Benefit Programs Policies

Why is it important to have written Benefit Program Policies? The truth is that there are a host of compliance issues involved in properly maintaining and operating an employee benefits program. Improper administration can lead to significant fines and penalties. The Internal Revenue Service and U.S. Department of Labor have been increasing the number of audits they do on these plans in recent years.

One of the biggest reasons why employers do not pass audits is because their benefit program is discriminatory. What does that mean? Simply put, it’s leaving employees out of a plan. Examples range from exclusions of part-timers to failing to extend benefits to clerical and custodial staff. A rule of thumb is that if one employee gets a tax-advantaged benefit–meaning one paid for with pretax dollars–the same benefit must be extended to everyone. Having company wide implemented written policies regarding benefit plans will ensure that this common mistake is avoided.

benefit-programs-policies-tipBenefits 101:

The law requires employers to provide employees with certain benefits. You must:

  • Give employees time off to vote, serve on a jury and perform militaryservice.
  • Comply with all workers’ compensation requirements.
  • Withhold FICA taxes from employees’ paychecks and pay your own portion of FICA taxes, providing employees with retirement and disability benefits.
  • Pay state and federal unemployment taxes, thus providing benefits for unemployed workers.
  • Contribute to state short-term disability programs in states where such programs exist.
  • Comply with the Federal Family and Medical Leave (FMLA).

The federal Family and Medical Leave Act (FMLA) requires employers with 50 or more employees to give workers up to 12 weeks off to attend to the birth or adoption of a baby, or the serious health condition of the employee or an immediate family member. After 12 weeks of unpaid leave, you must reinstate the employee in the same job or an equivalent one. (for more info regarding this, please see FMLA section of this site).

Benefits that are not required but are recommended policies:

  • Retirement plans
  • *Health plans (Medical, Dental & Vision)
  • Life insurance plans
  • Paid vacations, holidays or sick leave
  • Tuition Reimbursement (Educational Assistance)
  • Referral Program
*In March 2010, the Patient Protection and Affordable Care Act, also known as Obamacare and the Affordable Care Act (ACA), was signed into law. The law states that companies employing fifty or more people, and not offering health insurance, will pay a shared responsibility requirement if the government subsidizes a full time (30+hours) employee’s health care costs. For more information:
http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act

For more information forms and guidelines for implementing a comprehensive benefit plan for your company see the “Compensation and Benefit Programs” section of this site