Making sure your company complies with employee benefits regulations is essential. This is especially important because your workforce might not be as happy as you assume. Fortune reports that 78% of employers think their workers are satisfied with their benefits.
However, only 59% of employees feel the same way. Compliance isn't just about avoiding trouble with the law. It's also about creating a supportive workplace that improves the employee experience.
Read on to learn why keeping track of employee benefits laws is important. Plus, we’ll explore the advantages of improving your benefits offerings for employees and your company.
What is employee benefits compliance?
Benefits compliance ensures your employee benefits package follows the rules set by laws, regulations, and company policies. Plans often cover health care, retirement, and other employee perks. If your company doesn't do this, you can face legal trouble. This can include hefty fines and penalties.
Employee benefits compliance matters because it:
- Ensures employees receive fair and legal benefits, keeping everyone protected.
- Helps employees feel secure in their workplace, building trust and teamwork.
- Prevents the company from getting into legal trouble, keeping its reputation strong.
Reviewing and updating your benefits often is important and supports long-term compliance. Continuous improvements show your commitment to treating employees well and following the law.
What every leader needs to know about employee benefits compliance
Rules about employee benefits apply to every kind of business, including groups like non-profits or government offices. So, whether you own a big company or a small shop, you're required to follow these rules.
Professionals who handle employee benefits need to understand the laws and communicate effectively with others in their organization. This helps keep both workers and the company safe.
Who oversees employee benefits administration?
- HR professionals: Human resources teams handling employee oversight, including benefits.
- Benefits administrators: Individuals who manage and organize employee benefits administration.
- Finance managers: Professionals responsible for making sure benefits fit the budget.
- Small business owners: Small employers may have to ensure all their benefits are in line.
Getting to know the Employee Benefits Security Administration
The Employee Benefits Security Administration (EBSA) ensures workers receive what they should and that companies stick to the rules. These efforts are key to protecting employee rights and finances.
In 2023 alone, the EBSA recovered $1.435 billion. They paid plans, participants, and beneficiaries directly. Over half of this money came from enforcing rules. And more than 30% came from settling informal complaints.
The costs of ignoring employee benefits standards
If your employee benefits plan doesn’t follow applicable regulations, you may face risks like:
- Legal penalties: You could get fined or taken to court.
- Reputational damage: People may think poorly of your company. This can hurt its image in the long run.
- Employee dissatisfaction: Workers might feel unhappy or worried about their plans. As a result, they may become less motivated to perform.
- Financial losses: You can face significant money loss. This is due to potential fines, legal fees, or paying compensation.
- Loss of tax benefits: Your company might lose out on tax breaks or other money-saving perks.
- Exposing workers to accidents, injuries, or illnesses: Ignoring safety rules about benefits could put employees in danger of getting hurt or sick. This can lead to even more problems for the company, such as absenteeism.
A guide to key employee benefits regulations
You must follow several employee benefits rules to support your workers and avoid company problems. Here’s a closer look at key compliance topics and regulations. We’ll also discuss who these policies affect and what each requires your company to do:
Affordable Care Act
The Affordable Care Act (ACA) aims to make sure employers provide affordable health insurance options. Companies with over 50 full-time employees must offer health coverage meeting specific standards. If not, the ACA Times reports that the 2024 tax penalty is $372 a month, or $4,460 per year, per employee.
Meet ACA compliance by reviewing plan options and costs regularly. This includes teaching employees about their coverage choices.
The Consolidated Omnibus Budget Reconciliation Act
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows employees to continue their health insurance coverage for a limited time after leaving a job. This is generally at their own expense. Companies with 20 or more employees must comply with COBRA. However, the IRS estimates that over 90% of employers aren’t following these regulations.
To stay compliant, tell eligible employees about their rights to continue health coverage when they leave the company. You can consider using a COBRA compliance service for support.
Employee Retirement Income Security Act
The Employee Retirement Income Security Act (ERISA) sets standards for retirement and health benefits plans offered by private employers. It makes sure employees receive necessary information about their benefit plans. ERISA compliance also protects workers’ rights for plan management and funding. Penalties for violations have increased over the years. Today, companies can face up to $500,000 in fines.
Be sure to give employees clear information about their benefits and check plan documents often. Handling money and planning decisions responsibly is also key.
Family and Medical Leave Act
The Family and Medical Leave Act (FMLA) requires certain employers to provide unpaid, job-protected absence policies. Leave applies to specific medical and family reasons, such as caring for a newborn or adopted child or attending to a family member with a serious health problem. It could also cover employees addressing personal health concerns.
Establish clear absence policies and procedures for requesting and approving leave. Training human resources staff or your plan administrator on FMLA requirements can help. And keeping records of employee leave usage is critical along the way.
The Health Insurance Portability and Accountability Act
The Health Insurance Portability and Accountablity Act (HIPAA) ensures employees can keep health insurance coverage when they change or lose jobs. It also sets standards for protecting individuals' health information. Providing access to health insurance options is important for following HIPAA rules. This includes boosting security measures.
Medicare Part D Creditable Coverage Disclosures
Employers offering drug coverage must tell workers if it's as good as Medicare's. If this applies to your company, send a Medicare Part D notice every year to employees and the government.
Marsh McLennan Agency’s approach to employee benefits compliance
Making sure your company follows all relevant rules and regulations for employee benefits can be difficult. Fortunately, we can help these processes run more smoothly.
We offer a range of services to help you navigate employee benefits. This includes finding risks and creating enduring health plans. Compliance support, strategic HR consulting, and data-driven insights help you get the most out of your benefits plan. Whether implementing a wellness program or boosting employee communication, an improved plan helps keep you competitive.
Learn how Marsh McLennan Agency’s employee health and benefits services can help your company meet workers' changing needs.
Talk to a compliance consultant to see if you’re on the right track.
