Researchers in the social sciences are seeking to understand the components that create the elusive condition we call happiness. The happiness factor is coming into play in the work arena as well with studies showing the importance of job satisfaction in retention of top talent. As discussed in How to Keep Your Employees Happy—Part 1: Quality Benefits, studies suggest that employee benefits play an important role in the overall satisfaction employees experience in their jobs.
Many employers recognize the importance of job satisfaction when it comes to finding and retaining talented workers. In simple terms, they want their employees to be happy. Competitive salaries, compelling work, and a positive environment are big drivers of the happiness factor but more and more, particularly in industries that are arm wrestling for the best talent, a strong employee benefit package is a game changer. Offering strong health benefits as well as retirement and voluntary benefits can be the difference between recruiting a key staffer and losing them to your competition.
According to studies by MetLife and Unum, quality benefits and coinciding benefit education make a measurable difference in employee recruitment, retention, and reported job satisfaction.
Quality benefits remain a key recruiting and retention tool. From a tactical perspective, benefits still play a big role in attracting and retaining employees, a recent MetLife study confirmed. Sixty percent of employees said quality benefits are the reason they remain with their company. Forty-nine percent said benefits are the reason they came to work for the organization in the first place.
Compelling benefits programs translate into employee satisfaction. Employees who are satisfied with their benefits are more likely to be loyal and satisfied with their jobs by a wide margin, according to the MetLife study. More than 70% of employees who were satisfied with their benefits were also satisfied with their job and their employer.
The Affordable Care Act has imposed many new healthcare requirements impacting the already complex world of benefits administration and overloading human resources professionals even further. Employers have responded in a variety of ways, including implementing new technologies to manage the additional workload.
As of January 1, 2016, employers with 51-100 benefit eligible employees are now considered small group employers. As a newly labeled “small business,” you may see rate increases of 20-30%, depending on your group, if you haven’t already.
Why the big jump in rates?
The change is tied to rules that apply to small groups. Small groups are charged with what the insurance industry calls “age-banded” rates. Age-banded simply means age-based. In other words, cost is assessed for the age of each employee and spouse in the group. The shift impacts many employers, especially technology companies since many employ under 100 employees, and adds another obstacle in the quest to offer affordably priced health care coverage.
If you are one of these employers, the following is a quick summary of things to be aware of.
Small and midsized tech companies face many challenges, but none may be as difficult as attracting and retaining talent. The task is especially difficult given what these high-growth companies are up against in Silicon Valley. Consider the following:
- Google offers one-on-one consultations to new parents to help them find child care facilities
- Intuit has onsite fitness centers for employees and offers $650 for gym memberships and exercise class fees
- Netflix now offers a year of paid maternity and paternity leave for salaried employees
- Twitter employees receive Zipcar discounts, access to in-office yoga and Pilates classes, and dry cleaning and laundry services
In addition to competing against cash-rich tech companies, smaller firms are grappling with increasing healthcare costs and are stuck in a new pricing system that doesn’t allow for effective rate negotiation. According to a survey by Mercer, a Marsh & McLennan Agency (MMA) sister company, employers predict that health benefit cost per employee will rise by 4.2% on average in 2016 after they make benefit plan changes, such as raising deductibles or switching carriers. This is consistent with actual cost growth in 2014 (3.9%) and the expected cost growth for 2015.
So how does a promising tech company bring in the talent it needs when the tech giants are grabbing up the skilled employees with higher salaries, generous 401(k) plans, and impressive healthcare benefits?
One way small and midsized technology companies can compete is to take advantage of a small business trust. A relatively new way to lower employee benefit costs, tech companies are pooling their collective buying power to compete with the giants on robust healthcare benefits.
On Your Mark, Get Set, Motivate!
Savvy employers recognize the benefit of a healthy workforce. Study after study has demonstrated the increased productivity, improved morale and the health insurance savings that come with a healthy and physically active group of employees. As John F. Kennedy said, “Physical fitness is not only one of the most important keys to a healthy body, it is the basis of dynamic and creative intellectual activity.”
Yet knowing that something is important to the wellbeing of an organization is not the same as knowing how to implement an effective employee wellness program. The question remains: What can employers do to introduce healthy habits and keep employees motivated to stay active?
Marsh & McLennan Agency decided to test the effectiveness of our own wellness program Total Health by challenging our associates. In June, the MMA West San Francisco and Walnut Creek offices took part in the Get Up and Go Challenge, modeled after one of the basic challenge events from our Total Health wellness program. Using this model, we measured the number of steps people took, with the goal of 10,000 per day. This might sound like a lot, but using a conversion sheet, our associates were able to log steps taken doing everyday activities such as gardening, grocery shopping, and even housework.
Administering employee benefits can be time-consuming, but applying technology can help dramatically improve the process.
So what are the most effective ways to manage your benefits program, both from an employer’s and employee’s perspective?
Whether you’re in the early stages of looking for an online solution for your organization or already have one in place, here are five reasons technology will support your long-term goals and what to look for in a benefits administration platform.
1. Streamline enrollment information collection
Many companies have no organized approach to collecting enrollment data. Even today, with so much technology available, many companies still rely on a paper-based process to enroll employees or update benefits information.
With an online system, data collection is aggregated centrally and can be easily accessed and managed by the HR team from any location. Online data management is particularly important for complex benefits offerings, especially for employers with multiple offices, contribution strategies, and eligibility requirements.
2. Incorporate ACA tracking and reporting into your system
The "Affordable Care Act" (ACA) created two new duties to report healthcare information.
Individuals offered company-sponsored health insurance must state whether they had coverage that met the ACA’s requirements. Companies considered an Applicable Large Employer (ALE) also must report that they have complied with the ACA. To verify that information, the IRS created two forms, IRS Form 1095 C and IRS Form 1094 C. Employers can be fined $100 per day for each 1095 C form that has not been submitted to the IRS.
An online benefits administration system can integrate payroll, time and attendance information, so all of the data can be accessed in one location and transmitted seamlessly to the IRS.
3. Provide a self-service administration option for employees
For most companies with more than 50 employees, 2016 will bring significant new Internal Revenue Service (IRS) employer reporting requirements.
The goal of the IRS: To ensure that your employees maintained health insurance coverage in 2015, in addition to ensuring that certain employers offer coverage to full-time employees, as mandated by the Affordable Care Act (ACA).
Preparation is the key to managing this additional workload brought on by the ACA for your HR, Finance and Payroll teams. Planning is critical if you want to avoid a potentially big penalty. Employers may be fined up to $1.5 million for failing to report the proper information to the government.
By January 31, 2016, employers are required to report to an employee (and the government) as to what months the employee was offered coverage, in addition to other information related to the coverage, to the employee and the government. An employer must also transmit this information (along with other information regarding the offer of coverage to all of their employees) electronically to the government by March 31, 2016 (paper transmittals will be due one month earlier).
In maritime tradition, the captain is said to “go down with the ship.” But must the ship go down with the captain? This is the metaphorical question behind an insurance coverage called Key Person. Key Person is insurance that protects a business in the event that a key employee dies—the company owns and is the beneficiary of the policy.
The loss of any person in an organization is devastating. The loss of a person who is critical to the company’s operations, sales or decision-making can instantly multiply the impact of that loss. What would your organization do if something happened to your CFO? Or how about that long-term colleague who is the backbone of your company? Have you ever thought about how your company would function without them? Regardless of the size of the business or organization, there is always at least one person that is critical to the firm’s success.
Facing mortality is uncomfortable for most people and planning ahead for an unforeseen loss is a difficult subject, but for those responsible for the longevity of a company, it is an important coverage to consider.
Key Person Insurance protects a business by addressing the financial impact of losing a key person in the company. With the coverage in place, a claim would provide funds to:
- Offset interrupted or lost cash flow from reduced sales or company earnings
- Hire a temporary substitute
- Offset the expense of attracting and hiring a qualified replacement
Most executives overlook this type of insurance, because it’s not something they want to think about or plan for. Captains don’t think about going down with or without the ship. However, Key Person Life Insurance could be your saving grace in the event that an unforeseeable death takes place. Key Person Life Insurance can help keep a business going strong, even if tragedy should strike.
Unsurprisingly, the historic nature of the Affordable Care Act has made it a significant topic of discussion over the past four years and we don’t see that changing anytime soon. With numerous ongoing modifications and delays to legislation, it is essential employers stay up to date on ACA developments. As we approach the midway mark of 2015, we’ve compiled a list of high-priority ACA developments employers should have on their radar for the remainder of the year:
- Pre-established Stability Period - In 2014, employers should have established a Measurement Period or Stability Period for their variable hour/seasonal employees. The Stability Period should have begun January 2015 for variable hour/seasonal employees (subject to transition relief). If an employer has not yet established a Stability Period, the employer should do so immediately, unless they are entitled to transition relief in 2015.
- Section 125 Modifications - Employers that have not modified their Section 125 Plan documents to include the new permitted election changes introduced in 2014 may now choose to offer additional Section 125 Cafeteria Plan permitted election changes. This will allow their employees to make new mid-year election changes. This includes employees who:
- Intend to enroll in a Qualified Health Plan in the Exchange (i.e. Marketplace) or
- Work less than 30 hours a week during a Stability Period.
- Premim Reimbursement Grace Period for Small Employers - Small employers (less than 50 Full-time and/or Full-Time Equivalent employees) are able to continue having a premium reimbursement plan for their employees’ individual policies until July of 2015 without penalty.
- Cadillac Tax Planning - Employers should be focusing on strategies to reduce the cost of their high-priced health plans in anticipation of the looming Cadillac Tax. Health benefits (including HRAs, HSAs, FSAs) valued above the IRS threshold are subject to the recently released IRS Guidance on the applicability of the Cadillac Tax. The IRS Guidance also requested comments from the public on potential methods for calculating the cost of these plans.