for power posing? If that term alone leaves you wondering, it’s enough to watch Amy Cuddy’s TED Talk. Cuddy is a powerhouse in the world of psychology, studying body language and how the way we stand, sit, or hula hoop, causes others to perceive us as well as how we feel about ourselves.

Okay, so don’t quote me on the hula hoop part, but our body language is directly linked to our body chemistry. Why Cuddy’s talk is so powerful? To let you in on the secret, power posing is standing with your hands on your hips and chest out, in essence a “Superman” stance. Body language such as this can alter your brain chemistry to make you feel more powerful and more influential. This pose alone can help decrease stress and give you the ability to take more risks. Nothing crazy like hula hooping, but risks that could benefit your business.

In a nutshell: It really is all about the way you carry yourself.

5. Linda Hill: How to manage for collective creativity

Author and Harvard professor Linda Hill knows just how to pinpoint people’s strengths. Not only that, but how to take those strengths and encourage people to generate genius-level ideas. In her talk, Hill discusses how you and your teams can use certain tools (which she outlines) to keep everyone creative and forward thinking. She also highlights how to build creativity and problem solving into your company’s culture.

It doesn’t have to be as hard as you think: sometimes the catchiest ideas come from taking a step back and finding inspiration in other places outside of your small business. Take a look at your surroundings, and what’s going on in the world, and what people are actually saying. That’s how Adidas got its longstanding slogan, after all. The slogan, impossible is nothing, stems from a quote stated by Muhammad Ali, a huge influence in the world of sports (i.e. the world that Adidas operates in). Either that, or maybe the creative team was just power posing. Again, don’t quote me on that.

In a nutshell: You’re probably more creative than you realize.

When you think about your business you probably envision its growth, scalability, and overall success. After all, who wouldn’t? And one of the ways you scale your company is by continuing to grow in terms of the number of employees you hire.

Having a great benefits package along with compensation and office culture can be just what a prospect needs to work hard for your company. When selecting what goes into that benefits and insurance package, we want to ensure you can sidestep any and all mistakes. First off…

Know Your Options

The first big mistake is not knowing or analyzing all of your available options. Mainly, low or high deductible plans. Low deductible plans save employees the most money, while high deductible plans save you as the employer the most money. However, there are some things such as HRAs that you can implement to offset the costs of high deductible plans. But as they say, everything in moderation. Or in this case, in balance. Essentially, don’t make your decision for a plan based solely on the price.

Which brings me to my next point: ensuring you have the right broker working for you. You and your employees work as a team, and your broker should work like that for you, too. Brokers like Decisely focus on customer service and strategic partnerships. Mostly so that you can tailor your coverage to suit your workforce best.

For example, if your business is primarily a small group with dependents (i.e. children), it might be great to offer a wide range of benefits, but not so great if your business is made up of employees that spend their time traveling for work. Having a broker that understands these needs and understands your business means you can offer what is best to retain your employees.

Have Benefits Plan Documents

Benefit plan documents. Yes, they are necessary. More than necessary. It’s the law. For benefit plans, group health plans, the works. But it’s not as scary as it sounds. It’s simply having the legal documents in place that specify the benefit offerings and provisions behind the plans. Again, a broker can also help you here.

Similarly, it is equally important to have a Summary of Plan Description. Similarly, it is an outline of the plans offered, and should be updated at all times. This summary should be given to all employees that are participants in your healthcare offerings.

Let Employees Know about Plan Changes

This directly links to having plan documents available for your employees. If you decide to change your plan or eligibility criteria, be sure to let your employees know. No one wants to be left in the dark, after all.

One of the items that must be provided to coverage participants is called a Summary of Benefits and Coverage. This should be provided to employees before they enroll in a plan, when the plan renews, within 90 days of a special enrollment period, and within 7 business days of if an employee submits a written request.

An additional document is the Summary of Material Modification, which is supplemented when a plan changes outside of a renewal period.

No Sharing Allowed

One last mistake that some companies slip up on is the sharing of employee information. When doing your research to get price quotes for health plans, health providers only need ages, gender, zip codes, and the family makeup of your employees. No names, social security numbers, or addresses required – so keep that info safe.

This goes hand-in-hand with taking the necessary time to “shop” for the right insurance providers. And if all else fails, remember that synonym we all saw on posters in our elementary school: A.S.K. – always seek knowledge. The more you know, the better decision you can make for your business.

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Understanding these mistakes and what you can do to avoid them will not only help you, but also your employees. Most of all, it will attract and retain the highest quality talent to help you attain that vision we talked about: growth, scalability, success.

A little over 2 years ago, President Obama sought to restructure America’s labor system, and overtime laws. But a lot can happen in two years. That being said, we have compiled this guide so you know what’s going on, the impact these changes will (or already) have on your business, and how you can keep yourself walking in the legal line. Especially because these changes are expected to take effect in the summer of 2016.

Lay it on me – what’s changing?

First things first: under our current structure, overtime pay must be given to salaried employees that make less than $23,360 a year. That’s also equivalent to $455 a week.

So now you know what’s currently going on, but what might happen? The new threshold may be raised, meaning salaried employees that make under $50,440 a year (or $970 a week) must be paid for overtime work.

To break it down a little more, overtime essentially means time and a half for every hour an employee works after the typical 40 hours in their workweek. So if this reform happens, expect the current 8% of the workforce that is affected to jump to 40%. That’s an estimated 5 million Americans. For small business owners, the additional wages (on average) are estimated to be $2,400 a year per each qualifying employee.

Okay, so what’s the good? The bad? The ugly?

The upside here is that we all know change can be a good thing. It’s no secret that many employees are overworked, and the threshold for overtime pay has not been updated in over a decade. Not to mention adjustments to match inflation. Essentially, the proposed changes seek to give people a better quality of life.

On the other hand, these changes do mean increased costs to you as an employer. You may have to analyze which employees to keep as non-exempt or if you need to hire additional part-time workers. So yes, there is some red tape here, but additional pay for your employees can also yield increased productivity and job satisfaction.

What can I do to prepare?

The first thing is to simply remain updated. Whether that’s monitoring your news sources or working with your broker, be sure you are getting the information you need. Like Confucius said, “success depends upon previous preparation.” And who are we to argue with 2,000-year-old advice?

You’ll also need to think about a labor strategy. Some elements include:

1. Estimate the number of total overtime hours that your employees work throughout the year so you can estimate your costs. Because let’s face it, money doesn’t grow on trees. As much as we wish it did. 😉
2. Compare that cost with your current labor budget and determine if you will need to increase that budget.
3. Ensure your employees know about any changes you are going to make in regards to their work schedules and responsibilities.

If you are a little confused about how to classify your employees – exempt or non-exempt, that’s more than okay. Just perform an FLSA analysis. Say what?

The FLSA, aka the Fair Labor Standards Act, analysis will show you the exceptions to the rules of the new overtime reform. Meaning some employees, if they pass this “duties test,” are not eligible to receive overtime pay. Here’s how you know if an employee is exempt from overtime pay:

Executive Exemptions

1. The employee has to be salaried and make at least $455 a week.
2. Their main job responsibility has to be managing the company or a department or division of your business.
3. They must regularly oversee the work of at least 2 or more other full-time employees.
4. This employee must also have the right to hire or fire employees; or have a substantial amount of weight placed on their recommendations of the hiring or firing or promoting of employees.

Administrative Exemptions

1. The employee has to be salaried and make at least $455 a week.
2. Their main job responsibility must be administrative/office or non-manual work related to managing business operations.

Professional Exemptions

1. The employee has to be salaried and make at least $455 a week.
2. Their main job responsibility must be related to performing work based on advanced knowledge (typically science fields) that was gained under specialized instruction or other courses (in layman’s terms, school).

Computer Employee Exemptions

1. The employee has to be salaried and make at least $455 a week or if hourly, must be paid at least $27.63 an hour.
2. The employee must work as a computer systems analyst, programmer, software engineer, or the following must be their main job responsibilities: managing and implementing hardware and software systems, designing/developing/creating/testing computer programs, modifying operating systems, or a combination of the three.

We know, this is probably a lot. But the hope is that you can stay as prepared as possible so that you not only know what’s coming, but you can handle it like a pro, too.

The insurance marketplace undergoes constant changes – meaning your benefits broker plays an essential role in your small businesses. Brokers serve as educators and advisors to your business’ benefits program. It is their job to keep you informed.

Ask yourself the following questions to learn what your benefits broker should be doing for your business:

1. How knowledgeable is your broker? Here’s how to ensure a broker really understands the world of benefits and insurance.

Healthcare options can be (at times) confusing. Your broker should give you the ability to understand the details of the plans available for your business. Plus, they should explain how those plans align with the goals of your business.

A broker should be able to discuss the difference between HRAs, reimbursement plans, COBRA, the Affordable Care Act, to include the pros and cons behind each of those, and more. If you find your broker cannot provide you with the information you need, it’s time to invest your resources elsewhere. Companies like Decisely have licensed brokers and customized healthcare plans to provide the most up to date information as well as custom plans for your business. All in all, a dedicated broker will know the right coverage to benefit you and your employees the most.

2. What does your benefits broker actually do for you? How to find the right strategic partner for your business.

As referenced in the previous point, you shouldn’t have to be the expert on benefits and insurance. Your broker should. Not only should they be credible, but they should also be able to guide you through every step of picking a plan. They need to be a partner to your business, with an understanding of the ever changing requirements to guarantee a seamless setup for anything from onboarding new hires to data management.

3. Is your broker legit? How to verify your broker’s qualifications.

This may seem like a fairly obvious point, but it is a good question to ask. No one wants a broker that doesn’t truly care about who they are assisting because they weren’t trained effectively. The plans that your broker helps you choose trickle down to your current and potential employees.

In order to build a positive relationship with your broker, they need to be willing to understand your goals, needs, and even the various positions that your company has or will be hiring for. You should feel comfortable viewing your broker as a teammate and they should act as such, too. In order to build this kind of strategic partnership, verify your broker’s license and ask around for recommendations and feedback from sources that you trust. A proper state license demonstrates that your broker was trained, educated, and certified to transact business.

4. Is your broker available? How to create an open channel of communication.

Open enrollment is not the only time to speak with your broker. Again, they need to be operating as the experts on all things benefits. If your benefits broker isn’t reaching out to you to discuss the needs of your business, the possibility of changing plans, or providing updates to information on healthcare reform, then they are not the best fit for you and your team. The simplest way to establish communication with your broker is to set up check-in points throughout different times in the year. Whether that’s once a month, or once a quarter – the amount needs to be right for you.

At Decisley, we offer numerous ways for our clients to get in touch – chat, email, phone – our licensed team is available for you and your employees. Make sure your broker is available when you need them.

5. Is your broker compliant? Here’s how to make sure.

As previously mentioned, changes in healthcare tend to be quick and can even be unexpected. It is crucial to have a broker that will help steer you in the right direction to ensure the best practices for your small business. For both federal and state laws, your broker needs to ensure that everything is falling within the legal standards. From HSAs to enrollment deadlines, you should never have to turn to attorneys or other resources in the legal industry – your broker should be able to answer any and all of your questions when it comes to these kinds of regulations.

All in all, you want a broker that is not only helpful, but also cares about the outcome of your business and the wellness of you and your employees. With the right broker, you can remain informed and up to date so that your business can continue to run efficiently.

As we all know, the world of healthcare can be confusing to navigate. But don’t worry, we’ve got you covered.

Check out our glossary of Affordable Care Act terms. It will help you understand the lingo surrounding the ACA so you can make informed decisions.

Accountable Care Organizations

The network of doctors, physicians, and hospitals that fall under the ACA. These organizations strive to live out the mission of the ACA: “to provide affordable, quality health care for all Americans and reduce the growth in health care spending.”

Bundled Payment

A part of Medicare and Medicaid that serves as payment for doctors to treat various ailments and illnesses.

Cadillac Tax

A tax that will take effect in 2020. This tax is mainly for employers – it allocates a 40% tax on any healthcare coverage that extends above $10,200 for individuals and $27,500 for families. Although you’ve got a few years, you may want to make a Post-It note for this one.

Community Rating

Have existing medical conditions or health problems? Don’t worry about those premiums. You can’t be charged additional premiums because of it thanks to the ACA. This term ensures that the price of coverage can only be changed based on how many people you cover (e.g. if you have dependents), if you use tobacco, and your age.

Defined Contribution Health Plans

These types of healthcare plans allow you as an employer to contribute a certain amount of money towards your employees’ healthcare. These contributions can be used to offset premiums.

Employer Mandate

This stipulates that employers must offer health coverage to their employees. For businesses that have 50 or more full-time workers, you must pay at least $2,160 for healthcare for every employee after 30 (e.g. the 31^st hired employee, then the 32^nd, etc.). For the healthcare provided, employers must pass the ACA’s affordability test – essentially that an employee should not have to pay over 9.5% of their income for their insurance.

Forms 1094 and 1095

These forms require insurers (e.g. employers) to provide the information of their health coverage to those that are covered (e.g. employees).

Full-Time Employee

Any employee that works 30 hours or more each week.

Individual Membership Associations

These associations allow civic groups to receive group coverage. Civic groups include church groups, Toastmasters, etc. In general, civic groups are groups that come together through volunteer work to improve the surrounding communities.

Preventive Services

Essentially, being proactive when it comes to your healthcare. The usual: going to get screenings and vaccinations, getting your blood pressure checked, etc. You know, all the things you need to do to be ready for the zombie apocalypse. 😉

Waiting Period

The time that someone must wait for their healthcare coverage to go into effect after gaining employment or submitting a health insurance application. 

Variable Hour Employee

Similar to how it sounds, it is an employee that works an unset amount of hours per week – sometimes it can be under 30 hours, and sometimes it can be over 30 hours.