Employee Benefit Compliance for Small Business Groups: Burden or Opportunity?
As an employer, one of the most rewarding ways to compensate employees is to offer benefits. While the term "benefits" could mean a wide range of things, I am particularly referring to Health and Welfare benefits. This includes Medical, Dental, Vision, Life and Disability to name a few. It's not only rewarding but also essential in most cases to attract and retain top level talent in any given field.
By establishing an employee benefit package, employers must then follow important laws, guidelines and requirements set forth by Federal and State regulators. Just one more branch of compliance to add to the already fruitful tree of Employment Law that Human Resource departments must abide by. These compliance requirements are designed to protect both the employer and the employee. It really comes down to two things: communication and fairness.
At the surface you have complex laws, amendments and provisions such as ERISA, PPACA and HIPAA. This alphabet soup makes up a substantial amount of the laws regulating employee benefits. In order to enforce these laws you have another set of alphabet soup such as DOL, EBSA, IRS, HHS, CMS and EDD, which are government agencies. With one of those laws being the most monumental overhauls of health care in the United States, The Patient Protection and Affordable Care Act (PPACA), we now have all of these agencies talking to each other by way of various reporting requirements of the insurance carriers, employers and individuals. Thus the influx of compliance enforcement to ensure everyone is doing what they're supposed to be doing.
When you start digging down to the root of these complex laws you will find patterns and categories. For example, employers are divided up by size. In general you have "Small Business Groups" which consist of under 50 employees (soon to be under 100). Then you have "Mid-Size Business Groups" which are between 50 - 100 employees. And then you have the "Large Business Groups" consisting of over 100 employees. Each of which are subject to specific provisions of each law set forth to protect the employee and the employer.
Fundamentally, it makes sense. Let's take a Small Business Group (SBG) employer vs. a Large Business Group (LBG) employer. The SBG employer has, let's say 15 employees - all of whom have been there for years. They have very little turnover as far as employees leaving or new hires. This employer is less likely to have a dedicated Human Resource department and they most likely deal with things as they go along. Employee benefits is the LAST thing on their mind. This category of employer must still comply with the laws and regulations if they choose to offer benefits, however there are fewer of them to abide by. Whereas, the LBG employer has, let's say 1,250 employees. On a bi-annual basis they may have performance reviews of their employees. This means promotions, new hires, terminations, reduction of hours... sometimes their hourly employees fluctuate from part time to full time. You can see how there could be various situations where having regulations in place provide both parties the adequate guidelines and protections. There are definitely more laws and regulations for this size group. Knowing which category an employer group falls into is half the battle.
Mid-Size Business Groups and Large Business Groups typically have a Human Resource department that is dedicated to administering these laws as well as a plethora of other employment laws. And for the most part an infrastructure that creates and maintains the systems that work best for their duties. Communication should be a huge driver of these systems if it isn't already.
The Small Business Group employers, however, typically wear multiple hats. This is where breaking the benefit compliance requirements down into patterns and categories could create an opportunity to communicate the very benefit that was designed to compensate their employees. And THAT is the perspective that will change the way these employers administer the employee benefit package.
Creating "Employee Stages", for example, is a good way to break down the compliance categories. Stage 1 could be "New Hire". This is when the employer will have certain ERISA, ACA and HIPAA documents that their employees need to be given within 14 days of being hired. Within those documents it communicates their options, rights and responsibilities as an employee eligible for benefits. This allows for PROACTIVE measures instead of complicated and costly REACTIVE measures. Stage 2 could then be "Employee Enrollment". Once an employee is enrolled in benefits after satisfying any applicable waiting period, there are then additional documents the employee needs to be given within 90 days. These go into further detail about the wonderful benefits in which they've been enrolled. More of a WHO, WHAT, WHERE and WHEN explanation. The real "meat and potatoes" of the plan that illustrates the value and how to utilize benefits. Stage 3 could be something like "Open Enrollment". This is an annual time period when benefits renew and lasts about 30-60 days - an essential time to reiterate benefits, communicate changes, announce additions and address any problems or questions.
Right there are already 3 stages that break up what may have seemed like a laundry list of items added to the employer's plate. And you can see that each one of those stages is an opportunity to communicate the value of the employee benefit package. I'm sure you can imagine how much more cared for the employee would feel, which correlates to happier employees overall. This then lessens the chance of a disgruntled employee making a beeline to file a complaint. Because once the Department of Labor catches wind of such complaints, the chances of an audit go up. As an employer you'll then realize how important having organized and compliant files are!
To sum it up, breaking down compliance requirements into organized categories can help employers not only create the opportunity for communication but also help with documentation - which is also an important aspect of compliance. After all, employee benefits cost time and money. The last thing employers want is their best intentions going unused or even worse, creating unintended problems later.
Lastly, there are fantastic Third Party Administrators (TPAs) out there ranging in services and cost depending on the employers' need. Contact our firm to discuss if your plan is in compliance and best practice tips to implement efficient processes. We may also be able to help you determine which TPA may fit your overall needs.
Stay proactive. Stay organized. Stay informed. Communicate. Document. Communicate.
"An ounce of prevention is worth a pound of cure.." - Benjamin Franklin