FAQ’s

Find answers to frequently asked questions about our services, benefits programs, and other common topics. If you don’t find what you are looking for on this FAQ page, feel free to contact us directly.

Click a question below to expand and read more information.

Getting Started

I am considering starting a benefits program for the first time and am not sure where to start. How do I get started?

We normally recommend first and foremost, talk to your employees. See what is important to them and what they want and start there.  If you’re having a hard time hiring employees, in your recruiting efforts and interviews, make notes of what you don’t have that a potential hire sees as important.  Health insurance is typically a big concern but can be the costliest benefit you can provide.  In general, if you are wanting to start a program and health insurance is not needed, you can do a lot for your employees if you can afford a $75 – $100 per employee per month investment.  If you do need health insurance for your company, you are going to need to be able to afford an investment typically somewhere in the area of $250 – $300 per employee in order to make the program work and that’s minimum.  These numbers are of course averages but are good rules of thumb if you are just starting out.  As a business owner, these will typically be treated as business expenses but still can be cost prohibitive in certain situations.

Does my company have to pay for all of the insurance costs for my employees?

No, the company does not. Most ins. providers do require that a business pays at least half of the employee’s cost but you certainly do not have to pay for all of the insurance.  What a company decides to contribute will have a direct impact on how many employees enroll which impacts your overall participation.  Generally, if you have hourly or lower income earning employees, you are going to need to contribute more than the minimum required amount in order to meet participation and to be offered a contract.

What are participation requirements?

Most insurance companies require at least 50% of a company’s fulltime population to enroll in a health plan in order to be offered a contract. There are some examples of insurance companies requiring a higher level or participation, for example, Blue Cross Blue Shield of Texas actually requires 75% participation to qualify for a small group health contract.

How many employees do I have to have to get a group program?

We get this question a lot and it’s a common misconception among companies starting out that they have to be a certain size to start a group program. It is true that only certain companies will quote you based on your company size, however, you can absolutely have a company sponsored program with 1 or 2 employees enrolled IF you meet participation requirements. Overall company size is not near as important as the number of employees you have PARTICIPATING. Most insurance companies require that you have at least 50% of your fulltime employees enrolling, while some do require 75%. For example, if you have 10 fulltime employees, you are going to need to have at least 5 employees enrolling to be offered coverage.

Who is eligible for a benefits program?

Generally, most benefits are only available to W-2 employees who are fulltime (30 or more hours weekly on average).  In many cases, this can also include busines owners who are working fulltime, even if they are not paying themselves as a W-2 employee.  Most programs do NOT allow part-time employees or 1099’s to be covered.  If this is the type of coverage you are looking for, check with the insurance providers when you are researching your options so you do not enter into a contract and later find out you cannot offer coverage to the people you intended to offer to.

What is a new hire waiting period?

This is a timeframe that you as the business owner establish that all new employees must go through before their benefits program will start.  The most common waiting periods we tend to see are the first of the month following either date of hire, 30, or 60 days.   Once someone makes their way through the waiting period, their benefits normally start on the first of the following month.

What is required of me, the business owner, after I start a benefits program?

As the employer, in your contract(s) with the various insurance providers, you are going to be required to notify the insurer (or your agent) when you have new hires and when you have employees who leave the company so they can update your account and bill you appropriately. You are also going to be required to pay your bills in a timely fashion and collect any premiums due from your employees through payroll deduction.  Based on the size of your company and the various programs you have in place, you can also be required to provide required notices and continuation rights to employee as they onboard with and exit your company.

What are contribution requirements?

This is the amount of the insurance program that an employer sponsor is required to cover (or contribute) to an employee’s insurance costs.  This tends to be required in the health insurance environment, with most health ins. providers requiring at minimum a 50% contribution of the employee only cost.  There are several other programs that have these requirements as well, such as employer sponsored life insurance and disability.  Programs like dental and vision can be offered on a contributory or voluntary basis but typically have better pricing and sometimes even better benefits available when the employer is contributing.

What kinds of benefits does H|BC help with?

We work exclusively under a general agent life / health license through the Texas Dept of Insurance so we offer the following:

  • Common Programs for our clients:
    • Health Insurance
    • Dental & Vision Insurance
    • Life & Disability Insurance
    • Keyman Life & Disability Insurance
    • Stand Alone Group Telemedicine Programs
    • International Health
    • HSA’s, FSA’s and HRA’s
    • Benefits Related Compliance Services
    • Custom Online Enrollment Platforms

We do NOT help with retirement plans for worker’s comp, as those fall under different licensing categories.

What other things do we need to be thinking about when we start a benefits program?

There are 2 legal plan document related items that you as a company in most cases will need to have sourced when you are first setting up your benefits program.  The first is known as your ERISA Plan Document, sometimes also referred to as a Wrap Document.  Similar to the formation documents you have to have in place for your business, the ERISA Plan Document legally creates your benefits program in writing.  A benefit plan is a legal entity, it can sue and it can be sued and there is a fiduciary assigned to the plan, typically the business owner or another C Level individual.  These should not be omitted and these are not documents that the insurance companies will provide you.  The other item that you will need to get established is most often referred to as a Section 125 Document or the Premium Conversion Plan.  This creates the benefit plan that allows your company, in conjunction with the IRS, to handle your employee health, dental and vision deductions on a pre-tax basis.  The most common sources for these types of documents are benefit attorneys, CPA’s, payroll companies, TPA’s, payroll companies and licensed agents.  H|BC has a partnership with a legal attorneys office where we can source these documents specially for our clients very affordably.

I do not offer benefits now, am I required to do so?

  • If you have less than 50 fulltime equivalent employees (FTE’s), you are generally not required to offer benefits, however the majority of our clients fall into this category. Simply stated, most companies start to run into recruiting and retention issues, especially if they are a highly technical or professional services type establishment, so it is actually pretty common for small businesses to offer benefits even though they are not required.  With the passage of the Affordable Care Act, the individual market got very expensive and very limited in its offerings, so it is not as easy just to pay an employee more to go and get their own coverage in today’s business environment, which you could do pre-2014.
  • If you have more than 50 FTE’s you are required to offer at least a plan with Minimum Essential Coverage that is affordable to all of your fulltime staff. Here is a link from the IRS that details the levels of coverage and also the potential penalties your company could face if you do NOT offer the minimum required coverage.  Click here.  We are of course more than happy to help you & your company implement a health plan that meets all the requirements set forth by the Affordable Care Act.

How is H|BC compensated, do we pay you direct for your time?

In most cases, our compensation is built into the premiums of the insurance and benefits which we help your company establish. As you pay your bills each month, the insurance / benefits provider in turn sends our commissions or fees that were included in your premiums the following 30 – 60 days.  Generally, the only things we are billing our clients direct for are compliance services (ERISA / Section 125 Docs), enrollment site websites that we setup or in some very small group situations where the company is so small that we do have to charge for our time / efforts.  We do also do some consulting / eligibility assistance for some groups where we have onsite staff filling in for clients’ HR departments, so we do charge for our time in these types of situations, typically by the hour or we establish a monthly fee if the work is not limited in scope and is going to be a more of a long term project.

How long is an insurance contract?

Most insurance contracts are 12 months long, especially in the health insurance arena but we do see from time to time some insurers offering longer 15 month contracts as a promotion, usually during the last quarter of the year. If it also common for non-health providers, think dental, vision, etc. to offer multi-year rate guarantees.  In this instance, the policy is still on a 12 month renewal cycle, but you would not see any requests for price changes or benefit change until 2 or 3 years later.

Can we term our insurance at any time?

No, not at ANY time. You have more flexibility with some contracts over others, but in some instances, you are best off finishing the contract and then moving on.  If you are on a fully insured benefits program, typically you are locked into a 12 month program but you can normally term these types of policies off schedule with a 30 or 60 day notice.  Please refer to your ins. company certificates of coverage or speak to your agent for clarification and to get your options.  If you are on any form of self-funded or level-funded health plan, you do NOT want to term off cycle as you will typically lose all the insurance backing as soon as you term and then any pending claims become the responsibility of the employer.  If there are large pending claims, this can prove to be financially devastating for a small to mid-size company which is why we normally do NOT recommend anyone ever break a contract that is level-funded or self-funded.

When can I start a benefits program?

Unlike the individual space where you have federally regulated plan years that are calendar year based, in the group world, you can start contracts at any time. For example, if I was just starting my company and it was February, it might be ideal for me to try and start my benefits in March or April.  I can start the programs as I see fit.  Once the programs are started, in most cases your plan renewals will typically be 12 months later, depending on the kind of contract you have signed.

What is ERISA?

ERISA is an acronym that stands for Employee Retirement Income Security Act of 1974 which governs all things benefits related not only in our space but also in the pension / 401k world as well. We do not provide retirement related services but we do help our clients get their ERISA plan documents in order for their insurance and benefit related items. You will be familiar with your company formation documents, think of ERISA Plan Documents as your benefit program’s formation documents. These are required by law and most insurance companies do NOT provide these. If you are audited by the IRS or DOL chances are you will be asked to provide these documents for the auditor to review.

What is a Section 125 Document?

Sometimes referred to as a Premium Conversion Document, a Section 125 Document establishes your company’s plan in writing that allows for you to legally deduct for things like health insurance, dental, vision, FSA’s and HSA’s through payroll on a pre-tax basis.  Without this type of plan document in place, your company should NOT be making payroll deductions on a pre-tax basis.  This is also a document that will commonly be requested by an IRS or DOL auditor.

Financial

How much does health insurance cost? How is pricing determined?

It’s impossible to tell you how much your insurance. will cost without knowing what your company demographics look like.  In small group (under 50 employees), there’s 2 markets that you can purchase health plans from and each one uses a different pricing model.  Both markets do however use employee location and age as well as the company location as initial influencing factors when determining price.  Here’s a little bit more information regarding the 2 spaces eligible for small groups:

  1. Fully insured ACA programs are completely based on the age / location of the enrolling population and there’s no risk or claims evaluation done like with all other types of insurance. This market tends to be more expensive for companies that are overall pretty healthy and / or have a younger employee base.  This market can be much more affordable for companies that may have employees with chronic health conditions or expensive medications, treatments, etc.
  2. The other market to consider is one that does require underwriting and is most often referred to as Level Funded or Partially Self Funded. In this space, a risk evaluation is done either through claims review or individual underwriting (or both) and pricing is based more on expected future claims for the enrolling population.  This space can work very well for companies who have overall lower claims but at the same time companies with high claim costs may not even be eligible for a proposal.

In mid-market and large group (50+ employees), pricing is going to be based more on expected claims and evaluations will be done, but you tend not to see the individua underwriting aspect.  Pricing can also be increased in these markets if your company’s participating employee population is not great.

Does my company have to pay for all of the insurance costs for my employees?

No, the company does not. Most ins. providers do require that a business pays at least half of the employee’s cost but you certainly do not have to pay for all of the insurance.  What a company decides to contribute will have a direct impact on how many employees enroll which impacts your overall participation.  Generally, if you have hourly or lower income earning employees, you are going to need to contribute more than the minimum required amount in order to meet participation and to be offered a contract.

When are benefit premiums due?

Most insurance companies bill in advance, normally 1 – 2 weeks before an invoice is due. Due dates are normally the first of the month with a 30 day grace period.  Most ins. providers will stop paying claims and will terminate a group policy if premiums become more than 60 days late.

What are contribution requirements?

This is the amount of the insurance program that an employer sponsor is required to cover (or contribute) to an employee’s insurance costs.  This tends to be required in the health insurance environment, with most health ins. providers requiring at minimum a 50% contribution of the employee only cost.  There are several other programs that have these requirements as well, such as employer sponsored life insurance and disability.  Programs like dental and vision can be offered on a contributory or voluntary basis but typically have better pricing and sometimes even better benefits available when the employer is contributing.

I terminated an employee late in the month but have already received and paid my bill for the upcoming billing cycle, what do I do?

Most insurance providers bill in advance, usually about 2 weeks prior to the invoice being due, so if you have any eligibility changes in the last half of the month, chances are they will not be captured on your current statement.  Fear not, any changes made in the ins. company system will be reflected on the next month’s invoice where you will receive a credit back on the statement for any terminated employees that were term’d prior to the end of the month.

How is H|BC compensated, do we pay you direct for your time?

In most cases, our compensation is built into the premiums of the insurance and benefits which we help your company establish. As you pay your bills each month, the insurance / benefits provider in turn sends our commissions or fees that were included in your premiums the following 30 – 60 days.  Generally, the only things we are billing our clients direct for are compliance services (ERISA / Section 125 Docs), enrollment site websites that we setup or in some very small group situations where the company is so small that we do have to charge for our time / efforts.  We do also do some consulting / eligibility assistance for some groups where we have onsite staff filling in for clients’ HR departments, so we do charge for our time in these types of situations, typically by the hour or we establish a monthly fee if the work is not limited in scope and is going to be a more of a long term project.

Benefits Administration

How long does it take to get an ID Card?

It normally takes 7 – 10 business days for a new enrollment to be processed and ID cards to be mailed, which is why we always request new hire information be submitted at least 2 weeks in advance. Ideally a new employee will always have their ID card in hand when their benefits start.

How do terminiations work?

You should always notify the ins. provider (or your broker) as soon as an employee terms that is on the benefits program. Invoices typically process before the month in which they are due, so if terminations are not reported timely, in many cases you will be responsible for paying the premium on the invoice then you will get a credit back the following month.  Also, you need to be aware of Texas Senate Bill 51.  It requires employers to pay for insurance premium through the end of the month in which the employee is terminated (or when the employer notifies the insurer).  See what they did there?  If you do not notify your insurance provider timely and you are on a fully insured contract, your company can be on the hook for premiums well after the employee is gone.  This bill basically made it impossible for employers to process terminations from the ins. plan retroactively.

When are benefit premiums due?

Most insurance companies bill in advance, normally 1 – 2 weeks before an invoice is due. Due dates are normally the first of the month with a 30 day grace period.  Most ins. providers will stop paying claims and will terminate a group policy if premiums become more than 60 days late.

How long is an insurance contract?

Most insurance contracts are 12 months long, especially in the health insurance arena but we do see from time to time some insurers offering longer 15 month contracts as a promotion, usually during the last quarter of the year. If it also common for non-health providers, think dental, vision, etc. to offer multi-year rate guarantees.  In this instance, the policy is still on a 12 month renewal cycle, but you would not see any requests for price changes or benefit change until 2 or 3 years later.

Can we term our insurance at any time?

No, not at ANY time. You have more flexibility with some contracts over others, but in some instances, you are best off finishing the contract and then moving on.  If you are on a fully insured benefits program, typically you are locked into a 12 month program but you can normally term these types of policies off schedule with a 30 or 60 day notice.  Please refer to your ins. company certificates of coverage or speak to your agent for clarification and to get your options.  If you are on any form of self-funded or level-funded health plan, you do NOT want to term off cycle as you will typically lose all the insurance backing as soon as you term and then any pending claims become the responsibility of the employer.  If there are large pending claims, this can prove to be financially devastating for a small to mid-size company which is why we normally do NOT recommend anyone ever break a contract that is level-funded or self-funded.

When are benefit premiums due?

Most insurance companies bill in advance, normally 1 – 2 weeks before an invoice is due. Due dates are normally the first of the month with a 30 day grace period.  Most ins. providers will stop paying claims and will terminate a group policy if premiums become more than 60 days late.

What are participation requirements?

Most insurance companies require at least 50% of a company’s fulltime population to enroll in a health plan in order to be offered a contract. There are some examples of insurance companies requiring a higher level or participation, for example, Blue Cross Blue Shield of Texas actually requires 75% participation to qualify for a small group health contract.

Who is eligible for a benefits program?

Generally, most benefits are only available to W-2 employees who are fulltime (30 or more hours weekly on average).  In many cases, this can also include busines owners who are working fulltime, even if they are not paying themselves as a W-2 employee.  Most programs do NOT allow part-time employees or 1099’s to be covered.  If this is the type of coverage you are looking for, check with the insurance providers when you are researching your options so you do not enter into a contract and later find out you cannot offer coverage to the people you intended to offer to.

I terminated an employee late in the month but have already received and paid my bill for the upcoming billing cycle, what do I do?

Most insurance providers bill in advance, usually about 2 weeks prior to the invoice being due, so if you have any eligibility changes in the last half of the month, chances are they will not be captured on your current statement.  Fear not, any changes made in the ins. company system will be reflected on the next month’s invoice where you will receive a credit back on the statement for any terminated employees that were term’d prior to the end of the month.

What is a new hire waiting period?

This is a timeframe that you as the business owner establish that all new employees must go through before their benefits program will start.  The most common waiting periods we tend to see are the first of the month following either date of hire, 30, or 60 days.   Once someone makes their way through the waiting period, their benefits normally start on the first of the following month.

Can I make exceptions to the new hire waiting period for someone?

We get this question all the time and the answer is no. Once your new hire waiting period is established and built into the contract(s) you have with your insurance provider(s), you have to abide by these rules.  You cannot make exceptions for some employees vs others as that would be discrimination.  If you have over 50 employees, you can create different classes of employees so you can possibly have different waiting periods for different employee classes, but you still have to be consistent within each of these populations.

What is Texas Senate Bill 51?

Texas Senate Bill 51 requires Texas based employers who offer a fully insured health insurance program to notify the insurance providers of all employee terminations by the end of the month in which the employee(s) last worked, otherwise the employer will be responsible for paying add’l premiums for any / all subsequent months until the ins. provider is notified.  Most ins. companies do provide a window of a few business days during the first of each month to get any terms processed from the month prior that might have taken place late in the month prior.

What is ERISA?

ERISA is an acronym that stands for Employee Retirement Income Security Act of 1974 which governs all things benefits related not only in our space but also in the pension / 401k world as well. We do not provide retirement related services but we do help our clients get their ERISA plan documents in order for their insurance and benefit related items. You will be familiar with your company formation documents, think of ERISA Plan Documents as your benefit program’s formation documents. These are required by law and most insurance companies do NOT provide these. If you are audited by the IRS or DOL chances are you will be asked to provide these documents for the auditor to review.

What is a Section 125 Document?

Sometimes referred to as a Premium Conversion Document, a Section 125 Document establishes your company’s plan in writing that allows for you to legally deduct for things like health insurance, dental, vision, FSA’s and HSA’s through payroll on a pre-tax basis.  Without this type of plan document in place, your company should NOT be making payroll deductions on a pre-tax basis.  This is also a document that will commonly be requested by an IRS or DOL auditor.

H|BC

What kinds of benefits does H|BC help with?

We work exclusively under a general agent life / health license through the Texas Dept of Insurance so we offer the following:

  • Common Programs for our clients:
    • Health Insurance
    • Dental & Vision Insurance
    • Life & Disability Insurance
    • Keyman Life & Disability Insurance
    • Stand Alone Group Telemedicine Programs
    • International Health
    • HSA’s, FSA’s and HRA’s
    • Benefits Related Compliance Services
    • Custom Online Enrollment Platforms

We do NOT help with retirement plans for worker’s comp, as those fall under different licensing categories.

What kinds of compliance assistance does H|BC provide?

We help our clients secure their ERISA plan setup documents and their Section 125 documents as needed.  Additionally, we do also help clients provide the required employee notices such as SBC’s (Summaries of Benefits and Coverage) and New Hire Exchange Notices.  Our clients that opt into this program also received an employee acknowledgement that states the employees have received all of this documentation and know where to go if they have questions in the future.  This helps our clients protect themselves against future potential disgruntled employee complaints, which is here 95% of IRS and DOL audits come from.  We do get asked all the time if these are new requirements.  They are in fact not, it’s just most agents and brokers just want to sell you a policy and run but do not coach you on how to properly establish a benefits program.  We not only want to help you establish a program and manage it, we also want to make sure you are aware of the requirements to do this the right way.

How is H|BC different than other agencies? What makes you stand out?

The biggest different for H|BC is that we know our space and we know it well.  In addition to providing comprehensive market options for our clients big and small (fully insured, self-funded, association plans, etc.) we do also help our clients with day to day benefits management.  This is part of our service model.  Many agents / brokers either do not provide this service or they charge for it.  In some cases, if we are having to manage a program 100% with no help from our client then we will need to charge a monthly admin fee, but in most cases our assistance comes free of charge and is a value add for our clients, most of whom do not have dedicated benefits departments to handle day to day employee adds and terms.  We are also very proud of the fact that we can provide a 100% paperless benefits environment for our clients that want to have that experience, regardless of size.

How is H|BC compensated, do we pay you direct for your time?

In most cases, our compensation is built into the premiums of the insurance and benefits which we help your company establish. As you pay your bills each month, the insurance / benefits provider in turn sends our commissions or fees that were included in your premiums the following 30 – 60 days.  Generally, the only things we are billing our clients direct for are compliance services (ERISA / Section 125 Docs), enrollment site websites that we setup or in some very small group situations where the company is so small that we do have to charge for our time / efforts.  We do also do some consulting / eligibility assistance for some groups where we have onsite staff filling in for clients’ HR departments, so we do charge for our time in these types of situations, typically by the hour or we establish a monthly fee if the work is not limited in scope and is going to be a more of a long term project.

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1910 Pacific Ave Ste 17180 Dallas TX 75201