16 popular employee benefits for small businesses

A Freedom Benefits small business Consumer Driven Employee Benefit Plan can include these 16 benefits:

1) Group Health Insurance

2) Health Savings Account (HSA)

3) PPO Discount Pricing Service (PPO)

4) Health Reimbursement Arrangement (HRA)

5) Special Purpose Health Reimbursement Arrangement (SPHRA)

6) Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)

7) Flexible Spending Account (FSA) including Dependent Care Plan

8) 401(k) Plan

9) Pension Plan

10) IRA or SEP Retirement Savings Plan

11) Deferred Compensation Plan

12) Thrift Savings Plan

13) Employee Home Office Expense Reimbursement Plan

14) Employee Travel Expenses Reimbursement Plan

15) Employee Work-Related Expense Reimbursement Plan

16) Other benefits specified by the employer

For a free copy of Freedom Benefits small business employee bnenfits Summary Plan Description, call or write us.

Small Business Employee Benefits Made Easy!

Small business employee benefits are managed much more effectively when the business owner has a basic working knowledge of the components that make the plan successful. This bog post lists those basic components.

  1. Understand the purpose of the employee benefit plan – Usually the goal, at least the starting point goal, is to provide benefits that are tax-deductible as a business expense and tax-free to the employee. If not for this tax advantage, there would be little incentive for employers to be involved. Each employer has a unique and specific goal and so the employee benefit plan is designed to match that goal.
  2. Understand what is not the purpose of an employee benefit plan – No longer do employers provide a ‘one size fits all’ and ‘take it or leave it’ benefit plan design. Today’s employee benefits are designed to extract and maximize the benefits and efficiencies of consumer-driven choices.
  3. Communication – Good communication is the key to a successful employee benefit plan. All of the stakeholders – the employer, employees, spouses and dependents of employees, plan administrator, claim administrator, insurer, and payroll company must feel comfortable that they have a reliable source of information. A reputable benefit plan adviser makes all the difference.
  4. Documentation – Employer resolutions, Enrollment forms, Plan Documents and summary plan Descriptions are typically required. A non-attorney typically provides these sample documents but cannot provide legal advice. The employer is encouraged to seek independent legal advice on all business documents.
  5. Claim accounting – Nowadays this is typically handled via secure portal, email or text message, at the option of the employee. The result is an approved claim report that is sent to payroll processing.
  6. Payroll processing – Most employee benefit transactions between the employer and the employe are handled through a payroll processing service. Once the benefits accounts are set up properly within the payroll system, this process usually flows smoothly. Typically the payroll processor sends reports back to the employer for general accounting purposes.
  7. Tax filings – some employee benefit plans require year-end filings either singularly or as a data inclusion on another form like a W2. Again, this process flows effortlessly within a properly set up payroll and benefits administration system.

Freedom Benefits is prepared to make all the details flow effortlessly. Just give a call to discuss your own small business employee benefit plan. 

One page summary of Freedom Benefits

Yesterday an inspiring business adviser Sara Rosenberg of Powermatch, wrote a social media post that said that every business should have a one page summary that answers four questions: (1) The problem you solve, (2) A very brief description of your process (3) How you are different than everyone else that does what you do, (4) The results that happen when someone hires you. This is a powerful idea but one that I have not ever considered, So I spent some time and came up with this that flows exactly in the 4 part format she suggests. Next I’ll work on polishing and simplifying the wording and checking on a few compliance issues.

Here is the draft text of the one page summary as of now:

Slash your taxes now!

How it works

Freedom Benefits helps your small business slash wage taxes and move more of your earnings to long term wealth building accounts with the benefit plans used by larger firms. Our small business employee benefit plans are integrated with your payroll system to take advantage of IRS-sanctioned accounting methods and tax-favored employee benefit plans. Plans are now redesigned for 2018 to maximize savings under the Tax Cuts and Jobs Act.

First, your small business meets with the planner to elect the benefits to be offered and selects the employer’s financial contribution, if any, that the business will make toward the cost of these voluntary benefit programs. Some options like a Health Reimbursement Arrangement, if elected, and administrative costs are paid by the employer. The employer’s cost is always controlled and limited by what the employer elects to contribute.

Then employees may elect to pay with Voluntary Salary Reduction for Insurance Premium Payments, Flexible Spending Account, Health Savings Account, and Dependent Care Assistance Plan components. Popular savings plans including a 401(k) Plan, Simplified Employee Pension, IRA and Thrift Savings Plan are available to help employees keep more of what they earn. New for 2018: employees may now elect to participate in a Home Office Expense Reimbursement, Travel Expense Reimbursement and Commuting Expense Reimbursement Plan and an Employee Work Expense Reimbursement Plan. The Plan Advisor works with each employee individually to plan the benefit combination that works best. Participation is completely voluntary.

Why we are different

Our service is based on building long term relationships that are aligned with supporting the financial goals of the business and your individual employees. We deliver big firm executive service to small businesses. Freedom Benefits is powered by the experience of Tony Novak, CPA, MBA, MT, an employee benefits adviser with more than 30 years helping small businesses nationwide. Success is ensured by our unique pricing policy that limits the plan cost to a fraction of the tax savings that you achieve.

Results

You will see immediate wage tax savings adding up to thousands of dollars per employee in combined employer and employee savings. The savings will begin to show in your first payroll report after implementation. Employees will enjoy a better understanding of their benefit options and see more accumulating by year end as an additional benefit. The sooner you start, the greater the savings in 2018.

HEALTH   *   RETIREMENT   *   DEPENDENT CARE   *   EMPLOYEE BUSINESS EXPENSE

The draft PDF version:

freedom benefits page

“One-employee QSEHRA”: a contradiction in terms

The issue of health benefit payments for small businesses became a lot more complicated after implementation of the Affordable Care Act. After all, the law was designed to enforce rigid compliance with health care policy and do away with the liberally designed health plans that varied from one small employer to the next. Since late 2016 we’ve had a range of legislative and administrative actions to undo the harsh effect of the original law. Now we are left with a complicated hodge-podge of rules that can confuse just about anyone.

QSEHRAs are a new type of HRA implemented in 2017 that are specifically designed for an employer with a health plan covering two or more employees since plans covering only one employee are not subject to the reforms and restrictions that the QSEHRA is designed to address. The QSEHRA adds an additional layer of regulation and restrictions to allow an employer to help pay for individual insurance, something that is already always allowed in a one employee health plan,  In short, employers with a one employee health plan have no need for a QSEHRA.

The issue came up today among accountants when the bookkeeper of a small business said that the employer could reimburse only $10,0001 of the health insurance cost of an employee. The bookkeeper was likely referring to the strict excise tax penalties imposed by 4980 of the Internal Revenue Code and the limits of the workaround. Notwithstanding the effect of any administrative action designed to weaken and diminish the impact of these employer penalties, The IRS has already determined that these restrictions and penalties do not apply to one employee health plans2. In this case the use of a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) 3 is completely unnecessary and only serves to complicate the discussion.

My point is simply this: the QSEHRA was designed to help small employers mitigate the impact of ACA market reforms on small group plans – specifically those related to an employer penalty for paying for individual insurance. Those restrictions do not exist for one employee health plans. So any attempt to use a tool (QSEHRA) to mitigate the effect of the ACA is simply not necessary and only serves to create unnecessary complications and confusion.

While there is no authority specifically prohibiting the use of a use of a QSEHRA in a one employee plan, its use could be viewed by the Service or the courts, if applicable, as an error, It the event that QSEHRA failed to meet the more strict requirements then it seems likely that the plan might still qualifiy as a tradidtional HRA. For example, an employer with a one employee health plan that provided dental benefits would fail to meet the QSEHRA requirements but would still meet the requirements for a traditional HRA.

The conclusion is simple: Don’t use a QSEHRA in one person health plans where a traditional HRA will suffice.


1 The QSEHRA maximum for family coverage is actually $10,250 for 2018.

2 IRS Notice 2015-17: Guidance on the Application of Code § 4980D to Certain Types of Health Coverage Reimbursement Arrangements

3 IRS Notice 2017-67: Qualified Small Employer Health Reimbursement Arrangements

How do Pennsylvanians get their health insurance?

Pennsylvanians get their health coverage one of six ways, according to the Pennsylvania Insurance Department.

  • 27% commercial self-insured
  • 23% Medicaid and CHIP
  • 20% Medicare
  • 14% group insurance
  • 5% small business insurance
  • 5% individual insurance
  • 5.6% are uninsured

Since news coverage focuses primarily on commercial insurance, people are often surprised that commercial insurance plays such a small role in the system, covering only one in four residents. I sometimes notice a sentiment that there is something ‘wrong’ if regular insurance is not an option. That is not the case, based on statewide trends. Commercial insurance does play a larger role in secondary and supplemental insurance.

If you need coverage, then it makes sense to consider both the short-term and permanent coverage options within our heath care system. I am pleased to discuss the options and strategy. For businesses, I am pleased to assist with all aspects of health plan design, selection and enrollment.

 

Value Benefits of America Terms and Conditions

This content is provided for educational purposes only and is not an offer of coverage and is not intended to represent a communication from an insurer.

1. Member understands that VBA is not an insurance company or program. Accident Benefit Payments are made by the insurance company issuing the blanket coverage to Members.

2. VBA provides savings to its members on services through a number of sources. The current list of benefits may be modified through additions or deletions. A quarterly newsletter, posted on our web site or sent via e-mail, will keep Members up to date on benefits and other pertinent information.

3. Payments for the VBA Program are due in advance. Payments will be drafted on or about 15 days before the due date. If you choose to cancel your program, it is your responsibility to make sure that your membership card and a written request for cancellation are sent to VBA at least 15 days prior to the anniversary of your effective date in order for your account not to be
charged for additional fees.

4. Member hereby appoints Value Benefits of America (VBA) President, or failing this person, a VBA Director, as proxy holder for and on behalf
of the member with the power of substitution to attend, act and vote for and on behalf of the member in respect of all matters that may properly come before the meeting of the members of VBA and at every adjournment thereof, to the same extent and with the same powers as if the undersigned member were present at the said meeting, or any adjournment thereof. Annual meetings are to be held in Arizona the second Tuesday of August.

5. VBA reserves the right to terminate any enrollment or deny eligibility in
the program for lack of payment to VBA. Returned checks, insufficient notices on bank drafts or denial by the member’s credit card company for payment of the membership fee is deemed to be evidence of non-payment by a member. There will be a $10.00 charge to be reinstated in the program after such denial. If reinstatement for non-payment happens more than once, a $20.00 reinstatement fee will apply.

6. In the event of any dispute, member agrees to resolve said dispute solely by binding arbitration that shall be governed by the laws of the state of Arizona and enforceable at Scottsdale, Maricopa County.

7. Membership canceled within the first 30 days of the enrollment date may be eligible for refund if the membership card and written cancellation request are sent to VBA. The administrative fee is not refundable. Approved refunds will be processed approximately 30 days after the cancellation.

8. Membership is effective on the 1st of the month following enrollment acceptance by VBA.

Member Agreement:
By signing your enrollment form, Member expresses desire to become a member of Value Benefits of America. Member acknowledges that the
discount plans ARE NOT INSURANCE, but membership includes certain limited supplemental insured coverage’s. Membership benefits are not a replacement for health insurance coverage nor are they intended as a substitute for health insurance coverage. Membership fees may change for all members, but not individually, with notification.

The source of this content is the product brochure.

Introduction of Healthcare Market Certainty and Mandate Relief Act of 2017

I don’t normally spend much time commenting on newly proposed legislation in its earliest stages. However, the two separate major pieces of legislation introduced yesterday deserve some attention. The first piece was the tax reform legislation, I covered impressions of that “Tax Cuts and Jobs Act” bill here. The second proposed bill called “Healthcare Market Certainty and Mandate Relief Act of 2017” addresses health insurance issues by funding insurance subsidies and removing the individual and employer health insurance mandates.

The American Hospital Association published a press release that says:

“Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Chairman Kevin Brady (R-TX) yesterday introduced the Healthcare Market Certainty and Mandate Relief Act of 2017 that would fund cost-sharing reduction payments to health insurers for two years and eliminate temporarily certain Affordable Care Act mandates. The leaders said the proposal would fund the CSRs through 2019. For 2018, carriers would have to meet certain conditions that would be determined in consultation with the secretaries of the departments of Health and Human Services and Treasury. The proposal also would eliminate the ACA’s individual mandate from 2017-2021; eliminate the ACA’s employer mandate from 2015-2017; and expand the use of health savings accounts.”

The link in the description above is to the Senate bill. The House version of the bill is here. I haven’t read either because we understand that the wording is still in flux. (I don’t understand the process of changing a filed bill or whether these are still considered unfiled).

It is significant to note that this bill is separate from the tax reform proposal and will likely proceed on its own route. It seems to me that the proposal, while unorthodox from an actuarial perspective, just might work.

As of November 5, 2017, the bill has not moved forward from The House Ways and Means Committee.

Four health care savings you can implement now

Following the signing of the president’s executive order on health care today, much of the news coverage focused on the fact that it will take time for full implementation of the order and it is uncertain whether some provisions will ever be implemented. This blog post focuses on the opposite angle: the topics covered in the executive order that are already available and may be used to lower health costs immediately.

Consider the following four possibilities that may apply individually or to your small business right now:

1) Short term medical insurance is available in 34 states. Policies are issued immediately online with coverage starting as soon as the next day. Extended 11 month policies are already available in about 14 states.

2) Health Reimbursement Arrangements are available to all businesses with employees. Their use was expanded under the 21st Century Cures Act in December for 2017 to allow employers to pay for individual medial insurance. Special purpose HRAs can expand their usefulness of the plan.

3) Health Savings Accounts are available to everyone with qualifying primary high deductible insurance coverage.

4) Limited benefit or mini-med insurance is already available in most states.

I am happy to discuss the applicability of any of these to your situation. My older web site FreedomBenefits.net has more information.

Why the (.ORG)?

I am sometimes asked why Freedom Benefits uses a .org web site that is traditionally used for nonprofit organizations. The issue was raised by a Yahoo Finance reporter in 2013 and later picked up by the BBB. The short explanation is that it just evolved that way without much consideration.

There are actually three reasons that led up to this:

Freedom Benefits formerly used several different web sites to distinguish between unrelated lines of business. The .org was used as described below as an online industry library, the .net was used to compile insurance listings and the .com was used for the consulting business.

The intention and original use of the .org web site was to host an serve a library of public domain employee benefit documents that could be used by industry professionals n serve to build PR for my own practice. That plan ran into trouble when some abused the service and one professional regulatory organization challenged the service as an unauthorized practice of law. Rather than risk these consequences in the line of “no good deed goes unpunished” I removed the online employee benefits document library. That meant that the .org domain was temporarily idle and unused. Some educational materials under the brand name “Freedom Benefits University” were added in the interim.

Then I accidently lost the .com domain to cybersquatters during a period of medical  disability and refused to pay the ransom to get the domain back. So I mover the consulting services to the .org site.

Small business HRA services

Freedom Benefits offers three levels of service for self-directed small business Health Reimbursement Arrangements:

BASIC: 

Design of an HRA plan through an in-person interview

Recommended sample documents for limited use

ADVISORY:

Answers to benefits questions throughout the plan year

CLAIMS ADMINISTRATION:

Claims administration and preparation of summary report to the payroll administrator