Paid time off (PTO) policies are always a big part of the equation for individuals comparing benefits offerings across potential employers. Still, despite the need and desire for competitive PTO, 800 million days of PTO go unused by American workers every year, according to an article by Forbes. This number equals about 6.3 days of unused time off per every American with a full-time job.
Unused vacation days are not only costly for employers, but also can lead to burnout among members of the workforce. What’s worse, these problems have been exasperated by the pandemic due to work-from-home culture and a blurring of lines between work time and personal time.
In response to these trends, some companies like Goldman Sachs are issuing a mandatory PTO policy, with the hopes of curtailing burnout and encouraging more work-life balance. In this piece, we’ll dive into some of the reasons employers across the nation are weighing the pros and cons of implementing a mandatory PTO policy.
A recent study by Deloitte found that 77% of workers reported feeling burned out at their current job. What’s more, 64% said they were passionate about their jobs while admitting they were still frequently stressed out.
Burnout manifests in different ways depending on the individual, but burnout can lead to reduced production and employee engagement while simultaneously contributing to higher turnover rates. Recognizing the signs of burnout and requiring employees to take their earned vacation time forces them to unplug and take a step back from work, allowing them to recharge and be more productive upon their return.
Requiring employees to use their time off is also good for an employer's bottom line. When employees don’t have leftover PTO days at the end of the year, employers won't need to pay for that unused time or carry them over into the next year. For smaller companies where resources may be more scarce, this makes the accounting process easier to manage.
One of the reasons employees may be hesitant to take time off work is because of how they believe their coworkers will perceive them. A good work ethic is something that is universally admired, and nobody wants to be the one asking their coworkers to take on more work on their behalf.
Requiring employees to use their time off not only makes it easier for employees to feel comfortable asking for help, but also sets a precedent that time off is not only encouraged but expected as well. Some companies have even gone as far as tying in financial incentives, specifically by requiring employees to take a certain amount of time off to collect their end-of-year bonus. Changing the company culture around time off is a long-term approach, but one that could lead to a more relaxed and balanced workforce.
Lastly, having mandatory PTO will help recruit young talent. When searching for a job, research reveals that Gen Z workers heavily prioritize maintaining a work-life balance over other working generations. Attractive PTO policies, however, are of no use if a worker gets into their role and discovers that none of their peers utilize the policy. Mandatory PTO can help create a culture that prioritizes a healthy work-life balance, which could prove attractive in recruiting and retaining younger members of the workforce.
Mandatory PTO is not a necessary step for every business, especially if your culture has other measures in place to promote work-life balance. However, if you notice that your employees are hesitant to take time off, it may be time to audit your policy and gauge whether mandatory PTO could be a useful strategy.
Perhaps mandating PTO use is not the best scenario for your company–fair enough. Other ways to encourage time off could include additional all-company holidays that do not necessarily align with the federal holiday calendar. These days can set employees’ minds at ease because they won’t need to worry about getting their work covered or falling behind.
Another viable option: Offering financial incentives for employees to utilize vacation days. For instance, some companies such as PwC have implemented “summer Fridays,” so employees can start their weekends early in the warmer months.
No matter your specific solution, encouraging time off is an important strategy for HR leaders and managers to consistently promote year-round.
For more information, listen to our recent podcast episode, “Combatting Employee Stress and Financial Burnout With Voluntary Benefits,” or read our post “The Pros and Cons of the Four-Day Workweek.”
Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to check out our By the Numbers series.
Offering a comprehensive employee benefits package makes all the difference between attracting top-quality candidates and losing them to your competitors. An employee benefits package is one of the first things potential candidates will ask about during the interview process, and for some, a benefits package is more important than their salary.
For many workers, employer-provided benefits offer a sense of stability in a hectic world. Knowing that medical expenses are taken care of, a life insurance plan is set up, and a retirement savings account is growing can bring peace of mind. But, sometimes, employee benefits packages can be a bit complex and confusing. It can be hard to accurately explain all of the ins and outs of your benefits policy, so here are some tips that will help your communication be as clear and concise as possible.
Accessibility is a big hurdle to climb when it comes to your employee benefits packages. The best thing any business owner can do is to make all information easily available on a medium that your employees feel comfortable using. Since benefits can vary widely from employer to employer, it can take some time for employees to feel comfortable understanding how benefits work, so you will want to keep everything in one place for easy access.
With the wide variety of HR software available, this is much easier than you think! There are many user-friendly platforms available that keep all the information an employee would want to know in one place. For example, they can see their bank of PTO hours, access their health insurance card, and learn the specifics of disability coverage. When employees have instant access to all their important benefits information at the touch of a button, they will have a sense of control that they are at the center of their benefits program.
One of the best methods of explaining comprehensive employee benefits packages is by giving employees all the information they need as soon as they start working at your business. Any business owner needs to make sure each and every new hire is properly informed, so use new-hire orientation to your advantage and carve out time to educate new team members fully.
Be sure to provide every hire with a detailed, printed overview of every benefit offered, step-by-step instructions on how to access benefits information, and a frequently asked questions document. It is also a good idea to have one of your existing employees be your business’s benefits resource. This person can either be an HR professional or an employee who has been with the organization for a while and is available to answer any question, big or small, about anything related to benefits. When your employees are given a resource like this, they are more likely to feel comfortable and knowledgeable about their plan.
Medical benefits are usually the largest piece of the benefits puzzle, so it is always a good idea to carve out some time to go over medical benefits in extreme detail. Generally speaking, this is twice a year; once for all new-hires when they are brought on the team, and once before open enrollment starts in the fall, as this is the only time in the year any employee can change their healthcare plan. You’ll still need to communicate with your team regularly if there are any changes to your plan, but a business-wide meeting or conference is always a great idea.
Keep in mind, the spouse may be the person that is the benefits person in the employee’s home. Find a way to communicate to the spouses as well.
Health benefits can be notoriously hard for even employers to understand, so don’t hesitate in bringing in a health benefits professional to come and lead these meetings and answer questions for you. Remember, you most likely are enrolled in the plan as well and may have some questions you need to ask for yourself! That’s what professionals are for.
Sure, you’ve thoroughly explained the “what” of your benefits package. But that may not answer all of your employee’s questions, so you’ll need to emphasize why you have provided what you have. It is common for most employees to feel both uneducated and confused about why specific things are offered in your plan, so take the time to adequately explain your reasoning.
For example, if your health care offerings are changing due to updates within the Affordable Care Act, explain why. Or, if you provide specific personal days that are meant to be for mental health days instead of vacation days, say that! Not only will being overly transparent about your “why” aid in your employee’s understanding, but it will also help to show a more personal side of you and your business.
Your employees need to know that they feel trusted and valued as workers on your team. One of the best ways of showing this is to be completely open and honest about how much you are spending on their benefits packages. Most employees don’t realize how much their employer pays for their personal benefits plan, and seeing the number printed on paper will go far to add in their appreciation for both you as a boss and the benefits offered. They’ll see how much your company is investing to make them happier and healthier in their daily lives, which will work to boost morale and job satisfaction.
Who said that benefit plans have to be dreadful and boring? You can easily spice up your communications about benefits by hosting a benefits fair. This can be something simple where you decorate a conference room with detailed information about each plan, where the employees can wander in at their leisure. Add some health-specific raffles, such as gift cards to a healthy restaurant or workout equipment, to make things a bit more fun. Doing something creative like this can go far in helping the benefits feel less daunting to new employees, as well!
In addition, you may be able to schedule all the carrier representatives on site to answer questions.
With these ideas in mind, your employees will become both knowledgeable and confident in your employee benefits packages. An open line of communication with your employees is always a great idea, so use these tips and tricks to get started. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and read "How to Measure the Success of Your Employee Benefits Package" for more information on this topic.
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New research from people management platform Gusto shows that employer-sponsored 401(k) offerings dramatically increase employee retention and—even better—pay for themselves several times over in lower staff turnover.
Even more compelling, researchers found that offering a retirement plan can save small-and-medium-sized businesses (SMBs) more than $100,000 annually in reduced employee turnover costs.
The data from Gusto also revealed that retirement benefits led to better retention across all industries. In fact, employees were 40% less likely to leave during their first year if they were extended retirement benefits. In some positions, that figure jumped to 54%.
On average, employees with an active 401(k) were also 32% less likely to leave their job in any given month.
What’s more, most SBMS don’t offer retirement benefits of any kind. Overall, 22% of SMBs on Gusto’s platform extend retirement benefits. Specifically, for businesses with fewer than 10 employees, retirement plans for available to 15% of employees. However, 65% of employers with more than 100 employers were offered access to retirement benefits.
In a recent article, Luke Pardue, an economist at Gusto, explained that the time spent finding new workers can be a time-consuming and expensive endeavor for employers.
“One of the best ways a company can avoid those costs is by offering a 401(k) retirement plan for its employees,” he wrote. “Our calculations show a 401(k) plan can lead to annual cost savings of more than $100,000 in reduced employee turnover costs alone or a 2x return on the initial costs of offering a 401(k).”
For many working Americans, the importance placed on financial security has always been high; however, this sentiment was further exacerbated during the tumultuous ups and downs of the market due, in large part, to the COVID-19 pandemic.
As a result, millions of Americans chose to leave their jobs for better-paying positions with competitive benefits packages, resulting in what many refer to as the Great Resignation.
In fact, according to the Pew Research Center, in September 2022 there were two job openings for every unemployed person, and the rate at which workers were leaving jobs for more attractive positions hovered near historic records.
Additionally, it’s worth noting that more than 40 million employees currently do not have access to retirement benefits. If those workers could access a 401(k) through their employers, they’d be able to save as much as $5.7 trillion in 20 years.
Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to catch the latest episode of Mployer Advisor’s new podcast “This Week in Benefits.”
Editor's Note: This piece has been republished with the permission of The Horton Group.
During a merger or acquisition, employees may understandably feel wary about the security of their jobs, changes in management style, and cultural differences between the two merged companies. If business owners do not keep these factors in mind while preparing for the transaction and continue to neglect them during the entire process, employee productivity and morale could decrease drastically.Mismanaging talent can adversely affect a mergers and acquisition (M&A) transaction, which is why you should implement a strong talent strategy before the transaction has closed. Here are some effective ways to retain your best employees during the mergers and acquisitions process.
Many traditional retention strategies involve pay incentives, such as stay-or performance-based bonuses. However, firms are also looking for additional levers that can help bolster their retention strategy.For example, executive medical reimbursement offers programs that allow companies to reimburse their key employees tax-free for out-of-pocket medical expenses for themselves and family, which would not otherwise be covered by their base health insurance plan.Additional options include but are not limited to:
It may be a good opportunity to reevaluate your company’s benefits package. Creative benefits are an opportunity to show candidates how you can help them inside and outside the workplace. Do you offer flexible work schedules? Are there options for childcare? Are you able to offer remote working options? All of these are topics to consider.
It is important to keep employees’ needs in mind during the transaction and to update them frequently on the status of the merger or acquisition. If a certain change being implemented is going to be altered, let them know. If a timeline is going to run longer than projected, inform everyone. Keeping your employees in the loop will make them feel involved and trusted as a valuable part of the company. This also means you must be very transparent about positions that will be opening up or others that will be eliminated. It would be helpful if this information were decided and relayed before the actual merger begins, but sometimes decisions are unforeseen or must made along the way. These should be handled with tact and honesty.
Additionally, if employees are taking on extra work during the merger or have moved to a position that drastically alters their current roles and duties, ensure they are compensated fairly for the change. If employees must take on extra tasks and their increased efforts are not recognized, it could cause resentment.
It is also important to set aside time to reward and recognize employees for successfully handling changes, adapting quickly to new methods or processes, and managing new roles or duties well. Employee recognition is a great way to keep everyone encouraged and moving forward.
Stay positive and keep employees motivated when working through the merger or acquisition. There may be changes in the plan that are not ideal for your company or employees but are necessary to facilitate the merger. You should encourage employees along the way and keep reminding them of the end goal.
After the merger is complete, your most important focus will be training employees on changes to policies, processes and new systems or programs. Coordinate small group training where employees can work hands-on and receive guidance regarding any changes in workflows and processes.Employees may feel more comfortable asking questions in a smaller group setting. Any employees who need assistance above and beyond the scope of normal training can be helped on the spot. It’s also a good idea to set benchmarks to measure where you want employees to be with the training and by when. Setting goals will help employees who are struggling with or resisting the changes to stay on track.
Make sure new management is open and honest with employees after the merger–in return, employees will feel more comfortable being open and honest with management. Fostering these relationships and keeping them positive is imperative. Consider setting time aside for old and new employees to get to know each other outside of the office or during the day away from work responsibilities for a period of time—this could accelerate the time it takes for everyone to feel more comfortable around each other.A successful merger or acquisition requires planning beyond contracts and finances—business owners must remember to address the needs of their most important resource: employees. Looking for more exclusive content? Check out what's trending on the Mployer Advisor blog, and be sure to check out the Season 1 finale of Mployer Advisor's podcast "This Week in Benefits."
Business interruption insurance is a type of commercial insurance that compensates your company for any lost revenue or unexpected expenses.
Business interruption insurance generally does not cover temporary interruptions, such as power outages, or offer protection against losses unrelated to property insurance. If your company experiences an unexpected incident, like a fire, then your office could be forced to close temporarily. During these types of unforeseen closures, business interruption insurance could cover your expenses during that time.
Although your business insurance broker can discuss specific events covered by your policy, below are the different types of expenses that business interruption insurance covers in most cases.
Business interruption insurance covers all your lease and rental payments while your business cannot operate. If you are closing your business temporarily, you will still have to make rent or lease payments on the property. In most cases, business owners must pay for the equipment they don't own.
For instance, if your electronics store is damaged in a fire, you can use business interruption insurance to cover the rental payments until your shop reopens and throughout the renovation period.
Let's suppose your business can no longer make sales, serve customers, or work with clients because of damage to your property. Interruption insurance compensates your business for lost revenue, and the policy guarantees that a temporary shutdown does not turn into a permanent closure.
There are times when you could be forced to relocate your business. If any devastating or unexpected event forces you to relocate, business interruption insurance will help you bear the brunt of the moving costs. Your business could also use this money to cover the rent in a new location.
Retaining employees and covering their wages can feel impossible doing a temporary business closure business because you may have difficulty paying their wages. With business interruption insurance, you can pay your employee wages on time. Most policies offer coverage for up to a year for each employee.
An example: If a water pipe bursts in an architecture firm, it can flood the office and destroy valuable documents. Moreover, the carpeting, furnishings, and walls could be damaged. With business interruption insurance, the company can pay their employees for up to a year while the space is repaired.
Even if your business is experiencing a temporary shutdown, your company will still have to meet its annual and quarterly tax obligations.
With business interruption insurance, you will have enough funds to pay your taxes, even with no revenue.
Most business owners, especially small business owners, have loans to pay. If you are not making any substantial profits, business interruption insurance will ensure you can make your loan payments and pay down your loan.
Typically, business interruption insurance has a coverage limit, or the maximum amount allocated toward a covered claim. All financial losses that exceed your coverage limit become your responsibility. Thus, it is crucial to opt for coverage limits suitable for your business needs.
Here are a few points employers should consider when selecting business interruption coverage:
Business interruption insurance can help you pay for extra expenses and replace lost income if your business experiences an unexpected and damaging incident. This type of coverage is a crucial component of every solid business plan.
Business interruption insurance typically has a restoration period that refers to the length of time your policy can help pay for extra expenses and lost income. Ensure you read your policy documents closely and consult your broker to understand your restoration period. Generally, it takes two to three days before the restoration period kicks in, but it can also last for about a year.
The best way to get the right business interruption insurance coverage for your company is to work with an experienced commercial insurance broker, preferably one who specializes in your company’s industry.
Looking for more exclusive content? Check out the Mployer Advisor blog, and read on for what types of business insurance are required for your company.
Critical illness insurance provides a lump sum payment to policyholders who experience one of a few serious medical conditions, like a debilitating stroke or certain cancers, that are specified in the policy. These medical conditions often create significant financial burdens beyond the costs that traditional health insurance will cover. For this reason, critical illness insurance is typically complementary to traditional health insurance coverage.Imagine a scenario in which a person is diagnosed with a potentially life-threatening illness. Even with the best possible health care coverage, that person is likely to experience additional financial strains that are well outside the scope of their traditional insurance policy.
For example, time away from work may lead to reduced or eliminated income. The illness itself may render the person incapable of taking care of dependents or even themselves, thereby requiring additional childcare and other assistance. Further, perhaps the treatment for the illness is not available locally and therefore requires extended travelling and accommodation expenses.
In the above scenario, critical illness insurance may serve as a crucial stopgap that enables a person who is experiencing unfortunate and often unfamiliar circumstances to maintain some semblance of financial security and normalcy, such as looking after their household and paying rent or a mortgage despite significant time away from their job or home.
In some ways, critical illness insurance is similar to the traditional health insurance coverage that it supplements. For example, critical illness insurance policyholders will typically pay monthly premiums for coverage that extends to a finite list of conditions that are clearly outlined in the policy.
However, this is essentially where the similarities with traditional health insurance end. In fact, there are substantial differences in terms of what critical illness insurance covers as well as when and how claims are paid out.
The premiums for critical illness insurance tend to be considerably smaller than the more expensive premiums that accompany traditional health insurance.
Depending on the size of claims payment outlined in the policy, premiums for critical illness coverage may only cost 10% or less of what a policyholder's traditional health insurance coverage costs.
Of course, the cost of the monthly premium is relative to the potential maximum claims pay out, with lower premiums earning lower maximum claims payouts while higher monthly premiums lead to larger maximum claims payouts.
Critical Illness policies are more akin to term life insurance policies than traditional health insurance when it comes to the policy term. For critical illness insurance, many if not most policies will only remain active until the policyholder reaches a certain age, at which point the policy will expire. This is often 70 to 75 years old.
The list of conditions that critical illness insurance will cover is significantly smaller than the range of ailments that traditional insurance will cover, sometimes only including a handful of conditions.
Ailments and conditions that are commonly covered in critical illness insurance policies include:
Chronic conditions are typically excluded from critical illness insurance policy coverage because the continuing nature of such maladies is better served by types of insurance with other claims payout structures beyond the capped, lump-sum payout structure of critical illness policies.
Unlike traditional health insurance which typically pays out claims directly to health care providers, critical illness insurance pays out claims directly to policyholders in a lump sum once the policyholder has been diagnosed with a covered condition and has met the policy requirements.
Paying out critical illness insurance policies in lump sums allows policyholders to choose how best to allocate those financial resources to best meet their individual needs, which can include anything from paying a high deductible on their traditional insurance to taking a vacation if they deem rest and relaxation to be a prioritized step toward their recovery.
How the lump sum is spent is entirely in the policyholder’s discretion.
The amount of the lump sum can vary significantly from one policy to the next depending on the cost of the monthly premiums (higher premiums = higher lump-sum claims payouts) and the specific conditions that are covered by the policy. The size of capped payouts may range from $10k up to $100k and possibly even more in some circumstances.
There is a maximum amount for each lump-sum payout per condition that is covered under the policy. For example, assume that a given critical illness policy has a maximum payout of $30k and covers 5 conditions including strokes and coronary bypass. If a policyholder has a stroke and receives the full 30k lump sum payout, and then the same policyholder has a heart attack and needs a coronary bypass, most critical illness policies will then payout an additional 30k lump sum for the heart condition and treatment.
However, should that same policyholder then experience a second qualifying stroke or heart attack, the policy will no longer pay out a lump sum for those conditions. The policy would still pay out for the other 3 remaining conditions for which the policyholder had not yet made a claim.
Even when a patient experiences one of the handful of conditions that are covered by a critical illness insurance policy, full payment of the maximum lump sum requires that the condition in question meets a requisite degree of severity, as outlined in the policy.
For example, if cancer is covered in a critical illness policy that has a maximum lump-sum payout of $50k, that policy will likely stipulate that it will only pay out $10 to $15k if the cancer is stage 1 or stage 2, whereas stage 3 or stage 4 cancer might garner the maximum payout.
If a proportional payout is made due to the limited severity of the condition experienced by a policyholder, the policy will still pay lump sums for that same condition up to the amount of the capped maximum lump sum.
For example, assume a given policy has a $10k maximum capped lump sum for certain cancers, but will only pay out 10% of the maximum lump sum in cases where the cancer is in stage 1. In this instance, if a policyholder is diagnosed with stage 1 of a qualifying cancer, they would then be paid out $1k. However, if that same policyholder is later diagnosed with stage 4 cancer, they could then be paid out the remaining $9k to reach the amount of the maximum capped lump sum in accordance with the policy.
Even when a policyholder is diagnosed with or experiences one of the conditions explicitly covered in a critical illness insurance policy, the lump-sum payment, proportional to severity or otherwise, may not necessarily be immediately forthcoming.
For example, some critical illness insurance policies have explicit delays in payment to make sure that the policyholder survives the initial onset of the condition (i.e. stroke victims may have to wait a period of several weeks as outlined by the policy to ensure they survive their stroke before their claim will be paid out).
A 2018 article from the Society of Human Resource Management states that 25% of employers offer some form of critical illness insurance as an opt-in benefit for their employees. This was 8% higher than the number of employers that offered critical illness insurance in 2017 and 10% higher than 2014.
Given the trend, it’s likely that even more employers are offering CI benefits today.
There are many advantages to critical illness coverage, including relatively cheap premium payments for what can be a windfall of financial support when it’s needed most. Further, that financial support is flexible in terms of allowing the policyholder to focus those resources where they are most needed.
The most obvious negative aspect of critical illness coverage, however, is that the small number of conditions that a given policy will cover means that there are a wide variety of significant and sometimes catastrophic medical issues that a policyholder may experience for which their critical illness insurance policy will be of absolutely no help whatsoever.
That said, from the perspective of the employer, there is little downside to offering critical illness insurance on an opt-in, voluntary basis.
Given the relatively low premiums, these policies are typically affordable both for the employer (in the somewhat rare event that employers are making contributions) and for the employees, even if they’re paying their own premiums entirely out-of-pocket.
To get critical illness insurance, you should start by talking to your insurance broker. Ask them the questions above to ensure you receive the policy that best fits your specific needs.
If you don’t have a broker already or need a broker who has experience and expertise with critical illness insurance, Mployer Advisor can help. We make it easy to find and compare top-rated insurance brokers in your area.
Search for brokers with critical illness insurance expertise near you, and see reviews, ratings and more to help you find the best fit. Start your search now on Mployer Advisor.Find Insurance Brokers Near You
At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.
The past year has made many businesses worry that they will become the next to be impacted by bouts of civil unrest, riots or looting. You might be wondering if insurance will cover the damages that could occur at your properties.
Fortunately, most standard commercial insurance policies cover the cost of damage associated with riots and looting. Property damage caused by civil commotion and vandalism is generally covered under many business insurance policies.
This would include damage caused by rioters as well as business interruption caused by police and civil authorities during such an incident. Of course, coverage varies depending on your policies and your carrier.
In this post, we discuss which businesses need coverage for civil disorders and which types of business insurance cover riots and looting.
The limitations of insurance and the process of reestablishing operations became major hardships for many brick-and-mortar businesses in 2020. Civil disturbances can pose significant risks for many companies, but business owners can protect their assets with the right insurance coverage.
Businesses with property in urban areas are especially susceptible to losses due to riots, civil unrest or vandalism. A small business in an area that has seen rioting and looting faces not only rebuilding costs, but also a wait for customers to return.
Restaurants, too, could have specific risks inherent to their business property that require them to purchase individual coverages for riots and looting. Some policies cover inventory separately, and some businesses like jewelers or art galleries carry specialty policies that have specific limitations.
Small businesses need coverage for civil disorders when there is a potential for rioters or vandals to cause physical damage to your building or property. People may break into your location and loot property, including your inventory or merchandise. You may lose income if people damage your property and you cannot operate regularly until repairs are finished. You lose income if a civil authority closes access to the area where you do business.
Luckily, if your business is damaged from arson, violence, vandalism or burglary, a standard commercial insurance policy will help cover the costs. Which damages an insurer will cover – and how much of it – depends on your insurance plan and your management of claims.
The best way to prepare is to contact your broker, agent or insurance provider to understand exactly what your policy covers if your business suffers due to riots and looting. Make sure to ask for specific details, including the type of damages covered, how much you would be compensated, and how to file a claim properly if this occurs.
Businesses most commonly have general liability insurance, property insurance, and workers’ compensation insurance. Most of these standard business insurance policies will cover damages in the event of riots and looting. But different types of insurance and policies may protect you in different ways.
Here are some tips on how to use coverage and file claims for damages related to civil unrest, riots and looting:
After speaking with your broker or carrier and finding out what your policies cover, you may want to pick up additional commercial coverage that protects your business and your employees. Every business should find a reputable broker or agent that specializes in commercial insurance to find out which policies best protect you in the unfortunate event of civil commotion, riots and looting.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and learn more about insurance brokers here.
With over 50 years of experience, Omaha-based consultant Marty Traynor is an expert in the world of insurance and employee benefits. Recently, he interviewed other industry experts to get their perspectives on everything from the insurance world to corporate leadership and beyond.
During the interview, Traynor spoke with Kari Beam, a Certified Executive Coach and the Founder of Kari Beam Coaching, about her recent career transition and knowledge of the healthcare industry. For the past 15 years, Beam worked in healthcare leadership, including as a Chief Strategy Officer for Bon Secours Mercy Health and for over a decade at HCA, before starting her own firm in 2022.
Beam shared her thoughts on pandemic-induced stress being felt by the healthcare industry and the future of the healthcare system. She also offered some advice for those looking to start out in the healthcare industry.
Beam also discusses her new role as an Executive Coach. She advises those looking to make a similar change to take some time to really get to know themselves before committing to a new direction.
For more advice and insights, watch the video below for the full conversation. Also, be sure to watch Mployer Advisor’s compelling, on-demand webinar co-presented by Beam– titled “Tips for Managing a Hybrid Workforce and Redefining Company Culture”–or read the recap here.
Stay tuned for future “A Conversation With” interviews led by Traynor.
Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, including our recent webinar recaps and show notes from Mployer Advisor’s new podcast “This Week in Benefits.”
It’s almost that time of year again. With the 2022 open enrollment season rapidly approaching, there are several worthwhile questions that you should ponder in the coming weeks. How happy are you with your current broker? How have they best served you over the past year? Were there times when their offerings or communication felt less than satisfactory?
Whether or not you’ll be shopping for a new broker to expand upon or better your company’s benefits offerings, what’s most important when researching and auditing your current plan is weighing your employees’ needs. Do your research when building your candidate pool, and consider multiple brokers to represent your company before making a final decision. Remember to start the RFP process as far in advance as possible, too. It takes time and no small amount of effort to decide on a broker who will give you the day-to-day service and value that your employees need and deserve. Not sure what other questions to consider? Here are four to get you started:
Most employees thrive in a flexible work environment, and the same thing goes for creating a benefits package. Your employees need to see that their needs are important, which is why conducting a company wide survey and soliciting feedback will increase satisfaction in whichever plan that you choose. When choosing a plan, it’s also important not to take a one-size-fits-all approach in today’s diverse workforce environment. A good broker will have the knowledge on how to use your new plan to your advantage by keeping current employees around for longer while also attracting new talent.
A broker’s job goes far beyond simply discussing and running through your benefits plan. They should be communication experts, who possess the skills and expertise on how to address, cover and inform your employees on the best ways to approach open enrollment. In fact, nearly one-third of employees either know nothing about or don’t understand their healthcare coverage. Addressing the topic of education and transparency immediately in your broker selection is crucial to overall employee satisfaction and happiness.
When shopping for a new insurance broker, it’s important that a broker possess the expertise and knowledge regarding the rules and regulations that come with the ever-changing policies and industry. Your broker can give you the tools and resources to stay on top of this information in the time-sensitive manner you require.
Not only should brokers be experts in the insurance they’re providing you, but they should also be experts in your company as well. Your broker should have a genuine curiosity and want to dive deeper into your company’s mission, industry and demographics. From there, your broker should deliver customized information on why those solutions make the most sense for your business. And, above all, find a broker that offers you complete transparency to solidify your trust.
Technology is constantly changing and your broker needs to be changing with it to provide an easy and interactive solution for your employees to easily select their benefits plan. Although there has been an accelerated shift in transitioning to digital-first solutions, many brokers still fall short in this area. In the end, you’ll thank yourself for selecting a broker who provides you with a seamless digital experience and an efficient time-saving journey. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and see what to expect from your insurance broker here.
For employers looking at insurance options, cost can be a major factor in your decision. For some required types of insurance, like disability, you might wonder how much these policies cost employers.
The cost of disability insurance for employers depends on the type of business, amount of employees, age, gender mix, percent of coverage, maximums, elimination periods, coverage definitions and limits, and location
Disability insurance will provide your employees income security when needed.
In this post, we discuss what disability insurance covers, the cost of disability insurance for employers, and how to find the best plan for your company.
Disability insurance is a type of employee benefit that pays income if employees cannot work due to a non-work-related accident or illness. The insurance is needed more than you might think: About a quarter of 20-year-olds will become disabled before they retire, according to the U.S. Social Security Administration.
Disability insurance covers a large portion of a worker’s income when they lose their ability to work due to an illness or injury not resulting from their job. It generally replaces 60% of a policyholder's annual income up until retirement age – typically 65 years old.
In many cases, you may be required to purchase certain types of disability insurance when you have employees. U.S. government regulations generally require companies with employees to have a minimum of workers’ compensation, disability and unemployment insurance. Some states can require additional insurance, depending on your business and how hazardous it is.
Your business is explicitly required to carry short-term disability insurance for employees if you operate in a state where this coverage is mandatory. States currently mandating commercial disability insurance include California, Hawaii, New Jersey, New York and Rhode Island.
Otherwise, insurance requirements vary by state, so visit your state’s official commerce website and speak with an insurance broker to find out exactly what your business needs.
Offering this benefit is crucial to many employees, because rates for group plans are almost always less expensive than rates for individual coverage. Since your company is buying for many people on a consistent basis, the premium typically is much lower than individuals can get on their own. This is typical of any group policy versus an individual policy.
In short, almost every business needs group disability insurance to safeguard its employees in the event of serious injury or illness. The coverage also alleviates the company from determining when to pay and how long to pay a disabled employee and the liabilities therein. It transfers that to the insurance carrier.
There are two types of disability insurance: short-term and long-term.
Short-term disability insurance covers a portion of an employee’s salary for a short period of time. The length of time varies from policy to policy, but typically covers three to six months after the incident that qualified them as disabled. Long-term disability insurance, meanwhile, is used when the policyholder is disabled to where they are unable to work for more than six months.
Importantly, disability Insurance does not cover work-related injuries. Workers’ compensation insurance is used instead for accidents occurring on the job or work-related illnesses.
Disabilities from sickness and illness triggering coverage generally include chronic conditions like cancer, heart disease and back problems, along with off-the job injuries and, sometimes, pregnancy. Pregnancy coverage is an important benefit if your business expects to offer paid maternity benefits, as short-term disability partially compensates leaves of absence due to childbirth.
If your business offers or plans to offer disability insurance, you should familiarize yourself with the Employee Retirement Income Security Act (ERISA). These federal regulations, along with state guidelines, dictate how disability claims are made and what standards your group insurance policy must meet.
The cost of premiums for this type of coverage will vary for every organization and every insurance carrier. Researching coverage terms and prices, along with speaking to the right insurance experts, will tell you what makes the most sense for your business and lead to the best coverage.
The disability insurance policies you can choose and how much you pay for them vary depending on your business’s industry, among other factors. Costs for coverage are affected by the perceived risk of employees in your industry and the stability of the workforce.
According to the Bureau of Labor Statistics, short and long-term insurance plans generally cost $0.15 per employee, per hour worked on average. This works out to a premium cost between 1% and 3% of an employee’s total compensation. Monthly premiums – how much you and/or employees pay for the policy – range from about $25 to $600, but this varies depending on many factors.
To determine pricing and coverage limits for these policies, disability insurance providers group jobs into specific occupational classes taking into account the hazards of the job and typical risk profile. Much of this figure is based on the historical claim experience associated with certain professions. However, the size of your business generally will not change the cost of disability insurance for employers. All else equal, a small business owner is often subject to the same rate as a large enterprise. The rate is made up of many factors that include loads and discounts.
Of course, employers take many different approaches to benefits and the insurance policies dictating them. Some businesses cover disability insurance premiums in full, while others ask employees to contribute a small portion to participate.
Contributions that an employer makes or the employee make have tax consequences to the benefit. This is best reviewed by a professional insurance broker, agent or advisor.
The cost of short-term disability premiums are similar to, but generally more expensive, than long-term premiums. Employers are not legally required to offer long-term disability coverage, but many mid-sized and large corporations offer it to workers as a benefit.
There is no limit to how many employees your business can offer disability insurance, and much of the workforce sees it as an essential benefit. Having coverage will not alleviate the risks your employees face outside of work, but it will protect them financially when tragedy strikes.
Insurance brokers and benefits brokers can research coverage options, conditions, limits and costs across multiple insurance companies, and recommend policies that best fit your needs. They can eliminate your need to learn about the intricate details of disability insurance requirements, making it easier to choose the insurance that will provide your employees security and fit your budget.
To decide which insurance you need and find the best disability insurance plan for your company, consider using an insurance broker who knows what you need and can get you the best rates. Start your broker search at Mployer Advisor, a free broker marketplace that allows employers to compare brokers, consultants, and advisors in one place.
Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to catch the latest episode of This Week in Benefits.
For most insurance and employee benefits needs, employers must carefully weigh the value of their plan against the needs of their workforce. To do so, employers must turn to an insurance broker for guidance. So, how do you pay an insurance broker for their services, and how much do they make?
In most cases, you do not directly pay an insurance broker. Brokers are typically paid commissions by the insurer based on your policy, and the commission is included as a retention item in your premium cost. This is the case with fully insured coverages.
For any employer needing guidance to select insurance options for your employees, you should know how brokers are compensated for their services. This involves understanding commissions and fees.
In this post, we explain how an insurance broker is paid, differences in fees between brokers and consultants, and what to expect when you hire one.
Before you select an insurance broker, you should know how they are paid. Typically, brokers provide policy information, quotes and enrollment/renewal assistance at no direct billable fee to you.
Insurance brokers are typically paid through commissions based on insurance policies sold.
Commissions are typically based on a percentage of your premium payment. These may include base commissions and supplemental (or contingent) commissions.
Commissions usually fall between 7% and 15%, but can vary depending upon the type of coverage and complexity of your policy. Usually, brokers receive level commissions or graded commissions based on premium thresholds. In addition, they may receive an override commission for a block of business with a particular carrier. This override will typically also include a small percentage for persistency. The higher the persistency with that carrier, the higher the percentage.
Some brokers are paid solely through commissions for policy purchases and renewals, but some include other fees for additional services, such as voluntary benefits enrollment.
Sometimes, brokers will also charge fees as they take on consultant (or advisor) roles, providing ongoing services to help determine if policies should change, assist you with compliance, and help submit claims and receive benefits.
As brokers take on more consulting and advising responsibilities, fee-based broker compensation has become a more common payment method. Usually called a “fee for service agreement,” these fees are paid by insurance companies or may be directly billed to the client.
Even with commissions and fees a broker can add value and be lower cost than not utilizing a broker.
Independent insurance agents work with (and are paid by) multiple insurers, with contracts limiting them to sell certain policies. Brokers and consultants (also called advisors), meanwhile, are not limited to certain policies and can solicit price quotes from multiple insurers.
Insurance brokers and insurance consultants perform similar functions, are licensed, and have a fiduciary duty to you as the insurance buyer. But there are some differences between the two.
The main differences between an insurance broker and a consultant/advisor are their fee structures and how involved they are with a client beyond insurance purchases and renewals.
Traditionally, an insurance consultant works on a fee for service, and an insurance broker works for commission based on the policy’s premium. Consultants usually charge fees instead of, or in addition to, a commission that’s included in your premium payment. This is in the form of direct invoice of billable hours or a direct offset billable hours with commissions received.
As opposed to brokers, consultants often forgo commissions from the insurance company, which means they must charge a consultant’s fee. Unless of course, the client prefers them to receive commissions and offset their billable hours or fees in that way.
It all depends on your state, your size, and what type of insurance you need, but average consulting fees are 15% of the policy premium. The higher the premium, the lower the percentage.
Many modern insurance brokers’ services have evolved, and work more like consultants/advisors, working with you throughout the year and not just when you need to spend money on insurance. You should know what services your broker or consultant provides, if they charge fees, and what those fees are, before allowing them to search for insurance policies on your behalf.
Thus, the difference isn’t always straight forward. It is always in your best interest to define the relationship and expectations of the services expected.
With a broker, you get industry knowledge and experience. They understand the language of the insurance industry, and are best equipped to negotiate and service your needs with insurers.
As your business grows and changes, you should expect your insurance broker to provide decision support. To earn their payment, brokers and consultants should be involved in your plan several times per year, helping make decisions that complement your overall business objectives.
When evaluating insurance brokers, be sure to explore online ratings and benchmarking studies that show who is in your market.
The best way to find good insurance and benefits is through a broker, consultant, or advisor who knows the industry, has the partnerships, knows your needs and can deliver on the procurement process.
But, how do you know who to hire? With seemingly endless options, you feel under pressure to choose the right one. We believe that transparency, information, and choice leads to better hiring decisions.
It's why we created Mployer Advisor, a free broker marketplace that allows employers to compare brokers, consultants, and advisors in one place.
To get started, get matched with a short-list of qualified brokers.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, or read "Can an Insurance Broker Save My Company Money?" for more information on this topic.
The type, depth, and breadth of analytics that clients can expect to receive back from their insurance broker and insurance provider (in addition rate adjustments explanations, etc.) depends largely on the size of the client’s company, whether the client is fully insured or partially self-insured, the policies of the involved provider, and market trends. Depending on your relationship and structure, this can be frustrating for a number of senior executives.
Analytics clearly play a crucial role in the insurance business, from actuarial tables to market trends that can lead to rate adjustments for existing policies, but what analytics can you as a client reasonably expect to be made available to you?
As with most aspects of commercial insurance and even individual insurance, the answer to this question largely depends on a number of factors that can yield greatly varying results.
In the insurance industry, analytics play a role of utmost importance in determining how rates are set and how they are adjusted over time as more information is gathered about the insurance needs and usage or individual companies, as well as developing trends of the markets as a whole.
One of the most significant and beneficial functions of a good insurance broker is using the available data and analytics in annual negotiations with the insurance carrier in order to keep rates increases lower (or bring them down) for you, the client.
There are 3 main factors that will determine whether or not you, as a client, will be privy to the analytics that are used to set and adjust your insurance rates, and what level of access you may be able to reasonably expect.
Additionally, it’s important to be aware of the distinction between the raw numbers upon which the analytics are based vs. the process through which those analytics are computed, both of which may allow for different levels of access.
As with almost all aspects of acquiring or changing commercial insurance, the best time to address issues of analytics and data sharing is as early as possible in the process of vetting potential carriers and business insurance brokers.
Whether or not you will be able to access the data relevant to your company and the methods by which that data will be used to set and adjust your rates (and whether or not such access is important to you) are decisions that need to be made on a case-by-case basis. These decisions are typically made in conjunction with a trusted advisor or broker who can take into account the specific needs of your company.
For help finding such a broker, advisor or employee benefits consultant to assist in evaluating your company’s needs, search Mployer Advisor. Our database shows ratings, areas of expertise, employer reviews and more, making it easy for you to search for and compare top-rated brokers in your area.
Mployer Advisor's goal is to add transparency to the insurance brokerage industry and highlight top performers to ultimately benefit you, the employer, and your employees.Search Top-Rated Brokers Near You
At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.
Do you question whether you are getting the most value from your insurance broker? Are you doing everything possible to keep costs down and or feel that your benefit package is a commodity and not necessarily an employee retention tool?
Are you starting from scratch and need a new insurance broker?
The best first step is an insurance broker Request For Proposal, or RFP.
The first step when seeking health insurance for your company or commercial insurance coverage for your business whether you’re purchasing coverage for the first time or whether you’re considering changing policies, brokers, or carriers – usually starts with sending out RFPs to several insurance brokers and/or brokerage firms.
As the name implies, RFPs are simply requests made on behalf of the company which are typically sent to multiple brokerage firms in order to begin the process of vetting potential brokers with which the company may be interested in working.
While RFPs are in many ways synonymous with getting ‘quoted a price,’ these proposals often include additional information beyond merely the cost of services and coverage, which can be greatly beneficial in determining the range of services offered as well as the benefits (and potential detriments) of working with the particular brokerage firm providing each proposal.
Of course, in order to send out these RFPs, a company must first have identified potential brokers that they believe may be a good fit for assisting in their insurance coverage acquisition process and from which they attain more information.
Learn what makes a good insurance broker and see how to identify ones best suited to the needs of your business.
The short answer to this question is that RFPs should be sent out anytime your business is considering new or different commercial insurance coverage, but there are a number of other considerations that should be taken into account as well as potential events that may serve as good catalysts to trigger the need for change in an insurance broker and the accompanying issuance of new RFPs.
With all these considerations in mind, it’s also important to note that aside from the potential inefficiencies involved with the time and resources required to do so, there is no bad reason to reevaluate your insurance coverage and business insurance broker. The desire to refresh a policy that may feel otherwise stale or outdated is more than enough reason to look into making a change. Such decisions should always be made on a case-by-case basis and with the needs and context of your individual company in mind at the forefront.
Because RFPs are non-committal, there is theoretically no cap on the number of RFPs that a given company could issue, but there are practical limitations and efficiency considerations that should be accounted for when deciding how many proposals are requested.
A good analogy might be requesting quotes from multiple contractors for the construction of a new warehouse. In such a scenario, your company could (in principle) request as many quotes as there are contractors, but of course that would be a ridiculous and excessive time-wasting exercise in practice. Instead, you would be wise to narrow your search at the outset based on which factors are most important to your business, including local proximity, specific expertise (i.e. warehouse construction experience), recommendations/reputation, or any other factors you may wish to weigh in order to set the parameters of your search criteria as narrowly as desired before requesting quotes from the contractors deemed most likely not to waste your time.
The process of pre-vetting potential brokers in advance of sending out RFPs is an equally valuable preliminary step that can optimize the scope of your company’s search as well as allocating your time, energy, and resources more efficiently and effectively. To identify and locate a group of strong brokerage candidates in the pre-vetting phase of this process prior to sending out formal RFPs, search Mployer Advisor today.
At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.
Insurance brokers are valuable assets. Whether you’re a small business owner or a benefits manager at a large company, brokers can help make your insurance shopping experience simpler and, in many cases, more affordable. By acting as an intermediary between consumers and insurance carriers, they provide industry knowledge and expertise to ensure their clients are getting the right coverage at the right cost.
Insurance brokers differ from insurance agents in that they represent the client, not the insurance company. Because they aren’t incentivized by a specific insurance carrier or carriers, they’re able to keep the interests of their client and their client’s business at the forefront of the insurance shopping experience. This focus often results in a more positive outcome, with the client’s coverage needs being achieved in full and on budget. Let’s examine the three most important responsibilities insurance brokers should fulfill.
At the very least, every company should have property, interruption, and liability insurance; because all businesses are different. However, the specific circumstances of each one -- such as what services or products they provide, whether or not they possess a fleet, and whether or not they handle sensitive information -- must be taken into account. In these cases, additional coverage, such as cyber insurance, commercial auto insurance, and data breach insurance needs to be purchased. This is true whether you’re a small business owner with six employees trying to expand, a large corporation with significant assets, or a medium-sized company trying to maximize revenue.
At the same time, brokers should be actively listening to the concerns of their clients; it’s important that clients feel their needs are being addressed and appreciated. For example, if a business owner in Kansas is particularly worried about tornadoes damaging their office building, a great broker will spend extra time finding the right coverage to soothe those concerns.
Compared to the average individual looking for health or life insurance, businesses require more attention, care, and knowledge when it comes to finding coverage. The greater financial risks translate to more intensive and encompassing insurance packages that can be increasingly difficult to understand for a typical business owner or benefits manager, especially if they’re trying to go it on their own. The industry experience possessed by insurance brokers is especially beneficial when it comes to communicating directly with potential insurers; they should explain complex lingo, help with filling out any necessary forms, and negotiate final deals. Ultimately, this provides comfort and security for those unsure of what coverage they need and why.
Insurance brokers are uniquely equipped to sift through the mountain of different insurance options to ensure their clients and their client’s business are protected. Their experience and in-depth knowledge of current policies and trends allow them to hand-pick the most ideal plans depending on client interests and concerns. Great brokers will always be paying attention to industry changes and policies in order to provide the most up-to-date information. This means that clients from all experience levels and backgrounds can rest assured that they’ve made the right choice for their business.
Unfortunately, every industry has its bad eggs. Insurance brokers aren’t immune to selfish, unprofessional individuals that are more interested in turning a profit than looking out for the needs of their clients. If your broker is displaying any of the following four behaviors, you may want to start searching for a new one.
Brokers are supposed to make the insurance buying experience easier and more transparent. If yours is concealing information, ignoring your questions, or forcing you to go on the faith they aren’t doing their job; even worse, they may be stealing from you.
Luckily, business owners, benefits managers, and other professionals who feel they’ve been wronged, or believe they are currently being wronged, by their brokers aren’t helpless. Depending on the damage that’s been done -- which can range from mishandled claims to overt theft --, you have two main options beyond simply firing them: file a claim against the broker or file a lawsuit. The legalities surrounding suing your insurance broker vary by state; it’s wise to consult with a lawyer on whether or not a lawsuit is even possible based on your circumstances, let alone practical.
When filing a claim, you’ll need to contact your state’s department of insurance and may need to fill out a few forms. Focus on the professional details; list all events and contacts in chronological order, including any interactions you’ve had with the broker, police, insurance company, and others that are relevant to the case. Attach any necessary documents (for example, health records if the mismanaged claim was related to health coverage) and photocopy all your documents for safekeeping. Following up on the status of the claim after two weeks will ensure it gets handled.
The best insurance brokers are knowledgeable, trustworthy, experienced, accessible, and transparent. Remember, insurance brokers work for you; if they aren’t satisfying the above responsibilities or you suspect something underhanded may be going on, you’re well within your right to end the relationship and take action.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and check out this article if you are considering changing your broker.
There are more than 32.5 million businesses in the United States, operating in industries as vast as healthcare and manufacturing and as far-reaching as technology. Though the size and specifics of these businesses can vary immensely, all U.S. companies are legally required to obtain certain forms of insurance, namely employer-provided health insurance, worker’s compensation insurance, and unemployment insurance. These mandated types of insurance offer protection for employees against a myriad of risks and circumstances.
As a result of their mandated status, businesses can face serious consequences if they don’t provide sufficient coverage for their employees. Let’s take a look at each option to learn about what could potentially happen if a business doesn’t have insurance.
The Affordable Care Act (ACA), more commonly known as Obamacare, plays a vital role in today’s world, especially when one considers the impact of COVID-19. It was designed to achieve three main goals: make affordable health insurance available to more people, expand the Medicaid program’s coverage, and support innovative medical care delivery methods in an attempt to lower overall health care costs. Employer-sponsored health insurance is an essential part of the first goal; it applies to companies with 50 or more full-time employees and/or full-time equivalents (FTEs).
Employer-provided health insurance must meet two fundamental requirements: it must provide “affordable” coverage and “minimum value”. Affordable coverage is calculated by looking at an employee’s contributions compared to their household income; if the contributions exceed a certain percentage of their income (9.78% in 2020 and 9.83% in 2021), the coverage is not considered affordable. A plan that provides minimum value must pay at least 60% of the cost of covered services, such as deductibles, copays, and coinsurance. This affordable, minimum value coverage must also apply to any dependents the employee has up to the age of 26.
If an employer does not offer any health insurance despite having 50 or more employees or does not offer at least one medical plan option that provides “affordable,” “minimum value” coverage, the business will incur the following penalties.
Depending on the size of the business, these penalties can add up to a considerable cost very quickly.
With the exception of Texas, workers' compensation insurance is legally required for businesses throughout the United States, although the threshold varies by state. For example, California requires workers’ comp insurance as soon as the first employee is hired, while Florida doesn’t require it until four or more employees have been brought on board. It was designed to provide wage replacement benefits, medical treatments, vocational rehabilitation, and various other benefits to employees who have been injured at work or have acquired an occupational disease.
Because the law isn’t federally mandated, each state is allowed to set its own base requirements. This varies primarily depending on industry and employee numbers, meaning that business owners should take the time to check their local laws if they want to protect themselves from the penalties.
Failing to provide adequate workers’ compensation insurance for your employees can result in significant ramifications, including jail time. These also vary by state, so let’s take a look at a few examples.
While fines alone can do a lot of damage to a business, imprisonment can sink it entirely.
Unemployment insurance programs exist in all 50 states on both a federal and state level, serving to provide financial assistance to unemployed individuals who meet the following criteria: they are unemployed through no fault of their own, e.g., work simply isn’t available; they worked during a specified period, usually up to 18 months; they earned a minimum amount of wages as determined by each state, and they are actively seeking work each week they’re collecting benefits.
When an individual is approved for unemployment compensation, the money they receive comes from payroll taxes their company has paid to the government.
The Federal Unemployment Tax Act (FUTA) is an employer-only tax that costs 6% on the first $7,000 each employee earns per calendar year; this means the maximum amount a business will have to pay per employee is $420 per year. The State Unemployment Tax Act (SUTA) varies due to the fact that states are allowed to determine their own wage base and tax rates. Compliance with these acts results in a 5.4% tax credit, bringing down the FUTA tax rate to a much more affordable 0.6%.
Failing to pay unemployment taxes can result in penalties that are usually financial, including punitive fees or interest assessed on the money owed that was not paid. Fortunately, these penalties never extend to the company’s employees that are seeking unemployment support.
There are certain types of insurance that companies are simply required to pay into. While the details may vary from state to state, the consequences can be utterly ruinous. If a company is looking to save money, skimping on health insurance, workers’ compensation insurance, and unemployment insurance is the wrong way to do it; with penalties that can lead to bankruptcy and even imprisonment, it just isn’t worth the risk.
Want to read further? Read up on everything you need to know about compensation and employee benefits packages.
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