Happy employees are better employees. They’re more engaged in their work, more loyal to their employers, and make more meaningful contributions toward company goals. That’s not surprising.

However, today’s employees have different expectations for what makes them happy. In an always-on world, where work and life blend together, employees are looking for fulfillment in their work, personal lives, and relationships. Employers who recognize their employees’ need for flexibility and support, both at the workplace and beyond, are poised to reap the benefits in a competitive hiring market.

MetLife’s recently released 17^th Annual U.S. Employee Benefit Trends Study dives into the new work-life world to examine how employers can attract, engage, and retain the best talent by helping employees thrive in work and in life. This year’s research focuses on five key findings and their implications for employers, employees and intermediaries:

1. When employees are supported as individuals, they are more engaged
2. Finding purpose at work is multifaceted
3. Technology is driving a new mandate for training
4. Flexible careers are reshaping the workplace
5. The gig economy can be a challenge and an opportunity for employers

Benefit strategies will play a pivotal role in helping employers and employees navigate the evolving landscape. The study’s findings offer powerful conversation starters for your client consultations.

Financial stress tops employee concerns

Everyday stress affects employee happiness and can distract from succeeding at work. Across life stages, the number one stress cited by employees is personal finances. Short-term concerns like having the money to pay bills or cover out-of-pocket medical expenses rank high. But, three of employees’ top five financial concerns relate to longer-term retirement worries.

One in three employees admits to being less productive at work because of financial stress. At the same time, two in three employees say the benefits available to them through the workplace help to reduce their financial concerns.

Employees value benefits options

Seventy-three percent of employers believe employees are satisfied with their benefits. That’s a slight over-estimation when compared to 67 percent of employees who say they’re satisfied with their workplace benefits. Notably, the employee percentage is a decline of four percent from 2018.
One area where employers and employees may not be on the same page is about benefits choices. Employees want benefits to meet their specific needs.

• 90% would be willing to take a small pay cut – about 3.8 percent on average – in order to have a better choice of benefits through their employers.
• 55% would be willing to bear more of the costs of benefits to have choices that meet their needs.
• 60% are interested in having a wider array of benefits available that they can purchase on their own.

With low unemployment and heightened competition for top talent, benefits can play an important role in helping employees – and the companies they work for – thrive.

Visit MetLife.com/EBTS2019 to explore these and other insights to help your clients offer relevant benefit solutions that attract and retain employees.

 

Health Savings Accounts (HSAs) have seen tremendous growth in the past decade and are quickly becoming one of the most popular employee benefits. These accounts allow individuals who are enrolled in a Qualified High Deductible Health Plan to use tax-free dollars to pay for out-of-pocket
healthcare expenses for themselves and their families.

A new study from Devenir highlights HSA growth in 2018 and predicts continued growth this year. The 2018 Year-End HSA Research Report was based on a survey of top 100 HSA providers and included data for the
period ending December 31^st, 2018. Here are some of the key
findings:

HSA accounts exceed 25 million.

According to the study, the number of HSA accounts has surpassed 25 million,
holding $53.8 billion in assets. This represents a year-over-year increase of 13% for accounts and 19% for HSA assets.

HSA investment assets surpass the $10 billion mark.

Devenir estimates that HSA investment assets reached $10.2 billion at the end of December, up 23% year-over-year. The average total balance, including both the deposit and investment accounts, was $14,617.  19% of all HSA assets are in investments.

Fewer unfunded accounts.

The study found that 16% of HSAs were unfunded at the end of 2018, compared to 20% at the same time in 2017.

HSA contribution jump.

According to Devenir, HSA account holders contributed almost $33.7 billion to their accounts is 2018, up 22% from the year before. Of these contributions, 26% were from employers. The average employer contribution was $839, which is up for $604 in 2017. 57% of all HSA dollars contributed to an
account came from the employee with an average contribution of $1,872. A further 13% of contributions came from an individual account not associated with an employer, with an average of $1,723.

The future is bright.

Devenir currently projects that the HSA market will approach $75 billion in HSA assets by the end of 2020, held among roughly 30 million accounts.

Why are HSAs so popular?

Initially created in 2004, HSAs were slow to take off, but their popularity has
skyrocketed in recent years. One key factor that makes HSAs so attractive is the triple tax advantage. Contributions go into the account tax-free, any interest and investment income earned on the account is tax-free, and withdrawals made from the account for eligible medical expenses are tax-free as well. HSA funds can be used to cover a wide range of eligible expenses, not just those associated with the health plan.

HSAs have many other benefits that make them so popular, including the fact that the account is individually owned. There is no forfeiture of funds at the end of the plan year, or if the account holder retires or leaves the
company. Additionally, after age 65, HSA funds can be used for any expense without penalty, though withdrawals are taxed if not used for healthcare expense. Because of this, HSAs are also gaining popularity as a vehicle to pay for healthcare expenses in retirement.

In the continued war for talent, employers increasingly rely on benefits to help differentiate their organization and attract and retain better employees. Brokers have long played a critical role in this battle, helping employers build a better benefits package. But in today’s fast-changing workplace, a broker’s expertise on the multiple challenges their clients face is just as important as knowledge of the complicated benefits market.

MetLife’s 2018 Broker Study illuminates the evolution of the broker to trusted advisor and expert on the modern workplace and workforce trends including key components in driving growth:

• Broker’s expertise: Employers are working hard to keep pace with workplace trends, and they’re increasingly looking to their brokers to help navigate the new world of work. Employers report that they’d turn to their broker for expertise regarding cost savings (64%), innovative benefits solutions (60%) and benefits administration solutions (58%). 
   
• Work-life balance: 76% of brokers say that their clients need to focus additional attention on supporting work-life balance. Broker activity reflects this sentiment, with broker recommendations for non-traditional benefits related to work-life enrichment significantly increased from last year.

Three key takeaways from the MetLife Broker Study can help you elevate your role and add value to your client relationships:

 

1. Stay updated – and update your clients.

Dedicate time to studying workplace trends, the role of benefits in meeting employee needs and the proven results for employers that do. Educate your clients on these issues year-round, and not just when evaluating plans and enrolling employees.

2. Encourage your firm to lead by example.

It’s time for more brokerage firms to embrace their own advice and reap the rewards of offering a wider array of medical and non-medical benefits.

3. Dive deeper into non-medical benefits.

Understand the variety of offerings available to your clients, especially those that promote work-life enrichment, how these benefits fit in with current offerings and why they’re an increasingly important part of any benefits package.

Explore additional insights from this year’s study for your next client consultation.

 

What is a Commuter Account?

A Commuter Account is an employer-sponsored benefit that allows you to pay for qualified workplace mass transit (Transit Account) and parking expenses (Parking Account) using money that is not taxed.

It’s a great way to put extra money in your pocket each month and make your commute more convenient and affordable. You may contribute to both your transit and parking account on a pre-tax basis to pay for transit and parking expenses, which means you end up paying less in taxes and taking home more of your paycheck. The current monthly limit is $265 for your transit expenses and $265 for your parking expenses.

What is a Transit Account?

Transit Account is a pre-tax benefit account used to pay for public transit—including train, subway, light rail, bus, and ferry—as part of your daily commute to work.

What is a Commuter Parking Account?

A Commuter Parking Account is a pre-tax benefit account used to pay for parking as part of your daily commute to work, including parking at or near your place of work or at a location near where you take public transportation to get to work.

Do my unused Transit or Parking funds rollover from month to month or plan year to plan year?

Yes. However, there is currently a monthly benefit maximum of $265.

Can I submit a manual claim for Transit?

No. You must use your debit card to purchase your transit expenses.

Can I submit a manual claim for Parking?

Yes. Manual claims or debit card transactions are allowed for Parking expenses.

Can I change my election for Transit or Parking at any time?

Please see your Plan Administrator regarding their eligibility requirements of your Plan.

Is uberPOOL® and Lyft Line® Ridesharing available under my Transit Benefit?

Yes, however, there are limited locations and some restrictions. To qualify as an eligible benefit, the vehicle used for ridesharing (also referred as vanpooling) must seat at least six adults (not counting the driver).

UberPool is currently available in New York City, Boston, Chicago, Washington D.C., San Francisco, Philadelphia, Las Vegas, Denver, Atlanta, Miami, Los Angeles, San Diego, Seattle and New Jersey (state).

Lyft Line is currently available in New York City, Boston, Seattle, and Miami.

Are receipts required when submitting claims for parking reimbursement?

Receipts, if available, should be submitted along with a completed and signed reimbursement form. If a receipt is not available, just a completed and signed reimbursement form is acceptable.

 

Can the Commuter benefit be used for my family?

No. The Commuter benefit is available only for the employee to use for either public transportation or parking expenses associated with getting to and from the employee’s workplace.

What expenses are not included in the Commuter benefit?

Carpooling, Mileage, tools, and fuel. Also, business travel and expenses previously reimbursed by your employer.

Do I need to re-elect each month?

No, you elect your benefit amount for your employer’s annual plan year. Your monthly elections are available on your debit card each month.

 

Is there a maximum amount I can swipe my card for at one time?

The maximum you can swipe your card for is a total of $265 each month for transit purchases and a total of $265 each month for parking expenses. The current monthly limit is designated by the IRS. The limit will apply to all debit card swipes for transit and parking. 

What is a Commuter Benefits Account?
A commuter benefits account is an employer-sponsored benefit program that allows you to set aside pre-tax funds in separate accounts to pay for qualified mass transit and parking expenses associated with your commute to work.

What are the benefits of a commuter benefits account?

Tax Benefits
Contributions to a commuter benefits account are deducted from your paycheck on a pre-tax basis, reducing
your taxable income. You can save an average of 30%* on your eligible transit and parking expenses.

*For illustrative purposes only. Savings calculations are based on a federal tax rate of 15%,
state tax rate of 5%, and 7.65% FICA.

What expenses are considered eligible?

Qualified Mass Transit Expenses
Items that qualify as a mass transit expense include transit passes, tokens,
fare cards, vouchers, or similar items entitling you to ride a mass transit vehicle to or from work. The mass transit vehicle may be publicly or privately operated and includes bus, rail, or ferry.

Qualified Parking Expenses
With a commuter benefits account, you can be reimbursed for parking expenses incurred at or near your work location or a location from which you continue your commute to work by car pool, van-
pool or mass transit. Out-of-pocket parking fees for parking meters, garages and lots qualify. Parking at or near your home is not an eligible expense.

Qualified Van-Pooling Expenses
Van-pooling is not to be confused with carpooling. Van-pooling requires a commuter highway vehicle with a seating capacity of at least 7 adults, including the driver. At least 80 percent of the vehicle mileage must be for transporting employees between their homes and workplace with employees occupying at least one-half of the vehicle’s seats (not including the driver’s seat).

How can I contribute to my commuter benefits account?

Contribution Limits
There are monthly limits set by the IRS for Commuter Benefits. Your employer may decide to limit these amounts. Check with your employer to determine your maximum contribution limits. Currently, contributions for transit and van-pooling are limited to $265 per month. Parking contributions are limited to $265 per month. Any monthly expenses above these limits cannot be exempt from taxes and cannot be applied to future months.

Adjusting Contributions
You can make adjustments to your contribution, join, or terminate plan participation at any time.

How do I access my commuter benefits account funds?

Payment Options
You authorize your employer to deduct a pre-tax amount for parking and/or van pooling/transit throughout the year, up to the IRS limits. You pay for the qualified transportation with your benefits debit card or you can pay out of pocket and then file a claim for reimbursement.

Funds Deadlines
The money left in your account may be carried over into the next plan year, if you continue to participate in the plan.

 

Why employees should max out their HSA contributions

Most people don’t think about an HSA as a savings account. Instead, they think of it as an account used to set aside money, tax-free, to pay for healthcare expenses. While this is true, the reality is an HSA is much more
than a bank account. It’s a long-term savings vehicle.

HSAs offer the greatest tax benefits – more than any other retirement account, including a 401k. How is this possible? It’s simple. With an HSA, employees can tap into the power of triple-tax savings. This means contributions to the account are tax-free, earnings are tax-free, and withdrawals for eligible healthcare expenses are tax-free.

Here’s how HSAs stack up against traditional retirement plans:

As you can see, HSAs are the only account that offers these triple-tax savings. Plus, the funds in the account belong to the employee and roll over year to year, allowing employees to grow their accounts over time. Even better, they’re portable, so employees can take their HSA with them if they leave their employer.

How do HSAs help with retirement planning?

There is no doubt about it. Healthcare costs are on the rise and one of the biggest concerns when it comes to retirement planning. Studies show that a 65-year old couple leaving the workforce today can expect to need
$260,000 to cover medical expenses during retirement. And this does not even include long-term care, which most
of us will need at some point in our life.

So, the question is, are your employees taking the necessary steps today to ensure they are prepared for the future?

Directing savings to an HSA and maxing out their annual contributions helps ensure when health care expenses arise, they’re prepared. Not only will they have funds available, but those funds will be available on a tax-free basis. Employees who are fortunate enough to have good health and little need for healthcare-specific savings later in life can still access their HSA funds. They will just have to pay ordinary income tax on the distribution and wait until age 65 to avoid penalties.

The bottom line is there is no downside to maxing out HSA contributions. With healthcare costs continuing to grow, HSAs will become an even more important source of funds to pay for healthcare expenses. Make sure your
employees are doing everything in their power to get the most value from their accounts and the triple-tax savings only an HSA can provide.

 

Consumer-Driven Health Plans (CHDPs) have been steadily gaining in popularity for several years now. According to the Society for Human Resource Management (SHRM) 2018 Annual Benefits Report, 40% of the employers surveyed now offer a CDHP to their employees. SHRM defines a CDHP as a Health Reimbursement Arrangement (HRA) or a Health Savings
Account (HSA) paired with any underlying medical plan. In addition, 29% of employers surveyed offer a High Deductible Health Plan (HDHP) that is not linked to an HSA or HRA.

The central tenet of Consumer-Driven Healthcare (CDH) is that when employees have greater involvement in their healthcare finances, they will make better decisions. But is that actually the case? Are employees really ready to step up and take more responsibility for their healthcare? Do they have the foundation of financial knowledge and habits necessary to make CDH work for them?

Alegeus, a market leader in consumer-directed healthcare solutions, recently
commissioned an independent survey of more than 1,400 U.S. healthcare consumers to try and answer that very question. They didn’t just want to know if consumers understood basic healthcare terminology—they wanted a complete picture of their starting points, behaviors, and fluency in healthcare and finance.

Here is what they learned. 

Consumers lack basic financial skills

Alegeus believes that in order to stay on top of their healthcare finances, it’s
essential that consumers develop basic financial habits. Their survey found many consumers don’t have a strong handle on their finances and they aren’t confident in their ability to save for healthcare costs.

Of the respondents to their survey: 

These results are problematic for healthcare consumerism, which
requires consumers to be disciplined about their savings.

Unfortunately, the survey found that a high proportion of consumers are
undisciplined about savings in general. Of the respondents to the survey, 50% said they were not disciplined about saving for retirement and 51% reported they have no emergency savings at all.

It’s fair to say that if consumers aren’t saving in other important areas of their
lives, then they’re unlikely to save for their healthcare needs.

Healthcare fluency is still low

The survey results also highlighted a definite lack of understanding of basic
healthcare concepts.

For example, of the respondents:  

Even when consumers believe they understand healthcare, the reality is
often quite different. Alegeus found that, while 66% of respondents felt confident in their understanding of basic insurance terminology, only 50% correctly answered a simple true/false test about premiums and
deductibles.

What’s more, Alegeus has found that this lack of understanding to be magnified when it comes to health benefit accounts, such as Health Savings Accounts (HSAs). Of the general population, Alegeus reports that only 19% of people can pass a basic ten-question proficiency test on HSAs, compared to
29% for Flexible Spending Accounts (FSAs). Those numbers do go up amongst individuals currently enrolled in those accounts…but only to 35% and 37%.

That’s right. Around two-thirds of people
currently enrolled in an HSA or FSA simply do not understand their account.

According to Alegeus, it’s not just lack of understanding that’s getting consumers into trouble. Many people still struggle to predict how much they will need to spend out-of-pocket on their healthcare expenses:

• 55% can’t predict the amount of healthcare services they’ll consume this year
• 51% can’t forecast likely out-of-pocket costs for this plan year
• 58% don’t know or understand how much healthcare will cost in retirement

There is hope for the future

This is not to say that healthcare consumerism is doomed. The survey did highlight a few positive behaviors that can be built upon.

First of all, 82% of respondents were able to track their spending, with 75%
reporting that they are able to curb impulse spending when necessary. More than half had established clear financial goals. While these may seem like fairly basic financial behaviors, they do demonstrate an understanding that
financial planning is an essential part of modern life.

40% of respondents indicated that they want to take a more active role in their healthcare and highlighted key areas in which they would need support: 

Unsurprisingly, knowledge was highlighted as the single greatest barrier for
consumers who want to take a more active role in their healthcare finances.

Finally, Alegeus saw real cause for optimism in responses from consumers who have already joined the CDH movement. Respondents enrolled in HSAs displayed much higher than average levels of understanding and behavior. 

Where do we go from here?

As CDHPs continue to grow, Alegeus’s research results clearly demonstrate
that consumers feel the impact of their increased responsibility, and they struggle to manage it. Although consumers do have some basic financial systems and knowledge in place, many are not currently in a strong position to manage their healthcare finances.

Despite this, many consumers really do want to play a more central role in their
healthcare journey. When you take into consideration the recent growth of CDHPs, this suggests that consumers are starting to understand the value of healthcare consumerism but are looking to employers and plan providers for increased support.

Your employees are looking for the education, tools, and support they need to make informed decisions about their health, wellness, and finances. So long as this help is available, the future of healthcare consumerism looks bright.

 

The Department of Labor (DoL), Department of Treasury (DoT) and the Department of Health and Human Services (HHS) have jointly proposed new rules that would impact Health Reimbursement Arrangements (HRAs) effective January 1, 2020.

The proposed rules, which are open for public comment until December 28, 2018, would make a significant change to the HRA integration requirements. Current regulations require HRA participants to also be covered by a traditional group health plan with limited exceptions. The proposed
rules do not eliminate the integration requirement, but the rules would allow integration to also be available for employees covered by an individual health plan.  

If the proposed rules are finalized, this would allow employers of all
sizes to establish an HRA which reimburses individual health insurance premiums.

Some employers may shift from offering a traditional group health plan to offering an HRA which reimburses individual health insurance premiums, and the proposed rules make it clear that an employer cannot offer the same class of employees the choice between a traditional group health plan and an
HRA which reimburses individual health insurance plans. However, an employer could offer a traditional group health plan to one class of employees (e.g. full -time employees) and an HRA which reimburses individual health insurance premiums to another class of employees (e.g. part-time employees).

Employers would be free to establish the maximum reimbursement limits under the HRA, but variances for employees could only be based on an employee’s age and/or family size. Variances would be allowed for these two factors because they have a significant impact on the cost of an individual
health insurance plan.

A question that remains, and a question that is expected to be addressed with
future guidance, is how an employer who is subject to the Employer Mandate (generally, those with 50 or more employees) can establish this type of HRA and avoid the risk of penalties. The Employer Mandate requires a
health plan to be offered that is both affordable and has minimum value to avoid the risk of penalties. The proposed rules indicate that a future safe harbor rule will be issued and will tell employers how they can structure this type of HRA so that it can meet the affordability and minimum value requirements.

In addition to the above information, the proposed rules would also create a new limited, excepted benefit HRA. This HRA would be capped with
an annual reimbursement limit of $1,800 with the carryover of unused funds permitted. The HRA could reimburse expenses for things like out-of-pocket dental and vision care, or premiums for short-term medical plans and COBRA. This type of HRA could be offered by employers who also offer a traditional group health plan.

Many employers offer a cash payment to employees who waive health insurance coverage. These cash payments are always taxable to employees who waive health insurance coverage, but did you know employees who elect the health insurance coverage may be subject to paying taxes on the cash
payment that they didn’t receive?

Wait! What?

The Internal Revenue Service (IRS) has a term they use called “constructive
receipt.” In simple terms, constructive receipt means a person has control over money that is not yet in their possession. As an example, think about an employee who receives their final paycheck for the year on December 31, 2018, but the employee doesn’t cash the check until January 10, 2019. The IRS will consider the employee to have been in constructive receipt of this money in 2018, and subject to income taxes for 2018, even though the employee didn’t physically have the money until 2019.

Constructive receipt also needs to be taken into consideration when an employer provides a cash payment to employees who waive health insurance
coverage. Employees who are eligible for the health insurance plan have control over whether they receive a cash payment. That control exists because they have the option to waive coverage under the health insurance
plan in return for a cash payment. This is a form of constructive receipt.

This means an employee may actually elect health insurance coverage and have to pay taxes on the money they could’ve received had they waived coverage……unless the employer takes the appropriate steps and makes the cash payment available through a Cafeteria Plan.

First, let’s illustrate this the wrong way and assume an employer offers employees $1,000 in taxable compensation if they waive health insurance coverage. Employees who waive coverage will receive an additional $1,000 in compensation. This compensation should be treated like a cash bonus, subject to income and employment taxes. Employees who enroll in coverage will be considered to have constructively received $1,000, even though they didn’t receive any additional compensation. Employers will need to apply
the appropriate wage-withholding and employment taxes to money the employee never received due to constructive receipt.

Yikes!

But there is some good news. As long as an employer has a Cafeteria Plan in place which allows for the choice between health insurance and a cash payment, then constructive receipt will not apply to those employees who enroll in health insurance coverage. In other words, the employees who elect health insurance coverage can do so tax-free. The bottom line is to make sure the Cafeteria Plan document addresses this information so adverse tax consequences can be avoided.

 

Whether it be the ACA, COBRA, ERISA, HIPAA, Section 125, or another regulation, employers can find themselves out of compliance somehow, and they may not even be aware. Here is a list of some common areas of
non-compliance, not ranked in any particular order.

1. Determining applicable large employer
(ALE) status under the Employer Mandate: This requires employers to determine the average number of employees on business days in the prior year, and employers must count full-time equivalent employees.

2. Determining full-time (FT) employee status under the Employer Mandate: This requires employers to have a deep understanding of their
employee classifications, and they generally must track hours of service to know who is a full-time employee.

3. ACA Reporting: This requires an employer of any size with a self-insured medical plan to submit reporting to help the IRS enforce the Inpidual
Mandate. It also requires ALEs to submit reporting to help the IRS determine if penalties under the Employer Mandate will apply.

4. PCORI Fees: Employers who have a fully insured medical plan which is integrated with an HRA must pay PCORI fees on the HRA, and several
employers are unaware of this requirement.

5. Plan Documents: Many employers are unaware that plan documents that are issued by an insurance company or third-party administrator fail to
disclose several pieces of information required under ERISA, and employers should be supplementing their plan documents with an additional document commonly referred to as a Wrap Document.

6. Non-Discrimination Testing:
Cafeteria Plans, Health FSAs, Dependent Care FSAs, HRAs, and self-insured medical plans all require non-discrimination testing to be performed to ensure the plan does not discriminate in favor of highly compensated and/or key employees. Several employers are not performing the required testing.

7. Form 5500 Reporting: In general, employers with ERISA plans that have 100 or more participants must file details about the plans using
Form 5500. The DOL has indicated several employers are meeting the requirements for the retirement plans but are failing to submit reporting on the health plans.

8. Medicare Part D Notice and Reporting: Employers must provide a notice to Medicare-eligible employees with information about the drug coverage available on the group plan, and whether it’s at least as good as the standard Part D plan. Employers must also report information about the drug coverage to CMS. Many employers fail to meet one or both requirements.

9. COBRA Administration: Several employers have failed to update their COBRA notices with information about the Health Insurance Marketplace. In
addition, several employers are not providing the COBRA General (Initial) notice on time or at all.

10. HIPAA: Employers who offer a self-insured plan, including a Health FSA or HRA, have access to Protected Health Information (PHI). As a result, they are supposed to have written policies and procedures on how/when they will use or disclose PHI, they should be appointing a privacy and security officer and meet other requirements. Several employers are lacking some or all of the requirements under HIPAA.

The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice.