Today, it is not unusual at all to find that you are paying out an amount equal to nearly a third of wages for employee benefits. As an example, if you are paying someone $18 an hour, benefits may approach an additional $6 or $7 per hour, or about $13,500 or more each and every year per employee. Not a small amount. As a result, having an understanding of what’s happening in the world of employee benefits is important to know.

Disclaimer: This information is in no way meant to replace advice and direction from your insurance, tax/finance and legal professionals. It is accurate to the best of our knowledge. The writer is NOT an insurance agent, attorney or accountant. Before you make a decision on anything that follows, get appropriate help.

Since the largest portion of many business benefit plans is directly or somehow related to health insurance, we’ll start there. The first portion addresses small group insurance, followed by individual health insurance then other plans.

“What is important is to spread confusion, not eliminate it.” ? Salvador Dalí

To avoid some confusion, we will use ACA to designate the “Affordable Care Act,” otherwise known as the “Exchange,” “Obamacare” and other definitions.

While the number of firms offering insurance has dropped, it is critical to look at our industry in particular. The share of shops offering health insurance at some level is considerably higher. This has been the result of not enough good, trainable employees – and employers fighting over a pool of techs in particular that is much smaller than industry needs. In addition, many OEM dealerships are in the 25-199 workers category. Health insurance is generally expected as a benefit. For you to remain attractive to better techs or even trainees, health insurance coverage of some type appears to be all but a necessity. The annual Undercar Digest Benefits Survey bears witness to this situation.

Certain employers can enroll in Small Business Health Options Program (SHOP) coverage through private insurance companies, or with the help of a SHOP-registered agent or broker. SHOP plans are generally the only way to qualify for the Small Business Health Care Tax Credit to lower premium costs.

If You Already Offer Health Insurance to Your Employees

If you offer health insurance to your employees that is not through SHOP, you can keep the coverage you have. In general, offering a SHOP plan is the only way to qualify for the Small Business Health Care Tax Credit.

But, other parts of the health care law may also affect employers.

Required Reporting About the Marketplace to Your Employees

Certain employers are required to provide certain information about the Marketplace to their employees, whether they offer health insurance or not.

90-Day Maximum Waiting Period

If you offer health insurance to your employees, you must offer it to all eligible employees when they become eligible for health coverage. Learn about the 90-day waiting period from the IRS.

Summary of Benefits and Coverage (SBC) disclosure rules

Employers must provide employees with a standard "Summary of Benefits and Coverage" (SBC) form explaining what their health plan covers and what it costs. The purpose of the SBC is to help employees understand their health insurance options. You could face a penalty for non-compliance.
 
Flexible Spending Accounts (FSAs)

Employees can contribute up to $2,700 to their Flexible Spending Accounts per year in tax year 2019. That limit doesn't apply to employer contributions to the employees' FSAs. Employers have two options to let employees carry over unspent FSA funds into the following plan year.

Workplace Wellness Programs

The Affordable Care Act creates incentives to promote employer wellness programs and other activities that support healthier workplaces. The maximum reward to employers using a wellness program (contingent on employee health) has increased from 20% to 30% of the cost of health coverage. The maximum reward for programs designed to prevent or reduce tobacco use is 50%.

Employer Shared Responsibility Payment

Certain businesses with 50 or more full-time and full-time equivalent employees that don't offer insurance plans (that meet certain minimum standards), may be subject to the payment. Learn more about the Employer Shared Responsibility Payment from the IRS.

IMPORTANT: No small employer (generally those with fewer than 50 full-time and full-time equivalent employees), is subject to the Employer Shared Responsibility Payment, regardless of whether they offer health insurance to their employees.

Reporting Information on Health Coverage by Employers and Insurance Companies

The health care law requires the following organizations and some other parties to report that they provide health coverage to their employees:

Certain employers, generally those with 50 or more full-time and full-time equivalent employees
Health insurance companies
Self-insuring employers of any size
Medical Loss Ratio Rebates

Insurance companies must generally spend at least 80% of premium dollars on medical care. Insurance companies that don't meet this requirement must provide rebates to policyholders — usually an employer who provides a group health plan. Employers who get these premium rebates must allocate the rebate properly. Learn more about federal tax treatment of Medical Loss Ratio rebates from the IRS.

IRS Resources for Small Businesses

The IRS offers several resources to help employers.

Enrollment in small group health plans has declined, but may regain strength in our hot economy and low unemployment. In 2012, there were 36.8 million enrolled through small groups. This reportedly has declined to 26.5 million enrolled.

The same is true for the share of employees insured within small firms. In 2008, 36.8% of employees in small firms were covered by company healthcare. The share is now 26.5%.

So why is this an issue? Simply put, while many of our shop employees are covered by spousal plans and other means, for most of the past seven decades some type of health insurance coverage made one employer far more attractive than another (all other things being equal).

There are plans floating around that allow an employer to utilize the design of the individual insurance plans to assist their employees and thus avoid a group plan. They come under a variety of names for marketing purposes. However, most are similar in design in that there is money available to the employees to offset medical -- and possibly premium expenses. In my humble opinion, you should get a VERY knowledgeable insurance pro and always include your tax pro from the very beginning. Be sure to clearly understand any risks in these plans before moving ahead.

On the subject of individual insurance plans, more has stayed the same than has changed in this market. One may choose from either a “commercial” plan (non- ACA) or an ACA-qualified plan. ACA plans are the only way to receive premium subsidies.

While there has been much political hay made about repealing the ACA and other things, in reality only a few things have changed in the individual health insurance market. They include:

Likely most important, is that beginning for 2019 there is no longer an insurance mandate that requires everyone to have qualifying insurance or face penalties. The plan was still in effect for 2018, so the question is still asked on tax forms.

If your income is too high to qualify for an ACA subsidy, it may be a better bet to look around the so called “commercial” market where you deal with an agent and an insurance company.

Shorter annual enrollment periods. Watch the dates this year if you are making a change or getting new coverage! Also, know that the enrollment periods may vary by state.

Short term health insurance for up to one year is back. The premium is considerably lower than the more permanent type. But there are reasons. Chief among them are pre-existing conditions limitations.

So, much is the same as it has been since the onset of the ACA. But there are key differences you’ll want to discuss with your insurance, tax and legal pros to find out if there’s a more cost-effective way to design your plan.

Incidentally, the group and individual plan design itself hasn’t changed. Whether commercial or ACA you are still able to choose from a variety of deductibles and coinsurance. These are all subject to out of pocket maximums that are adjusted each year. For 2019, the maximum annual out of pocket is $7,900 for individuals, $15,800 for two or more.

Since I am running out of space, the balance of the article will address other employee benefits that you may wish to consider. We’ll start with some of the most popular:
Retirement Plans

There are a number of plans, from basic IRA’s to SIMPLE plans and 401k plans. Generally, we deal with younger people and want them to participate, so some matching-type program may be best.

Flex Spending and Health Savings Accounts
FSA’s and H.S.A.’s both provide tax advantaged funding mechanisms to cover costs that health plans don’t, such as deductibles.

Dental & Vision Insurance

Dental coverage is essentially a break-even plan. Get your cleanings and a little bit of work and you’ll get back about what is paid in premiums. Vision coverage is not dissimilar, except that most plans have really great cost savings on glasses.

Tool Allowance

Goes without explanation.

Group Life and Disability Insurance

I always had this because my employees never did! And, they were actually a reasonable cost for the benefit. Higher perceived benefit than premium is always great, and it helps a lot towards making you competitive with big shops and OEM dealers.

Paid Time Off

Kind of a gimme. But, I am forever amazed at how many shops don’t offer some paid vacation scheme.

Paid Holidays

This is a little tougher. Take a look at the calendar to see how many holidays fall during the week. And don’t forget Memorial Day, 4th of July and Labor Day. Now do a little math and see if it’s in the cards.

Uniforms

Again, it’s amazing how many shops have techs without uniform attire. We liked tops and bottoms. Very professional, clean -- and established a different shop atmosphere. But if pants aren’t in the budget, go with shirts and have them collected at the day’s end and laundered by the uniform service.

Assistance with Child Care

Some shops offer this assistance. Some are for a short time situation, others include the Childcare program in their FSA’s. It is valued and does help ensure your employee is in the shop rather than babysitting at home.

Commuter Financial Assistance

Some shops have no choice in large metro areas, where they recruit from a distance. If I take home $650 a week and spend more than $50 of it commuting, you’ll no doubt lose me as an employee sooner than later.

Flex Time & Shared Jobs

One answer to the tech shortage is to hire two techs, maybe two semi-retired people, and split the time. This is gaining popularity in other industries throughout the country. Time to look at something for you?

Time now to have a smile, even though some of these may well be of interest to some employees:

• Pet Health Insurance

• Legal Expense Insurance
• House Cleaning Services
• Pet Sitting Services
There are plenty more, interesting programs, but we’ll leave that for another day.

Whatever you do, spend some time finding out what local shops and OEM dealers offer for benefits. You may not have to copy the program if it’s too expensive, but with a little creativity, your benefit package will go a long way towards attracting and keeping great people.