This article is about Justworks PEO and Payroll. What product am I using?
What are benefits classes?
Some companies want to set different contribution amounts or different waiting periods for different groups of U.S.-based employees. These groups are called benefits classes. Please note a company can only change these classes once annually, during health insurance renewals.
Enabling benefits classes is an optional step, and it comes with serious compliance considerations. The majority of our customers do not use benefits classes.
Watch this short video for a deeper understanding of Benefits Classes:
How do I set up benefits classes?
While selecting the insurance plans your U.S.-based employees will have access to, either for the first time or during your annual renewal, you’ll have the option to manage benefits classes as part of the insurance dashboard. Follow the instructions on that page to turn on benefits classes, edit the names of your different classes, assign each employee to the appropriate class, and finally, set the waiting periods and contribution amounts for each class.
How am I allowed to group my employees?
To protect against discrimination, there are many regulations dictating how employers can group U.S.-based employees in benefits classes. Make sure you understand the rules before enabling them for your company. Please note that if the available benefits, eligibility requirements, and employee premium costs are not the same for all eligible employees, you could put at risk the Section 125 pre-tax benefits for higher-paid employees. Each employer is responsible for ensuring that its insurance class system complies with any applicable nondiscrimination requirements and, if applicable, does not negatively impact the employer’s strategy for complying with the ACA employer mandate.
How can I change an employee's benefits class?
Master Policy Plans
You can change a U.S.-based employee's benefits class directly in Justworks by navigating to Manage > Employees > Job Information. In the ‘Current Position’ box, you will see the employee’s current benefits class. To change this, click the blue ‘Edit’ pencil. Once clicked, you will first need to check the box that affirms you would like to change the employee’s benefits class.
Once checked, you can proceed by clicking ‘Save and Edit Benefits Class.’ On the next screen, you'll have to select the date for which the benefits class change will go into effect. Keep in mind that since you can only make changes effective for the first of the following month, the dropdown will give you the option to make the change effective as of the first of forthcoming months. Once you select which benefits class to move your employee to, click 'Save' at the bottom.
You can also change an employee's benefits class during a compensation change. Learn more about Updating an Employee’s Compensation.
Open Market Plans
Benefit classes for Open Market plans can only be edited during plan selection. Once you’ve clicked Start, you will be able to read more information on the next page and follow the prompts to Add Benefits Class > Name Benefits Class > select your Benefit Class waiting period > and Assign Employees to this new Benefit Class.
Remember that since you can only make changes effective for the first of the following month, the waiting period section will give you the option to make the change effective as of the first of forthcoming months.
*Setting Benefit Classes Visual Example for Open Market Plans
*Setting Benefit Classes Visual Example for Open Market Plans
Once you select which benefits class to move your U.S.-based employee to, click 'Save' at the bottom. Once all of your plan submissions are sent in, you will need to contact Support to have them reset.
What are waiting periods?
A waiting period is a set amount of time that must pass from an employee’s date of hire to when that employee becomes eligible to select a health insurance plan. Justworks offers 3 waiting periods to employers when selecting benefits in Justworks including 0 days, 30 days, and 60 days. Waiting periods can only be set up during initial company onboarding and during health insurance renewals.
How do waiting periods work?
Once an employee satisfies their waiting period, they’ll have the opportunity to select their medical, dental, and vision insurance plans in open enrollment. Open enrollment for new hires is 30 days, with plan coverage always becoming effective on the first of the month after the employee’s eligibility date. Let’s look at some examples:
1. An employee hired on April 15th with a 0-day waiting period.
Open enrollment period: April 15th - May 15th
Plan coverage effective date: May 1st
2. An employee hired on April 15th with a 30-day waiting period.
Waiting period satisfied: May 15th
Open enrollment period: May 15th - June 14th
Plan coverage effective date: June 1st
3. An employee hired on April 15th with a 60-day waiting period.
Waiting period satisfied: June 14th
Open enrollment period: June 14th - July 14th
Plan Coverage effective date: July 1st
An Important Note
Waiting periods are based on when your employee is hired and becomes benefits eligible, not from the date that an employee may have started working.
IE: If a part time employee who was initially ineligible for benefits becomes a benefits eligible full time employee their waiting period would start on the day they became full time.
Waiting Periods and Benefits Classes
Employers may want to set different waiting periods for different groups of employees based on benefits classes. Please note that you can only set up benefits classes during initial company onboarding and during health insurance renewals.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.