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What Is The Employee Retirement Income Security Act (ERISA)?

The Employee Retirement Income Security Act of 1974, also known as ERISA, was designed to define the rules and standards for retirement and healthcare benefits. It was created to protect the assets of those who are retiring and to set out rules for how employers manage their healthcare plans. If you are an employer who offers a group health insurance plan, whether self-insured or fully insured, then ERISA most likely applies to your plan. There are very few types of plans that are not subject to it. All private companies are required to comply with ERISA laws. So you need to know what ERISA is, what protections it offers your employees, and what rules you are subject to as an employer.

What Is ERISA?

According to the U.S. Department of Labor, ERISA sets “minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.” For employees, this means that they will be afforded certain protections under this law when they participate in retirement and health insurance plans through their employer. For you, the employer, it means that you need to take certain steps to protect your employees’ retirement savings from any mismanagement or abuse. You also need to make sure that their healthcare plans are being managed in the best interest of the plan participants. Under ERISA, you also have duties to disclose certain information regarding your plan to your employees, as well as to set out guidelines for how your employees should file claims.

ERISA’s Rules

As an employer, ERISA requires you to adhere to rules surrounding the following:

silhouette of people sitting down with a person standing up pointing at a backboard — *You have to disclose any information about funding with your employees that partake in the plan.*

Conduct- ERISA sets standards of conduct for plan managers. Because managing your employees’ benefits plan might be complicated and time consuming, you may choose to hire an outside professional (sometimes called third-party service providers). Or you can use an internal administrative committee or human resources department to manage some or all of your plan’s day-to-day operations. Under ERISA, you need to make sure that anyone who is managing your plan is acting in the best interest of your employees.
Disclosures– ERISA requires you to provide any employees participating in your plan with information about funding and the different features of the plan. There are set standards for how companies regulate participation in the plan, including defining how long an employee has to work for the company before they can join the plan.
Reporting & Accountability– ERISA requires that you, or the third-party plan manager, provide detailed reporting and accountability to the federal government about the plan and participants.
Notification of Benefit Determination– ERISA requires that you have a written policy in place that states exactly how claims should be filed, as well as have an appeal process for claims that are denied. Any and all claims appeals have to be conducted in a fair and timely manner.

Further Protection

a lock made up of different health related pictures. — *ERISA also protects those who might be discriminated against based on their health.*

ERISA is all about making sure that your plan’s funds are protected and delivered in the best interest of plan members. It also prohibits any discriminatory practices when granting plan benefits to qualified individuals. In addition to the rules laid out above, there have also been two amendments to ERISA that are meant to further protect employees. These are:

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)- This was created to give workers and their families the right to continue their health coverage for a limited time after certain events, like losing their job.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA)- This offers protection for workers and their families who might suffer discrimination in health coverage based on factors that relate to an individual’s health.

Offering a healthcare plan to your employees can be beneficial to you (think: tax breaks), but you need to comply with all ERISA rules. Not complying with the rules will not only lead to the loss of your tax advantages, but also to penalties such as thousands of dollars in fines.

If you need advice on group health insurance or need more information on how ERISA works, speak to an EZ.Insure agent. Our agents are highly knowledgeable about group insurance and have access to all the top-rated insurance companies in your area. We will review your needs, make sure you are in compliance with any and all rules, and find ways for you to save money. To get free instant quotes, simply enter your zip code in the bar above, or to speak directly to an agent, call 888-998-2027.

Sole Proprietor Participation in HRAs

Employers who have trouble providing their employees with a traditional group health insurance plan sometimes turn to health reimbursement arrangements (HRAs) to help. HRAs are not health insurance, they are employer-funded accounts approved by the IRS that help employees pay for qualified out-of-pocket medical expenses. They can also help pay for their individual health insurance plan’s premiums. HRAs work through a reimbursement system. Employers offer employees a monthly allowance of tax-free money that they can use to pay for healthcare services, including health insurance, and then the employer reimburses them up to their allowance amount. But what if you’re a sole proprietor? You can offer this arrangement to any employees you have, but can you participate in the savings from an HRA yourself? In short, generally no, but there is a way you might be able to!

HRA Rules

Offering an HRA is a great way to help pay for your employees’ healthcare costs; these arrangements give you more control over how much you’re spending, and can help to lower your healthcare costs. HRAs only need to be funded when employees who participate in them incur expenses, and not all employees who participate will incur expenses up to the limit established by the employer. Any unused funds in the HRA stay with you, the employer.

There are also tax advantages to HRAs: any reimbursements made to your employees are tax deductible for you and tax-free for your employees. HRAs are only available to:

Current and former employees, and their spouses.
Covered tax dependents.
Children who will not be 27 years old by the end of the tax year.
Unfortunately the IRS does not separate you and your business, which makes you ineligible to participate in an HRA.

Sole Proprietorship

As a sole proprietor, according to the IRS, there is no separation between you and your business. The Internal Revenue Code Section (IRC) 401(c) determines that owners who are self-employed individuals are not considered employees. This makes them ineligible to participate in a HRA. Ineligible owners include partners, sole proprietors, and more-than-2% shareholders in a Subchapter S corporation.

However…

If you are married and your spouse is listed as a W-2 employee at your business, then there is a way for you to get a HRA, and enjoy all of its tax benefits. To work around the rule set by the IRS, you can set up a HRA in your spouse’s name and list yourself as a dependent of your spouse. However, this will only work if you don’t hire any other W-2 employees who would be eligible for either an ICHRA, QSEHRA or a One-Person 105 HRA. What you can do is:

Hire your spouse as a W-2 employee, and make their salary the amount you want to reimburse through the HRA.
Make your spouse the primary policy holder on your family health insurance plan.
Become a dependent on your spouse’s health insurance plan.
Set up a One-Person 105 HRA, ICHRA, or QSEHRA for your spouse. Consider:
- The One-Person 105 option if you have medical expenses or other employees that are excludable under the rules.
- A QSEHRA if your health expenses are less than the reimbursement limit under the QSEHRA rules.
- An ICHRA if the reimbursement limit of a QSEHRA is too restrictive, since there are no limits on ICHRA contributions.
Save all of your medical bills so your company can reimburse them each month from a separate account.

Get Help

To make sure that you are following the rules laid out by the IRS properly, it would be wise to speak with an insurance agent. EZ’s agents are highly trained and knowledgeable in the group health insurance industry, and can help you determine if participating in an HRA is possible for you. To find out if you are eligible, and to compare plans in your area for free, enter your ZIP code in the bar above, or to speak directly to an agent, call 888-998-2027.

Effective Ways To Reduce Group Costs

One of the best ways to attract better employees is by offering group health insurance. Unfortunately, providing high quality health insurance usually means that your business is going to pay a lot for premiums. With premium prices soaring, many small businesses are struggling to continue offering group health insurance to their employees. In fact, according to the US Chamber of Commerce, of the more than 45 million Americans who are uninsured, 60% are employed by small businesses. If you want satisfied, productive, and healthy employees, but are struggling to provide the health insurance options they’re looking for, here are some tips to reduce your group costs.

Get More Employees to Participate in Your Plan

In order to get a good price on group health insurance, make sure that as many of your employees are participating in your plan as possible. If you’re in the financial position to do so, you can even consider hiring more employees – the more employees that you cover, the lower your premiums will be. How will your premiums be lower? Well, insurance companies face large risks for every employee that they have to cover, so having a smaller pool of employees paying into the plan means that they are taking on more risk. However if you have a larger amount of employees paying into the plan, then there will be less risk for the insurance company, and they will be able to offer you a better deal.

Reduce Coverage: Exclude Dental & Vision

Reducing the amount of coverage that you offer is a simple way to keep your insurance costs low. You can do so by cutting dental and vision from your plan and having your employees decide whether they would like to purchase their own dental and vision coverage. These costs will come out of your employees pockets, but eliminating these plans will help to lower your premium costs and save you money.

Consider Switching Plans

The most common way to control the costs of your group insurance plan is by switching plans. Consider switching to a high-deductible health plan (HDHP). Doing so will increase your employees’ deductibles, but it will also reduce the cost of their premiums, and your premium contributions. Another route you can take is switching to a more cost effective plan with a smaller network, such as an HMO.

money on a table near some prescription medications — *There are different ways you can save on prescription medication costs.*

Take Control of Prescription Drug Costs

Medications are necessary, but they can be expensive. There are ways, though, to save on prescription drug costs in your plan by:

Having a plan that mandates a generic substitution for any medication that has one.
Having a limit on coverage, which will allow you to save on dispensing fees.
Encouraging your employees to shop at less expensive pharmacies, use money-saving apps, or request 90-day supplies of their medications.
Checking your plan’s drug formulary, and making sure that it includes a large range of drugs in the lowest tier. These generic, lower cost drugs will most likely be covered 100%.

Keep Your Employees Healthy

The healthier your employees are, the lower your insurance costs will be. Offer a wellness program, which could include perks like fitness membership stipends, free flu shots, help quitting smoking, and cancer screenings. This is a cheap and easy way to not only make your own employees happier and more productive, but also a great way to save money in the long run.

Provide An HSA

If you decide to switch to a high-deductible health plan (HDHP), consider offering a health savings account (HSA) alongside it. HSAs are only available with a qualified high-deductible health plan, and will allow your employees to contribute tax-exempt dollars to a fund that can only be used for medical expenses. These funds also accrue tax-free interest and roll over each year, so employees will have money for healthcare when they really need it. The benefits for you? Tax breaks for you if you choose to contribute to your employees’ HSAs, and a healthcare plan that is more attractive to your employees.

Find A Good Agent

Health insurance is complex. But if you have a good insurance agent, they can help you shop around for plans from different providers and help you to reduce your health insurance costs. Many insurance agents charge a fee for their services, but not EZ. We will provide you with one dedicated agent who will navigate through all available plans and provide you with instant, accurate quotes. All of our services are free – our mission is to help you find an affordable plan that provides great coverage. To compare group insurance quotes in minutes, simply enter your zip code in the bar above, or to speak to one of our agents, call 888-998-2027.

The Advantages of Group Insurance

Being a small business owner means being on a tight budget, so fitting in a group health insurance plan for your employees can seem a bit overwhelming. Offering group health insurance, though, is not something that you should overlook. If you do not offer a healthcare plan, you might find that it is more difficult to recruit and retain good employees. In fact, surveys show, most employees say that they would prefer to be offered health insurance over a pay raise. While group health insurance can seem unaffordable or unattainable, providing healthcare has many advantages that can balance out the costs – and there are ways to get great plans at an affordable price.

Tax Credits & Deductions

Contributing to your employees’ premiums can be expensive, but you can get some of that money back through tax credits and deductions. If you run a small business, you might qualify for the small business health care tax credit if you offer your employees a plan through the Small Business Health Options Program, or SHOP. To qualify for the minimum credit, you must have fewer than 25 full-time or full-time equivalent employees earning an average of $50,000 or less per year; to qualify for the maximum credit, you must have fewer than 10 employees earning an average of $25,000 or less per year.

If you decide to offer a HRA or HSA, your employees will get tax advantages (all of their contributions and reimbursements are pre-tax), and so will you. Contributions to your employees’ HSAs and HRA reimbursements are tax-deductible.

Lower Payroll Taxes

Another tax benefit of offering group insurance is the ability to lower your payroll tax. When employees pay for health insurance, the cost of their premiums is typically excluded from their taxable income. This lowers most workers’ tax bills, and in turn reduces their after-tax cost of coverage. Lower taxable income for your employees means lower business payroll taxes for you. In addition, if you contribute to your employees’ HSAs, you can also save on payroll taxes because HSA contributions are deducted from your payroll on a pre-tax basis.

caucasian hand with a suit on holding a blue card with a heart on it and a family holding hands together — *You and your family can participate in your group insurance plan.*

You Can Participate In The Plan

Offering health insurance to your employees means that you and your family can also participate in the plan. Compared to individual plans, group policies offer more pre-deductible benefits such as preventative care and primary doctor visit coverage. They also offer lower copays for prescription drugs and routine care.

Lower Costs Due To Larger Risk Pool

The higher the number of employees that participate in your group plan, the lower the cost of health insurance. When more people are included in your plan, you have a larger risk pool, and everyone will have more options at a lower price.

Attract & Retain Employees

Do you want healthy, productive employees who show up to work and boost your bottom line? Then provide them with group health insurance! If you want employees who come to work and work hard for you, there’s no better way to ensure you’ll get that than by offering health insurance. They’ll be able to receive care when they need it, and they will feel like you have invested in them, so they will invest in you. This will lower your hiring costs, improve morale, and reduce absenteeism and risks associated with poor health.

Health insurance can help you keep your current employees happy and healthy, and it can also help you to attract the best employees when it comes time to hire. Job seekers expect employers to offer health insurance and partially pay for their premiums, so you risk missing out on great candidates and potential employees if you’re not offering some sort of plan. You don’t want to be disappointed if a candidate rocks the interview, you offer them the job, and they turn it down because you’re not offering the benefits they’re looking for!

You Can Save Money

When searching for a group health insurance plan, you have to look beyond the premium. The costs associated with group health insurance plans include premiums, which you contribute to, but also co-payments, deductibles, and coinsurance, which your employees are responsible for. If you are looking for a way to lower your premium costs, consider offering a high deductible health plan. The higher the deductible a plan has, the lower the premium costs will be, so you can save on contributions. You can also offer a HSA with qualified high deductible health plans, so your employees will be able to put money aside to help with the cost of the higher deductible.

Affordable group health insurance plans are out there, and you can find the right one for your business as long as you use a licensed, trained agent to help you. There are ways to offer everyone the most coverage while saving the most money. The best way? Start by talking to an EZ agent! All of our services are completely free, and there’s never any hassle or obligation. To instantly compare plans in minutes from top rated carriers around the country, enter your zip code in the bar above, or to speak directly to one of our agents, call 888-998-2027.

Group Health vs Blanket Health

As a small business owner, you want to provide the best for your employees. That includes offering group health insurance that will not break the bank. When researching group health plans for your employees, you’ve probably come across the terms “group health” and “blanket health”. Both are different in what type of coverage they provide your employees, so you need to understand how each type of plan works in order to determine which might be right for your employees and your business.

torso of a person with a suit in holding a green umbrella over blocks with peoples silhouettes on them — *Group health insurance will provide comprehensive coverage for your employees and their spouses and children.*

Group Health Insurance

Group health insurance provides health benefits to your employees, their spouses, and any other eligible dependents. With a group health plan, they will have coverage for visits to the doctor, hospital, or any urgent care facility. If you choose to offer a group health plan, you can also include coverage for prescription drugs and vision and dental care.

Blanket Health Insurance

Blanket health insurance is similar to group health insurance, except it is less comprehensive. It is meant to cover a group of individuals engaged in a specific activity. This type of insurance is often referred to as an accident-only policy, because it provides only basic coverage in the event that your employee is involved in an accident or is injured. The benefit of this kind of insurance is that you don’t have to purchase multiple individual policies to get coverage; the coverage you purchase is a “blanket” policy that covers all of your employees.

You can purchase blanket health coverage to provide health benefits in connection with accidental injury, but the policy usually has a limit on the type of procedures and services that are covered.

How They Are Different

While both offer some type of healthcare coverage, group health insurance and blanket health insurance have many key differences. Group health insurance:

post it note with limited time offer on it — *Unlike group health, blanket health has a limited time duration.*

Covers the 10 essential health benefits that are required to be covered by the Affordable Care Act.
Does not have a dollar limit on what it will pay for care received by your employees.
Is more comprehensive in what it covers and has more coverage options than blanket health.
Has policy terms of a full year.

Blanket health insurance:

Does not have to cover the 10 essential benefits; these plans usually are limited in the types of procedures, tests, and services they offer.
Usually has a maximum covered benefit amount for each person covered.
Has a limited term duration.

If you choose group health insurance, you can tailor your plan to your employees’ financial and medical needs. Blanket health insurance is more cost-effective, but you will not be providing full-coverage health insurance for your employees. You need to consider your employees’ different needs, which a single policy, like blanket health, might not be able to meet.

It can be difficult and time-consuming to compare all the different group health insurance plans in your area, but with the help of an EZ.Insure agent, you are guaranteed to find a group health plan that meets your employees’ needs and saves you money. Our agent will assess your business and employees, and will research and compare all available plans in your area, for free. No hassle and no obligation, just free quotes! Easily compare plans now by entering the zip code in the bar above, or to speak directly to an agent, call 888-998-2027.

Small Business Owners: Should You Offer More than One Type of Health Insurance Plan?

If you own a business that employs fewer than 50 people, then you are not required to offer your workforce group health insurance – but that doesn’t mean that you can’t, or that you shouldn’t. Many small business owners find that having healthier and happier employees is worth the cost and the administrative headaches of providing a healthcare plan, some go even further: they offer multiple plan options for their workers to choose from. Going this route may not be right for every small business, but if you’re looking to keep a diverse workforce satisfied, then it might be right for you.

health insurance in a blue border with a green check next to the word yes in green too — *Employees prefer health insurance over a raise in pay, and it is a huge deciding factor for job seekers.*

Offering Health Insurance: The Stats

If you’re not currently offering a healthcare plan to your employees, you may want to take a look at a few stats:

40%: The percentage of workers that say that healthcare is their number one priority when it comes to benefits.
88%: The percentage of job seekers who say that they would give health benefits “some consideration” or “heavy consideration” when choosing a job. 46% said it was a deciding factor.
56%: The percentage of people with employer-sponsored health benefits who say that whether or not they like their health coverage is a key factor in deciding to stay at their current job.
50-60% of a worker’s annual salary: The amount it can cost to find a direct replacement for them if they leave their position.
$4,000: The average amount it takes to hire an employee.

The numbers above should give you an idea of how important offering group insurance to your employees can be to recruiting, retention, and to your bottom line. Adding flexibility to your plan options can only increase those benefits.

green pie chart with the numbers 76%, 20%, and 4% divided into it — *Percentage of employees who offer one or more plans to their employees. 76% offer 1 plan type.*

If you are currently offering one type of insurance plan to your employees, then you’re not alone. According to the Kaiser Family Foundation 2019 Health Benefits Survey:

76% of small businesses offer one plan type

20% offer two plan types
4% offer three or more plan types

If you’re choosing between plan types, you might want to take a look at a breakdown of what other small employers are choosing:

Point of Service (POS) plans: almost half of small employers – 47% – chose this option, according to a recent survey. POS plans are a hybrid of PPOs and HMOs: they have the lower premiums and primary care physician requirement of HMOs, but are slightly more flexible.

HMOs: This type of plan, which requires that employees choose a primary care physician, get referrals to see specialists, and stay within a narrow network, accounted for 26% of small business plans
PPOs: 15% of plans were this more flexible type, which have larger networks and fewer requirements than an HMO, but also have higher premiums.

Offering Plan Options: The Factors

Now that you know all the relevant facts and figures, and we’ve established that offering at least one plan is a good idea, let’s take a look at the factors that should go into determining whether you decide to offer more than one plan type.

The ages and health needs of your employees: If you’ve got a workforce completely populated by Millennials or X-ennials who are single, childless, and healthy, then offering a one-size-fits-all high deductible health plan might be a great choice for you. You and your young, healthy employees could both save money on premiums, and they could contribute money tax-free to an HSA. But if you have some older employees, or employees who need to visit their doctor often, then they would probably prefer a plan with a higher premium and lower deductible. Adding a PPO into the mix would probably work for them, especially because they might not want to have to see their primary care physician every time they need to visit a specialist.

Location: If your employees all live and work in one small area, then they might not need to pay extra for a PPO with a wide network. However, if you have a lot of commuters who are spread out over a large area, they may prefer the flexibility of a plan with a larger network.
Budget: You need to think about what both you and your employees can afford when it comes to choosing a plan. If you really can’t find it in your budget to contribute to higher premiums plans, then stick with offering a cheaper option – it’s better to offer one plan than no plan! On the other hand, if most of your employees are older and/or have families and are willing to pay for a more full-coverage plan, but you have a few younger, more budget-conscious employees, consider offering them a second, cheaper option.

There’s always a lot to consider when choosing whether – and how – to offer health insurance to your small business’s employees. If you need more input, turn to your employees themselves – you can always offer an anonymous employee healthcare survey so that they can tell you exactly what they want. And if you need still more help, turn to EZ! We can answer all of your questions about offering multiple plans (or anything else!), find you the best plan options, and get you super fast, accurate quotes, and we’ll do it all for free. To get started with us today, simply enter your zip code in the bar above, or to speak with an agent directly, call 888-350-1890.

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