End of Year ViewPoints
November 21, 2013
Year End Assessments
The end of the year is a perfect time to review and assess your employee benefits plan. Even those that find themselves in the middle of a plan year can benefit from a review.
Those that are at the end of their plan year have already made decisions for the next year, but you should use this time to assess what is working and what could be better. Those in the middle of the plan year still have time to finalize goals and changes for the next plan year.
What end of year questions should you ask?
– Are the benefits we offer meeting the needs of our employees?
– Is the benefit package fitting within our organization’s financial expectations?
– How can we increase participation in under-utilized benefits?
– Are they other tools or options that can help our organization improve results?
Stacy, Renee, and Victoria
With the new health care regulations, some employers have asked themselves if they need to reinforce their compliance efforts through the use of compliance services or hiring additional staff. There is no doubt that we operate in a more regulated environment. Employee benefits now face even greater compliance attention with the Affordable Care Act and supporting regulation and reporting requirements.
Industry groups and private firms offer many services to support compliance. Be mindful of the financial incentive various presenters may have as you attend seminars and read marketing materials. Some sources are communicating concerns an urgency that may be exaggerated in order to promote and sell their products. These products are not targeted to a particular client or industry and may not apply to your specific situation.
Before investing in additional compliance solutions, take a careful of assessment of the current resources and support that are already available to your organization. Review your current consultant agreements and resources to determine if you are utilizing all the support they offer. Simply accessing what is already available to you may fill your compliance gaps. If the services you are already paying for are not providing needed information, consider a targeted resource to fill that gap.
You will also want to review the various publications and newsletters that come your way. Many provide sound, but duplicate information. Unsubscribe from duplicate information when no compliance gap exists.
Clients of Perspective can be assured that our services include comprehensive compliance support for their employee benefits program. It is our job to ensure you meet regulatory standards and we take that commitment seriously. We provide:
– Legislative guidance, including notification and education about federal and state regulatory changes
– Interpretation of new regulations
– Assistance with the completion and filing of forms
– Annual review of compliance status
– Assess impacts to your specific plan
– Provide options and recommendations for compliance
Our support includes on-site meetings with your team and Perspective staff dedicated to your compliance needs.
On October 31st the Department of the Treasury and the IRS announced changes to the FSA “use-it or lose-it” provision. This longstanding provision required participants forfeit unused FSA dollars at the end of the plan year. The new guidance allows plan sponsors to create a carryover provision. This provision allows participants to carryover up to $500 of unused FSA funds to be reimbursed at any time during the next plan year.
The goal with this change is to make the FSA more user-friendly and encourage enrollment by those who did not previously participate due to concerns about losing some of their FSA dollars. This action is in direct response to public feedback about this provision and the difficulty individuals have predicting future health care costs.
Some key points of the guidance:
– FSA plans cannot have both a grace period and the carryover options. Plan sponsors must elect one of the two options or they can choose not to implement either option.
– The plan may specify a rollover amount lower than $500.
– Carryover amounts do not impact the salary reduction limits for the following plan year; however, unused amounts over $500 (or lesser plan-specified amount) are forfeited.
– To implement the carryover provision, plan documents must be amended.
– Plan documents must be amended by the last day of the plan year from which funds may be carried over.
– Carryover provisions dictate that new plan year dollars are used first, followed by carryover funds from the previous plan year.
Prior to plan modification, you will want to consider your overall FSA plan goals as well as factors such as projected costs and employee communication needs.
Perspective recommends groups avoid the cost of a plan amendment and budget differences by not making mid-year changes. Take the time to consider your approach during renewal planning. This will also allow proper time for accurate budget projections and to create an employee communication plan.
Most Offered Employee Benefits
In July of 2012, the U.S Bureau of Labor Statistics and the Department of Labor released an employee benefits report. Findings include:
– Paid leave is the most common employee benefit with 77% of employees receiving this benefit.
– Medical coverage was available to 70% of workers with only 51% of employees electing to participate.
– 57% of workers were offered life insurance.
VIEW IS A MATTER OF PERSPECTIVE
At Perspective, we give you a broader view of employee benefits – a new perspective based on independence, insight, and initiative.