Health Care & Benefits

Understanding Your Medical Plan

by NPEO Media NPEO Media No Comments

Understanding how your health insurance works is an imperative component of being prepared for care. In order to maximize your care and keep your out-of-pocket costs low, it is essential you understand and familiarize yourself with the details of your plan. While benefit plans vary in what is covered and the associated out-of-pocket expenses, this article is designed to tell you what you need to know and the most common terms you’ll come across.

• Premiums
• In and Out of Network
• HMO vs PPO
• Annual Deductible
• Co-Pays
• Coinsurance
• Annual Out-of-Pocket Maximum


Premiums are the payments you make through payroll deductions on a per-pay-period basis. Rates are affected by many variables including the cost of various medical services and how likely it is that plan participants will need those services.
Consider This: There is a high correlation between the premium and the annual deductible. The higher the annual deductible, the lower the premium and vice versa. In addition, most employer-sponsored medical plans allow participates to pay their benefit premiums on a pre-tax basis through employee payroll deductions.

In and Out of Network

When a healthcare provider wants to do business with an insurance company, such as Aetna or Blue Cross Blue Shield, the healthcare provider enters into an agreement with the insurance company to only charge what the insurance company pays for covered services: in-network healthcare provider. In doing so, a plan participant’s out-of-pocket costs are significantly lower than from a healthcare provider who is not “contracted” with an insurance company: out-of-network healthcare provider. Understanding both your plan’s in-network and out-of-network benefits is critical as you review your out-of-pocket responsibility for covered services. If a plan participant uses an out-of-network provider, the plan participant will be responsible for a lager portion of the cost.

Consider This: All insurance carriers should be able to provide you with a list of their current in-network healthcare providers. If you ask a provider this question directly is imperative you do not ask if they “ACCEPT” yourmedical carrier (e.g., Aetna, or Blue Cross Blue Shield, etc.), but rather if they are “CONTRACTED” with your medical carrier. While the semantics are subtle their effect is profound. While most out-of-network providers will accept all major medical carriers, those medical carriers will only pay what is unusual and customary. Moreover, because your out-of-network healthcare provider is not contracted with your medical carrier,they have no restrictions on the amount they can charge. More often than not, you will be “balance billed” for the difference figure.


In a Preferred Provider Organization (PPO) arrangement, the plan contracts with physicians and hospitals to provide services at a reduced cost. If you use in-network providers, the plan pays for all or most of the common cost of treatment. Participants can use out-network healthcare providers, but may pay a larger portion of the cost. A Health Maintenance Organization (HMO) is a group plan in which members must choose a Primary Care Physician (PCP) form a network of local healthcare providers who will refer you to an in-network specialist or hospital.
Consider This: In a PPO arrangement, you do not need a referral to see a specialist, nor do you need to designate a PCP.

Annual Deductible

The annual deductible is the amount the participant(s) must pay before the health plan begins to pay towards covered services, called co-insurance. There are typically two types of deductibles, family and individual. Under a family deducible arrangement, which means you’ve enrolled dependent(s), the full-family deducible must be met before the plan begins to pay for any one or more covered dependents. In addition, most plan designs include a separate family and individual deductible for in-network and out-of-network services.

In some cases the family deductible is embedded, meaning if one or more covered dependent(s) meets their individual deducible, the plan will begin paying towards covered services for that specific plan participant regardless if the family deducible has been met. Plans designs which include embedded deductibles are rarer because of the IRS restrictions placed on this type of medical plan but they are becoming more popular. More typically, embedded deductibles are associated with Consumer Directed Health Plans (CDHP/HDHP).
Consider This: In most cases, any covered service that a plan participant pays out-of-pocket for counts towards the annual deductible accumulation. In most plans, office visit co-pays and prescription drug co-pays are excluded from the annual deductible accumulation. Moreover, the per-pay-period premiums associated with the medical plan also do not count towards the plan’s annual deductible accumulation.

Participant annual deductibles are reset at the beginning of every plan year. Many participants use, for example, a flexible spending account or a heath savings account to pay for their out-of-pocket costs until they reach their annual deductible. If you have to pay out-of-pocket anyway, you might was well use pre-tax dollars.


Some medical plans include co-pays. Co-pays are set prices for various services you may need throughout your benefit plan year. Co-pays typically apply to primary and specialty doctor visits, prescription drugs and emergency room visits. Co-pays are normally only associated with in-network healthcare providers. Consumer Directed Health Plans (CDHP/HDHP) do not use co-pays as part of their plan design.

Consider This: Because co-pays do not typically count towards the plan’s annual deductible or out-of-pocket maximum, co-pays can be a double-edge sword. While co-pays insulate you from the full cost (billed cost) of a doctor office visit, for example, participants who have a high utilization of healthcare needs throughout plan year typically fare much better under in a Consumer Directed Health Plan, if one is offered. Consumer Directed Health Plans, with the possible exception of prescription drugs coverage once the annual deductible has been met, do not have co-pays as part of their plan design, and as such, all cost associated for covered services leading up to the annual deductible are 100% out-of-pocket to the participant. In effect, participants tend to meet their annual deductible and out-of-pocket maximum much faster during the plan year. In addition, participants can pay for out-of-pocket costs using pre-tax dollars through their Health Savings Account which is always an important feature of a Consumer Directed Health Plan. Likewise, co-pays are eligible reimbursable expenses under a Medical Flexible Spending Account.


Once a plan participant meets their annual deductible, then the plan starts paying towards covered medical services. Coinsurance is the cost sharing between the plan participant and the insurance company. For example, if the plan has 80/20 coinsurance, this means the plan will pay 80% of all covered services while the plan participant pays for 20%, up to the plan’s out-of-pocket maximum.

Consider This: Many participants use a Medical Flexible Spending Account to pay for their coinsurance amounts

Annual Out-of-Pocket Maximum

This is the maximum amount of money you could be required to pay for your covered healthcare costs during the plan year and includes the amounts applied to your annual deductible and the coinsurance after the annual deductible has been met. Once a plan participant meets their annual deductible, then the plan pays 100% of all covered services. In addition, most plan designs include separate family and individual out-of-pocket maximums for in-network and out-of-network services.

Consider This: Because co-pays typically are not included in either the annual deductible or out-of-pocket maximum accumulations, co-pays will typically continue even after the annual out-of-pocket maximum has been met. The per-pay-period premiums associated with the medical plan do not count towards the plan’s annual out-of-pocket maximum accumulations.

Understanding Legally Mandated Employee Benefits

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employeebenefitsToday’s workers expect generous benefit packages, so many companies offer more than fair wages to recruit top talent. By law, you must provide several indirect compensation forms to your staff. These non-negotiable employer requirements involve various state and federal regulatory and tax responsibilities. Reviewing each will help you stay current on your legal obligations.

Small firms tend to assign benefit administration to employees wearing numerous hats. If those staffers are not familiar with all necessary technicalities, they may miss key details, forms, and deadlines. Resulting penalties and fines can add up quickly. Outsourcing your benefit management to National PEO will take those complex duties off their shoulders while ensuring proper, timely compliance.

Minimum Wage and Overtime

Laws require most public and private employers to follow standards for hourly and overtime compensation. Your company must allocate the federal minimum wage or higher to hourly workers unless you state dictates a better rate. Also calculate overtime for hours exceeding 40 per week as time and a half of your regular rates.

Health Insurance

Per the Affordable Care Act (ACA), organizations with 50 plus workers must offer minimum essential health insurance to 95 or more percent of eligible staffers. Being compliant with all of ACA’s complexities is a mandatory responsibility that avoids hefty penalties.

Workers’ Compensation

Companies have legal obligations to provide self-insured, no-fault Workers’ Compensation Insurance through commercial carriers or your state’s program. Every state dictates its unique financial protection plan for crewmembers who suffer on-the-job injuries, illnesses, or emotional strains. Reparations may cover medical expenses, a percentage of lost wages, dismemberment, permanent disability, and/or death benefits to survivors.

Family and Medical Leaves

Rulings require all public employers and private ones with at least 50 workers to abide by the Family and Medical Leave Act (FMLA). It entitles personnel to take off as much as 12 weeks per 12-month interval. Law demands that group health benefits continue during those unpaid but job-protected breaks. Afterward, your firm must reinstate staffers in the same or equivalent positions. Employees do not need to use their 12 weeks in a row. Taking one day per week may be necessary. Acceptable FLMA reasons are:

  • Birth and supervision of eligible worker’s newborn
  • Employee’s adjustment period with newly adopted or placed foster child
  • Seriously ill immediate family (child, spouse, or parent) needing staffer’s care
  • Team member’s recuperation from a serious medical condition

Disability Insurance

Five states (California, Rhode Island, New York, New Jersey, and Hawaii) along with Puerto Rico must provide disability insurance. That coverage replaces partial wages when eligible employees are unable to fulfill their duties due to non-work-related injuries or illnesses.

employeebenefits1Unemployment Insurance

This benefit compensates personnel who experience job separations without work-related misconduct. Wages that each claimant earned in the previous year determine this stipend’s specific amount. If laws require your business to remunerate unemployment insurance taxes on staffers, registering with your state’s workforce agency is compulsory. Each state manages its own unique program.

Social Security Taxes

Retired personnel age 62 and up and disabled talent or their survivors can receive monthly Social Security income. Funds come from companies matching staffers’ contributions, a fraction of their earnings with inflation adjustments. Your firm must withhold Social Security and payroll taxes. All crewmembers who are eligible for retirement benefits also receive Medicare health insurance. Worker and employer taxes fund that coverage.


The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires companies with at least 20 employees to allow former personnel to stay on their health insurance for as long as 18 months. Ex-workers must pay the full premiums at their previous employers’ group rates. This ruling also affects retirees as well as former staffers’ spouses and dependent children.

Optional Benefits

Many employers round out their required compensation packages with additional optional benefits to attract, motivate, reward, and retain staffers. Common examples include voluntary insurance policies (like dental, vision, and life), discounts on company services or products, relocation expenses, tuition reimbursement, child care, bonuses, profit sharing, stock options, retirement plans, tax-sheltered annuities, savings plans, and pensions. National PEO experts are ready to administer various elective employee perks along with legally mandated ones.

Federal laws do not require the most common paid time off (PTO) policies that firms offer. Comprehensive compensation and benefit plans may include holidays, vacations, personal days, sick days, bereavement and funeral periods, and jury duty. Each state governs PTO payments to separated employees when earnings remain.

Wellness Programs Benefit Management and Employees

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Wellness Programs Benefit Management & Employees

Wellness ProgramsHealth. Happiness. Productivity. When businesses promote these three related concepts at work through corporate wellness efforts, everyone benefits. Studies show that company-sponsored well-being programs boost employee engagement and productivity significantly. Additional advantages include decreasing sick days, fewer hospital visits, lower health care costs, and fewer workers’ compensation claims.

Outsourcing essential office tasks can free you up to organize wellness events. Whether you need assistance tracking employee hours and absences, handling health insurance, processing workers’ compensation claims, or recruiting top talent, National PEO’s experts are ready to fulfill your needs. Visit our online Help Center to post a question about these or other services, and we will reply promptly during business hours.

Significant Increases

Effective programs can lead to these desirable personal and business outcomes:

Improved health: Individual benefits include better diet, portion control, weight loss, obesity prevention, smoking cessation, chronic illness management, better overall health and safety, stress management, and sleep.

Better morale: Healthier people are happier workers, and a contented team is a powerful recruiting tool. Upgraded morale improves job performance, fosters greater personal responsibility, and increases reliability. When management prioritizes employees’ well-being, they exhibit a positive outlook that elevates your brand.

More loyalty: If your top players move on to rival companies for better benefits, productivity may decline. Filling temporary voids and acquiring new talent can be costly. However, demonstrating that your organization cares about the health of staffers and their families fosters strong feelings of belonging and allegiance. Workers are likely to respond with better concentration, commitment, and longevity.

Greater productivity: People receiving encouragement to maintain healthier lifestyles experience upgrades in attitude, focus, energy level, and job satisfaction, which increases productivity. Improving even one staffer’s workplace stamina can boost overall efficiency significantly.

Enhanced teamwork: On-site health-improvement events persuade employees to bond while sharing personal challenges, tips, support, and successes. Stronger relationships can lead to better on-the-job teamwork.

Superior talent: Gifted job hunters scrutinize benefits carefully. Demonstrating concern for their well-being attracts top talent. Existing employees who appreciate your facility’s atmosphere will spread the news, enticing exceptional candidates.

Positive Declines

Decreased absences: As staffers absorb health knowledge, lifestyle management tips, and fitness training, they enjoy healthier, more rewarding lives and use less sick time.

Fewer hospital admissions: Studies found that wellness initiatives decrease hospital stays by 66 percent.

Lower health care costs: Healthier workers and their employers pay less for almost everything — particularly health care. Your investments in wellness projects will help everyone financially. According to a 20-company investigation, those with wellness options had average annual health care cost increases of just 1 to 2 percent while the national average is 7 percent. After analyzing 62 studies, scientists determined that companies with wellness activities spent 25 percent less on sick leaves, workers’ compensation, and medical and disability insurance.

Wellness ProgramsCompany Motivations

A recent poll of 443 human resources (HR) professionals reported these top reasons for why organizations offer wellness programs:

  • 85 percent: Boost staff health
  • 79 percent: Workers’ perceived value
  • 77 percent: Lower medical premium costs
  • 73 percent: Increase employee productivity
  • 72 percent: Improve workforce engagement
  • 64 percent: Decrease absences

An overwhelming 96 percent of firms supported workforce well-being activities with 75 percent preparing to enhance them during the next 24 months. Among businesses that eliminated company-sponsored health care, only 29 percent indicated that they would discontinue disease management efforts, and 26 percent would withdraw wellness-coaching services.

Employers’ top wellness initiatives are:

  • 73 percent: Immunizations
  • 70 percent: Physical fitness
  • 69 percent: Mental and behavioral insurance
  • 62 percent: Nutrition and diet
  • 60 percent: Smoking cessation

Successful Program Elements

If your business is experiencing low team morale, dropping productivity, and/or more absences, try these results-oriented wellness program approaches:

Practical, accessible events:

  • Health fairs
  • Yoga classes
  • Healthy recipe swaps
  • Cooking classes
  • Weight loss contests
  • Smoking cessation
  • Health screenings
  • Fitness challenges
  • Stress management guidance

Health-conscious facility features:

  • Vending machines with healthy options
  • Healthy refreshments at meetings
  • Encouraged breaks
  • In-house exercise areas
  • Walking paths
  • No-smoking policy
  • Mandatory seat belt usage in company vehicles
  • Limited workplace noise
  • Prominent signage promoting wellness events

Incentivized participation: Bonuses could include extra vacation days, company contributions to staffers’ flexible spending accounts, grocery store gift cards, and cash prizes.

Company structures that incorporate wellness: A cohesive HR strategy combines benefits, workplace safety, and healthy lifestyle encouragement.

Wellness that supports other efforts: For example, coordinate with your employee assistance program (EAP) that offers counseling when challenging physical or emotional situations affect staffers’ work and health.

Worried About Labor Law Compliance? Use Our Checklist

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Worried About Labor Law Compliance? Use Our Checklist

labor law complianceEmployment laws protect personnel while guaranteeing that employers provide fair and equal workplaces for everyone involved. Whenever you want to know if your company is legally compliant with these mandatory laws, call on National PEO’s legal-savvy team. During our stringent labor law compliance audits, we’ll detect any potential federal, state, and local regulation violations.

Then together, we’ll prioritize your issues and rectify them in cost-effective ways. We’ll help develop options to overcome existing infringements and avoid future ones including revising your company’s policies, procedures, facility, or equipment. Safeguarding your employees will protect your business from liabilities. Get a head start today by making sure that your employment processes conform to this sampling of common labor laws. National PEO’s periodic audits will boost your company’s ongoing compliance and help your business achieve long-term sustainability.

Minimum Wages

The 1938 Fair Labor Standards Act (FLSA) requires employers to meet America’s hourly and salary minimums. Since July 2009, the federal wage minimum has been $7.25. Yet some states have established higher minimums for hourly personnel. Whenever state and federal laws vary, maximum rates apply.

Not paying hourly employees sufficiently for overtime work sets you up for federal as well as state labor standard violations. Employers must compensate salaried staffers the weekly $455 federal minimum to satisfy the exempt worker classification’s first step. Review your entire team’s payroll data to be sure that your organization complies with these wage requirements.

Employment Authorizations

Many businesses skip I-9 forms. The 1986 Immigration Reform and Control Act (IRCA) requires employees and employers to complete these legal authorizations correctly within specific time constraints to be sure that all new hires are eligible to work in America. Your company could be liable if you contract services out to other businesses that you know use unauthorized laborers.

Workplace Postings

The U.S. Equal Employment Opportunity Commission (EEOC) and Department of Labor (DOL) oblige employers to hang posters in noticeable places such as break room bulletin boards throughout their premises. Mandatory notifications include EEOC’s employment rights notices, FLSA’s minimum wage postings, and Occupational Safety and Health Administration (OSHA) workplace safety signs. Walking through your facility, you can check that all notices are current without alterations or defacements. Visit federal agency Internet sites to print new or replacement posters. Or call local EEOC or DOL offices to receive them by mail.

labor law complianceFair Employment Methods

Review your workforce census to decide which labor laws relate to your company. For instance, Title VII from the 1964 Civil Rights Act (CRA) and the 1990 Americans with Disabilities Act (ADA) affect businesses with 15 or more employees. The 1967 Age Discrimination in Employment Act (ADEA) minimum is 20 workers. Laws like 1935’s National Labor Relations Act (NLRA) and 1970’s Occupational Safety and Health Act (OSHA) are valid for all crew sizes. Check your job applications, hiring practices, and employment policies to make sure that you follow appropriate laws and your organization’s business standards.

Training Programs

In many states, employers must provide sexual harassment and EEOC law training for their managers and their reports. For instance, California law mandates that companies with over 50 staffers hold two-hour interactive sexual harassment sessions, despite worker locations. To determine if your business complies with your state’s laws, assess your new employee orientation’s subjects and leadership training’s learning objectives. Consult National PEO’s experts about our labor law and custom training programs.

Workers’ Compensation

If you don’t know the right ways to manage your workers’ compensation program or learn the law accurately, you might process paperwork incorrectly and/or miss deadlines. Audits can find such errors and help you get on track.

Family and Personal Medical Leaves

Thanks to the 1993 Family and Medical Leave Act (FMLA), eligible employees can take off as much as 12 weeks of unpaid leave during 12-month periods and still have their jobs protected. This time allows them to take care of newborns, recently adopted children, other kids, parents, or spouses with serious health conditions.

Personnel also can use their leaves to recuperate from their own major illnesses. But some employers aren’t clear on FMLA’s payment regulations, leave length, and their responsibilities after staffers exhaust their leaves. Regular audits can make sure that you aren’t violating this act’s federal regulations.

Industry-Specific Policies

Various industries including construction, manufacturing, mining, and agriculture must adhere to additional regulations that affect their fields explicitly. These extra obligations increase your infraction chances and thus your audit needs.

Employee Benefits that Improve Hiring and Retention

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Employee Benefits that Improve Hiring and Retention

Employee BenefitsA new benefit survey of human resource professionals found that around a third of companies had more trouble hiring and retaining employees at all levels in 2014 than the two previous years. Some 29 percent of businesses leveraged their incentive packages to gain new staffers while 25 percent utilized them to retain current team members during the previous 12 months.

Health Insurance Tops the List

To overcome recruitment and retention hurdles, 85 percent of companies relied mostly on health insurance to attract new hires while 74 percent used that perk to retain existing workers. Retirement savings and planning programs came in second with 72 percent promoting those rewards to hire personnel and 62 percent offering those enticements to keep present employees. In third place, 51 percent of organizations used leave benefits to hold onto their best staffers.

As businesses compete for top candidates, employers are distinguishing their advantages by emphasizing employee motivators. With 56 percent of companies struggling to attract highly skilled recruits, 32 percent publicized incentives to draw in talent. But just 9 percent reported that their workforces have significant knowledge about their employers’ available perks. And 22 percent agreed strongly that their communication efforts relate reward information to their staffers very effectively.

More than 50 percent of respondents noted which fringe benefits they thought would become more important in their employee retention efforts during the next three to five years. Retirement planning and savings came in at 67 percent, health care at 58 percent, wellness and preventive health at 57 percent, flexible work schedules at 54 percent, and career and professional development at 51 percent.

Employer Communications Need Improvement

Some 83 percent of companies provided online or printed benefit enrollment forms, and 70 percent held group sessions with organizational representatives who explained options to employees. Just 4 percent shared perk information with staffers through social media. The surveyors noted that HR communication is vital because previous research shows that benefits are important contributors to workforce job satisfaction. But personnel won’t value extra packages without adequate employer notifications.

If these issues are overwhelming you, outsourcing your incentive management and promotions will keep employees up to date on their total reward packages. National PEO offers extensive benefit administration services including plan election and registration, staff communication materials, vendor payments, payroll deductions, customer service, claims support, and annual renewals. Our expert financial advisors administer, manage, and process various retirement planning options including IRAs, 401(k) plans with and without company matching, and pension plans.

Employee BenefitsWorkforce Confusion

HR experts believe that employees might misunderstand their benefits in these six areas:

  1. Awareness of available company-sponsored perks: Only 9 percent of respondents rated their workers as very knowledgeable about their benefits while 73 percent were somewhat knowledgeable.
  2. Companies’ compensation disclosure effectiveness: Some 22 percent of HR pros agreed strongly that their firms conveyed their employee reward information very effectively while 58 percent agreed somewhat.
  3. Perk communication budget changes: Respondents reported that 32 percent of employers upped their benefit explanation funds for 2014, compared to 2013. But 9 percent decreased that budget.
  4. Employee resource material changes: According to HR staffers, 63 percent of organizations revised their reward materials during the previous 12 months. Throughout 2014, 70 percent of employers scheduled meetings with organization group representatives to announce benefit details, compared to 62 percent in 2013. Companies using online or printed newsletters went up from 34 percent in 2013 to 41 percent in 2014.
  5. HR disclosure approaches: The two top ways organizations offered benefits to workers were online or printed enrollment forms at 83 percent and/or staff meetings with organizational reps at 70 percent. Some 52 percent of businesses offered private sessions with reps while 46 percent posted details on company intranet sites.
  6. Social media communications: Just 4 percent of respondents disseminated benefit information via social media. Among the rest, 8 percent planned to initiate social media announcements during the next year.

Upgrading Benefit Information

The survey report included three recommendations to increase workforce knowledge:

  1. Allocate funds for your employee resource disclosure program: Understanding overall compensations better can boost job satisfaction, so budget ways to explain available perks’ values.
  2. Revisit your reward promotion efforts routinely: Because changing laws, strategies, and costs keep the benefit landscape in flux constantly, reviewing your strategies and communications regularly is vital.
  3. Explore social media usage: Consider using multiple social media avenues to reach and increase employee benefit awareness.

Reduce On-the-Job Injuries

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Involve Employees to Reduce On-the-Job Injuries

on the job injuriesKeeping employees safe and avoiding on-the-job injuries is a top priority for any business. OSHA estimates that employers pay almost $52 billion annually in worker’s compensation alone; that doesn’t even include the costs associated with lost productivity, absenteeism, hiring and training replacement employees, mitigating safety hazards, repairing damaged equipment, and lowered morale. Not to mention, workplace injuries are costly to employees as well. While worker’s compensation and insurance covers most of the expenses, injuries often lead to loss of income, possible loss of livelihood, and reduced quality of life. In short, businesses cannot afford to ignore safety.

While U.S. labor law requires employers to maintain safe workplaces for employees, and to conduct industry and occupation specific safety training, the safest workplaces are those that involve employees themselves in maintaining a culture of safety. Employees bear a certain amount of responsibility for their own health and safety at work, and managers cannot reasonably be expected to identify and mitigate every risk, every moment of every day.

Not only are employees the eyes and ears for safety issues, but when they feel a sense of ownership over the well-being of their co-workers and customers as well as themselves, they are more likely to adhere to safety guidelines and take steps to prevent-on-the-job injuries.

So how do you get employees more involved with safety? By finding creative ways to get them involved with decision-making, soliciting their ideas for improvement, and empowering them to be safety leaders. Doing that doesn’t necessarily mean a series of dull meetings, either — you can actually have some fun and make it enjoyable to think about safety.

Create a Committee

Some people hear the words “safety committee” and automatically conjure up images of the hall monitors of their school years, ready to cite anyone who commits the most minor of infractions. However, a safety committee doesn’t need to be legalistic or punitive.

A safety committee can serve as a sounding board for employee concerns, and be a catalyst for taking action. The safety committee can also develop tools for assessing the overall safety of the workplace, such as checklists to assess the strengths and weaknesses to guide action plans.

The idea is to provide employees with the chance to take ownership over workplace safety, and make decisions based on how people really work each day.

workplace injuriesMake it Personal

Often, employees don’t think about safety because it doesn’t seem immediately relevant to them. Someone who spends most of the day sitting at a desk, for example, is probably not thinking about slip and fall accidents — until she strips over a box of paper left in the hallway and is seriously injured.

To encourage even those employees who have “safe” jobs to make safety a priority, you need to make it personal to them. Why is safety important to them, personally?

One idea from the Michigan Department of Licensing and Regulatory Affairs (LARA) is to develop a bulletin board on which employees can share the reasons that they want to stay safe. These reasons could include family, friends, hobbies, passions — anything that could be negatively affected by a serious injury. Employees can post photos or words, but the idea is to drive home what’s at stake should an injury occur. Place the bulletin board in a well-traveled area, like the employee break room, to give co-workers a chance to get to know each other a little better, which builds camaraderie among the team.

Create Reporting Mechanisms

Many employees are reluctant to point out safety hazards or to confront co-workers about unsafe work habits for fear of retaliation or developing a reputation for being the “safety police.” However, co-workers are often the first line of defense against injuries, so putting mechanisms in place that allow employees to communicate risk without fear is important.

Another tip from LARA is to implement a system of cards to use in identifying safety risks — and commending those who keep safety a priority. Give employees red (Stop) cards to hand to co-workers that they witness doing something unsafe and green (Go) cards to hand to people they see demonstrating proper safety protocols. Handing someone a card removes some of the potential awkwardness inherent in confronting someone, and opens up the door to a conversation about accident and injury prevention.

Some companies have used the red and green communication cards as part of an overall awareness and incentive program. Tap into your employees’ natural competitiveness and make safety a contest; the individual or group who creates the safest environment in the office wins a prize, for example, or honor employees who receive green cards at a meeting or with a small token. The idea is to make safety awareness an everyday concern, and to show employees that they are all at risk for injury, so make safety incentives an ongoing program. You could even make these incentive programs a responsibility of the safety committee.

It is everyone’s job to create a safe working environment, so find ways to get your employees invested and committed to avoiding injuries. When you do, you’ll save costs and build a stronger team.

Flexible Spending Accounts

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Flexible Spending Accounts: New Rules Mean New Choices

Flexible Spending AccountsThere are fewer than 60 days left in 2014. Do you know where your flexible spending account is?

If you don’t, you should.

Medical flexible spending accounts, also known as FSAs, allow employees to put up to $2,500 per year into a dedicated account to cover certain out-of-pocket medical expenses. Because the money comes out of the paycheck before taxes, these accounts can save employees some money on their tax bills while also providing a cushion to cover unanticipated medical expenses.

However, the passage of the Affordable Care Act resulted in some important changes to FSAs, and if your employees aren’t aware of them, they could be in for some unpleasant surprises.

Use It Or Lose It? Not Necessarily

Prior to 2014, most FSA plans were a use it or lose it proposition: If you didn’t spend all of the money you put into the account by the end of the plan year (usually December 31) it was gone forever. Some plans did offer a grace period of up to 90 days, but for most people, maximizing an FSA meant scrambling to spend everything in the account by the end of the year.

Under the new rules, plans have the option of either offering a grace period until March 15, or allowing employees to roll over up to $500 until the next year. However, federal guidelines prohibit plans from offering both options and they do not require plans to offer either option. In fact, only about half of all employers plan to allow the rollovers this year. In either case, now is the time to let employees know what their options are.

How Can FSA Funds Be Spent?

Another major change to FSA plans this year are the restrictions on how the money can be spent. In the past, the list of eligible expenses was broad, and covered everything from over-the-counter medications to alternative care, such as chiropractic and acupuncture.

Some of those items are still eligible for payments, but the restrictions have become tighter. In order to qualify for payment via an FSA, a doctor must prescribe an over-the-counter medication. For example, if your doctor recommends that you take acetaminophen for pain, or use an over-the-counter yeast infection treatment, he or she will need to write a prescription that you can submit along with your receipt in order to be reimbursed from your FSA.

This new rule applies to any over-the-counter treatment that is considered a medicine or drug; it does not, however, apply to purchases of medical devices like crutches, blood pressure monitors, breast pumps, heating pads, or diabetes meters. Diabetics can also still purchase insulin using FSA funds, even if they do not have a prescription.

The restrictions on over-the-counter medications are the only major change to what can be purchased with FSA funds this year. The money can still be used to cover co-payments and deductibles for office visits and prescriptions, in addition to vision and dental care. You still cannot use your FSA money for cosmetic treatments like tooth whitening, but it can pay for an extra cleaning or a stylish new pair of specs.

FSA Rules in 2015Planning for 2015

One of the most common complaints about FSAs has always been that it’s difficult to predict your annual medical expenses, and therefore calculate how much money to put away. Many people either lose hundreds of dollars at the end of the year, or go on an unnecessary spending spree.

On the other hand, some people who relied on FSA funds to cover significant expenses, such as orthodontia, have been stymied by the account limits established in 2013. Prior to 2013, employees could contribute up to $5,000 (depending on their plan) to their account. In 2015, the contribution limit will rise slightly to $2,550, as 2014 marked the first year in which a new policy tied the cap to the consumer price index.

According to the methodology set forth by the Affordable Care Act, the annual FSA account limit will be set in accordance to the CPI at the close of the 12-month period ending on August 31.  The ACA calls for the annual indexed amount to be rounded down to the nearest $50, so when the CPI on August 31, 2013 was $2,542, the annual cap for 2014 was set at $2,500. However, the indexed amount on August 31, 201 was $2,583, so by rounding down to the nearest $50, the 2015 cap will be $2,550. Keep in mind, as well, that the cap is not per household or per tax return, but per employee, so technically a husband and wife could put away $5,100 in 2015.

However, determining how much of that amount you actually put away depends on your own needs and spending patterns. When determining your 2015 contributions, analyze how much of your 2014 contributions you actually spent. If you have too much money, or are able to roll over hundreds of dollars, you might consider contributing less this year.

In any case, if you have an FSA, take some time to figure out your options before the year ends. While you may not lose money as you did last year, or have to buy loads of bandages and cough drops to use up your money, you still need to maximize your investment.

Making Smart Decisions During the Open Enrollment Period

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How HR Can Help Employees Make Smart Decisions During the Open Enrollment Period

Open EnrollmentFor most employees using their employer’s benefits plans, fall marks the beginning of the open enrollment period, during which they can make changes to their health insurance coverage and other benefits. However, according to research from Aflac, about 90 percent of all employees do not carefully review their options and make changes, and most people spend less than 15 minutes making their selections and filling out the paperwork. In fact, about a quarter of all employees spend less than five minutes considering their health coverage options.

With the advent of the Affordable Care Act, though, employees may want to rethink that strategy. Changes to how health insurance is sold, policy coverages, and rules regarding flexible accounts have most likely significantly changed the available options, and if an employee does not make the right selections now, he or she could wind up paying a lot more for their health insurance in 2015.

So what can HR do? Communication is important during open enrollment, and HR can help people make the right choices with a comprehensive communication and action plan.

Communication Priority 1: Explain the Exchanges

In the past, most employees relied upon their employers to do the health insurance shopping for them, and chose their plan from a pre-determined array of options offered by a single carrier. However, the new health insurance exchanges provide more options, and some employees may find that they will pay less for their coverage by purchasing insurance on the exchange. In fact, studies show that many employers are not shopping for employee coverage at all, and are instead providing subsidies for employees to shop for their own coverage on the exchanges.

In either case, employees should be prompted to spend some time exploring their options and weighing the costs and benefits of multiple plans. It’s important to note that employees who are eligible for employer-sponsored health insurance who opt for the public exchange instead will not be eligible for any government subsidies, but if the overall premium cost is equal to or less than the premium for the employer-sponsored coverage, that may not be a factor.

Premiums Aren't EverythingCommunication Priority 2: Premiums Aren’t Everything

Many employees, especially those who are younger or who earn lower wages, look at their monthly premium first and choose the least expensive option without carefully considering what each policy covers. For a relatively healthy individual who needs basic primary care, a lower priced, higher deductible plan may work. For someone with chronic conditions or a family, though, a plan with a slightly higher monthly cost may prove to be a better value, if it provides better coverage. Benefits administrators need to communicate the value of each plan option and specific coverages to help guide employees to the best choice.

Communication Priority 3: Flexible Spending Accounts

One of the provisions of the Affordable Care Act was a major change to Flexible Spending Accounts (FSA). Under the new rules, individuals can only defer up to $2,500 a year into a FSA, which must then be used to cover qualified health care expenses. Employees need to understand that such accounts are “use it or lose it” propositions — money left over at the end of the year does not roll over or get refunded — and that only certain expenses are covered.

For example, over the counter medications no longer qualify for reimbursement unless they are prescribed by a doctor. Benefits administrators should be prepared to help employees identify the potential out of pocket medical expenses they will incur throughout the year, and determine how much (if any) cash should go into an FSA.

Communication Priority 4: Compare Family Coverage Options

If your employees are covering family members — including their spouse — on their plans, encourage them to compare their options. In some cases, transferring the children to a spouse’s policy or purchasing coverage on the exchange may be more affordable than covering the whole gang under your employer’s policy. That’s because some employers will only subsidize the employee’s coverage, or perhaps the employee and the children.

Some companies have even started adding surcharges onto premiums when an employee adds his or her spouse, and the spouse qualifies for coverage from his or her own employer. Help employees compare all of the options to determine which offers the best coverage at the best price, and communicate all surcharges and other fees that can raise the rates.

Communication Priority 5: Explain Health Incentives

Under the ACA, employers can charge more for health insurance for those employees who smoke or do not meet designated health standards. However, employees who agree to enroll in wellness or smoking cessation programs, and meet certain benchmarks can qualify for discounts and lower premiums. It’s up to the benefits team to communicate these policies to employees and help them enroll in the appropriate programs to ensure that they not only save money, but get healthy at the same time.

As a benefits administrator, it’s your job to ensure that all employees have the same access to benefits and get the coverage that they need. As we head into the open enrollment period, be prepared to communicate these important points to avoid last minute changes and unhappy employees.

The Most Unusual Employee Benefits

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The Most Unusual Employee Benefits — And How You Can Keep Employees Happy Without Breaking the Bank

When it comes to employee benefits, most of us expect the standards: Paid vacation time, sick time, a retirement plan, and health insurance.

But what about house cleaning? Or travel stipends? Or spa services? At some companies, the employee perks sound like a list of options at a swanky resort, or the top prizes in a sweepstakes giveaway. While these benefits are undoubtedly expensive — the cost of an onsite childcare center can easily approach six figures when accounting for salaries and facilities — the result, in most cases, are happier, more engaged, and more productive employees.

Beyond Casual Friday

By now, we’ve all heard about some of the incredible benefits offered at Silicon Valley tech companies — tales of bowling alleys, star-studded corporate barbecues, and unlimited vacation time have become almost mythical in our imaginations — and left some wondering if anyone has any time left to get work done.

Clearly, they do, and it hasn’t stopped companies from offering benefits like these:

  • Unique Employee BenefitsJM Family Enterprises, a Florida-based automotive parts distributor, maintains a fleet of yachts for employee use.
  • California IT staffing company Akraya helps employees do their chores by sending a cleaning service to their homes every two weeks.
  • Multiple companies offer beauty and medi-spa treatments to employees; for example, one London ad agency allows employees to take a paid day off during the holidays to get haircuts, facials, and spray tans.
  • Some companies offer stipends to employees who take a week’s vacation or visit a particular destination.

Of course, there are usually requirements for employees who want to take advantage of these benefits, but they undoubtedly make employees happier — and more loyal to their employers.

What Can You Offer?

If you want to be competitive with those companies that have deeper pockets, and building a company spa or buying a yacht is out of the question? Don’t worry — you aren’t alone. Most small businesses can’t spend millions each year on employee benefits. However, you can offer similar benefits that will keep your workers happy and engaged without breaking the bank.

  1. Food. The fastest way to your employees’ hearts is through their stomachs, so try cooking up a culinary benefit. Schedule a monthly employee lunch, for example, where you provide pizza or sandwiches. Stock up on free healthy snacks in the break room to support employee wellness efforts, or coordinate with a nearby sandwich shop or café to offer discounts to your employees.
  2. Discounts. Speaking of discounts, everyone wants to save money. Identify places where employees might appreciate discounts, such as the aforementioned restaurants. Travel and entertainment discounts are always popular as well. Your company could purchase memberships to local museums or parks, for example, and allow employees to borrow a pass for a day of fun.

Don’t overlook your own business, either: Do employees receive a discount on your products or services? Be generous, as your employees can be your greatest marketing tool.

  1. Services. For many workers, juggling work and family responsibilities Employee Benefitscan be exhausting, and instead of spending time off recharging and relaxing, they are instead running around crossing things off the to-do list. Make your employees’ lives easier by pitching in to help with their other tasks.

For example, contract with a local dry cleaning company to handle employee laundry, with pickups and drop-offs at the office. Some companies even offer concierge services to help employees with arranging travel plans, buying event tickets, and more. Consider contracting with an outside company that employees can access to handle their needs.

  1. Computers. Many employees use their work computers for personal tasks because their home computers are inadequate — or they can’t afford to buy one. Leverage your company’s purchasing power to allow employees to purchase hardware and software through your IT department; some companies have even started offering low or no-interest loans to employees to allow them to purchase new computers.
  2. Health and Wellness. With the new push toward employee wellness spurred on by the Affordable Care Act, it’s your responsibility to help your employees stay healthy, both physically and mentally. Gym memberships have been popular employee benefits for a while, but there is even more you can do. Building a complete spa facility is most likely impractical, but inviting a massage therapist to work onsite a few times a month can help employees relax and unwind. Consider subsidizing the massage sessions, or arrange for a discounted rate that the employees can cover themselves. In addition to massage, acupressure and acupuncture, Reiki, reflexology, and even nail services are easy to arrange and conduct in an office environment.
  3. Time Off. What’s a better reward for working hard than some time away from work? Some companies offer time off for everyone during certain times of the year — the mythic “Summer Fridays” when everyone takes off at noon — but you can also offer time off to individuals without harming productivity. Try giving people a day off (half day off) on their birthdays, or allow a few days a year off for volunteer work.

Competitive benefits packages are important to employees, not only when it comes to comparing employment opportunities but as incentives to perform at their highest levels. Be creative in your offerings, and your employees will be happier and more productive — even if they can’t get Botox at work.

Saying Goodbye to the 2 Weeks of Vacation

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Should You Say Goodbye to Your Two Weeks of Vacation?

Unlimited vacation policyImagine having the freedom to tell your boss that you plan to take an entire month off this winter to go skiing — and he’s okay with that. Or deciding on Thursday night that you’re going to head to Vegas for the weekend, and your boss just tells you to have fun.

If you work for a company with an unlimited vacation time policy, that could be a reality. The principle is simple: As long as work is done and deadlines are met, workers are free to take as much vacation as they wish. No need to request time off from HR or cram their vacations into the allotted two weeks. Workers have the freedom to take off and come back whenever they wish, as many times a year as they want. However, while letting employees take as much time off as they wish has some benefits, it’s not right for all companies.

Unlimited Vacation: The Pros

The first question that anyone asks when investigating unlimited vacation is inevitably “Do people take advantage of such a lenient policy?”

Those companies that have such policies invariably answer with an emphatic “No.” Most point to the fact that such policies are built around accountability. Employees know and understand their responsibilities, they know what needs to be done, and most will not head out on a three-week vacation in the middle of a major project or the busiest time of the year. Those employees who do abuse the privilege are generally either quickly reprimanded, or don’t last long within the organization. Quite simply, taking too much vacation affects performance.

At the same time, unlimited vacation also improves performance. Experts note that when employees are limited to the standard two to four weeks of vacation time, they are often stressed and resentful. Instead of taking off for a week at the beach during the summer, they are forced to take time off during their children’s school vacations instead, or they have to compete for the same coveted vacation weeks with their coworkers.

When they have unlimited time, it’s possible to spend a week with the kids at Christmas, and take the beach vacation in the summer. Employees are more satisfied, and companies find that they are more creative and productive when they have enough time to recharge.

HR pros also note that an unlimited vacation policy takes some of the hassles out of scheduling and accounting for employee vacation time. Instead of wading through requests and making sure that no one takes more time than they are allowed, vacations are handled informally via departments. Experts note that most salaried employees don’t track their time anyway — most people work far more than the standard 40-hour workweek anyway — so why put all of the time and effort into tracking vacations?

Problems with Unlimited Vacation DaysThe Dark Side of Unlimited Vacation

While unlimited vacation time has its benefits, it also has its downsides — and they probably aren’t what you think.

First and foremost, not only is it unlikely that employees will abuse the system, there’s a greater likelihood that they won’t take vacation at all. Because there isn’t any clear guidance on how much time off is really acceptable, and when it’s okay to be out of the office, many employees err on the side of caution and take less time than they would if they had a “use it or lose it” two weeks.

Compounding the problem are managers who rarely take vacations — or when they do, they “check in” with the office every day — and effectively set the same expectations for their teams. The result? Overworked, overtired, and stressed employees who resent the fact that they can’t take advantage of their paid time off.

Is It Right For Your Company?

The question, then, is whether instituting an unlimited vacation time policy is right for your company. The answer really comes down to culture. Does your company already have a culture of accountability in place? Is there a strong team dynamic of collaboration? Do the managers model work-life balance? If those factors aren’t in place, there’s a good chance that an unlimited vacation policy will not work.

In fact, many experts argue that unlimited vacation policies work best when there are some standards in place. One such policy is to mandate a minimum number of vacation days per year, with flexibility for additional time off based on performance. Other companies have created vacation time flexibility by allowing employees to earn time off based on hours worked and seniority. Those hours go into a “bank,” which employees can then withdraw time off from whenever they wish.

In the quest to keep employees happy, increase productivity, and streamline management, companies are constantly on the lookout for creative solutions. If you’re considering an unlimited vacation policy, take care to determine whether it’s right for your company, or whether you’re simply following a fad.