Where employers miss the mark on employee health plans
If you’re an employer that’s never offered health care to your employees before, the idea of doing so might feel a bit daunting. However, there’s no reason to let this fear get the best of you.
Health benefits are extremely important to employees. They help increase employee loyalty, establish a positive work culture, and entice future employees. In fact, according to a 2017 report from the Society for Human Resources Management (SHRM), 29 percent of employees cited better overall health benefits as a reason why they would considering seeking employment elsewhere. This was the second most important factor, behind more compensation (56 percent), per the survey.
Of course, if you’re going to offer healthcare to your employees, you need to be smart about it and you need to make sure it’s affordable – both financially for your business and as it pertains to the obligation you as an employer might have under the Affordable Care Act (ACA). According to the IRS, if you employed at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, you are an applicable large employer (ALE) for the current calendar year. And as an ALE, you are required to offer full-time employees and their dependents health care coverage.
Choosing the wrong plans can put your company in a terrible situation, one that might result in costly penalties from the IRS. In this post, we’ll examine how you should go about selecting plans that not only meet the needs of your employees, but fit into your business’s financial plans as well.
Utilize a trusted advisor
First and foremost, you should leverage a trusted advisor, like a benefits broker or consultant, to help you navigate this process. The ACA encourages employers to consult with a trusted advisor to ensure they’re choosing a health plan that meets the minimum essential coverage (MEC) requirements of the ACA.
It’s equally important that you work with an advisor who’s truly qualified. Make sure to properly vet them to ensure they’re properly educated and up to date on compliance requirements. When choosing an advisor, it’s imperative to consider the following:
- Their level of knowledge and expertise – Not every advisor has a clear understanding of the ACA. Make sure to vet their ACA regulation knowledge, and to ask them about their training and certifications, as well as about their experience with organizations similar to your own, to ensure they can provide the best advice for your situation.
- The resources available at their disposal – As an employer, you want to make sure the advisor you choose is taking all the necessary precautions to ensure you’re getting the best possible plan and support. That means they should be consulting outside sources – like ACA compliance experts and technology vendors – to make certain clients know about the affordable coverages available and can make the most informed decision.
Choosing the wrong advisor, one who isn’t up to date on compliance issues and isn’t immersed in what’s going on in the benefits world, can be just as costly as selecting the wrong health care plan.
Don’t be seduced by the price
It’s easy to become enamored with a low-cost health care plan. Which makes sense considering if you don’t choose a plan that’s affordable for your employees, there’s a good chance you’re going to trigger penalties down the road. However, buying on price alone is not a good strategy. You need to pay close attention to how the policy is actually structured.
For instance, some employers don’t understand that just because they provide their employees with a co-pay, that co-pay may or may not go toward their deductible. So, while an employer might be scared to touch the co-pay, the truth is, if a company migrates to a high-deductible health plan and front loads that deductible with a health savings account or a spending account, this might be a more affordable option and would still meet ACA requirements.
Make sure you’re focusing on the health plan itself and its coverage features rather than just taking into account the monthly cost of individual coverage. Some important aspects to consider are co-insurance levels in and out of network, deductibles in and out of network, and pharmacy deductibles.
As an employer, you need to be fully aware of what plan you’re buying. Going for the cheapest possible plan shouldn’t be the bottom line.
The process of determining health care for your employees may seem overwhelming, but there are ways to make it easier. By educating yourself, working with trusted advisors, and utilizing available resources you can make sure you’re providing your employees with quality coverage that’s affordable, compliant with the ACA, and good for business.