Effectively forecasting employee benefit costs for the coming year helps secure a budget. Extensive research and in-depth analysis provide a clear picture of what costs to expect, keeping in mind industry regulations.
PwC’s Health Research Institute estimates an average increase of 6% in employee benefits costs in 2019 which represents an increasing employee benefits costs for the sixth consecutive year.
Rising health insurance costs have created an atmosphere of frustration for both employers and employees alike. This rise can be contributed to a number of factors including chronic illnesses, an aging population, mega-mergers, and specialty drugs to name a few.
In this blog, we take a look at some methods of forecasting employee benefits costs for 2019.
Reviewing Current Employee Benefits Packages
An important consideration when it comes to developing the coming year’s benefit plan is to match the employee’s satisfaction level with their current package.
If there’s something left to be desired, then it should be included as part of the budget to determine if enough funds are available. Other popular benefits include 401(k) retirement savings, paid time off from the job, voluntary benefit programs, wellness perks, commissions and bonuses, and more. The business is not obliged to offer any of these benefits, but they can be included.
Regulatory Compliance with the Affordable Care Act
Part of the reason behind forecasting employee benefits costs is to ensure they are in accordance with the ACA regulations before the new laws and policies finally come into effect. This also includes setting aside money to pay for any fines or offensives a company commits if they decide against providing certain benefits.
Consulting the Experts
It’s highly possible to still encounter problems with regards to compliance issues despite conducting research which is why it’s vital to consult with the experts. They should be accessible and have enough experience in the industry to be able to answer any and all questions.
Calculating the Average Costs
Significant costs sources to take into account during budgeting include the Cadillac Tax which is placed on high-value health care plans. The tax can go as high as 40 percent for individual plans above $10,200 and family coverage plans to exceed $27,000. The costs will be shared by both employers and employees.
Other benefits typically offered by the company include disability insurance, dental plans, dependent care assistance, retirement plans, and tuition reimbursement. This roughly translates to an additional healthcare cost of anywhere up to $75,000 on each individual employee.
Accurately forecasting every aspect of an employee benefits plan requires expertise, insight, and years of experience in the industry. Our employee benefits services in Pennsylvania match just that description and help businesses develop cost-effective employee benefits programs. Contact us today!