Health, Disability, Life, Dental, Vision Insurance: paying too much?

Do you know if you are overpaying for your company sponsored Health, Dental, Life & Disability plans?

One question we frequently hear from potential clients is - "Is there is any way to tell if our sponsored group benefit plan rates are set correctly by the insurance companies?"  The answer is "yes".  And, there's also a way to find out how much profit your insurance company yields from your company premiums.

At HR Knowledge, we consistently reduce premiums of group benefit plans through our proprietary algorithm which can accurately determine the profitability of your group plans with the carriers.

Here are a couple of examples of companies we have helped:

A major health insurance company assessed that for the $3 million that Company A received in premiums, the insurance company had paid out $3.3 million in claims and associated expenses. The health insurer was requiring an annual

premium increase of $385,000. After running the plan financial data through our proprietary algorithm, we were able to leverage the results to secure a reduction off Company A’s renewal of $400,000, which actually resulted in a rate reduction for the client.

A major health insurance company received $1.9 million in premium and paid $2.275 million in claims, a loss of $375,000. They were requiring an increase from Company B of $271,000.  After running the group’s plan data through our proprietary algorithm, we discovered that the losses were not as high as the insurance company had represented.  The renewal increase was subsequently reduced to $100,000.

How we can help your company?

• We can review your benefit costs, provide a detailed analysis utilizing the proprietary algorithm to accurately determine the profitability of your group plans with the carriers.  Then we'll determine more equitable pricing of these benefits. 

• This analysis helps HR Knowledge negotiate your benefit group plan rates with compelling indisputable data, that the carrier underwriters clearly understand and adopt to ensure more AFFORDABLE pricing on your benefits

We impact 80% of the companies we analyze, yielding substantial savings on benefit plans.  To receive a no obligation quote or “second opinion” on your group benefit plans, contact HR Knowledge at 508-339-1300

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

Defined Benefit Pension Plans Are They Still Viable?

Defined Benefit Pension Plans Making a Comeback

 

Remember your father's pension plan?  Before the days of restrictive government regulation, many companies offered one basic variety of pension plans—the defined benefit plan.  With these plans, employers were responsible for pension plan contributions and employees could count on a fixed retirement income.

Enter the 1980s.  Government began to strangle defined benefit plans, while defined contribution plans, such as 401(k)’s, exploded onto the retirement benefits scene.  They were simpler to understand, slightly less expensive to administer and employee driven.  And, unlike with defined benefit plans, the onus on saving for retirement fell on employees' shoulders.  Defined benefit plans were terminated at a record pace.

Now, three factors are renewing interest in defined benefit plans: Less-than-expected retirement benefits, a higher tax rate structure and an increasingly older population.

Recent studies show that Americans, particularly higher income workers and business owners, may face a retirement income shortfall.  Higher taxes on Social Security benefits, more active retirement lifestyles (and resulting expenses) and a lack of savings discipline are a few of the factors that may contribute to this shortfall.

The latter may be exacerbated by defined contribution plans.  When employees lack the discipline to save or the savvy to make their investment choices pay, it is their retirement savings that suffer.  With 401(k) plans, the onus on saving can fall squarely on employees.  Contrast how this differs from defined benefit plans, using the help of a theoretical bucket.

With some defined contributions such as 401(k) plans, employees have individual buckets with their names on them.  Each employee contributes—or doesn't contribute—to his or her bucket and, depending on the performance of the investment, the employee takes from that individual bucket at retirement.

With defined benefit plans, everybody's share comes from the same bucket.  The plan has a built-in discipline and a benefit—typically 60 to 75 percent of the average of an employee's last three years' salary—that are dependable.  This bucket is filled as needed to cover retirement liabilities.  Defined benefit plans are fully paid by the employer.

While defined benefit plans may be attractive to employees who have a hard time saving on their own, they are also more attractive to employers these days.  First, contributions to the plan and administrative expenses are tax-deductible.  Secondly, defined benefit plans offer advantages for older owners and key employees.

Annual contributions to a defined contribution plan are limited by law to $49,000 (2011 limits).  Not so with defined benefit plans—you can pay what is needed for retirement.  For older owners and employees, this element is key because they've had less time to save than younger individuals.  This also is particularly effective for higher paid individuals, who can occupy an effective tax rate tier as high as 50 percent during their working years.  If these people expect a lower tax rate during retirement, today's tax-sheltered savings can equal added retirement dollars tomorrow.

Remember, defined benefit plans aren't for everyone.  Candidates typically are companies with owners at least in their 40s, with a good stable profit history and the capability of meeting plan contributions that can vary from year to year. Additionally, these plans' restrictions and regulations still exist.  Overfunding and termination of these plans present special challenges, but a retirement plan advisor can suggest flexible options in these instances—more flexible than you might think.

And, contrary to popular belief, defined benefit plans are not only for the largest companies.  When business owners need to contribute more to a pension than defined contribution plans allow, or they want another vehicle in which to lessen today's increased tax burden, defined benefit plans are an increasingly attractive alternative.

Bryan Nelson is the President of HR Knowledge’s Financial Services Division.  HR Knowledge has a strategic relationship with David Levine a Registered Representative and Investment Advisor Representative of Equity Services, Inc. Securities and Investment Advisory Services are offered solely by Equity Services, Inc.  Member FINRA/SIPC.

The views and information herein have been prepared independently of the presenting Representative and are for informational purposes only.

 

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

Do I Need Disability Insurance?

The Council for Disability Awareness has some very interesting results concerning employees’ beliefs and misperceptions about disability insurance. The survey highlights the difference between what employees believe about disability and how they have planned for a potential disability. The results show that although most people believe disability can happen, they do not believe it can happen to them and have not done any planning in case it does happen.

Here’s some of the major findings of the survey:

-83% of the workers surveyed believe a disability can happen to anyone, but deny it will happen to them.

-90% say they value their income, but 40% say they have not thought of how they would replace it if they were to be disabled.

-70% say disabilities that keep you out of work are caused by serious accidents, but the reality is 90% of disabilities are caused by illness.

-44% think they have a 1% chance of becoming disabled, but the reality is 30% of workers in their 20s will be disabled prior to retirement.

-70% said a disability would keep an employee out of work for more than a year, but 38% said they could only pay bills for 3 months if they lost their income.

The survey results show employees need to be better educated about the likeliness of a disability happening to them, how they can better protect themselves against losing their income and what benefits they currently have. It also shows there are plenty of opportunities for educating employees and employers on the importance of disability which will hopefully lead to new disability sales.

If you are interested in learning more about Disability Insurance please contact HR Knowledge, Inc. at Sales@hrknowledge.com or call at 508-339-1300.

 

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

Personnel Files Are You Compliant?

EMPLOYER DOCUMENTATION GUIDELINES

Employers receive, generate, and accumulate substantial volumes of documents beginning with hiring documents, including job postings, employment applications, resumes, and reference checks and once a worker is employed, personnel files, wage and hour records, payroll records, and disciplinary files. At the conclusion of employment, there may be separation documents generated as well. Part of being a successful employer is properly generating, drafting, and retaining quality professional records, before, during and after the employment relationship.

Recommended Contents of Personnel Files

A. Employment

• Resume

• Online job inquiries (i.e., through monster.com, etc.)

• Original employment application

• Education verification

• Employment verification

• Other background verification

• Rejection letter, if any

• Employment offer letter, if any

• Employment agency agreement, if hired through an agency

• Employee Handbook acknowledgment form showing receipt of Handbook

• Checklist from new employee orientation showing subjects covered

• Transfer requests

• Relocation records

 

B. Payroll

• W-4 Form

• Weekly time records, i.e. timesheets or timecards

• Individual attendance record

• Pay advance request records

• Garnishment orders and records

 

C. Training and Development

• Training history records

• Training program applications/requests

• Skills questionnaire

• Training evaluation forms

 

D. Wage/Salary Administration

• Job description form

• Payroll authorization form

• Compensation history records

• Notification of wage and or salary increase/decrease

 

E. Employee Relations

• Report of discipline/counseling session

• Commendations

• Employee written warning notices

• Employee progress reports

• Performance appraisal forms

• Performance improvement program records

 CLICK HERE FOR MORE INFO

www.hrknowledge.com

 

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.