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  • When employees are set up for success, companies often enjoy the benefits. Happy, motivated employees are more likely to be more productive. Unfortunately, there are several factors outside of the workplace that have a direct impact on the overall wellbeing of your employees.

    An Employee assistance program (EAP) is one tool employers can use to help stressed-out employees and improve both morale and work performance. Let’s break down what an EAP does, how it benefits both employers and employees, and how your company can get the most out of its program.

    What Is An Employee Assistance Program?

    The Society for Human Resource Management (SHRM) defines an EAP as “a work-based intervention program designed to assist employees in resolving personal problems that may be adversely affecting the employee’s performance.” These intervention programs are designed to give employees support for private matters until they can find a more permanent solution. An ideal EAP should meet the criteria listed below:

    • Confidential – Given the personal nature of employees’ issues, EAPs should allow employees to privately and anonymously seek support.
    • Accessible – Services provided by an EAP should be accessible online and easy for employees to contact during and outside of work hours.
    • Available – Services should be readily available to any employees and immediate family members who are eligible for the program.
    • Short-term – EAPs aren’t meant to be permanent sources of aid. The services an EAP provides are designed to give employees access to key services and short-term help until they can find a good, long-term solution for them.

    The exact form of support can differ greatly from program to program, but an average EAP is typically designed to assist employees in a variety of ways. While the services may differ, the goal is the same – to give employees the support they need to address factors that impact their mental and emotional health.

    Examples Of Employee Assistance Programs

    EAPs vary greatly depending on which services they include. The average EAP provides a wide range of services aimed to provide critical support for your workforce, but the exact selection can vary from program to program. However, it’s common for EAPs to address a number of personal issues, including the following concerns:

    • Relationship challenges
    • Grief over loss of a loved one
    • Financial or legal problems
    • Stress management
    • Mental health issues, such as anxiety, depression, or PTSD
    • Substance abuse
    • Workplace or domestic violence
    • Crisis management

    While EAPs were traditionally developed to support these personal issues, modern programs have expanded to include further services. Employers have found that there are a number of additional stressors that impact work-life balance and future plans. EAPs can also include the following forms of support:

    • Child care
    • Elder care
    • Adoption specialists
    • Retirement planning
    • Living wills
    • Pet care
    • Academic and tutor resources
    • Personal and professional development

    Benefits Of Employee Assistance Programs

    More stress means more problems for both employees and employers. According to Gallup’s State of the Global Workforce Report, a whopping 57% of U.S. employees reported feeling stress on a daily basis. By alleviating that stress, EAPs can help businesses enjoy the following benefits:

    • Reduced absenteeism
    • Increased productivity
    • Better morale
    • Improved retention

    Reduced absenteeism

    Outside stressors can often lead to employees taking additional sick days or simply calling off to attend to personal issues. EAPs give employees the means to alleviate those stresses. A study by Federal Occupational Health (FOH) found that companies that offer EAPs saw a 69.2% decrease in absenteeism by giving employees access to various means of personal support.

    Increased productivity

    Just because employees are at work doesn’t mean that they’re productive. Behavioral health concerns like stress, anxiety, or depression directly impact how engaged employees are at work. That same FOH study found that employees with access to assistance programs were 22.8% less checked out while on the job and more invested in their work.

    Better morale

    Another benefit the FOH found was that EAPs can improve employees’ sense of overall wellbeing. Studies found that EAPs increased users’ life satisfaction by 24.2% by addressing stressors that caused personal distress. In turn, employee morale is substantially better when employees take advantage of EAP services.

    Improved retention

    Simply put, stress makes good employees leave. EAPs show employees that your business cares about their wellbeing, making them less likely to suffer burnout or look for a fresh start somewhere else.

    Assistance programs can also entice talent to join your business. According to SHRM, 76% of employees “consider mental health benefits to be a critical factor when evaluating new jobs.” An EAP is a clear sign that your business takes employees’ mental health seriously.

    How To Maximize The Value Of Your Employee Assistance Program

    Offering an EAP is one step. Getting employees to use it is another. National studies find that EAP utilization averages just under 10%, but not because the programs are ineffective. SHRM reports that there are a couple of key reasons for the low usage rate:

    • Privacy concerns – Employees either feel uncomfortable sharing personal issue or are afraid that employers will gain access to this personal health information.
    • Lack of promotion – Companies either don’t promote these programs enough or employees aren’t aware of how they can access these services.

    Even with low participation numbers, employers who offered an EAP typically enjoyed an ROI of at least $3 for every $1 spent according to the 2020 Workplace Outcome Suite. Still, there are ways that businesses can encourage better EAP participation and receive even more value from their programs.

    Regularly promote EAP awareness

    It’s not uncommon for employees to only hear about their EAP once during the onboarding process or when the program was added as a benefit. It’s best to give employees regular reminders about your EAP and how to access these services. These reminders can come in multiple forms – during annual meetings, email updates, etc. Regardless of how you send the message, multiple reminders will only increase the odds employees will utilize these services.

    Stress privacy

    It’s not always easy for individuals to admit they need help. With that being said, it’s essential to communicate that employees can privately access services online or on the phone around the clock.

    In addition, employees should understand that their interactions with these services are completely private and are not shared with others within the company, including the employer. By stressing the private nature of an EAP, employees are more likely to explore these services on their own terms.

    Work with HR advocates

    It’s not always easy to manage the various aspects of benefits administration by yourself. Fortunately, you don’t have to promote and manage your EAP alone. The right EAP provider can help you maximize the effectiveness of your program.

    For example, GMS partners with businesses to offer critical assistance and educate employees about how to best utilize these services. We work with employers to help them offer a quality benefits package without having to spend the time to administer these benefits by themselves, including group health insurance, assistance programs, and more.

    Ready to enhance your employee benefits package? Contact us now about how GMS can help you save time and money through expert benefits administration.

  • Effective January 1, 2022, the No Surprises Act went into effect with regard to emergency care and balance billing by non-network providers. An undoubtedly complex piece of legislation, GMS’ Vice President of Benefits Beth Kohmann experts share some of the key takeaways below.

    With this new ruling, if a group health plan covers any type of emergency care, then emergency care treatment rendered through the stabilization of the patient must be covered by the group health plan – even if services are rendered by a non-network provider. The group health plan must cover these services at the in-network level of benefits. The group health plan will consider these charges at a qualified payment amount level and negotiate (if the qualifying payment amount is appealed) with the non-network provider until an acceptable payment amount is reached. The patient cannot be balanced billed for the difference between the billed charge and the agreed-upon payment amount.

    This applies to such providers as facilities, emergency room physicians, anesthesiologists, and air ambulances. Ground ambulance providers are not subject to the above ruling and would be permitted to balance bill a patient for the difference between the total charge and the qualifying payment amount.

    The same applies to non-emergency care where the patient would have no choice of provider. For example, if a patient is having surgery at a network facility with a network surgeon and the anesthesiologist or outside laboratory are non-network providers, the group health plan must pay these providers at the in-network level of benefits and at a qualified payment amount (or a negotiated rate if the qualified payment amount is appealed). As above, the patient cannot be balance-billed for the difference between the billed charges and the agreed-upon payment amount.

    If the patient chooses treatment from a provider that is not in-network for services, for example, a surgical center or surgeon, that provider must inform the patient of the estimated fee, prior to rendering treatment, for their services and explain that they could be balance billed for any non-allowed amounts. This must be in writing and the patient will need to sign a document stating they acknowledge and understand that they could be balance billed.

    This ruling will apply to any claims incurred after January 1, 2022. To stay in the know with the latest legislation and compliance, be sure to subscribe to our email list. 

  • As a business owner, you already know offering a competitive health insurance plan is one of the greatest tools in your recruiting and retention toolbox. So, you’re ready to search for health coverage that best suits your organization’s needs. The next decision to make is perhaps not as simple, but undoubtedly as important: Should you purchase your insurance through a broker or through a Professional Employer Organization (PEO)?

    When you outsource the purchase to a broker, you gain a professional who will work with insurance companies on your behalf. A broker is an independent agent licensed and regulated by states. After they shop options, they can make recommendations about which carrier and plans you should enroll in. Brokers earn a commission from the insurer for the people they enroll in said insurer’s plans. While some brokers work with numerous insurance providers, others may only sell from specific providers, thus limiting your options.

    On the other hand, a PEO offers its co-employees at small and medium-sized businesses access to affordable health coverage that is comparable to those of large corporations. In the most simplified version, this is due to the buying power a PEO has – a PEO represents thousands of companies and their employees, thus appearing like a large-sized business. In turn, your organization enjoys quality coverage and highly competitive rates. For example, in 2020 GMS’ family premium cost was 34% lower than the US average.

    Moreover, partnering with a PEO for health coverage means:

    • The administrative burdens of health insurance are handed over to them.
    • They handle the entire carrier relationship – including policy selection, annual renewals, and open enrollment.
    • You gain assistance for any changes, minimizing surprises by ongoing support and guidance.
    • Access to ancillaries like dental, vision, long- and short-term disability, and more!

    Another distinguishing feature of partnering with a PEO is their services go far beyond just insurance coverage, so, for someone looking for payroll, HR assistance, and even risk management, it simply makes sense to go with one single vendor for everything.

    Ready to offer the insurance coverage your employees deserve? Trust GMS to remove the burden of finding and managing a health insurance plan – simply contact us today to get started.

  • New For 2022: 401(k) Contribution Limit Rises   

    The IRS announced the 2022 cost-of-living adjustments (COLAs) for employer-sponsored retirement plans. Both employee and employer limits will increase due to the continued rise of inflation. Employees under the age of 50 will now be able to max out their contributions at $20,500. This is a $1,000 increase from the cap in the years 2020 and 2021. Employees aged 50 and older will continue to be able to contribute an extra $6,500 in catch-up contributions, which has been unchanged for the last two years. 

    In addition, the employer-plus-employee contribution limit will increase to $61,000 in 2022, up by $3,000 from 2021. This is particularly beneficial for employers that make an annual profit-sharing contribution. 

    When dealing with the annual limit as a contribution goal, not all employees will be able to fund the maximum amount. However, if employees consider raising their contribution rate by even 1% each year, they will see a dramatic impact at retirement. “If your employer offers a matching contribution, it’s important to try and contribute at least that percentage as a minimum,” said Tom Smith, Manager – Executive & Retirement Benefits for GMS. “Also, striving to increase your personal deferrals each year in order to eventually reach those annual contribution limits will help increase your odds for a comfortable retirement.” 

    Employees that do want to max out their contributions should check in with their employer about reaching the annual limit prior to year-end. If this occurs, employees may lose out on employer matching contributions tied to each paycheck. Certain plans allow for a year-end “true-up” contribution, so it’s best to know your company’s 401(k) plan provisions to ensure you are receiving the maximum employer match.  

    It can be challenging for both the employer and the employee to comply with these limits. Employers must ensure that their payroll systems do not accept contributions once the limit is reached. Employees also must remember that the annual limit applies to the total contributions between all 401(k) plans. Since the contribution limit is an aggregate total, employees who work at multiple jobs over the course of a year and contribute to multiple different 401(k) plans will need to self-police how much they are contributing to each plan, so that they do not contribute more than the IRS limit. 

    How GMS can help:   

    Partnering with a CPEO (Certified Professional Employer Organization) like GMS can allow you to offer 401(k) and profit-sharing plans for your employees. It’s no secret offering retirement plans is important to recruit and retain quality employees, but they do come with a lot of complexity and risk. GMS takes on the role of the fiduciary to ensure employers maintain compliance, which means that business owners do not have to waste time trying to make sense of their legal responsibilities. When you work with GMS, we will take care of the administrative tasks, auditing, and plan management.  

    Interested in cutting costs and reducing stress? Contact GMS today to get your customizable 401(k) or profit-sharing retirement plan started. 

  • When you run a small business, offering group health insurance plays a critical part in attracting and retaining top talent. According to a study by MetLife, 81% of employees named health insurance as a “must-have” benefit, while only 3% said that it wasn’t needed. While other factors impact job decisions, it’s no secret that healthcare coverage plays a key role in making your business a more desirable place to work.

    The advantages of offering group health insurance are clear, but there is a drawback for businesses – it’s not cheap. Group health coverage can cost a small business thousands of dollars per employee, and those annual costs can add up depending on the size of your workforce. It’s also common for premiums to rise year over year.

    Want to know why premiums are getting more and more expensive? We’ll break down what impacts your premiums and why rising costs are a common trend.

    What Impacts Your Group Health Premiums?

    The cost of a group health insurance premium is driven by several different factors. Insurance companies use these different considerations to raise or lower your group’s rates. The biggest factors that will dictate how much you and your employees pay include the following categories.

    Group size and overall wellness

    The first thing an insurer considers when calculating your company’s premium is the size of the group. Larger groups tend to enjoy lower costs because other factors can be spread across a greater number of individuals, whereas small groups won’t enjoy the same economy of scale.

    In addition to size, insurers also evaluate the general health and wellness of a group. A group that presents a higher risk of costly claims is likely to pay higher insurance rates. This reality is simply because the insurer estimates how much they can anticipate in paying out for claims in any given year, which is why your premiums may be higher.

    Age of the group

    The unfortunate truth is that as an individual ages, medical issues tend to be more common. Insurers will typically use the average age of your group members to calculate your premium. If your group skews older, your premiums will likely be higher than average.

    Group member occupations

    Some occupations inherently carry more health risks than others. The level of risk based on certain industries or jobs directly impacts the cost of group insurance premiums. For example, a staff comprised mostly of accountants will present a lower risk than a group of construction workers. As such, the construction company is likely to have a higher number of claims and more expensive premiums in this scenario.

    History of claims

    Your past also plays a direct part in premium calculations. The total cost of past claims can negatively or positively impact your rates. If your group has several members undergo costly medical procedures, your premiums may increase the following year. This adjustment is the result of an insurer using current data to estimate how much your group should pay for its coverage.

    The Reasons For The Rising Costs Of Healthcare

    In recent years, the cost of offering health insurance seems to be on a never-ending upward trend. That perception isn’t an illusion – rising healthcare premiums are a real trend instigated by a variety of factors.

    Increase in medical expenses

    Demand for medical services has seen a big increase due to government programs such as Medicare and Medicaid. Many individuals who lacked coverage are now on these programs. This rise in demand and hospital visits effectively causes a similar rise in medical care costs and premiums. Prescription drug spending is also on the rise, which adds yet another layer to why the costs of health insurance keep increasing.

    Population growth

    Sometimes rising healthcare costs is simply a matter of having more patients. Our population continues to grow, which simply leads to greater national health expenditures. As a result, the overall population increase puts a greater strain on the healthcare system and leads to higher operational costs that impact everyone’s premiums.

    Advancing age of population

    The population of the United States is not only increasing, but also aging. As of 2020, there were approximately 47 million people in the United States over the age of 65. As recently as the year 2000, this number was only 31 million. The aging of the population won’t slow down anytime soon, either. It’s projected that our population will include 65 million people over the age of 65 by 2040.

    With an aging population comes increased healthcare expenses. The older we get, the more medical issues we face. Therefore, a country whose senior citizen population is increasing is going to see hospitals that are hit hard on resources. In addition, the average group age can increase, leading to a more direct impact on your small business’ premiums.

    Increase in chronic illness

    As a nation, we are facing more chronic diseases now than ever before. The largest culprit is diabetes, followed by high blood pressure and high cholesterol. Simply put, the growth of chronic illness in the country leads to long-term care and greater costs for constant coverage to treat these conditions.

    How Can a PEO Help Lower Healthcare Premiums?

    A Professional Employer Organization (PEO) allows businesses to balance the benefits of group health coverage with the costs of health care spending. A PEO like GMS can help you offer top-tier coverage through more affordable insurance options. This cost-effective approach is made possible through both economy of scale and expert benefits administration.

    Increased buying power

    When you partner with a PEO, you aren’t buying group health insurance on your own. One tremendous benefit of a PEO is that it represents many organizations rather than just yours. This network of relationships means that a PEO can treat several companies as a single group while dealing with insurance companies. This grouping of organizations means that your small business can see the same types of benefits and cost savings that can typically only be obtained by larger corporations.

    More importantly, a PEO will split its portfolio of organizations into separate groups based on their own demographics. This means that your company will not be grouped in with every other company under the umbrella of your PEO, but instead will be treated based on your own group’s ratings. This means you will see the lowest cost possible, without cutting back on your actual coverage.

    Benefits administration and payroll

    A PEO can also help ease your administrative burden by enabling your healthcare admin and payroll to integrate with one another for a streamlined process. For example, payroll deductions will be set up automatically when new employees are onboarded and opt into health insurance. Paycheck deductions can be automated, including determining what should be pre-tax and post-tax.

    The process of employees enrolling in benefits or renewing during open enrollment can also be simplified by a PEO. Dedicated account managers and online systems make it simple to educate employees on their options and help them choose their coverage elections in the same online portal.

    In short, a PEO makes your benefits administration simpler and more cost-effective. It’s almost a full-time job to simply deal with the health benefits for your employees. That’s why our experts can help you invest in quality, affordable coverage and save you valuable time by handling time-consuming administrative tasks.

    Are you ready to streamline your administrative processes? Contact GMS now to talk with our experts about all your health insurance needs.

  • No matter the size of your company, a 401(k) can play a pivotal part in a competitive benefits package. Only 48% of businesses offer some form of retirement savings plan for their employees, which makes starting a 401(k) plan all the more enticing for an enterprising business owner.

    Of course, it’s not always clear how to set up a 401(k) or profit sharing plan for your small business. Offering a retirement saving and investing plan takes a few steps, but the results can have a major impact on both your employees and your company. It’s time to break down what it takes to set up the right 401(k) for your company.

    Why Should My Small Business Offer a 401(k) Plan?

    Before you set up a 401(k) for your small business, it’s important to know why it makes sense for your company. There are several key reasons to offer this sought-after benefit.

    Attract and retain talent

    Arguably the most obvious benefit of offering a 401(k) plan is that it makes your business more competitive in the hiring market. Charles Schwab reports that 88% of job seekers named a 401(k) plan as a “must have” benefit when considering a position. That desire for a retirement plan not only makes your business more attractive as a landing spot, but also adds another way to keep your current employees satisfied.

    Improve your employees’ morale

    A 401(k) can stand as more than just a financial benefit. The act of giving your employees a retirement savings plan serves as a symbol that you value their future with your company—and beyond. 73% of Americans named their finances as the top cause of stress in their lives. By offering a 401(k), you can show employees that you care for their quality of life, which can help make them more productive and appreciative.

    Tax-deductible perks

    Another potential advantage of offering a 401(k) plan is that they can help out during tax season. First off, the IRS states that any “elective deferrals and investment gains are not currently taxed,” which means that you and your employees can enjoy tax deferral until those funds are distributed. Employers can also deduct any matching contributions up to the annual limit on their federal income tax return.

    The Four Steps for Setting up a 401(k) for a Small Business

    Once you’re ready to establish a 401(k) plan, there are some initial actions you’ll need to take for your business. This four-part process will help you go from identifying the right type of plan all the way through executing your new 401(k).

    Step One: Choose A Plan That’s Right For You

    Once you decide to offer a 401(k), it’s time to determine which type of plan is right for your business. There are many types of plan designs that offer different contribution features or advantages. This amount of flexibility allows you to determine how contributions work, create eligibility requirements and vesting schedules, and decide on whether or not to contribute to these plans. These plans include:

    • Traditional 401(k)
    • Safe harbor profit sharing 401(k)
    • Simple 401(k)
    • Roth 401(k)

    Traditional 401(k)

    The traditional 401(k) plans are arguably the most flexible option available. The plans give employers a lot of freedom in terms of profit sharing options, vesting schedules, and more. Through a traditional 401(k), employers can:

    • Contribute directly to all participants’ plans.
    • Match employees’ deferral amounts (or a portion of the deferrals).
    • Provide both contributions and matches.
    • Offer none of the above.

    Any contributions employers make can be subject to a vesting schedule, giving employers added flexibility. These schedules determine how long an employee must work for your company in order to keep part or all of your company’s contribution.

    Another key part of traditional 401(k) plans is that they are subject to non-discrimination tests with the IRS. These tests are designed to prevent businesses from favoring certain employees over others. Every year, the IRS will test traditional plans to see if the deferral percentage and actual contribution percentage don’t favor highly compensated employees key employees such as an owner. As such, you’ll need to meet these testing requirements to prevent your 401(k) from failing IRS guidelines.

    Safe harbor 401(k)

    Safe harbor plans are similar in nature to traditional plans, with the biggest difference being that safe harbor plans are not subject to the IRS annual contribution testing. In exchange for eliminating these non-discrimination tests, employers are required to make contributions to employees’ plans. In addition, many safe harbor 401(k) plans require these mandatory contributions to fully vest when they’re made.

    SIMPLE 401(k)

    If your business has fewer than 100 employees, you can also opt to offer what’s called a SIMPLE 401(k). This type of plan is also exempt from nondiscrimination testing, but does limit some of the flexibility of other plan types. For example, your business cannot offer any other types of plans and all contributions must be fully vested. SIMPLE plans also require employees to make one of the following types of contributions.

    • A matching contribution up to 3% of each employee’s pay.
    • A non-elective contribution of 2% of each eligible employee’s pay.

    Roth 401(k)

    Another option available to business owners when setting up a 401(k) is a Roth account. Roth accounts function much in the same way as a regular 401(k), except that all contributions are taxed before they’re deposited. The main advantage of this type of plan is that account owners don’t need to pay any taxes on withdrawals, including all of the investment earnings.

    Step Two: Find the right team for your 401(k) plan

    When learning how to set up 401(k) for a small business, an essential requirement is partnering with the right providers for your business. There are many different aspects of a 401(k) plan that makes it nearly impossible for business owners to do everything by themselves. That’s why these plans can involve a variety of partners, including:

    • Recordkeepers in charge of processing withdrawals and tracking contributions, earnings, losses, plan investments, expenses, and benefit distributions.
    • Advisors who help you select and maintain plan investments and potentially oversee the money management of the plan.
    • Plan administrators who handle document preparation, transaction approval, compliance filing, and other behind-the-scenes tasks.
    • Payroll providers who tie your payroll process to plan contributions and paycheck deductions.

    With the right team, business owners can successfully implement a 401(k) plan. However, that doesn’t necessarily mean that multiple providers for each role. Small businesses can choose to work with multiple vendors or find a partner like a Professional Employer Organization that can oversee and manage most, if not all, of the setup and administration for your plan.

    Step Three: Start Your New 401(k) Plan

    Now that you have the plan type and partnerships in place, it’s time to make your 401(k) official. The IRS requires businesses to take some basic actions to officially establish and run a 401(k) plan.

    Create a plan document

    Every 401(k) plan needs to start with a written document. According to the IRS, this document should serve as “the foundation for day-to-day plan operations.” In short, the document should lay out the various rights, benefits, and features of your plan. These details include:

    • When your employees are eligible for the plan.
    • A breakdown of profit sharing and employer matching (if applicable).
    • Guidelines on vesting schedules.
    • The process for handling distribution.
    • Relevant contact information for providers and internal company resources.

    Set up a trust

    The next basic action involves having any plan assets held in a trust. This step ensures that these assets only benefit the participants of the plan. Your business must assign at least one trustee to the plan. This individual or group is tasked with handling plan activities such as contributions, distributions, and plan investments.

    While this step may seem simple, it’s critical to have the right trustee in place. Trustees’ decisions will have a direct impact on your plan’s financial health, so you’ll want a person or people in place who you can trust with the financial integrity of the plan.

    Record maintenance

    Businesses are also required to set up an accurate recordkeeping system for their plans. This system should track and properly attribute several key details, including:

    • Contributions
    • Earnings and losses
    • Plan investments
    • Expenses
    • Benefit distributions

    Another reason recordkeeping systems are important is that they can help your business stay compliant with the Federal government. Every year, businesses must prepare and file an annual return/report for their 401(k) plans. The recordkeeping system makes it easier for you and your team to prepare these reports.

    Inform participants

    The final action for setting up your small business’ 401(k) plan is to notify eligible employees about your plan. This information should include key details about your plan’s benefits and requirements. These efforts should include providing employees with a summary plan description (SPD) that shares key information and discloses fees. You can also opt to provide additional information, such as education about the advantages of a 401(k) plan and employees can get the most value out of them.

    Step Four: Ongoing Maintenance

    Setting up a 401(k) for a small business is a big accomplishment, but it’s not the end of the process. An ongoing 401(k) plan requires additional work to keep it successful and compliant. These responsibilities include:

    • Regular plan maintenance
    • Ongoing nondiscrimination testing
    • Government filings
    • Employee assistance

    Find the Right Partner to Help You Set Up and Maintain Your Small Business’ 401(k)

    Let’s face it – setting up and maintaining a 401(k) plan can be an overwhelming, time-consuming process. That’s why GMS partners with small businesses to offer an attractive 401(k) or profit sharing retirement plan without the added time and hassle. GMS not only saves you time by managing your setup and ongoing maintenance, but also reduces plan costs by leveraging the group buying power as a PEO.

    Ready to set up a fully customizable retirement savings plan for your business? Contact GMS today to talk to our experts about how we can support the financial health of your employees through our large-scale 401(k) plan.

    Already a GMS client? Sign up for a 401(k) through GMS now through Aug. 31 and we’ll waive the admin fee for the rest of 2021-22! Reach out to your account manager or Tom Smith (TSmith@groupmgmt.com) to set up an appointment.

  • Your small business’ benefits package takes on added importance as it gets harder and harder to attract and retain top talent. While group health insurance may dominate headlines in terms of what job seekers want in a new role, it’s not the only health care benefit employees want. 

    Ancillary insurance can play a pivotal role in making your workplace more enticing for both job candidates and current employees. However, some businesses may see supplemental benefits like dental and vision insurance as less important than other offerings. Let’s break down how ancillary insurance works and why your small business should offer these benefits.

    What are Ancillary Benefits?

    By definition, ancillary insurance is a secondary health care benefit that’s typically purchased in conjunction with major medical coverage. These supplemental benefits are meant to enhance your existing health coverage and give employees more support for their overall well-being. Employers can also offer ancillary insurance in a couple of different forms.

    • Voluntary benefits – Employees pay 100% of ancillary premiums, but have access to lower premiums by being part of a group plan as opposed to purchasing a policy as an individual.
    • Employer-contributory benefits – The employer pays at least half of the premiums.

    While dental, vision, and life insurance are the most well-known ancillary benefits, they’re not the only options for small businesses and their employees. Ancillary benefits can also include any of the following options to enhance your benefits package.

    • Long-term care
    • Cancer and critical illness
    • Hospital indemnity and intensive care
    • Accidental death policy
    • Long-term and short-term disability

    Why Small Businesses Should Offer Vision Insurance and Other Ancillary Benefits

    Simply put, employees care about ancillary insurance. One survey asked 2,000 people to choose between a higher-paying job and a position with more attractive benefits. A whopping 88% of those individuals said that they would consider taking a lower-paying job that had better health, dental, and vision insurance – and that doesn’t even take into account the other ancillary benefits that would make your benefits package even more enticing. 

    Adding ancillary insurance for your small business not only makes your benefits package more competitive, but also shows your employees that you care about them. A little peace of mind can go a long way, so giving your employees access to ancillary insurance can save them from worrying about getting contacts or scheduling their next dentist appointment. 

    That added emphasis on your employees’ well-being can also have a direct impact on the future of your business. Employees who feel valued and are happy at work are likely more willing and able to contribute to your company’s success. That increased employee engagement can lead to a plethora of benefits for your business, including:

    • Improved retention – Businesses with engaged employees reduced employee turnover by 90%, according to Gallup.
    • Increased productivity – That same Gallup report found that engaged employees were 17% more productive.
    • Reduced absenteeism – Gallup also learned that engaged employees missed work 37% percent less than unmotivated workers.
    • Greater profitability – According to Inc., a 10% increase in productivity can increase profits by $2,400 per employee per year.

    Another major advantage of offering ancillary benefits is that they can help your employees stay healthy. Vision insurance is a great example for this. Poor vision and eyestrain will not only negatively impact your employees health, they can have a direct impact on job performance as well. 

    According to the American Optometric Association, dry eye disease can reduce employee productivity by 20 to 25%. Offering vision insurance and other ancillary benefits can go a long way toward keeping your employees happy, healthy, and productive.

    Work with a PEO to Offer Competitive, Cost-Effective Ancillary Insurance

    Running a small business is no easy task. There are countless administrative burdens that rest on your shoulders, and managing your benefits offerings is one notable example. Fortunately, you don’t have to deal with employee benefits administration alone.

    Group Management Services works with small business owners to help them offer and manage quality benefits packages and save valuable time. As a Professional Employer Organization (PEO), our greater buying power allows you to offer competitively-priced group health plans and ancillary options on a mass level, even for at-risk employers or small groups.

    Partnering with GMS also means that you have a dedicated resource that’s here to help. We’re always looking for ways to improve your offerings, which is why we recently switched our vision provider to VSP to ensure that you and your employees have the perfect ancillary benefits for your business. In addition to our new vision provider, we continue to offer additional benefits to our clients, including Metlife Auto & Home coverage. We also have a team of experts on hand to answer your questions and guide your through any HR hurdles you may face in the future.

    Ready to make your business more competitive? Contact GMS today about how we can support you and your employees with ancillary insurance and other HR services. Already a GMS client? Contact your account manager to learn more about VSP and our vision plans.

  • As a small business owner, you’re in charge of making many critical decisions that impact your employees. Determining which benefits and employee perks you offer is one choice that plays a direct role in attracting top talent and retaining key members of your company.

    These days, health insurance is a major sticking point for new and current workers. The Society for Human Resource Management (SHRM) found that nearly half of employees ‘said health insurance was either the deciding factor or a positive influence in choosing their current job.’ That willingness to choose jobs based on health insurance makes a competitive benefits package even more important for a growing business.

    Of course, offering health insurance is also a notable expense for a small business trying to grow. Fortunately, the small business health care tax credit allows qualifying organizations to offset some of those costs and provide quality health insurance for their employees. Here’s what you need to know about this tax credit and whether it can help your business.

    Which Small Businesses Qualify for the Health Care Tax Credit

    While any business that offers health coverage would love to save money, the IRS does set some stipulations for which organizations will benefit from the tax credit. Your business will need to meet the following criteria to be eligible for the small business health care tax credit. 

    Your business must have fewer than 25 full-time equivalent employees

    Full-time equivalent (FTE) employees are typically counted as those who meet “an average of 30 hours of service per week for a calendar month or at least 130 hours of service in a month.” Any employee that performs services for your business would normally be counted, but the IRS requires employers to alter this calculation for the tax credit.

    Instead of counting 30 hours per week as one FTE employee, the health care tax reviews hours from an annual perspective. One FTE employee for the tax credits equals approximately 2,080 hours per year. Any part-time employees who combine to equal more than 2,080 hours would count as one FTE employee in these calculations.

    The IRS asks employers to not include the wages and hours worked by certain types of employees toward their 25 FTE employee limit. These individuals include:

    • The owner of a sole proprietorship
    • Any partner in a partnership
    • Shareholders of S Corporation owning more than 2%
    • Owners of more than 5% of the business or other businesses
    • Family members of the above
    • Seasonal employees who work 120 or fewer days per year

    Your business’s average wages must be lower than $56,000 per full-time equivalent

    In addition to meeting FTE requirements, your business must also meet certain wage thresholds. The IRS set the average annual wages at $50,000 back in 2014 and have adjusted the amount each year for inflation. As of the 2020 tax year, businesses must pay average wages of less than $56,000 to FTE employees to qualify for the tax credit. 

    Your business must offer a qualified health plan

    Any organization that wants to be eligible for the small business health care tax credit is required to offer a qualified health plan through a Small Business Health Options Program (SHOP) marketplace. There are also certain areas where a qualified health plan may not be available through SHOP. In those cases, an eligible business may still be able to claim the credit.

    Your business must pay health insurance premiums through a “qualified arrangement”

    According to the IRS, a qualified arrangement means that employers pay at least 50% of any premium costs for enrolled employee’s health insurance coverage. This arrangement only extends to costs incurred by those employees, meaning that any costs incurred by family or dependents do not affect the 50% threshold.

    How Much Can Organizations Receive from the Small Business Health Care Tax Credit?

    The exact amount of credit your organization receives depends on two main factors:

    • Whether your organization is tax-exempt or not
    • The size of your organization

    Eligible smaller businesses can receive a tax credit that covers up to 50% of the premiums paid for by the employers. Meanwhile, eligible employers who are tax-exempt can max out a 35% tax credit. This credit is available to both types of employers for two consecutive taxable years. Small business employers are able to carry that credit either forward or back as well.

    Of course, those numbers represent the maximum tax credit for your business. The exact amount your business can receive is based on a sliding scale where smaller employers will receive larger credits. According to the IRS, your maximum allowed credit will be reduced if you employ more than 10 FTE employees or have average wages of more than $25,000 (subject to change due to inflation).

    How to Claim the Tax Credit

    If your small business is eligible for the tax credit, you should fill out Form 8941 to calculate that credit. The IRS provides a detailed PDF with instructions on how to list your employees, their total hours, and how much you paid them. Meanwhile, tax-exempt organizations can file Form 990-T for their credits.

    How to Invest in the Right Benefits Package for Your Small Business

    Whether you qualify for a tax credit or not, it’s difficult to balance rising premiums and providing quality health care coverage that helps you attract and retain top talent. Fortunately, Professional Employer Organizations (PEO) like GMS make it possible for you to provide top-tier coverage at affordable prices.

    As a PEO, GMS is a natural fit for health insurance administration. We represent hundreds of businesses and can leverage our greater buying power to keep premiums down and give you access to quality plans at cost-effective prices. GMS also gives you and your employees access to experts who can help you stay on top of regulatory changes and educate group members about how to best use your plans.

    Let’s face it, benefits administration is confusing and time consuming. GMS helps you invest in quality, cost-effective coverage and allows you to reclaim your valuable time. Contact GMS today about group health insurance and ancillary benefits that makes sense for your small business.

  • I receive this question very often, especially at the beginning of each year. The IRS requires any company with a 401(k) plan to conduct annual compliance testing.

    The testing is conducted after the plan’s year-end. For most plans, this is 12/31.

    Why is plan nondiscrimination testing important?

    According to Transamerica Retirement Services, “Nondiscrimination testing mandates were added to the rules governing 401(k) plans to ensure that these plans are not designed to economically benefit only highly-paid personnel, but are fair for all employees. Not meeting these mandates, or failing to correct any failed year-end compliance test, could mean substantial penalties and possibly even disqualification of the plan’s tax-exempt status.”

    Simply put, 401(k) testing is required to make sure all employees benefit from the plan equally, regardless of their income level. When plans aren’t tested or fail the test, or when plan problems aren’t corrected, the company can be penalized.

    How does 401(k) testing work?

    401(k) testing involves examining the benefits received by all employees. For the purposes of these tests, employees are grouped into three categories:

    • Key Employee – anyone with at least a 5% ownership stake in the company (either last year and/or current year) or a direct relative (spouse, parent, or child) of someone with a 5% ownership stake.
    • Highly Compensated Employee (HCE) – for 2013 testing, anyone who has made $115,000 in 2012.
    • Non-Highly Compensated Employee (NHCE) – anyone that doesn’t fall into the other two categories.

    *Please note that all Key Employees are also considered Highly-Compensated Employees, but not all Highly-Compensated are considered Key Employees.

    What do the tests entail?

    These two tests are probably the ones that effect employers the most.

      1. Average Deferral Percentage Test (ADP)

    This test takes the average deferral rate of the HCE and compares it to the average deferral rate of the NHCE. The HCE can only contribute so much more than the NHCE.

    If you are a HCE and contribute more than the maximum allowed, then you could be subject to a refund or the company might have to make contributions into the NHCE accounts.

      1. Top-Heavy Test

    This test is a little different, in that it is always conducted for the upcoming year. The numbers used are from 12/31/12 to determine if you are Top-Heavy for 2013.

    Key Employees cannot control more than 60% of the entire plan’s assets. If they do, the company will have to make up to a maximum of a 3% non-elective contribution to any eligible employee of the company—even those who aren’t participating in the plan.

    How do I make sure I’m abiding by the rules?

    You need to make sure you are getting the proper guidance from your retirement provider. You also need to take ownership of your plan. Additional Plan Data forms are extremely important, because things change from year to year. It’s important to have the most up-to-date information so that your retirement provider can correctly conduct your testing.

    GMS, as a PEO company, is able to offer clients our 401(k) plan. We assist with administering the testing. Instead of just handing you the results, we will go over them and provide advice. Every company is in a different situation.

    Are you getting the right guidance on your 401(k) plan?

    “Numbers and Finance,” © 2011 Ken Teegardin, used under a Creative Commons Attribution-Share Alike 2.0 Generic License.

  • My two older boys, ages 9 and 10, are playing ‘kid pitch’ baseball this year. Believe it or not, when I asked them what position they wanted to play, they both said “Dad, I want to be the pitcher”.

    Then we asked each player on the team what position they wanted to play and each and every player said “Pitcher”. On paper this is not strange, as this is the most glorified position in baseball. After all, they make the most money, get the most publicity (when they are good), and seem to have the biggest fan base.

    The other coaches and I talked to our 13-man roster about how important every position is on the team and how every position contributes to the overall goal. We teach them that they all have to play together to win.

    This conversation made me think of a business and all the “players” within a company. I bet if you asked most employees, “If I could give you a new position, what would it be?”, a popular responses would be, “I want to be the manager, the president, or the owner.”

    I am not downplaying the pitcher, the manager, the president, or the owner positions, as they are still important. But isn’t the baseball team just like a company, where that every position is important?

    • Without Risk Managers – workers gets hurt and worker’s comp rates go through the roof.
    • Without Payroll Employees – we have anarchy because no one gets paid.
    • Without Tax Administrators – the IRS is knocking at the door (actually they don’t even knock, they just enter.)
    • Without Sales People – there are no new customers.
    • Without Benefits Administrators – no one has healthcare, 401K’s, or vision and dental insurance.
    • Without Wellness Coordinators – people miss out on learning to improve their health choices.
    • Without Human Resource Employees – you have a disheveled mess.

    You get my point? Every business needs:

    • Right, center, and left fielders
    • Catchers and pitchers
    • First, second, and third basemen
    • Shortstops
    • Teammates on the bench ready to play
    • Fans
    • Beloved mascots
    • Coaches
    • Umpires

    No team is successful without all of these positions working together towards a unified goal. Isn’t the same true in business? Whenever everyone works together—bringing their special talents and experiences with them—games are won, and businesses grow.

    “Trend Following Little League Team,” © 2012 Michael Covel, used under Creative Commons Attribution-Share Alike 2.0 Generic License.