The American Rescue Act was signed into law last March 11, and provides additional pandemic relief for small businesses, adds grants for restaurants, increases funding for grants for entertainment venues, and makes changes to the Paycheck Protection Program (PPP). Now that the dust has settled, what does this mean for your business?

$7.25B in Paycheck Protection Program (PPP) Funding

The new law adds about $7.25 billion to the Paycheck Protection Program. This popular program provides forgivable loans to small businesses, independent contractors, freelancers, and proprietors. The loans will only be forgiven, however, if at least 60% of the money is used to support payroll expenses and the remainder goes to mortgage interest, rent, utilities, personal protective equipment or other business expenses.

PPP loan forgiveness is also expanded to include payments made for premiums on behalf of individuals who qualify for COBRA health insurance continuation coverage. The expansion applies only with respect to loan forgiveness applications received after March 10, 2021.

The rules of the program have been changed to target businesses that have suffered revenue declines and expanded to include more eligible businesses. This time around, money has been set aside specifically for businesses in low-income communities.

The final day for applications is on March 31, although there is new legislation that proposes to extend the deadline two months through the end of May. You can apply by finding a Small Business approved lender here.

What This Means for Your Business

Whether or not you took out a PPP loan the first time, if your business had continued to struggle in 2020, consider applying if you believe your business qualifies. These loans, just like the first round, may qualify for full forgiveness. And if you didn’t apply the first time because you didn’t think your business was big enough, now may be the time to consider it, as second draw PPP loans put even more emphasis on very small businesses (300 employees or fewer).

Again, these funds are forgivable, so if you realize you might have qualified for more in loan funds the first time, having that cushion could be what your business needs to get through the coming months.

Using Your PPP Loan for Employee Benefits

At least 60 percent of the PPP loan must be used to fund payroll and employee benefits costs.

What does this mean? In addition to salaries, the rules include, “covered benefits for employees (but not owners), including health care expenses, retirement contributions, and state taxes imposed on employee payroll paid by the employer (such as unemployment insurance premiums).”

So yes, you can use the PPP loan towards the health plan premium that you pay for or partially pay for. However, ‘payroll costs’ do not include expenses for group health care benefits paid by employees (or beneficiaries of the plan) either pre-tax or after tax, such as the employee share of their health care premium.

Where and When to Apply

You can apply through any existing SBA lender. The final day for applications is on March 31, although there is new legislation that proposes to extend the deadline two months through the end of May. You can apply by finding a Small Business approved lender here.

Things are looking hopeful that the economy will recover in 2021. But regardless of this recovery, many small businesses still need help recovering from the devastating financial impact of the prior year. Our advice for employee retention? Take advantage of as many of these stimulus programs as you can.

The full American Rescue Plan Act can be found here.

Offering group health insurance is one of the biggest advantages you have for attracting talent and improving employee production and retention—especially in challenging times.

Here are the five biggest reasons you should offer employee benefits.

1. It’s what employees value

Health insurance is the top valued benefit by employees, according to a survey conducted by the American Institute of CPAs (AICPA) in 2018.

2. It gives you a competitive advantage in hiring

If employees are choosing between two jobs, they are more likely to join a company that offers health benefits with lower pay, than one that doesn’t but with higher pay.

Per the survey conducted by The Harris Poll, among the existing and potential workforce, when asked to choose between two jobs offers—one that included a base salary and benefits (healthcare insurance, two weeks paid vacation, and a 401(k) plan) and another that offered a base salary plus an additional 30% more salary, but no further benefits—these adults were four times as likely to choose the offer with benefits (80% vs. 20%).

2018 AICPA study “How well do Americans understand workplace benefits?”

3. It minimizes sick days

Illness-related lost productivity costs US employers $530 Billion a year.

4. It’s a good tax move

Premium contributions are pre-tax, and companies with more than 50 full-time employees have to pay a tax penalty for not providing health benefits.

5. It helps with retention

Employees are more likely to stay at their current job if they have great benefits.

56% of survey respondents say that health insurance impacts their choice to stay at their current job – “How much of an impact, if any, does the health insurance your job provides you have on your choice to stay at your current job?”

2018 AHIP survey “The Value of Employer-Provided Coverage”

As an employer, you’re in a position to help employees get great coverage that gives them access to care on their terms. Shop around and evaluate your options to ensure you’re providing the best plans for your staff.

There is one thing everyone can agree on when it comes to health insurance:
it’s expensive.

And as a business owner, it’s easy to feel conflicted about offering it and determining the quality of coverage. On one hand, offering health benefits can be a big line item cost. On the other, you care about your staff’s health and want them to have protection in case of a medical emergency.

With a little savviness, you can make sure your employees are protected without breaking the bank.

1. See what plans are available in your area.

To find the right health insurer, it’s necessary to shop around and see what plans are available in your area—usually through an insurance broker.

You may find that you can save money by offering new health plan options. Generally, HMOs (health maintenance organizations) and EPOs (exclusive provider organizations) are cheaper than PPOs (preferred provider organizations).

Of course, not all PPO plans are the same. You can have a large network (which is much more expensive), or a narrow network (which is cheaper, but provides less coverage). Making a choice between the two networks can be difficult—but not always. In Illinois, Blue Cross Blue Shield offers a hybrid plan called the Blue Options Plan, which gives you the ability to take advantage of the large PPO network with costs similar to a narrow network plan.

It is worth considering changing to a new health plan type upon assessing the kind of access to care that your employees need. If you need help in finding the best plan, you can also contact a consultant from IXSolutions who can help show you all the plan options available.

2. Educate your employees on the different health insurance options, how to pick a plan, and how to properly use their plans

Education can lead to better healthcare spending, such as visiting a walk-in clinic or urgent care, instead of the ER. A walk-in clinic or urgent care is usually a good option to consider for non-life threatening symptoms, such as a sore throat, a headache, rashes, or allergies. The ER is best equipped to see people with unexpected and intense symptoms or injuries, such as chest pain, difficulty breathing, or severe bleeding. As many as one in four ER visits can be handled at an urgent care center. Knowing where to go can save you time and money.

3. Give your employees a chance to save with HSAs or FSAs

HSAs (Health Savings Account) and FSAs (Flexible Spending Account) are pre-tax accounts you can use to pay for healthcare related expenses. With HSAs and FSAs, you can pay for things like co-pays, medical bills, and vision expenses. Both HSA and FSA accounts offer tax benefits and have annual contribution limits. The key differences between them lie in their allowed usage.

If employees opted for a non-HSA eligible health plan (typically lower deductible plans), they can set aside money to pay for health care through a Flexible Spending Account (FSA), where they can put in money pre-tax from their paycheck, and decide what health care bills to pay from their account throughout the year. FSAs also work like a line of credit to cover eligible health care expenses early in the year, as long as you’re on track to make your contribution by the year’s end. However, FSA funds expire by the end of every year, so remind your staff to use their FSA dollars before they expire!

If employees chose an HSA eligible high-deductible health plan, they are eligible for an HSA. An HSA works like a savings account, where the money saved can be rolled year after year. Some HSA plans also give the option of investing funds, which earn profits tax-free.

HSA holders can also contribute to a type of FSA called a Limited Purpose FSA (LPFSA), which work like regular FSAs, but funds can only be used for vision and dental expenses.

4. Look for virtual care solutions (chances are, your carrier offers them!)

Many health plans now include virtual care solutions like telemedicine/telehealth options that are low-cost or even offered at no additional cost to you, and let you talk to a doctor by phone or video instead of visiting a clinic in person.

For routine medical issues such as colds, rashes, UTIs, and pink eye, telemedicine is a great way to get treatment from a medical professional while saving time and money.

5. Consider level-funded plans to save up to 35% in premiums

Level-funded plans give you the opportunity to save money on premiums and a chance to receive a return of premium following a good claims year.

How it works: you pay a fixed monthly premium based on estimated claims for the year. If your employees don’t meet their expected claim amount, the unused funds go back in your pocket. If your employees do exceed the claim amount, you continue to pay the same fixed monthly premium amount thanks to stop-loss insurance.

Level-funded plans are medically underwritten so it’s a great option for healthy groups. Savings can exceed to over 30%.

6. Add voluntary coverage at no cost

Another way to add value to your employees’ benefits plan is through adding voluntary coverage (this includes legal services, worksite benefits, disability insurance, and life insurance), which would otherwise be unavailable or more expensive outside of a group plan.

Offering these is at no cost to you, but adds more products to create better value for your employee benefits plan.

7. Promote good health and wellness

The last practical way to save money? When everyone in the company stays healthy.

Let’s face it — many of your employees can’t afford an attorney on their own and you’re always looking for new benefits to offer. Adding a legal plan to your benefits program will help you attract and retain employees. And because it’s a voluntary benefit, offering a legal plan has no direct cost to your business.

If an employee knows they will need legal representation in the next year, then a legal service plan is an obvious perk. And even if they don’t have the need now, legal issues occur every day. When you get married, have a baby, buy a home, or loose a loved one, legal documents will be required. Having access to a legal service plan helps your employees overcome the intimidation of an unexpected legal crisis by being given the option to contact a lawyer.

LEARN WHAT EMPLOYERS ARE SAYING ABOUT METLAW

One of the main reasons people never use an attorney is the expense. MetLaw, a group legal plan available through MetLife, covers all your personal and financial legal expenses for less than $1 a day.

What sets MetLaw apart from other legal plans?

Unlimited use – there’s no max to the number of times you can use it.  If necessary, you could literally contact an attorney every day for the life of the policy. MetLaw offers convenient access to a large network of experienced attorneys.

No deductibles – less than $1 a day and it’s yours. There are no additional fees associated with owning (or using) a legal service plan. That’s right. No matter how many times you use a network attorney over the course of the year for covered legal matters, all you pay is your monthly premium.

No claim forms – when you contact a network attorney, there’s no paperwork involved. Not even online submissions.  To use your legal service plan, simply call the number on your card and explain your need. For example, say “loan closing” and your network attorney will handle it from there.

Affordable coverage for everyday legal matters – including traffic ticket defense and will preparation. If you get a speeding ticket in another state, say 6 hours away, an attorney will show up on your behalf, so you don’t have to.

Your spouse, dependents and other relatives are also all covered on your legal plan for your single base monthly fee. That means if your son or daughter gets a speeding ticket in another state, an attorney will show up on their behalf too.

By adding this unique product to your benefit offering, you set yourself apart from other employers and better yet — you increase the competitiveness of your employee benefits program without increasing your financial contribution.

You can offer MetLaw through your business with as few as 2 employees enrolled. Outside of IXSolutions, this product is only available to businesses with over 200 employees.

Employee benefits are one of the largest cost’s employers in the United States encounter.  Deciding which benefit options will serve your business best now and in the future isn’t the smallest decision.

From carriers to contributions to plans choices — there’s a lot to consider.  Depending on whether you work with a PEO, private brokerage or go direct to the insurance carrier — that decision is guided by their advice. 

Which solution will you leverage for your employee benefit needs?

The first step is knowing all your options. As a small to mid-sized business owner, there are three main options:

1. Going direct to an insurance carrier
2. Hiring a Professional Employer Organization (PEO)
3. Working with a private brokerage

The decision ultimately depends on your organizational structure. Maybe cost is your only concern, or perhaps a more personal experience is what you’re looking for. Whatever your priority is when it comes to choosing your company’s health benefits, there are pros and cons of each option.

1. Going direct to an insurance carrier

An insurance carrier like UnitedHealthcare and Blue Cross Blue Shield controls the underwriting, claims and pricing of the insurance polices they offer. 

If you currently go direct to an insurance carrier for your employee benefits, you probably never worked with a private brokerage before.

For employers with less than 50 employees, group health insurance costs the same no matter where you shop.  Why?  Because the rates are based on your age, geographic location and other qualifying conditions under the Affordable Care Act a.k.a Obamacare.

One condition is when you purchase your benefits with an insurance carrier — you’re on your own when it comes to managing employee benefits for your business.

That means services typically performed by a brokerage are completely in your hands.  These services include: 

• Communicating with the insurance carrier on your behalf
• Providing post-sale support throughout the year
• Adding or removing employees from your plan
• Assisting with open enrollment
• Employee maintenance including an explanation of benefits to your new hires
• Compliance support

Not to mention when you go direct to a specific carrier, you are subject to that carrier’s plan offering. A broker will typically shop benefit options from multiple carriers and help you narrow down plans to find the best fit for your company.

Another interesting fact: there’s no service fee for going through a broker. Working with a broker means having a personal assistant for your employee benefits (without paying a penny extra).

Insurance carriers simply can’t provide the one on one assistance that brokers do. That’s why carriers appoint thousands of brokers to sell their products at no additional cost to you. So if the cost is the same, and brokers will do the work for you, why not get the added support? 

2. Hiring a Professional Employer Organization (PEO)

Professional Employer Organizations (PEOs) can charge anywhere from 3% to 15% of your employees Gross Payroll in exchange for their services. The cost of a PEO may seem like a solution for your business today—but it’s not a long-term solution. Depending on the size of your company this fee could add up quickly.

When you decide to hire a PEO, you enter a “co-employment” relationship between your company and the PEO itself.

What does co-employment mean?

When you enter a co-employement relationship with a PEO, the PEO literally hires your employees along with the employees of other companies like yours to form one large group. This is beneficial for small groups looking to utilize large group benefits that would otherwise not be available to companies of that size. basically one company (the PEO) owns all these separate companies.

The more employees you have, the less you’ll end up paying for benefits like workers compensation and retirement plans. But when it comes to health insurance a lower price tag may only apply during your first year with the PEO. When your employees are hired by a PEO along with other small businesses’ employees, you enter a contractual agreement stating that the PEO: 

• Reserves a right of direction and control of the employees with respect to certain matters
• Shares or allocates employment responsibilities with the client in a matter consistent with the client maintaining its responsibility for its product or service
• Remits wages and withholdings of the client’s workers
• Issues Form W-2s for the compensation paid under its Employer Identification Number
• Reports, collects and deposits employment taxes with local, state and federal authorities

So when your employees complete their annual tax return, the name of your company will not appear on their W2. For example, if Insperity was your PEO, Insperity would be the employer name on your employees W2. 

Day to day activities are still your control such as who gets hired and who gets fired. But overall PEOs come with their fair share of limitations, such as a lack of transparency.

With a PEO, your benefits payroll and taxes are bundled, so the breakdown and transparency of what you are paying is hard to come by.

Your broker can provide you an exact cost breakdown of your benefits, from employer contributions to individual employee payments.

And because so many of these services are bundled, it’s not easy to leave your PEO. Think about your internet provider at home. You have an all-in-one solution that bundles internet, cable and maybe even your phone. It takes a lot of time to unbundle. When you leave your PEO, you have to find a replacement for your payroll administration, Human Resource services and taxes.

Health insurance plans available through a PEO are based on the number of employees the PEO you choose is employing. PEOs often work with a single carrier and offer two to four different plan options.

3. Working with a private brokerage

A good broker will shop the market each year to find the best plans for your business.

A PEO will not shop for coverage outside of what they offer because their main goal is to drive membership for their PEO plan.

In addition, your PEO may not be able to answer specific benefit related questions. PEOs typically provide online support only for you and your employees. When working with a broker you get a designated account representative to answer your questions and your employees questions.

Brokers Educate

Most brokers will host in person enrollment meetings to better educate your employees. Lack of employee education on healthcare options can lead to a lower utilization of benefits. And after you’ve spent your money to make these benefits available, you want to make sure your employees are using them.  

Brokers save you money on premiums by teaching your employees to visit quick care facilities instead of going to the ER and to take advantage of the benefits that are built into their health plans like annual physical exams and mental health service. Don’t assume they know!

Your employees may be better off physically and financially with their group benefit versus shopping in the individual market. By educating them, you’re increasing their appreciation too.

Keeping up with Compliance

A big part of owning a business is knowing the rules and regulations that apply to you and following them.  With the rules constantly changing, it’s hard to keep track of what rules are still being enforced.  You’ve probably avoided compliance in the past because you simply don’t have time to sort through boring legal documents. But this could be an expensive mistake.    

In fact, the consequences for not complying can end up costing your business thousands of dollars.

For example: One provision under the ERISA law requires employers to provide a Summary Plan Description also known as plan SPDs to participants (your employees) within 30 days of their request. If you fail to do so you could be issued a fine of $110/day.

Most private brokerages should be able to help you with these issues (or consider switching to a new one if he/she is not able to help). It’s not worth the risk. 

Service Service Service

Brokers work with you, around your schedule to come up with the best benefits solution for your business. At IXSolutions we believe every business, no matter the size or yearly revenue, should have access to affordable health and ancillary insurance benefits.

We handle your employee benefits administration process, offer more choices and save you money. How? Through our service focused culture and one stop shop employee benefits platform.

With our platform, your employees can enroll into a health insurance plan with the click of a button, so you can go back to doing what you do best — managing your business. 

Summary of our services:

• All-in-one employee benefits platform 
• Hassle-free HR & benefits administration 
• Assigned support team available year-round
• Affordable health insurance options 
• Dental, vision, life, disability & temporary health
• Online enrollment for every plan
• HSAs, HRAs and FSAs

Your income is your greatest asset. Protect it.

If you’re an incentive-based earner your income is more like a reward for working hard than an expected paycheck.  Insurance carriers treat your commissions as taxable income and cap the monthly disability benefits you receive.

Don’t let your hard-earned income go uncovered. If you’re a high earner IDI is a must have supplement to your standard LTD. IDI covers income from profit sharing to bonuses, so you don’t miss out on the financial benefits you’re entitled to.

Why do I need disability insurance?

Most people have a list of expenses they pay on a regularly scheduled basis. But who pays the bills when you’re not getting paid?    Social Security Disability Benefits don’t always cover you when you aren’t working. In fact, these benefits may not be available to you at all if you are expected to be out of work for less than a year.

If you have a family that counts on your paycheck, or if you alone rely on your income for personal expenses—you need disability insurance. Because when you get diagnosed with a qualified disability, you should be focusing on your personal recovery, not your personal finances.

Short-Term Disability allows you to maintain your standard of living when you become disabled for up to six months only. STD benefits will replace a portion of your salary if you’re out of work due to a qualified leave of absence, illness or injury.

If you’re unable to return to work for longer than six months, Long-Term Disability (LTD) insurance will protect your paycheck for 5 years or up to Social Security National Retirement Age. Your LTD benefit will kick in after your STD benefit runs out.

What if I already have disability insurance through my employer?  Shouldn’t that protect me?

Your employer sponsored Long Term Disability (LTD) coverage provides a solid foundation for income protection, but it may not be enough for you:

• Most LTD coverage offered through employers don’t consider bonuses, commissions, or incentive compensation as part of your earnings, and they place a cap on the monthly benefits you can receive.
• If your employer pays for your LTD coverage, benefits are taxable, reducing the net benefit you receive.

Simply put—if you make over $100,000 per month, your LTD policy is underinsuring you.

Standard LTD benefits cover your salary at 60% to a max of $5,000.  Anyone making less than $100,000 is insured properly at this cap, but if you have greater income replacement needs, you should consider supplemental disability insurance.

In this example, three employees with different earnings have the same long-term disability benefit.

The policy covers all but one employee, Jane, the highest earner of the three employees. If Jane were to purchase Individual Disability Insurance, her salary would be covered up to 85% instead of the standard 60%, matching Jack and Jim’s benefits.  

Individual Disability Insurance (IDI) Guaranteed Standard Issue (GSI) program provides an additional monthly benefit in the event of a disability, protecting more of your income than Long Term Disability (LTD).

When you purchase an Individual Disability policy, there’re no medical exams required, limited underwriting and policies have discounted unisex rates (35%).

Unlike LTD, a portion of your bonuses and more of your base salary may be covered with IDI, providing you with additional disability income protection.

How is IDI different than long-term disability insurance?

Think of Individual Disability Insurance as a rider to your LTD. If you were only enrolled in LTD, those benefits may only cover part of your monthly expenses. For example, you may only be able to cover your mortgage alone with your current disability policy while also trying to maintain household expenses. With IDI, your mortgage, student loans, car payment, not to mention your savings are covered.

IDI can help cover income from commissions, bonuses and other incentive pay that Long-Term Disability plans traditionally may not cover. Even if you return to work part time you can still receive benefits from IDI carrier.

Who is Individual Disability Insurance for?

IDI is ideal for employees who have commission-based income or generally higher salaries. IDI is designed to support the needs of executives and professionals with high salaries or uninsured earnings.

Why is it important to have Individual Disability Insurance?

The risk of a disability during your working years may be greater than you think. If you rely on commissions and bonuses as your main source of income, your Long Term Disability plan may not be enough coverage to support you and your family.

Individual disability insurance covers your bonuses and more of your base salary than LTD.

And when you have IDI, you own the policy, meaning you have the option to continue coverage after leaving the company or changing jobs at the same guaranteed premium.

How much does Individual Disability cover?

IDI replaces 85% of your pre-disability earnings. LTD typically covers only 60%. 

Some policies will pay benefits until you turn 67 so you can keep receiving benefits as long as you remain disabled under the terms of your policy. It’s possible you may be eligible for a portion of your benefits as you return to work.

Benefits of Individual Disability Insurance

• Covers commissions and bonuses
• 100% portable so if you leave your employer, your policy stays with you
• Benefits are not offset by Workers’ Compensation and Social Security Insurance payments
• Protects against reverse discrimination
• Benefit replacement up to 85% depending upon taxability
• Tax-free benefits if you pay your premium using after-tax dollars
• No medical exam required when you enroll
• Discounted unisex premiums
• Convenient payroll deductions of premium payments

The Internal Revenue Service (IRS) recently released Revenue Procedure 2018-34 which includes details about the affordability percentage related to the Employer Mandate for the upcoming year. In 2019, coverage will be considered affordable if an employee has to pay no more than 9.86% of their household income for self-only coverage. As most employers don’t know the household income of their employees, three alternative safe harbor methods may be used:

1. W-2 Safe Harbor Method: Coverage will be considered affordable if the employee has to pay no more than 9.86% of their current year wages according to Box 1 of their W-2.
2. Monthly Rate of Pay Method: Coverage will be considered affordable if the employee has to pay no more than 9.86% of their monthly rate of pay.
3. Federal Poverty Level Method: Coverage will be considered affordable if the employee has to pay no more than 9.86% of the most recently published mainland Federal Poverty Level (FPL) for a household of one.

A summary of the Employer Mandate affordability percentages since its inception has been provided below. If you recall, the Employer Mandate was originally set to take effect in 2014, but it was delayed until 2015. The original 9.5% affordability percentage has been adjusted each year for inflation.