Offering a competitive benefits package
The goal of this guide is to help employers of all sizes, and the benefits brokers and consultants who serve them, put together the strongest benefits package that makes sense for their company.
The economic landscape is constantly changing, healthcare costs are rising and the state of the employment market seems like it’s constantly up for debate. That can make putting together a popular yet cost-effective benefits package challenging for even seasoned benefits brokers and HR professionals. Small businesses might have additional challenges since they aren’t legally required to offer benefits but probably need to if they want to be competitive. The goal of this guide is to help employers of all sizes, and the benefits brokers and consultants who serve them, put together the strongest benefits package that makes sense for their company.
We’ll cover Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), Standard Health Reimbursement Arrangements (HRAs), Lifestyle Spending Accounts (LSAs), Medical Travel Accounts (MTAs), COBRA, and Section 125 Cafeteria Plans. We’ll tell you which accounts work together so you can serve the diverse needs of your workforce while maintaining fidelity to your budget.
Are you required to offer benefits?
First of all, is an employer required to offer any benefits at all? If you have fewer than 50 full-time or full-time equivalent employees, then according to the Affordable Care Act (ACA), the answer is no. You don’t need to offer your employees any type of health insurance or supplemental benefits like HSAs, FSAs, or HRAs. If a company has more than 20 employees, federal law requires that they provide their employees and beneficiaries with the option to continue their group health benefits through COBRA if those benefits were to end.
If you have 50 or more full-time or full-time equivalent employees (meaning they work at least 30 hours per week or 130 hours per month), you’re considered an applicable large employer (ALE) and are required, per the ACA, to offer health insurance coverage that meets IRS guidelines for affordability and minimum coverage. If you don’t offer insurance options that meet the minimum IRS standards for affordability and coverage levels, you might be subject to what’s called a shared responsibility payment to the IRS.
Should you offer benefits? (probably)
Studies have shown that access to health insurance leads to a healthier workforce, and a healthier workforce is a more productive workforce. Surveyed employees have said that the overall quality of a benefits package can be the deciding factor when taking a job and they are more likely to feel loyal to a company where they feel valued and supported. Providing tax-advantaged benefits and post-tax spending accounts can also help relieve the financial stress many employees feel today. So regardless of your company size, offering basic and supplemental benefits can help you strengthen your company overall. Small businesses with 1-50 full time or full time equivalent employees can sign up for group health and dental insurance plans through the Small Business Health Options Program (SHOP). You can enroll in SHOP through private insurance or through a registered agent or broker. SHOP plans are generally the only way to qualify for the Small Business Healthcare Tax Credit to lower premium costs. Small businesses can sign up for supplemental benefit accounts through Lively.
If you have 50+ full time or full time equivalent employees you can sign up for group health and dental plans through an agent, broker or directly with a private insurance company. Alternatively, you can set up an HRA to help employees pay for health insurance premiums and other qualified medical expenses (as long as the per employee allocated reimbursement amount makes insurance premiums “affordable” per IRS guidelines). Employers can also sign up for supplemental benefit accounts to help employees pay for the cost of healthcare, such as HSAs, FSAs, HRAs, and lifestyle and medical travel spending accounts, through Lively.