INSURANCE AND RISK MANAGEMENT


Healthcare Challenges? Hour Banking Offers ‘Easy Button’ for Benefits Administration, Compliance & Accounting for Contractors


By KC Cannon, Fringe Benefit Group Some contractors may feel as if they’ve


heard about preparing for the Affordable Care Act (ACA) for years – and they have. Now that the employer mandate has taken effect, contractors who are subject to the mandate must be compliant. Smaller con- tractors who are not subject to the man- date are affected by it as well, since every individual in the U.S. is now required to have health insurance, and workers who don’t qualify for employer-sponsored cov- erage must research and secure coverage for themselves and their families. One challenge that particularly affects


contractors is determining which employ- ees are considered full time (under ACA, that means those who work an average of at least 30 hours per week) and must be offered health insurance that meets both minimum value and affordability stan- dards. Contractors who perform seasonal work may especially struggle with tracking hours and ensuring compliance with the mandate. Those who perform the type of work that can have fluctuating hours, and those who have downtime between con- tracts have these challenges as well. While the DOL has outlined methods


to be used when tracking hours for vari- able-hour and seasonal employees, it does little to address the unique needs of con- tractors and their employees. For example, when workload is high and employees are working overtime, contractors may find themselves in a situation where health insurance premiums are overpaid. Those same employees are likely frustrated by having to bounce back and forth between employer-paid health insurance and find- ing coverage on their own during down- times.


Continuing Health Insurance Coverage An innovative


solution called hour


banking is beneficial for both the employer and the employee. Just as the term implies, hour banking is a method that allows em-


22 March/April 2015


ployees to “bank” extra


worked during peaked


excess


continue health insurance


age during times.


then draw from this


hours


periods, to


cover- slow


Having


this flexibility can serve as a huge relief for workers and their families. Here’s how it works:  When an employee works more than 40 hours in a week, those hours and the premium associated with them are held in reserve, or “banked”.


KC Cannon


 During slow times, employees can draw from these reserve hours and banked premium to extend health coverage for themselves and their families.


 Employees can hold as much as six months of medical coverage in reserve.


 When employees reach the maximum allowed in their hour banking reserve, excess fringe dollars are redirected to their retirement accounts. Hour banking also provides a simple


method for tracking hours worked by each employee. This is especially beneficial for contractors who work on projects in sev- eral states and across multiple job sites, as well as for those with employees who perform work in different job classifica- tions. Hour banking breaks the monthly premium into an hourly rate, which makes tracking and accounting much easier for the employer.


Streamlined Process Not all benefit providers offer an hour


banking solution, but some who do – like AGC of California’s affinity partner The Contractors Plan – handle administra- tion of benefits, which simplifies and streamlines the process for the employer. Hour banking can only be offered with an ERISA plan, and it requires a special ar- rangement with the insurance carrier. It’s


KC Cannon Jr. is regional vice president of Fringe Benefit Group, which has been help- ing the construction industry design and ad- minister fringe benefit programs since 1983. For more information on its prevailing wage benefit plan, The Contractors Plan, please contact KC at info@contractorsplan.com or 855-481-9643. 


California Constructor


also important to vet any benefits provider you may be considering to make sure they understand not only the federal prevail- ing wage laws and ACA, but state and local prevailing wage and benefits laws as well. Hour banking has several additional


advantages for employers beyond provid- ing solutions for compliance with the em- ployer mandate. They include:  Accounting is precise and easy to track.  Hour banking can be applied to mul- tiple benefits, including health insur- ance, dental, vision, and life insurance.


 Tracking benefits per hour simplifies recordkeeping. In the event of an audit, showing funding and allocation is easy.


 The possibility of overpaying premium is greatly reduced.


 The possibility that fringe dollars will be returned to company assets, which violates bona fide plan requirements, is prevented. When


contractors


implement hour


banking in conjunction with their health plan offering to their employees, they gain the advantages of simplified accounting, no overpayment of premium, decreased volatility with employees going on and off benefit, and the added assurance of taking full and proper credit for the full fringe amount to which they are entitled when/if working on prevailing wage projects. And, with increasing demand for skilled work- ers, this powerful combination can be a valuable tool for recruiting and retaining the best employees. For more information on hour bank-


ing, visit http://agc.contractorsplan.com/ where you can download an hour banking fact sheet.


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