Canopy Nation Blog

Company Benefits
Christina Babu

What to know about offering life insurance as a benefit

Life insurance is one of the most common employer-provided benefits. Though life insurance is an important asset for future financial security, many employees don’t realize its significance. Teaching employees about the value of life insurance may increase loyalty to your company as they better appreciate this benefit. Employer-sponsored coverage can be offered in a variety of ways. Employers can choose between a term policy, permanent coverage or both. Term life insurance has a specified coverage period (term), but can usually be renewed or converted into a permanent policy at the end of a term. Premiums are generally affordable initially, but can increase substantially when renewed. Permanent life insurance is life-long coverage that generally also includes a cash value savings component. There are many types of permanent life insurance, including whole, universal and variable. This type of coverage has higher premiums, but offers more long-term value. Cost-sharing among employers and employees also varies between organizations. Some employers cover the full cost, some require employees to pay the full premium and others split the cost with employees. A common scenario among CanopyNation clients is a group-term policy, which is no cost to the employee and provides a coverage amount that is a multiple of their annual salary (usually one to five times their annual pay). Group-term policies often end when an employee leaves the organization (or passes away), but employees may be able to convert it to a permanent policy or renew it upon leaving. This is generally an affordable plan for employers to offer, though it does not offer as much long-term value to employees as a permanent plan. Many employers who offer such a group-term policy also offer additional voluntary coverage options, in which the employee pays the full cost but still receives the benefit of group rates and payroll deductions. Additional coverages offered may include: Spouse/dependent life insurance in which group-term policies only cover the employee. Supplemental term life insurance for the employee to elect a higher amount than the employer offers. Supplemental permanent coverage, which provides a whole, universal or variable life policy in addition to the term policy. Accidental death and dismemberment (AD&D) coverage. Premiums for life insurance offered by the employer are generally deductible as ordinary and necessary business expenses (unless the employer is the beneficiary of the policy). Additionally, the cost of employer-provided group-term life insurance is excludable from the employees’ gross income (up to $50,000 of coverage). However, the plan must meet special nondiscrimination rules or key employees may not be eligible to exclude the cost of their coverage from their gross income. Showing life insurance’s value to your employees Many employees do not realize the financial benefits of a life insurance policy until they think through life-altering issues. Ask employees to envision the debt and financial responsibilities that loved ones would face in the event of their death. If the employee is the primary household income, how will the family support themselves? If the employee dies and leaves behind a mortgage or substantial medical bills, who will have the burden of paying that debt? If you offer a permanent coverage option, explain the value of having the cash benefit component to the policy. Emphasize to employees that buying life insurance on their own is costly. Even if your group coverage is employee-paid, you are still offering significant advantages: Lower rates through a group policy than if buying individual coverage No medical review required for group policies, as opposed to individual policies where an unfavorable medical exam could disqualify the individual or trigger extremely high premiums Be sure to inform employees on restrictions regarding this issue, such as a requirement to enroll when first eligible to avoid a medical exam. Convenience of payroll deductions for premiums Educating employees on the benefits of life insurance in general and the advantages of purchasing through your group plan can help increase awareness and participation, boost loyalty, and support hiring and retention initiatives. What to consider before offering life insurance as an employee benefit When deciding to offer life insurance as an employee benefit, there are a number of factors to consider: What type of coverage will you offer? Will you offer term insurance, permanent or both? Who will be covered? Will you cover employees only or also retirees, spouses and dependents? Note: Only employees can be covered under a group-term policy. When is coverage effective? Will there be a waiting period? What amount of insurance will be available? How will that amount be determined, i.e., flat fee vs. multiple of salary? Will you, the employee or both of you pay the premiums? Will there be a minimum amount that employees are required to elect? What is the maximum coverage amount allowed? Once you have an idea about the type of coverage you’d like to offer, CanopyNation can help you find a plan that meets your needs. To get started or for more guidance, contact us at hello@joincanopynation.com or 901-805-2860.

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Legislation Updates
Christina Babu

IRS Releases 2024 Benefit Plan Limits

The Internal Revenue Service recently released the 2024 benefit plan limits in the Internal Revenue Code. These updates were based on the annual cost-of-living adjustments. The new limits take effect on Jan. 1, 2024. Employers should update their Summary Plan Descriptions and other materials highlighting the annual dollar limits. For assistance on updating your documents and communicating this new information with your employees, please contact the team at CanopyNation at hello@joincanopynation.com or 901-805-2860. Welfare plans and fringe benefits Health FSA: $3,200 limit proposed for 2024 (up from $3,050 in 2023) The proposed carryover amount from 2023 to 2024 is $640, up from $610 last year. Dependent care assistance plan: Married and filing together = $5,000 proposed for 2024 (same as last year) Married and filing separately = $2,500 proposed for 2024 (same as last year) HDHP minimum annual deductible: Self-only coverage = $1,600 for 2024 (up from $1,500 in 2023) Family coverage = $3,200 for 2024 (up from $3,000 in 2023) HDHP out-of-pocket maximum: Self-only coverage = $8,050 for 2024 (up from $7,500 in 2023) Family coverage = $16,100 for 2024 (up from $15,000 in 2023) HSA maximum contribution: Self-only coverage = $4,150 for 2024 (up from $3,850 in 2023) Family coverage = $8,300 for 2024 (up from $7,750 in 2023) Catch-up contribution for participants over age 55 = $1,000 (same as last year) “Key employees”: Officer group = $220,000 for 2024 (up from $210,000 in 2023) More-than-one-percent owner = $150,000 for 2024 (same as last year) Highly compensated employee: $155,000 for 2024 (up from $150,000 in 2023) Retirement benefits Social Security taxable wage base: $168,600 for 2024 (up from $160,200 in 2023) Basic limit on elective deferral amounts: $23,000 for 2024 (up from $22,500 in 2023) Limitation on catch-up contributions for participants over age 50 = $7,500 or 2024 (same as last year) Elective deferral limit for SIMPLE plans: $16,000 for 2024 (up from $15,500 in 2023) Limitation on catch-up contributions for participants over age 50 = $3,500 or 2024 (same as last year) IRA maximum contribution limit: $7,000 for 2024 (up from $6,500 in 2023) Limitation on catch-up contributions for participants over age 50 = $1,000 or 2024 (same as last year) 457 elective deferral limit: $23,000 for 2024 (up from $22,500 in 2023) Annual dollar limit on includible compensation: $345,000 for 2024 (up from $330,000 in 2023) Annual dollar limit on contributions: $69,000 for 2024 (up from $66,000 in 2023)

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Insurance Tips
Christina Babu

An Employee Guide to the Major Types of Health Plans

Health plans vary and have their own sets of benefits and drawbacks related to coverage, physicians, copays and premiums, among others. You’ll need to compare the different types of health insurance plans and choose the one that best fits your needs and budget. It’s important to note that the most suitable plan will depend on your personal health, family’s health and financial situation. There are a few main points of differentiation for health insurance plans. For one, some plans require you to have a primary care provider or have health services pre-authorized. Other plans have requirements to obtain a referral to see a specialist or whether you have to file insurance claims. Some plans pay for out of network health care, and others do not. One of the biggest differentiators is how much cost sharing (e.g., deductibles, copays and coinsurance) you’re responsible for paying when you use your health plan. Health Maintenance Organization (HMO) Plans An HMO plan typically has low premiums and deductibles with fixed copays for doctor visits. While cheap, HMO plans require the selection of only in-network providers. When you sign up for the plan, you’ll select a primary care provider (PCP) for your routine checkups. Your PCP will need to give you a referral before you can see a specialist, such as an allergist or dermatologist. HMO plans are generally most feasible if you don’t have many specific medical issues or needs. Although they are restrictive compared to other options, these plans tend to be the most cost-effective. Preferred Provider Organization (PPO) Plans PPO plans have pricier premiums than HMO plans, but they allow you to see specialists and out-of-network providers without referrals. Out-of-network care typically comes with greater employee cost sharing, but in-network copays and coinsurance are generally low. More paperwork is typically involved with this plan if you see out-of-network providers. A PPO plan could be ideal if you’ll need more health care or flexible options in the coming year, but you can afford higher premiums. Point-of-Service (POS) Plans A POS plan is a hybrid of an HMO and PPO plan. This plan allows you to choose whether to use HMO or PPO services each time you receive health care. For slightly higher premiums than an HMO plan, a POS plan can cover out-of-network doctors. As such, it’ll be more beneficial and cost-effective if you initially see a PCP and seek in-network care instead of not first seeing a PCP for a referral. A POS plan could be a good fit if you prefer out-of-network care but also want a PCP coordinating your regular care. Exclusive Provider Organization (EPO) Plans An EPO plan offers moderate freedom to choose your health care providers. Like HMO plans, EPO plans only cover in-network care; however, they typically don’t require specialist referrals from PCPs. Premiums are generally higher than those of HMO plans, but lower than PPO plans. An EPO plan may make the most sense if you don’t mind having a limited number of doctors and facilities and would rather not have to get a referral to see a specialist. High Deductible Health Plans (HDHPs) An HDHP can be designed as an HMO, PPO, POS or EPO plan. These plans have low premiums, but higher immediate out-of-pocket costs. An HDHP is often paired with a health savings account (HSA). An HSA is a tax-advantaged account used to pay for qualified medical expenses. An advantage of an HSA is that the remaining funds at the end of the plan year can be rolled over into the account for the following year. An HDHP might be a good option if you don’t need much medical care. As such, this type of plan is popular among young and healthy adults but could be costly to older adults or young families. Health insurance regulations vary by state, so be sure to read the fine print on each plan you consider before enrollment. It’s also likely that employer-offered plans could be more or less expensive based on certain factors. When comparing health plan options, consider your health, unique needs and financial situation. It’ll also be necessary to review costs, flexibility, coverage and convenience when making your decision. If you have more questions about health plans, contact your HR director.

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Company Benefits
Christina Babu

Group disability insurance explained

Economic, demographic and societal trends have led to an increasingly mobile, diverse and older workforce. In addition to this, increased stresses in the workplace and home are taking a toll on overall employee health, productivity and safety. The result is higher health care and disability costs that have a measurable impact on employers and the employee benefits packages that they offer. Many employers aren’t aware of group disability insurance options or they don’t understand the full benefits of them. So, what is group disability insurance and is it really necessary? We map out the basics below. What is group disability insurance? Group disability insurance provides income protection for employees. For employers, it covers the cost of overtime and hiring a replacement. For employers, lost time on the job due to a disability can significantly impact workplace productivity and profitability, so investing in a group disability insurance plan can help. Most employers also offer salary continuation plans, which is when the employer gets the full income and benefits after a disability prevents an employee from working. California, Hawaii, New Jersey, New York and Rhode Island also mandate temporary disability insurance, which requires employers to provide benefits equivalent to those working in non-statutory states. Why is group liability insurance necessary? The possibility of becoming disabled is very real for working Americans, and so are the financial consequences and costs associated with employee absence. Over 36 million Americans currently classify as disabled. Moreover, an illness or accident will keep one in five workers from working for at least a year during their career. It’s not pleasant to think about this potential scenario, but preparing your insurance plan in advance will save the employer and employee a great deal of stress. The population is aging, which in turn causes rising benefit utilization and cost. Beyond that, unscheduled absences disrupt workflow and increase cost, while human resource pressures are impacting the ability to dedicate adequate time and attention to situations where working time is lost. Group disability insurance protects your organization and employees alike, making it necessary if you want to protect your business. If you have more questions about group disability insurance options, reach out to our team at CanopyNation.

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Insurance Tips
Christina Babu

6 Common Mistakes to Avoid When Choosing a Health Plan

Health insurance may be one of the most critical annual purchases you undergo since it can impact your physical, mental and financial wellness. Unfortunately, selecting a health insurance plan can feel overwhelming. With so many options, it can also be easy to make a mistake when selecting coverage. We explore six common missteps related to selecting a health insurance plan. Avoid these mistakes and you’ll be ready to choose the best plan coverage for your situation. 1. Rushing through enrollment options Many people rush when buying their health insurance or only rely on recommendations from friends, family and coworkers. Others may simply re-enroll with last year’s choices. But health insurance provides personal coverage, so it’s important to research and find what will work best for your health needs and budget. When it comes time to enroll in a plan, compare different policies and understand their coverages and associated costs, such as premiums. One of the best ways to ensure the policy is right for your health needs is to consider your medical requirements and spending in the next year. Don’t forget to confirm in-network coverage to ensure your preferred doctor, clinic and pharmacy are connected in the new plan. Then, you can find the most suitable plan and coverage in an effort to simplify your health care and make it more affordable. 2. Overlooking policy documents Another common mistake is skipping through or not thoroughly reading the policy’s terms and conditions. However, carefully reading a policy is the best way to know what to expect from the health plan and what the plan expects of you. As such, read the fine print on each plan you consider before enrollment. Reviewing the policy’s inclusions and exclusions will help you make an informed decision and potentially avoid surprise bills later on. 3. Misunderstanding costs A cost-sharing charge is an amount you must pay for a medical item or service covered by the health insurance plan. Plans typically have a deductible, copays and coinsurance. Here’s what those terms mean: The deductible is the amount you pay out of pocket before your health insurance starts to cover costs. A copay is a flat fee you pay upfront for doctor visits, prescriptions and other health care services. Coinsurance is the percentage you pay for covered health services after you’ve met your deductible. When shopping for a plan, keep in mind that the deductible is tied to the premium. As such, a low deductible plan may seem attractive, but understand that it generally comes with a higher premium—and vice versa. Consider keeping your deductible to no more than 5% of your gross annual income. When shopping for a plan, look closely to see when you’ll have a copay and how much it will cost for various services. 4. Concealing your medical history It may be tempting to avoid sharing your medical history if you’re worried about being rejected or receiving higher premiums. However, it could hurt you in the long run when insurance claims are denied for existing conditions or undisclosed medical information. 5. Ignoring add-ons Health insurance add-ons are often included separately and require an additional premium, which means many people don’t look at them. A standard health insurance plan may not cover certain situations, so reviewing all available options is essential. An insurance add-on could help bolster your overall health insurance coverage by offering extra protection. Review the add-on covers offered with your health insurance policy. See if any would be helpful for you, your family or your plans in the next year. For example, some common add-ons include critical illness insurance, maternity and newborn baby insurance, hospital daily expenses and emergency ambulance services. 6. Selecting insufficient coverage People may hold back on purchasing certain coverage to pay a lower premium. While that may seem advantageous in the short term, you’ll be on the hook for out-of-pocket costs when facing a medical emergency. This mistake may be accompanied by physical, mental and financial health consequences. When selecting a plan, check that the policy provides adequate coverage for your medical needs and other essentials. The right health insurance can take care of yourself and ensure financial security. Health insurance is an essential investment for you and your family. As we near the 2023 open enrollment period, be sure to avoid these common mistakes while buying health insurance, and you’ll be better informed to enroll in a plan and other coverages. Health care costs continue to rise, so it’s more important than ever to carefully review available policies, consider your options and health needs, and, ultimately, select the best plan to protect your health and finances. If you have more questions about health plan options, contact your human resources director or our team at CanopyNation.

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Legislation Updates
Christina Babu

Breaking down employer record retention requirements

Collecting and keeping track of various paperwork and records can cause confusion for many employers. Federal laws, such as the Federal Insurance Contributions Act (FICA), the Fair Labor Standards Act (FLSA) and the Equal Pay Act (EPA), impose firm record-keeping duties on employers. These recordkeeping duties require employers to create and keep certain information related to their compliance with federal laws. Below, we have outlined numerous employer recordkeeping and retention requirements, indicating the longest retention period established by federal law. Please take into account this list does not attempt to outline all documents an employer may need in all situations. Age Discrimination in Employment Act of 1967 (ADEA) Payroll or other records for each employee containing name, address, date of birth, occupation, pay rate and compensation earned each week must be kept for three years. All personnel records including job applications, resumes, job advertisements, documents related to hiring/failure to hire, firing, transfer, demotions, promotions, layoffs/recall, payroll records, job descriptions, employment handbooks, training programs, employee evaluations and requests for reasonable accommodation must be recorded. The retention period for these records is one year from the date of personnel action to which any records relate. Employee benefit plans, such as pension and insurance plans and copies of documents describing any seniority systems and merit systems must be kept for the full period the plan or system is in effect, and for at least one year after its termination. Employment Retirement Income Security Act (ERISA) Employers must keep benefit plan documents, annual reports and summaries of annual reports, summary plan descriptions, and all information used in compiling required reports, such as vouchers, worksheets, receipts, applicable resolutions, and participants’ elections and deferrals. Generally, these should be retained no less than six years from the date of record or the date of filing (or date would have been filed but for exemption or simplified reporting requirement). Americans with Disabilities Act (ADA) Any personnel or employment record made or kept by an employer, including requests for reasonable accommodation, application forms and other records having to do with hiring, promotion, demotion, transfer, lay-off or termination, rates of pay or other terms of compensation, and selection for training or apprenticeship must be kept one year from the date the record is made or the date of personnel action involved, whichever is later. ***This requirement also falls under the Civil Rights Act of 1964 – Title VII and the Genetic Information Nondiscrimination Act (GINA). Personnel records of an individual who is involuntarily terminated must be kept for one year after the termination. Civil Rights Act of 1964 – Title VII Personnel records of an individual who is involuntarily terminated must be kept for one year after the termination. For an apprenticeship program, a chronological listing of the names, addresses, gender and minority group identification of all applicants, including the dates applications were received, any test papers and interview notes, and all other records relating to apprenticeship must be kept two years from date record is made or program length, whichever is greater. Occupational Safety and Health Act (OSHA) OSHA Form 300 (Log of Work-related Injuries and Illnesses), OSHA Form 300A (Summary of Work-related Injuries and Illnesses) and OSHA Form 301 (Injury and Illness Report) must be retained five years following the end of the calendar year that these records cover. Employee exposure or medical records pertaining to employees exposed to toxic substances or harmful physical agents must be retained for 30 years. Internal Revenue Code (IRC) Tax and Social Security records such as income tax withholding, Social Security, unemployment compensation and advanced date earned income credit payments must be kept four years from date of filing. Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) Copies of all COBRA-required notices; any documentation or signed acknowledgments that the notices were received by the employee/qualified beneficiary; and detailed documentation related to any instance in which COBRA continuation is not offered due to gross misconduct, late notification, Medicare entitlement or other reasons and all related correspondence. COBRA regulations do not specify a recordkeeping period. Since COBRA amended the Employee Retirement Income Security Act of 1974 (ERISA), it is generally recommended that records be maintained for no less than six years from the date of record, in accordance with ERISA requirements. Family and Medical Leave Act (FMLA) Medical certifications and related medical information; type of leave taken; dates or hours of leave taken; name, position and pay rate of person on leave; copies of all notices given to or received from employee; documents describing employee benefits and status; documents describing employer policies and practices regarding leave; records of any dispute about the designation of leave as FMLA leave must be retained three years from the date the leave ended. Employee Polygraph Protection Act (EPPA) Polygraph test results and the reasons for administering the test must be kept three years from the date the polygraph test is conducted. Equal Pay Act of 1963 (EPA) Any records relating to payment of wages, wage rates, job evaluations, job descriptions, merit or seniority systems, collective bargaining agreements, description of practices or other matters that describe or explain the basis for payment of any wage differential to employees of the opposite sex in the same establishment and that may be pertinent to a determination whether such differential is based on a factor other than sex must be kept for two years. Immigration Reform and Control Act (IRCA) All current employees hired since Nov. 6, 1986, must have an I-9 on file. I-9 forms for terminated employees must be kept for three years from the date of completion or one year from termination of employment, whichever is later. Fair Labor Standards Act (FLSA) Payroll and other records containing each employee’s name, Social Security number, address, date of birth (if under 19), sex, occupation, time and day of the week when the employee’s workweek begins, hours worked each day, total hours worked each workweek, basis on which employee’s wages are paid, regular hourly pay rate, total daily or weekly straight-time earnings,

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