BridgeTower Media Newswires//September 26, 2023
BridgeTower Media Newswires//September 26, 2023//
Any employers muddling through the current labor shortage probably have already seen dozens of articles with advice on how to best attract, incentivize, and retain employees. A simple Google search will yield hundreds of hits exhorting the benefits of an inclusive culture and a positive work environment. I agree that those things can become distinguishing factors for employees looking for their next engagement. Let’s cut through the talk about recognition programs. Cash is king and, by extension, health insurance is the queen, with retirement plans rounding out the nobility.
While represented employees generally have access to this total compensation royalty, non-represented employees, particularly those working for small to midsize employers, often go without the financial security a health insurance package and retirement plan can offer. For many employers, the price of a traditional group health plan, even a high-deductible plan, is unaffordable. So, what can these employers do to offer useful benefits to their workers and hopefully attract and retain valuable talent?
After the passage of the Affordable Care Act, it became unlawful for employers to give cash to their employees to buy their own insurance policies. However, to expand access to employer-based coverage, the Trump administration authorized a new type of group health plan – an individual coverage Health Reimbursement Arrangement (ICHRA) – to reimburse individuals’ insurance premium costs.
Under an ICHRA, an employer can provide tax-advantaged cash payments to any bona fide group of employees so long as the individual workers purchase their own insurance coverage on the exchange (Health Insurance Marketplace). Unlike many group insurance policies that require an employer to pay a minimum of 50 percent of the cost of employee coverage, under an ICHRA, an employer can offer a uniform dollar amount (or uniform percentage of individual premium). The caveat is that to receive the money, the employee must purchase individual coverage. Workers are not entitled to a cash reimbursement for coverage under a spouse’s plan or enrollment in Medicare.
When ICHRAs first became available in January 2020, I thought small employers would surely rush to adopt them. I remain baffled why so few employers take advantage of this opportunity to provide at least some contribution toward their employees’ health insurance needs. An employer that makes a genuine attempt to offer a health insurance benefit to lower-income employees can create a positive work environment for all and thus enhance its ability to attract and retain talent.
One of the few positive outcomes of the pandemic is that telemedicine really has had an opportunity to blossom. Employers can purchase group telemedicine benefits for less than $100 per employee per month. Usually, these programs provide unlimited telemedicine appointments with general practitioners, and with some programs providing specialist and mental health telemedicine for affordable copays. Some plans include a limited number of in-office physician visits and the ability to access lab work for discounted rates. Most also include a prescription drug discount card that helps save money on a wide range of pharmaceuticals.
While these plans do not replace major medical coverage (neither surgery nor hospitalization benefits), for those people who need only occasional medical consults, telemedicine benefits provide 24/7 peace of mind with a licensed doctor on speed dial.
Several insurers offer an array of individual insurance products sold to employees through payroll deduction. These include life insurance products, accident plans, cancer or specified disease coverage, hospitalization reimbursement, dental, vision, and disability products. Even if an employer cannot afford group health insurance, fully insured dental and vision and a small amount of life insurance should cost less than $100 per employee per month and provide valuable benefits to the workforce.
By packaging an array of employer-paid “workplace” products with a more traditional group dental and vision plan, plus telemedicine with a prescription drug discount program, an employer can provide a valuable financial benefit to employees and their families, even without major medical coverage.
Akin to a 401(k), a SIMPLE IRA allows employees to contribute toward their retirement while the employer generally matches contributions up to 3 percent of employee compensation. As the name implies, these retirement plans are easy to set up and inexpensive to administer (approximately $25 per participant). Most of the plan’s administrative costs can be funded via deductions to participants’ accounts.
As traditional group health insurance policies continue to increase in price year after year, creative thinkers from both inside and outside of the health care industry (particularly technology companies) have been developing products and services that make it easier and less expensive for individuals to interact with America’s complicated health care delivery system effectively. Most of these products fall outside of the purview of the Affordable Care Act and are not considered “group health plans” under the Employee Retirement Income Security Act of 1974 (ERISA). Fewer regulatory requirements mean these products and services are available at considerably less expense and with fewer rules for the employers offering them. The lack of oversight does not necessarily imply that these are not trustworthy companies offering valuable benefits.
Employers, particularly smaller ones that have long thought they cannot afford to offer a benefits package, might consider finding an advisor who has kept abreast of all these new product offerings and established relationships with reliable companies working in this new frontier of health care benefits.
Christine Zinter is of counsel at Schwabe, Williamson & Wyatt. This column is intended to provide readers with general information and not legal advice. Consult professional counsel for help regarding specific situations.