Your organization’s Human Resources Department understands the importance of recruiting and retaining the best talent. While a competitive salary certainly attracts excellent candidates to a position, the benefits a company offers as part of a compensation package can play a big part as well. Do you know when you should offer which benefits? Read on to learn what the Employee Benefits and Compliance Experts at Benely have to say about when companies should offer employee benefits!
When Does the Affordable Care Act Require Companies to Offer Health Insurance to Employees?
The Affordable Care Act (ACA) mandates that employers with fifty or more full-time employees must offer health insurance to their full-time employees. If your small business has grown to fifty or more full-time employees, the Affordable Care Act applies to you.
A full-time employee is defined by the Affordable Care Act as an employee who is working for the company for a minimum of 30 hours per week, or 130 hours per month for more than 120 days in a row. This is the same standard separating part-time from full-time employees that the IRS provides. If you have a group of employees who is not averaging 30 hours per week, or 130 hours per month for more than 120 in a row, you are not legally required to offer those employees health insurance, as they are considered part-time.
If an employer fails to offer health insurance to these individuals, they face the assessment of lofty fines and penalties from the federal government.
What Kind of Benefits Can I Offer to My Employees Other Than Health Insurance?
If your organization is a small business that does not employ fifty or more full-time employees, you may still want to offer some benefits in order to attract and retain a talented team of staff. Of course, you can choose to offer full coverage health insurance, but you can also choose to offer something less.
Health Reimbursement Arrangements (HRAs) as an Alternative to Health Insurance for Employers:
Many employers, especially smaller businesses, offer HRAs, or “Health Reimbursement Arrangements” to their employees. An HRA isn’t traditional health insurance coverage, rather, it is a kind of health spending account that an employer can choose to provide to their employees. Funds in an HRA can go toward paying for anything that is deemed a “qualified expense,” including medical, pharmacy, dental, and vision care expenses. Most commonly, HRA funds are used to reimburse employees for out-of-pocket medical expenses and health insurance premiums.
One particularly attractive type of HRA is the Qualified Small Employer HRA, or “QSEHRA,” which became available as result of a 2017 piece of legislation. This type of HRA is only available to companies that don’t offer a group health plan and have fewer than 50 employees.
Reimbursement limits are capped on QSEHRAs to $5,150 for employees without spouses or dependents and $10,450 for employees with families. As the employer, you can choose to contribute less, but not more. QSEHRAs typically work like this: an employee pays their insurance company, then the employee will submit proof of payment for tax-free QSEHRA reimbursement. If an employee never submits claims for reimbursement, the employer retains the funds and can choose to roll it over from year to year while the employee is still employed by the business.
You can also offer HRAs for dental and vision coverage and for retirement savings. Under a dental or vision HRA, eligible dental expenses typically include check-ups, exams, cleanings, X-rays, glasses and contact lenses, and even orthodontic work and laser eye surgery. A Retirement HRA allows an employer to provide their employees with tax-free money for qualified medical expenses incurred after the employee has retired.
Health Share Plans as an Alternative to Health Insurance for Employers:
Health share plans, also referred to as health share programs, are organizations made up of individuals who share the cost of the group members’ health care. They are often used as an alternative to health insurance. Members of the health share plan define which medical expenses are eligible for coverage. Members are required to contribute a pre-set amount, usually monthly, in order to fund the health share plan.
Because health share plans must adhere to far fewer regulations than health insurance plans, health share plans are often able to charge their members lower premiums. The trade-off is that many of the expenses the health share plan has deemed ineligible for coverage will ultimately be borne by individual members. This is a “pro” if your employees are mostly young, healthy, and unlikely to experience any major health events.
Should Our Small Business Offer Benefits to Our Employees?
What your company provides its employees in exchange for their hard work and dedication amounts to so much more than a set amount of money for a set amount of time. The benefits your firm offers contribute to the exceptional culture of your company. Benefits objectively attract and retain staff and are often almost as important to your team as their salary expectations. In fact, a 2018 survey revealed that 78% of employees reported being more likely to stay with an employer because of their benefits. For this reason alone, your company should consider offering benefits as your budget allows as part of your human resources strategies.
The benefits you offer can go beyond health coverage of any type. They can include things such as savings toward retirement, like 401K matches; paid leave, such as sick leave or parental leave; and vacation and holiday time. You can also incorporate perks such as flexible remote-working options. If your company is a budding start-up, giving stock options and/or company equity to your employees could be an attractive benefit, as well.
Need Help Deciding Which Employee Benefits to Offer?
Do you need guidance in deciding whether to offer health insurance to your employees, or advice as to benefits to choose? Deciding on the perfect benefits can be tricky for even the most seasoned human resource professionals and small business owners. Luckily, Benely makes the employee benefits process simple. Reach out to the employee benefits and compliance experts at Benely, or request a free demo today.