This article is about Justworks PEO. What product am I using?
Large Group Plan Customers
Watch our video guide about how to set up your contributions here:
What are company contribution amounts when picking plans?
Company contributions are the portion of the monthly premium that your company pays for each U.S.-based employee that elects coverage and any enrolled partner/dependent(s).
When does my company pay for premiums?
On the first semimonthly invoice of the month, your company will be billed the entire cost of the plan that your employees are enrolled in for the following month’s coverage. For example, on the first semimonthly invoice of November, you will see employer contribution charges for the total cost of the premiums for December coverage.
In the month of coverage, each employee will be charged the portion of the premium they are required to pay, split evenly between the first and second paycheck of the month. This amount will be credited back to your company. To continue the example above, employees will be charged one-half of their portion of December premiums on the first paycheck and the other half of their portion of December premiums on their second paycheck. This amount will then be credit back to your company on the corresponding invoice.
What are the different contribution methods I can choose?
'Same for all plans‘ is the method when the company uses the same contribution scheme for all of the medical, dental, and/or vision plans to which it provides access. If you opt for ‘custom for each plan,' the company will use different contribution schemes for each of the medical, dental, and/or vision plans to which it provides access.
For either selection method, you can choose to contribute a flat dollar amount or a percentage.
How much must I contribute?
For medical and dental insurance, Justworks requires a minimum employer contribution of 50% towards the most affordable (cheapest) plan at the Employee only tier. This then becomes the minimum amount your company can contribute to all plans and tiers you choose to offer your team. If you choose to offer more than the minimum amount to the Employee tier of a plan, you must then contribute at least that same amount to dependent tiers of that plan as well.
There is no minimum contribution requirement for vision insurance.
Do I have to contribute the same amount to all employees?
If you have different benefits classes set up, you will have the ability to set up custom contributions for different benefits classes. If your company chooses to contribute to certain groups of employees in different amounts, please note it is your company’s responsibility to ensure that any differential treatment is non-discriminatory.
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. Your company is responsible for ensuring that your benefits class system complies with any applicable nondiscrimination requirements and, if applicable, does not negatively impact your company’s strategy for complying with the ACA employer mandate.
My company offers medical plans with PPO or Kaiser Permanente regional variants. How do I ensure our contributions are consistent across all plan variants?
The ‘custom for each plan’ contribution method provides the option for companies to use different contribution schemes for each medical plan the company provides access to. Plans with a PPO or regional variant have slightly different premium amounts than POS plans and plans offered in your HQ region. Therefore, any contribution amounts or percentages indicated for POS and HQ region plans will automatically apply to their respective PPO and regional variant plans.
There are a few contribution approaches available for PPO and Kaiser Permanente regional plans, the choice of which depends on the priority of the contribution scheme:
- Setting contributions by dollar amount provides the option to keep employer contributions constant, regardless of the plan variant available to the employee.
- Setting contributions by dollar amount - then creating separate benefits classes for each plan variant - provides the option to keep employee contributions constant, regardless of the plan variant available to the employee. Separate benefits classes allow for each PPO or regional variant that exists under the given medical plan to have its own dedicated contribution scheme.
- Setting contributions by percentage will ensure that both employer and employee contributions are proportional to the total plan cost, regardless of the plan variant available to the employee.
As previously mentioned, your company is responsible for ensuring that your benefits class system complies with any applicable nondiscrimination requirements, ensures that any differential treatment is non-discriminatory and, if applicable, does not negatively impact your company’s strategy for complying with the ACA employer mandate.
Small Group Open Market Plan Customers
Waterfall Contributions
For Small Group Open Market plans through Justworks, you can set waterfall contributions if you’re offering plans with age-banded rates.
Waterfall contributions are the method in which a company sets a base contribution percentage at the employee level and from there can set additional percentage contributions at each subsequent enrollment tier. Percentage based contributions help ensure companies remain compliant with the ACA minimum contribution requirements.
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.