Top 5 Costly Employee Benefit Mistakes
Most employment opportunities include benefits packages as standard fare. In order to attract the right sort of employees, a company needs to include retirement packages, health plans and more. Despite this, employee benefit mistakes are more common than you may think.
Breaking Down Common Employee Benefit Mistakes
Damage to the company often occurs when these benefits are implemented improperly. Here are the top 5 employee benefit mistakes to avoid.
Not Making Deposits Promptly
When employees choose to defer salary in order to make payments into a benefits plan, those deposits must be made right away. Do not delay when it comes to the salary deferral itself or matching and profit-sharing funds from the company. Failure to do so results in fines and penalties from the government, not to mention frustration from the employee. The workers legally own the money, not the company. Therefore, making a deposit within seven days is a good rule. Any longer than that is putting the company at risk for complaints and potential claims against them.
Late Enrollment of Qualified Employees
If an employee is eligible for any kind of benefits package, they must be enrolled as soon as possible. Companies face major penalties for delaying. The human resources department must know who qualifies for a retirement package or health program and enroll them right away. Sometimes companies try to exclude part-time employees, but many cases exist where certain part-time employees qualify for benefits. Failure to deliver on this contract can be costly.
Failing to Have a Written Plan Summary
The employees of a company have a right to know what is available to them concerning their benefits packages. Companies that fail to provide a summary of available plans are putting themselves at risk. This could be a problem for smaller companies who try to keep things informal. If an employee claims they were never properly informed of their rights, it could turn into an expensive problem.
Purchasing Inadequate Insurance Plans
It is great to have insurance programs for disability, health and so on, but they have to be adequate to meet the needs of the employees. If every claim is denied, or the kinds of disabilities produced by the job are not covered, then the company has a problem. Be sure that the group plans purchased are adequate to the needs of the employees to avoid having to pay out of pocket for the claims.
Confusion Over Independent Contractors
Dealing with independent contractors can be confusing for the human resources department. An independent contractor is not technically an employee of the company and therefore should not be covered by the health plan. Doing so causes the plan to be categorized as a “multiple employer” plan and can be a major clerical and financial hassle for the company. Be sure to know what job every employee does and categorize them appropriately.
About Moody Insurance Worldwide
Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.