3 Things Your Insurance Broker Should Do To Provide Better Employee Benefits

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Texas is a state where there is a lot of competition to find good employees. During June of 2019, the unemployment rate dropped to 3.5%, below the national unemployment rate of 3.8% (according to the U.S. Bureau of Labor Statistics). This means that to attract and retain top employees, you need an insurance broker that provides you with careful guidance and exceptional employee benefits administration. 

In this article, we will share with you 3 things that your insurance broker should be doing to help you maximize the benefits you are offering to your employees. 

As one of the largest group and individual benefit agencies in the United States, we are in a great position to share valuable insights and benchmarks when talking about employee benefits.

We will cover:

  • Strategic Benefit Planning

  • Effective Benefit Plan Communication

  • Employee Benefit Plan Audits


Why You Should Conduct Strategic Benefit Planning


The way you design and deploy your employee benefits packages will have an impact on your bottom line as well as in the long-term sustainability of your business. 

There may be times when it might make sense to cut some benefits to maximize your bottom line, however, this proves to have negative consequences in the long-term. 

A strategic benefit plan takes into consideration goals, action plans, and contingencies so that you can be proactive when the economic environment changes. Doing so will allow you to follow a deliberate road map instead of being reactive and making changes every year. 

Employees worry about their benefits and compensation almost as much as they worry about job security.  This is why it is so important to be proactive and not react to economic downturns with a cut in their benefits package. 

Studies have shown that employee morale is linked to the quality of the employee benefits package they receive. For this reason, reassuring employees that they will continue to receive benefits is key for the growth and sustainability of your business.

Also, a strategic benefit plan must include an effective communication strategy that will keep employees informed about the current and future status of their benefits package. 

Maybe we can add a button to “receive communication” or something like that


How To Execute An Effective Benefit Plan Communication Strategy


Any business that wants to maximize the investment made on employee benefits must make sure their employees are understanding and utilizing their benefits. In order to do so, businesses must provide sufficient, informative resources to guarantee a successful communication effort. 

Managers are usually the best candidates for these communication efforts, as they are more likely to have a better understanding of the content needed to simplify the information. It is important to create opportunities where employees can ask questions, express ideas, and talk about concerns regarding their benefits packages.

This should be done with a proactive process in place to avoid confusion. Below are some tips you might find helpful:

Avoiding Confusion Related to Employee Benefit Packages

The communication of inaccurate information can cause employee relation problems, as well as the possibility of litigation. In order to mitigate the risk, you should:

  • Consider designating specific Human Resources (HR) personnel as the point of contact for benefits information

  • Remind managers to review the plan documents and refer to the HR department (or the leader in charge if there is no HR department) if they need assistance in answering certain questions.

  • In all plan documents it must be stated that for any amendment to be made, there must be written approval by the plan administrator (when applicable)


Be Careful With Written Communications Related to Employee Benefit Packages

Informal written commitments can prevail in court. This is why you must be careful with ALL written material regarding benefits, even if it’s not an official plan document. 

Most likely, your employees will utilize summary plan descriptions to determine how to use their benefits. If there are any discrepancies within the full plan and/or the summary, the summary can prevail in court. 

This is why it is crucial to have a quality process in place to review ALL of your benefit plan written materials. 

Consider including a statement in the summary plan description as a safety measure, mentioning that the plan document has absolute authority over the summary plan. It is recommended to have this information in a separate paragraph, using large, italic, or boldface type. 

Other valuable measures:

  • Keep a copy of every communication sent to employees

  • Always check documents for possible misleading information before sharing

  • Reserve the right to amend the plan at any time for any reason

The Value Of An Employee Benefit Plan Audit

Failure to comply with the complex laws and regulations related to employee benefits can result in significant penalties.

Generally, the Department of Labor (DOL) requires employee benefit plans to have an audit each year as part of their obligations to file an annual Form 5500 report. Any inconsistencies in this audit report can raise concerns around compliance and might require further investigation from the DOL. 

According to a CPA in a recent Employee Benefit News article, there are two common mistakes you will want to avoid.   

Not Following Plan Eligibility Requirements

These are the most common ways in which plan sponsors fail to follow their plan’s eligibility requirements:

  • Allowing participants that should be excluded as per the Plan guidelines for eligibility.

  • Allowing participants before the eligibility requirements are met

  • Not allowing eligible participants into the plan 

  • Not following the rules of eligibility related to elective deferrals and employer match or profit-sharing contributions

It is important that sponsors familiarize themselves with the eligibility requirements of their Plan, as well as performing periodic audits.

Late Deposit Of Funds

Any loan payments or employee deferrals have to be deposited as soon as administratively possible or no later than the 15th business day of the month following the month in which the participant’s contributions are received or withheld. 

Keep in mind that the 15-day time period is not a safe harbor. The requirement is that the deposit is made as soon as administratively possible. Never confuse the 15-day period with a “grace period”. 

Focus On Your Business While We Focus On Your Benefits Plan

As you can see, there are many important details that might be missed unless you have an experienced team making sure the details are in order.

Benefit Concepts, Inc. provides guidance and peace of mind to employers by offering comprehensive and cost-effective employee benefit solutions. As a result, your employees can focus on providing great service to your clients and you can focus on growing your business.

If you’d like to meet with a consultant, review your current process and maximize the benefits you are offering your employees click the button below to get connected with one of our Benefits Consultants.