Why Your Business Needs Employee Benefits Liability insurance

18 07 EB Why Your Business Needs Employee Benefits Liability insurance - Why Your Business Needs Employee Benefits Liability insurance

You can offer your employees many benefits which make your business more attractive, including retirement accounts, shares in the company, and healthcare plans. Although these benefits are great to have in place, errors and fraudulent activities can inevitably occur, setting you back and damaging your reputation. In this case, it can be a great idea to purchase Employee Benefits Liability Insurance, known as EBL for short.

An introduction to Employee Benefits Liability Insurance

EBL, also known as fiduciary insurance, is a unique kind of liability insurance which protects your business from costly litigation arising from fraud and errors in handling employee benefit schemes. For example, your admin team may incorrectly describe the benefits or who is eligible, or they may accidentally fail to list beneficiaries to life insurance benefits. EBL normally comes as an “add-on” coverage to a commercial general liability insurance policy, and usually only covers claims which have been made during the designated coverage period.

Do I need EBL?

If you offer benefits to employees as part of your business, then EBL may be a good idea. Furthermore, if you offer different types of benefits to different employees, then the risk of errors is higher and EBL is even more advisable. It is also advisable to purchase EBL if your business has a high staff turnover, as a greater amount of administrative work (i.e. processing new employee information) can make it more likely than a costly mistake will occur despite the best intentions of your clerical staff.

Things to consider

In your general liability insurance policy, you should check whether the protections of EBL which are relevant to your business are already offered in your policy. However, if you do decide to purchase EBL, be sure to read the policy carefully and find out if there are any specific things which it doesn’t cover. For example, many EBL policies will not protect you from breach of contract, fraud, and practices such as sexual harassment and discrimination – you would need a different policy (or an additional policy) if you are looking to protect yourself from these phenomena.

Put simply, EBL is designed to protect the integrity of both your business and your employees, ensuring that everyone walks away happy in the event that mistakes crop up with your employee benefits handling. EBL is a great way to safeguard your reputation and bank accounts from damage if an error occurs, which is not unlikely if you’re running a business with a degree of complexity.

Looking for advice on getting the best Employee Benefits Liability Insurance deals? Speak to a member of our knowledgeable team today; we can provide you with EBL insurance which meets all of your needs and more!

A Reminder of How Tax Changes Have Impacted Employee Benefits in 2018

A Reminder of How Tax Changes Have Impacted Employee Benefits in 2018 - A Reminder of How Tax Changes Have Impacted Employee Benefits in 2018

If companies want to remain competitive and attract talent, they need to offer both good salaries and good benefits too. In the US, where healthcare isn’t free and living costs are on the rise, employee benefits are increasingly attractive to young new hopefuls. Alas, despite the best intentions of employers to provide their workers with benefits, changing tax laws are making it difficult for some HR departments to adapt or find the funds for employee benefits.

So how exactly have employee benefits been affected by tax reform in 2018? Let’s take a look at some examples!

Employer deductions

Employers cannot claim deductions for qualified transportation fringe benefits anymore, and this includes commuting. Employer deductions are now completely prohibited, apart from when they are essential to the security of their employees. For employers, this means that they could look into sponsor transportation plans which are paid on a pre-tax model. In general, however, businesses will be forced to closely examine their expenses and restructure some logistical systems in order to reduce their tax liability.

Cycling reimbursements

Bicycle reimbursements are not tax-free anymore under the new reform. Under the new system, employees who cycle to work are no longer protected from the tax man. This is sad news for cycling enthusiasts, who are good for both the sustainable energy crisis and the national obesity crisis.

Engagement activity deductions

As of 2018, employer deductions for granular-level engagement activities are no longer allowed. This means that engagement activities for low-level employees will become more pricey, necessitating enhanced support and planning in order to offset the increased costs.

Food, beverages, and meals

Employers are only able to partially deduct expenses spent on drinks, food, and meal options for their workforce, meaning that costs are likely to rise for employees. Under the 2018 tax reform, only 50% of food and drink costs can be deducted, and this includes costs arising from things such as on-site cafeterias.

Recognitions and rewards

There is now a line drawn between cash and non-cash rewards, with deductions for employers only being limited to tangible property such as a gift voucher for a computer store or something similar. This means that any rewards given to employees which are not “tangible property” will no longer be deductible, leaving employers and employees alike with increased tax bills. Non-tangible rewards are things such as cash, coupons, vacations, hotels, meals, and event tickets. This could cause employers to become less enthusiastic about certain types of employee rewards.

Paid medical leave and family leave

According to the new regulations, employers offering at least 2 weeks of annual paid medical and family leave will now receive a tax credit for doing so. This applies to their full-time employees who qualify for the leave, and the paid leave must ensure that the employee at hand receives a minimum of 50% of their normal salary. This is great for mid-level employees, who are very likely to qualify for such benefits according to guidelines. Employers who give out these benefits can claim 12.5% of the paid leave as tax credits, with that figure increasing by 0.25% for every 1% of salary that the employer pays over the 50% minimum.

The bottom line

This recent tax reform certainly has its pros and cons depending on who you ask. Although a bunch of employer tax deductions have been reigned in, there are now tax credits which inadvertently boost employee morale and aim to help companies retain funds in the form of tax credits. In addition, although some employees may enjoy non-tangible rewards from their employer, this new focus on tangible rewards is likely to mitigate the risk of fraud and disappointment going forward.

Of course, these reforms will trickle their way into companies very differently, but any company worth its salt will be able to adapt and ensure that the most crucial employee benefits will continue to be offered despite changes in the tax structure.

Are you an employer who’s looking to adapt your benefits system to work in tandem with the latest tax regulations? Speak to a member of our helpful team today for bespoke advice!

The Continued Shift To Consumer-Directed Health Care

The Continued Shift To Consumer Directed Health Care - The Continued Shift To Consumer-Directed Health Care

Data shows that more and more employers are shifting toward consumer-directed health care, as employers offering a minimum of 1 HDHP (high-deductible health plan) has increased by over 20% since 2016. This is due to employers continually offering HDHPs in addition to more old-school health plans, as employers strive to give their employees more choices regarding their healthcare expenses going forward. An employees’ circumstances and demographics can greatly affect their desire for certain health plans, meaning that employers need to offer a diverse range in order to fulfil employee needs and sustain morale.

Despite this need for employers to offer diverse and competitive packages, they need to ensure that they can manage these costs and be able to offer these plans to employs on a long-term basis. Although more affordable options are becoming available to employers as the desire for consumer-driven healthcare increases, some companies are struggling to offer their employees such packages.

More employees are using HSAs

HSAs (health savings accounts) are being used by more employees than ever before, with usage growing by 60% among those who are eligible. The most eager group to adopt HSAs appears to be millennials, whose participation has almost doubled since 2017, highlighting exponential increasing in adoption among younger employees especially.

Reports have also shown that high-earners aren’t concerned about HDHPs with higher deductibles, as HDHPs consistently fare well among employees with high incomes. Statistics show that HDHP-enrolled people earn 7% more than those enrolled in PPO systems.

Rising premiums

Despite rising premiums, the reduced out-of-pocket risk these come with is making things much easier for employees. Although most employees are seeing their premiums go up, for example, most of these will also be subject to lower deductibles in 2018 and beyond. PPO subscribers with family coverage plans can expect a 9% decrease, while single-coverage plan holders can expect a 7% decrease.

Voluntary benefits

Many employees have needs greater than their own basic health care, and voluntary benefits can help to address this. For example, one may desire accident insurance or hospital indemnity insurance, in addition to insurance covering areas such as identity theft and pet health. Employers have offered 56% more identity theft protections in the last 2 years, while pet insurance offerings have gone up by 80% in the same timeframe.

Are you an employer or employee looking for advice as consumer-directed healthcare becomes more popular? Speak to a member of our well-informed team today!