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HSAs: Health Savings Accounts 

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Health savings accounts (HSAs) are a growing trend in health care. An HSA is a tax-exempt savings account established for the purpose of paying for the qualified medical expenses of an individual and/or his or her spouse and tax dependents. HSAs are designed to provide eligible individuals with the following federal tax benefits:

  • HSA contributions are tax-free.
  • Interest and other earnings on HSA contributions accumulate tax-free.
  • Amounts distributed from an HSA for qualified medical expenses are tax-free as well.

In addition to tax benefits, HSA plans have grown in popularity because they offer potential health care cost savings to both employers and employees. For example, individuals covered under an HSA are more likely to seek preventive care, choose generic drugs, not misuse the emergency room, and use online tools to research health care providers.

HSA Eligibility

HSAs are offered in combination with high deductible health plans (HDHPs). To be HSA-eligible, an individual must be covered under a qualified HDHP and not also covered by another health plan that is not an HDHP (with a few exceptions, including disability, dental care, vision care and long-term care insurance). HDHPs generally have lower monthly premiums and higher deductibles than traditional health plans.

HSAs can cover medical expenses until the HDHP deductible is reached. The idea of this design is that the HSA pays for routine, smaller health expenses, while the HDHP offers protection in the event of a catastrophic medical expense, such as an unexpected illness, injury or hospitalization.

Because HSA amounts are non-forfeitable, amounts contributed to an HSA can increase savings for future health care needs, even into retirement.   

In general, money placed into an HSA can be withdrawn at any time. Any HSA withdrawal used for a purpose other than to pay for qualified medical expenses is taxable as income

and subject to an additional 20 percent penalty. After an individual reaches age 65, the additional penalty tax does not apply to HSA withdrawals.

Additional HSA Basics

  • HSAs are controlled and owned by the individual or employee. HSA owners are responsible for annually reporting HSA contributions and distributions to the Internal Revenue Service (IRS) as an attachment to their IRS Form 1040 (U.S. Individual Income Tax Return).
  • HSA contributions are non-taxable, and can be made by the HSA owner, an employer, a family member or any other person for months during which the owner is HSA-eligible. 
  • Annual limits apply to HSA contributions. The amount of the annual limit is federally mandated, and depends on whether the HSA owner has individual or family HDHP coverage.
  • HSA funds, including interest and earnings, accumulate tax-free from year to year. HSAs are not subject to the “use it or lose it” rule applicable to health flexible spending accounts (FSAs). HSAs are portable, meaning individuals keep their HSAs even if they change jobs, change medical coverage or make other life changes.
  • Even if an HSA owner is no longer HSA-eligible (for example, because the owner is no longer covered under an HDHP), he or she can still use accumulated HSA funds to pay for qualified medical expenses on a tax-free basis.
  • HSAs are an inheritable asset. If a surviving spouse is the beneficiary, the spouse becomes the owner of the account and can use it as if it were his or her own HSA. For other beneficiaries, the account will no longer be treated as an HSA, and will pass to a beneficiary or become part of the deceased individual’s estate.
  • HSAs can help individuals become better health care consumers by giving them more of a stake in controlling their health care costs. Since they are responsible for more out-of-pocket costs due to the higher deductible, many employees become more conscious of the health care dollars they are spending.
  • HSAs are not for everyone. The decision of whether to choose HSA/HDHP coverage is different for each individual, and may depend on the predictability of health care costs. If an individual is generally healthy and/or has a reasonable idea of health care costs, then HSA/HDHP coverage may make more financial sense than traditional health plan coverage.

2017 HSA Annual Limits

Single Coverage

  • HDHP minimum deductible: $1,300 ($1,350 for 2018)
  • HDHP out-of-pocket maximum: $6,550 ($6,650 for 2018)
  • HSA maximum contribution: $3,400 ($3,450 for 2018)

Family Coverage

  • HDHP minimum deductible: $2,600* ($2,700 for 2018)
  • HDHP out-of-pocket maximum: $13,100 ($13,300 for 2018)
  • HSA maximum contribution: $6,750 ($6,900 for 2018)

*For family plans that have deductibles both for the family as a whole and for individual members: If either the family deductible or the deductible for an individual member is less than the minimum required deductible, then the plan is not an HDHP.

Example: A family plan has a family annual deductible of $3,500 and an individual deductible of $1,500 per family member. This plan is not a qualified HDHP.

Catch-up Contributions

Individuals who are 55 years old and older are allowed to contribute an extra $1,000 per year to their HSA, to help them save for retirement.

For more information about HSAs, contact Davenport & Associates today.

Maternity Leave Benefits

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Many women choose to balance their career with starting a family, meaning employers often face the issue of managing employee pregnancy and maternity leave. Companies handle this issue in different ways, but federal mandates affect certain aspects of employee pregnancy and leave. Understanding and abiding by these regulations will help you stay in compliance, avoid discrimination lawsuits and remain an attractive workplace to employees.

Pregnancy Discrimination Act

Under this act, which amended Title VII of the Civil Rights Act of 1964, pregnancy is considered a temporary disability, and should be treated as the employer would treat any other short-term disability. The act applies to any companies with 15 or more employees, and prohibits any kind of discrimination based on pregnancy, childbirth or related medical conditions. For example:

  • Employers may not refuse to hire a pregnant woman based on her pregnancy.
  • In granting sick leave, disability leave or modified job duties, employers must treat pregnant women as they would any other employee with a disability. For instance, if short-term disability is generally granted without making the employee exhaust their sick leave or vacation days, then the same must be allowed for maternity leave.
  • While an employee is on maternity leave, her job status and seniority must remain secure, including all health insurance, retirement and other benefits.
  • While on maternity leave, employees should continue to receive the same fringe benefits, compensation, vacation calculation and seniority accrual as any employee on short-term disability leave.
  • Pregnancy-related medical expenses should be reimbursed exactly as expenses for any other medical condition.

Length of Maternity Leave

There is no federally mandated minimum amount of time required for maternity leave, but the courts state that the leave must be reasonable in length. The Pregnancy Discrimination Act holds that the leave should be at least comparable to any other short-term disability leave. For employers with 50 or more employees, the Family and Medical Leave Act (FMLA) also applies, which grants the employee 12 weeks of unpaid maternity leave. Generally, employers also allow employees to use vacation or paid sick time to supplement their allotted time off. This is not always ideal though, since employees often like to have that time off available in case of illness (their own or their child’s) down the road.

Companies may choose to simply comply with those federal acts, or craft their own plan. They may offer maternity leave as a separate benefit (if they don’t offer short-term disability, for instance). In that case, the company must ensure they are not discriminating against pregnant employees, but rather are treating them reasonably and as if they had any other disabling condition. Employers also may choose to offer maternity benefits above and beyond their short-term disability allowances or FMLA requirements.

While allowing significant time off for an employee can be burdensome, especially if it is paid time off, offering maternity leave can still benefit the employer.

Providing a workplace that is sensitive and accommodating to employees’ work-life balance is a great recruiting and retention tool for employers. The cost of recruiting, hiring and training a new employee generally far outweighs the short-term costs of allowing generous maternity leave and flexible time scheduling after the birth of a child.

Common and Costly Mistakes: Workers’ Compensation Injuries 

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Our company does not want to hire individuals who present workers’ compensation risks. Can we ask about prior workers’ compensation injuries during the interview process?

No, the Americans with Disabilities Act (ADA) prohibits private employers, state and local governments, employment agencies and labor unions from discriminating against qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, job training and other terms, conditions and privileges of employment. Specifically, the ADA covers employers with 15 or more employees, including state and local governments. It also applies to employment agencies and to labor organizations. An individual with a disability is a person who has a physical or mental impairment that substantially limits one or more major life activities, has a record of such impairment or is regarded as having such impairment.

This means that you cannot ask questions about accidents that caused injuries, prior workers’ compensation claims, or health insurance claims during the application or interview process.

You and any other interviewers should be trained to clearly describe the requirements of the job, and to focus on the applicant’s ability to meet them. Any candidate may be asked if he or she is able to perform all of the essential job assignments safely. Ask the candidate whether he or she can perform the functions of the job, with or without reasonable accommodation. You may inquire as to the applicant’s ability to perform both essential and marginal job functions. However, avoid specifically asking whether reasonable accommodation is needed, or what type of accommodation would be required. 

You may make medical history inquires and even require a medical examination after you offer an individual a job, provided that individuals who are in similar positions are required to do the same. You may then screen out individuals who are physically unable to perform the job’s essential functions provided there is not a reasonable accommodation that would allow them to do so.

If you discover after an offer of employment has been made that the individual does not have a disability and has made multiple workers’ compensation claims in the past, you can factor that information into your final hiring decision.

All personal health information gathered needs to be kept confidential and in compliance with HIPAA. Keep health information in a separate file from other personnel records.

The Davenport Difference for Business Owners

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What does your insurance agency do for you?

By Jose De Leon III

 

Considering the high cost of health care in the United States, it’s no question these days whether an individual should be insured. In the workplace, health insurance is an enticing benefit; in Texas, 48 percent of the population is insured through their employer, according to a Kaiser Family Foundation study based on census data. With many options regarding what benefits employers can provide to their employees,  human resources departments and business owners have a difficult task in deciding the packages that make most sense for their situation, but insurance agencies help with just that. Davenport & Associates specializes in group benefits, and prides itself on being a different type of agency that provides year-round support for more than insurance. According to Dusty Davenport, CEO, they provide resources that can save their clients thousands in HR consulting and professional fees.    

 

Analysis and Guidance

Insurance packages are a lot of information to handle, and Davenport says it’s not uncommon for clients to feel overwhelmed. Changes to the Affordable Care Act and other legislation makes enrolling a process that takes careful consideration; According to a 2015 ConnectedHealth consumer survey, 54 percent of employees say selecting a health plan is more complicated than solving a Rubik’s cube. “Davenports and Associates will help with any insurance questions. Our mission is to match clients with an insurance package that works for them,” he said. “For over 20 years, we’ve fulfilled this goal by offering products from top-rated carriers and supporting clients with friendly customer service and clear straight talk.”

Most employers typically review their company’s insurance plan once a year.  However, due to changes in personnel and other activity that may occur over the year, Davenport’s team of 15 brokers maintain close contact with their policy holders. They recommend that business owners start thinking of any changes they might make to their insurance plan in advance and discuss with their insurance broker, especially if they are a large group.

 

Beyond Insurance

Davenport and his team stay up-to-date on all federal and state benefit laws and serve as a resource to the HR staff by regularly informing and advising them of changes that will affect their employer and employees.  For small businesses that with a small or nonexistent internal HR department, Davenport can be a real benefit, providing support with claim service, explanations of employee benefits, online administration tools to help with payroll, and vital guidance with compliance issues. Davenport and Associates provide the legal documents typically produced for a fee by attorneys and HR service providers to keep employers in compliance with the U.S. Department of Labor as well as resources for COBRA, health care reform, ARRA, HIPAA, HIPAA Privacy, Section 125, and FMLA. Davenport says that 32 percent of business plans audited by the U.S. Department of Labor received fines of over $10,000. Davenport & Associates assists with reporting, filing,  and answering other compliance questions to avoid that problem.  

When working with an employer, he makes it a point to make employees aware of the value that their employers are offering them with their  insurance.  Some employers cover the entire cost of insurance for the employees while others cover a percentage. Davenport says that often, employees are not aware of how much coverage they have and don’t take full advantage of it. “Taking advantage of their preventative services through their employer’s plan, they could possibly detect and prevent future complications with high healthcare costs,” says Davenport.

They also provide online resources to expand existing HR departments’ capabilities, such as online access to benefit information, wellness program implementation, and benefit booklets. This is all part of Davenport’s efforts to increase communication and education about insurance for business owners and those managing insurance for large groups. The firm provides a range of articles, videos, and handbooks covering topics such as benefit statements, company policies, health awareness, retirement planning, wellness initiatives, and more. “Think of us as an extension of an HR department,” Davenport said.

 

Dusty Davenport has been in the insurance business for nearly 12 years alongside his father, Rip Davenport. He hopes to continue his father’s legacy of providing excellent service, while taking it in a new direction by expanding their service offerings. “Break away from the mold of the traditional broker,” Davenport said.

 

For more information, visit www.davenportins.com or call (956) 971-0326.

TRUMP SIGNS EXECUTIVE ORDER ON THE ACA

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OVERVIEW

On Jan. 20, 2017, President Donald Trump signed an  executive order addressing the Affordable Care Act (ACA), as his first act as president. The order states that it is intended to “to minimize the unwarranted economic and regulatory burdens” of the ACA until the law can be repealed and eventually replaced.

The executive order broadly directs the Department of Health and Human Services (HHS) and other federal agencies to waive, delay or grant exemptions from ACA requirements that may impose a financial burden.

ACTION STEPS

An executive order is a broad policy directive that is used to establish how laws will be enforced by the administration. It does not include specific guidance regarding any particular ACA requirement or provision, and does not change any existing regulations.

As a result, the executive order’s specific impact will remain largely unclear until the new administration is fully in place and can begin implementing these changes.

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Overview

President Trump’s executive order begins by emphasizing his administration’s long-stated goal of repealing the ACA. Pending these repeal efforts—which are already underway in Congress—the executive order is intended to:

Minimize the ACA’s unwarranted economic and regulatory burdens; and

Prepare to afford states more flexibility and control to create a free and open health care market.

Specifically, the executive order directs HHS and other federal agencies responsible for administering the ACA to “exercise all authority and discretion available to them to:

Waive, defer, grant exemptions from, or delay implementation of any ACA provision or requirement that would impose a fiscal burden on any state or a cost, fee, tax, penalty or regulatory burden on individuals, families, health care providers, health insurers, patients, recipients of health care services, purchasers of health insurance, or makers of medical devices, products or medications;

Provide greater flexibility to states and cooperate with them in implementing health care programs; and

Encourage the development of a free and open market in interstate commerce for the offering of health care services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.”

The executive order specifically states that it does not, itself, make changes to any existing regulations. To the extent that the executive order’s directives would require revision of regulations, that will be done by federal agencies through the normal regulatory process.

Impact on ACA Provisions

The executive order is very broad, and does not include any detailed guidance as to how it should be carried out. Instead, it gives federal agencies broad authority to eliminate or fail to enforce any number of ACA requirements, as permitted by law. As a result, until the new heads of federal agencies are in place, it is difficult to know how the ACA will be specifically impacted.

There is some indication that the executive order is partially aimed at eliminating or providing exemptions from the ACA’s individual and employer mandates, since those requirements impose tax penalties that may impose a “fiscal burden” on individuals and employers. In addition, it is clear that the executive order is intended to help accomplish an idea that has been long supported by President Trump, which is to allow health insurers to sell policies across state lines in an effort to increase free market competition.

However, the immediate impact of the executive order will likely be small, since it will take time to implement policies, regulations and other subregulatory guidance to carry out the directives. In addition, health insurance policies for 2017 are already in place, and state law, in many cases, prohibits significant changes from being made midyear.

No ACA provisions or requirements have been eliminated or delayed at this time as a result of President Trump’s actions. Therefore, employers should continue to prepare for upcoming requirements and deadlines to ensure full compliance.

HOLIDAY STRESS: TRAVELING

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The holiday season is the busiest time of the year for long-distance travel. Flights are often overbooked and highways are overcrowded, which can add stress to the season.
Keep Your Sanity
To keep travel worries from ruining your holiday plans, reduce your stress by planning ahead. Use the following tips to help you stay in control during your trip.
If you are flying:
Do not delay purchasing tickets. Make your reservations well in advance to make sure you have many flight times, prices and seats to choose from.
Choose your ticket wisely. Travel on off-peak days and during early morning hours whenever possible. Airports tend to be less crowded during these times, which will make it easier to get another reservation if your flight is cancelled.
Call or check online to confirm that your flight is still on time before leaving for the airport.
Check in for your flight online, if possible, to avoid waiting in line at the airport.
Stay hydrated. Drink water frequently to avoid jet lag.
Pack wisely. Avoid checking luggage, but if you have to, keep prescriptions, glasses and other overnight basics in your carry-on bag in case your luggage gets lost. Keep in mind that most airlines charge fees for checking luggage.
Fight boredom. Pack activities to help pass the time, especially if traveling with children.

If you are driving:
Be prepared. Have a mechanic examine your vehicle before your trip. Also, be sure to pack emergency and first aid supplies in case your car breaks down.
Know your route. Plot out your route before leaving, and bring a map. Make sure your phone is fully charged if you plan on using smartphone maps or bring along a GPS.
Save time. Try to do most of your driving during non-rush hour times to avoid the bad traffic.
Take a break. Rest every two hours and limit yourself to eight hours of driving each day. Stop at rest areas to walk around and stretch. Make more frequent stops if traveling with small children or pets.
Lay off the caffeine. Drink plenty of water and eat balanced meals. Drinking caffeine may make you crash a few hours later.
Wear safety belts at all times. When used correctly, they significantly reduce the number of serious traffic injuries and fatalities.
By following the tips above, you can minimize the stress associated with holiday travel.

Fair Employee Compensation

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Providing nondiscriminatory, fair employee compensation is a top concern for employers across the country. Because HR specializes in areas like recruiting and compensation packages, they are in the best position to determine appropriate compensation plans, make acceptable initial salary offers, establish guidelines for merit increases, suggest pay audits, and, if necessary, help the company phase in compensation change.

Designing Compensation Plans

Having a well-designed compensation plan that ensures equity should be a high priority for all employers. Yet, a compensation plan should not be focused on the salary for a position. Compensation plans can, and typically do, include things like commissions, bonuses or merit pay, stock options and a comprehensive benefits package to complement a base salary.

Compensation will typically be perceived as fair if it is designed with a system of components including job descriptions, job analyses and evaluations, and pay structures. Ensuring that these elements are included when determining compensation plans is essential to maintaining internal and external equity.

  • Internal equity refers to employees’ perception of their pay in comparison to their co-workers.
  • External equity refers to employees’ perception of your company’s pay in comparison to the pay of similar positions at other companies.

Job Descriptions

Defining and documenting the responsibilities, requirements, duties, conditions, environment and other applicable aspects of a job is an important element of a compensation system. Having well-written job descriptions can help you set the parameters for fair salary offers and ranges and help you appropriately group jobs. Additionally, it can help streamline the recruiting process and ensure compliance with federal laws like the Americans with Disabilities Act (ADA) and the Fair Labor Standards Act (FLSA), as well as applicable state and local legislation.

Job Analyses and Evaluations

Analyzing and evaluating job elements like safety risks, job stress, work schedule, autonomy and level of supervision are factors that play into determining fair levels of compensation. Often, this task involves comparing your company’s positions and evaluations with industry market data and adjusting both the position itself, ranking levels of each position (entry level, intermediate, senior) and pay grades, as necessary.

Pay Structures

After deciding how many different levels (if any) of each position your company wants to have, you must determine pricing and salary structures for each. Be sure to set a minimum and maximum percent spread for each salary range and pay grade.

It’s important to look at market trends for salary ranges of each level and align them with company pay philosophy; or, in other words, decide if you want to pay your employees at, below or above market salary trends. Take your company’s industry and geographic location into account when drawing comparisons and adjust accordingly.

Making an Appropriate Salary Offer

Perceived pay fairness begins with a new hire’s initial salary offer. The offer should be placed within the current workforce’s population and within market trends to maintain internal and external equity, respectively. HR should document if salary negotiation occurs or if any unique issues occur for future reference, if needed.

Be mindful of the perceived market value of a specific position, but also remember that it’s not all about the monetary offer. Company culture and benefits offerings play a role in an employee’s perception of whether or not they are being paid fairly for their work.

Establishing Guidelines for Merit Increases

Merit increases, also known as merit bonuses, are a great way to reward employees, but without set guidelines, there is no real way to ensure that these incentives are being awarded fairly. It may be beneficial to develop a standardized, objective method for evaluating employees.

Consider the following suggestions when establishing and implementing merit increase procedures:

  • Emphasize to managers which accomplishments and behaviors will warrant a reward.
  • Offer performance-management training for all managers to ensure all managers are capable of conducting performance reviews to your company’s standards.
  • Remain transparent with employees about how your company’s bonus structure works.
  • Provide opportunities for employee feedback.
  • Review your merit increase program regularly.

Suggesting Pay Audits

As previously mentioned, because HR deals with employee compensation directly, they are in the best position to bring up the topic of—and, in some cases, to conduct—a pay audit. HR will be instrumental in gathering the necessary paperwork for a legal counsel to conduct a pay audit and will likely be responsible for explaining differences in pay among employees based on the job descriptions, which exacerbates the importance of having proper job descriptions written for each position at your company.

If a pay audit is needed at your company and your company uses legal counsel to conduct the audit, remember to discuss the terms of attorney-client privilege with them so that you do not put your company at risk of losing it.

Phasing in Compensation Change

If a pay audit reveals that compensation changes need to be made in order to comply with fair employee compensation legislation, HR will be responsible for helping implement them. A large part of their role will involve communicating these changes to employees and managing any issues that may arise following these changes.

Taking a thoughtful approach is often the best way to phase in compensation changes for both the employer and the employee.

The Importance of Fair Compensation

If your company’s employee compensation is fair, it can be a useful tool to help you recruit and retain talent, increase employee morale and reward or encourage high performance. Employees are coming to expect fair compensation as well. If your company does not offer compensation that is deemed “fair” by potential and current employees or state and federal governments, it may find itself in trouble in the near future.

It is in your company’s best interest to ensure you abide by federal and local fair pay regulations. Be proactive and look at your employee compensation data today.

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