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Employer Alert

Inform Your Employees How This New California Mandate May Impact Them

The California individual mandate (Senate Bill 78) was passed by the California Legislature requiring every California resident to maintain minimum essential coverage (MCE) throughout the year. Under the mandate, those who do not maintain qualifying health insurance coverage could face a financial penalty. Beginning in 2020, California residents must either:

  •  have qualifying health insurance, or
  •  pay a penalty when they file their state tax return, or
  • obtain an exemption from the requirement to have coverage

Many people already have qualifying health insurance coverage, including employer-sponsored plans, coverage purchased through Covered California or directly from insurers, Medicare, and most Medicaid plans.For more information regarding the penalty and exemptions, please refer to the Covered California Penalty and Exemptions web page.

Financially stressed employees are 2 times less likely to get enough sleep, exercise regularly, eat healthy. (Photo: Shutterstock)

Employers are starting to realize the impact of employee financial stress, for good reason — there is a direct correlation between the economic health of employees and the companies they work for.

Since nearly 60 percent of employees in the U.S. say they are financially stressed—more than all other life stressors combined—employers should not only be concerned about this problem, but also actively trying to solve it.

Studies show that financially stressed employees are less productive, more distracted, produce lower-quality work, have poorer relationships with co-workers and have higher rates of absenteeism and on-the-job accidents.

Financial stress has been linked to post-traumatic stress disorder, substance abuse disorder, suicide, and mental health disorders, especially among millennials.

U.S. businesses are losing $500 billion a year because of employees’ personal financial stress, according to a survey by Salary Finance.

5 signs of employee financial stress

In order to solve the problem, however, employers must first be able to recognize it. Employee financial stress signs include the following:

1. Poor health 

When trying to cope with stress, your employees may experience poor health including digestive issues, headaches, fatigue, depression, heart disease, high blood pressure, diabetes, anxiety and increased susceptibility to contracting viral illnesses like the cold and flu.

To make matters worse, people experiencing high stress often neglect their health and/or delay seeing a doctor, causing health problems to worsen and become more difficult and costly to treat.

A Fidelity Investments survey found that financially stressed employees are two times less likely to get enough sleep, exercise regularly, get a flu shot, go to the doctor and dentist, eat healthy, maintain a healthy weight and avoid tobacco use.

Employers can end up paying more due to higher use of employee assistance programs, higher health care costs, increased absenteeism and more on-the-job, stress-related employee accidents.

2. Absenteeism

Employees experiencing financial stress are more likely to habitually miss work. Absenteeism costs U.S. companies a whopping $226 billion a year, according to the CDC Foundation.

A Fidelity Investments well-being survey of more than 9,300 people found that employees with the highest levels of debt were twice as likely to miss work as those with the lowest debt levels.

3. “Presenteeism”

Presenteeism is the term used for employees who are physically present at work but performing their jobs at less than full capacity. Presenteeism shows itself in a number of ways, including high levels of distraction, low engagement with work and colleagues, poor work quality and declining job performance.

The 2019 PWC Employee Financial Wellness Survey found that 35 percent of employees were distracted at work due to finances. Of those distracted, nearly half spent 3 or more hours per week handling financial issues.

Salary Finance found that financially stressed employees lose 23 to 31 days of productive work per year and are 2.2 times more likely to look for a new job.

4. Delayed retirement

If an employee does not have enough retirement savings and/or is buried in debt, they often have no choice but to continue working past their planned retirement age. Prudential found that 57 percent of finance executives say delayed retirements can be attributed to lack of retirement savings.

This can be expensive for employers, with increased annual costs of 1 to 1.5 percent. Workers delaying retirement usually have more paid sick leave and vacation days along with higher life, disability and health insurance costs.

People staying in the workforce longer has a trickle-down effect: Younger employees have less opportunities for advancement, leaving them with stagnant wages on top of student loan debt. Studies show young adults are delaying home buying and starting families because of this combination of financial factors.

5. Making hardship withdrawals

Employees can withdraw money from their 401(k) if they find themselves in a financial crisis and meet the criteria for a hardship withdrawal. According to the IRS, allowable hardship withdrawals must create “an immediate and heavy financial need of the employee,” such as medical expenses, preventing eviction or foreclosure, funeral expenses and some qualifying home repairs.

According to Fidelity Investments, the average amount of hardship withdrawals is $2,900, and the two biggest reasons are the prevention of eviction or foreclosure and medical bills.

Hardship withdrawals hurt both the employee and the employer. The employee will see increased taxes, potential withdrawal penalties and less money for retirement. In fact, taking a hardship withdrawal can decrease retirement savings by 14 percent, according to a study by MassMutual.

For an employer, a hardship withdrawal is seen as plan leakage, which costs money in higher per-account fees.

Solving the problem with employee financial wellness programs

One way that organizations are solving the problem of financially stressed employees is by providing a financial wellness program as part of the benefits package. According to The Business Case for Financial Education, an employer-offered financial wellness program can have a return on investment of 300 percent in the first year by decreasing absenteeism and presenteeism, as well as increasing productivity.

However, not every financial wellness program is equal. To find the right program, look for one that offers the following:

●       Valuable for all employees, with content that adapts to each user’s age, financial situation, life stage, etc.

●       Interactive, with features like video and gamification to increase engagement.

●       Unbiased: The platform should not pressure users to buy a particular product or service.

●       Recognized: Seek referrals, read reviews, etc.

If the signs of financial stress are evident in your company, it is time to find a financial wellness program that benefits both your organization and its greatest asset—employees.

California’s new gig economy law requires employers to treat independent contractors as regular employees if the work they perform is central to the core mission of the company. (Photo: Shutterstock)

A new California law that reclassifies some independent contractors as employees, requiring they be offered a range of benefits and worker protections, will likely expand health insurance coverage in the state, health policy experts say.

But it might end up harming some workers.

That’s in part because the law, which takes effect Jan. 1, could cut two ways. While inducing many employers to extend health insurance to newly reclassified employees, it might prompt others to shift some workers from full-time to part-time status to avoid offering them health coverage, or — in the case of some small firms — to drop such benefits altogether.

Related: Uber’s top lawyer vows fight new California gig rule

Some companies might trim their workforce to limit cost increases. Benefits typically account for about 30 percent of total employee compensation costs, and health insurance is the largest component of that.

“I think we will see more people classified as employees over time,” said Ken Jacobs, chair of the Center for Labor Research at the University of California-Berkeley. “And that is very likely to expand the number who are offered and take coverage. But the situation is definitely fluid.”

Adding to the fluidity: Some large employers are contesting the new law. Uber, the ride-sharing app company, has said the law does not apply to its drivers and indicated it is prepared to defend its position in court. The company has joined competitor Lyft in broaching the idea of a 2020 ballot initiative to challenge the law.

California Gov. Gavin Newsom has indicated a willingness to negotiate changes and exemptions with those companies and others.

Uber did not respond to requests for comment, and Lyft declined to comment.

In addition to shared-ride drivers, the law affects construction workers, custodians and truck drivers, among others.

Some independent contractors prefer the flexibility that comes with setting their own hours, but others are eagerly eyeing health coverage.

Steve Gregg, a resident of Antioch, Calif., is among them. Gregg, 51, is uninsured and makes too much to qualify for Medi-Cal, the state’s version of the Medicaid program. He hopes to be reclassified as an Uber employee in 2020, primarily to gain access to health insurance.

“The only medical care I can really afford right now is to use an online doctor for my blood pressure medicine,” said Gregg, who typically logs 50 hours or more a week driving for Uber in the Bay Area.

Under the Affordable Care Act, companies with at least 50 full-time employees must pay a penalty if they don’t offer health insurance to those who work 30 hours or more a week.

California’s new “gig economy” law requires employers to treat independent contractors as regular employees if the work they perform is central to the core mission of the company and they operate under the company’s direction.

Several kinds of workers are exempt from the law’s provisions, however, including insurance and real estate agents, investment advisers, doctors and nurses, direct sales workers and commercial fishermen.

Jacobs said other states will closely watch what happens in California, given that some tech companies hire large numbers of independent contractors.

New Jersey, Massachusetts and Connecticut have similar labor laws on the books. Lawmakers in Oregon and Washington state are eyeing legislation akin to California’s.

Independent contractors in the Golden State are nearly twice as likely to be uninsured as regular employees, according to an analysis by UC-Berkeley’s Center for Labor Research, known as the Labor Center. From 2014 to 2016, just under 70% of workers classified as employees had employer-sponsored health insurance, compared with 32% of independent contractors, the study shows.

An estimated 1.6 million of the state’s 19.4 million workers are full-time independent contractors, according to another analysis by the Labor Center. It is unclear precisely how many contractors are “misclassified,” but sponsors of the new law, led by Assemblywoman Lorena Gonzalez (D-San Diego), put the number at around 1 million.

Whatever the exact number, employers who rely on contract workers will need to make complex health insurance decisions.

A company whose contract workers average 35 to 40 hours a week, for example, could reclassify them as employees for the purpose of complying with the new law but try to limit their weekly hours to fewer than 29, thus avoiding the ACA coverage requirement, said Dylan Roby, an associate professor of health policy and management at the University of Maryland and an adjunct associate professor at UCLA.

A large proportion of small companies that are not required by the ACA to cover their employees do so anyway, and the ones that hire independent contractors will also face hard choices.

“If they have to expand that to reclassified employees, the cost could be substantial,” said Christen Linke Young, a health insurance researcher at the Brookings Institution in Washington, D.C.

A small firm with a skilled and relatively high-wage workforce might choose to absorb the cost of expanding coverage to reclassified workers, Young said, because those workers might not qualify for subsidies to buy health insurance on their own through Covered California, the state’s ACA marketplace. Offering insurance is also a retention tool.

Other small companies, however, could choose to drop coverage altogether rather than pay the tab for newly reclassified workers.

And some might be able to place the new employees in a separate category and offer them no health benefits, or less generous ones than the existing employees get. But under federal law, an employer can do that only if the new employees are doing a different kind of work than the current ones, Young said. Companies of all sizes can wait a year before offering new employees coverage, to establish what their average weekly hours are. That buys firms with 50 or more employees time to decide whether the reclassified workers qualify for health benefits under the ACA.

The uncertainty about how the new law will play out is sowing confusion among many independent contractors.

Vanessa Bain, a resident of Menlo Park, Calif., who works full time as a contract worker for Instacart — a same-day delivery service for groceries — worries about what her employer will do.

Bain and her family are enrolled in Medi-Cal, California’s version of the Medicaid program for people with low incomes. But she would rather get insurance through Instacart.

“What will they offer us?” Bain, 33, wonders. “If the premiums are too high or the coverage crappy, we may be better off buying it on our own through Covered California. We’ll have to see.”

This KHN story first published on California Healthline, a service of the California Health Care Foundation.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

Ascend Benefit Solutions Insurance Services has partnered with Farmers Insurance to give your business the ultimate small business package...

Farmers® Business Insurance

Whether you’re shopping for commercial insurance, ready to purchase a policy or reviewing your current coverage, we’re here to help you:

  • Research business insurance options by coverage type and industry type.
  • Understand the value Farmers agents and claims representatives add to your experience.
  • Get answers to insurance questions that are often asked by small business owners like you.

Our goal here is simple: To equip you with information so you can choose the commercial insurance coverage you want for your business.

Commercial Property Insurance

The place you do business says a lot about your success. Maybe your wholesale company acquired a second warehouse. Perhaps your ad agency just moved to a stylish new office space. Or you might have added extra stations at your beauty salon.  Whatever purpose your commercial property serves, you need to protect it from the unexpected. As a small business owner, too, a Farmers® agent understands your challenges — and can help you understand your coverage options so you can select the coverage you want.

Business General Liability Insurance

It’s a simple reality that anyone who comes into contact with you or your employees while you’re conducting business can file a claim or lawsuit against you for any number of reasons — from physical injuries to wrongful termination. That’s why Farmers® offers small business general liability insurance, which can help with challenging situations and the associated costs of legal defense and legal damages, up to policy limits selected for covered claims.

Commercial Crime Insurance Coverage

The more successful your company, the more it may attract the attention of dishonest people — whether employees, associates or outsiders.

Farmers® agents are small business owners, too, and understand the challenges of protecting your company from people with negative intent. They can show you insurance coverage options to help address a variety of risks like these — low-tech and high-tech:

Workers’ Compensation Insurance

You choose employees for the value they add to your business — whether a key member of your management team, a skilled technician or your executive assistant. If anyone suffers an on-the-job injury, you want to try to take care of them and minimize lost productivity.

In a best-case scenario, you’re able to manage an injury so employees can get back to work as quickly as possible. And Farmers® has highly specialized workers’ compensation services that can help.

A workers’ compensation policy can address medical care and lost income for your employees, death benefits for survivors, and your potential liability for covered claims. Farmers works with you to reduce costs and improve recovery times — by making quick contact with an injured employee and using excellent medical providers for a specific injury or illness.

Jul 26, 2019 by Small Business Editor

Small Businesses are Relying on Email – A Lot!

The debate on how many emails your business should send to customers and clients is as old as email itself. Or so it seems sometimes. How many is too much? How few are not enough? You look one way and you get told you’re not sending enough. And in another direction, you hear the complete opposite. Well, some news this week may help shed some light on the confusion. Or maybe it’ll make it less clear. It’s hard to tell. The data we found comes from a new report titled, “2019 State of Conversational Marketing” and in it, we’re discovering that email seems to be making a comeback … again. Or did it ever go away?

In this study, it’s found that one-third of businesses said they sent more emails to customers last year. And the reason they sent more emails? They worked, of course. Now, there’s always going to be that fine line between just the right amount and too many emails. But if you’ve been using marketing emails to some success for a little while now, maybe this should encourage you to step up your efforts just a little more.

If you’ve built up a trust factor with your customers and clients, it’s likely you’ll get a little (and friendly) nudge from them when you may be crossing the line.