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HEALTH BENEFITS WITH A NUMBER OF CONTRACTOR SPECIFIC ERISA TRUSTS
Another strategy for taking the fringe off your prevailing wage payroll is to adopt into an ERISA Trust for your health benefits needs. Specifically designed for prevailing wage contractors, these ERISA Trusts provide the same cost-savings from reduced payroll taxes and lower workman’s compensation premiums, while offering certain clients significant advantages over a direct-to-carrier policy.
How ERISA Trusts work – a brief overview
ERISA Trusts pool together groups of contractors, enabling them to form a larger insurance group than they would be on their own. The ERISA Trust then negotiates insurance rates on behalf of this larger group, enabling some smaller companies to achieve better health benefit rates than they might receive on their own. Additionally, the ERISA Trusts maintain all accounting and fiduciary responsibility for insurance benefits, reducing compliance costs as well as decreasing liability exposure. You can learn more about the Employee Retirement Income Security Act of 1974 and “bona fide” ERISA Trusts in our Frequently Asked Questions section.
Advantages of “bona fide” ERISA Trusts
Why use a “bona fide” ERISA Trust as opposed to a direct-to-carrier policy? For some prevailing wage companies, Trust participation can offer numerous benefits, including:
• COBRA & HIPAA compliance
By maintaining health benefits on behalf of its members, the Trust invests the time and assumes the expense of staying in compliance with Davis-Bacon regulations (not to mention the Little Davis-Bacon’s, like Cal-COBRA). As a result, the Trust eliminates the need for the Trust members (including you) to support those regulations on your own.
•Fiduciary responsibility
The Trust maintains the burden of responsibility for managing financial paperwork and Government filings. By spreading the cost of compliance across the entire Trust membership, it can result in lower overall costs than maintaining those filings on your own. Not to mention, with the Trust maintaining fiduciary responsibility, you are shielded from liability exposure in the event of a lawsuit.
•Lower rates
As pooled entities, ERISA Trusts get the benefit of composite, as opposed to age-banded, rates. This means that, in addition to general Trust benefits of simplified plan administration, you may also get lower premiums.
•Hour Bank eligibility
For contractors who prefer to implement an Hour Bank program to fund their health benefits, ERISA Trusts enable another funding option in addition to annualization.
CPWIS is here to help you lower your costs
Looking for guidance on the best health care benefits approach – Direct-to Carrier or “bona fide” ERISA Trust? CPWIS offers advice to companies of all sizes, providing invaluable guidance on prevailing wage benefits plans for both Davis-Bacon and California prevailing wage. Not to mention, as one of our clients, you’ll realize the benefits of CPWIS’ years of experience advising contractors on prevailing wage rules and regulations. That means you’ll be able to rely on us to do more than just direct you to an employee benefits strategy. By working with your finance team to integrate your benefits packages into your accounting system, we’ll help to assure that your accounting is correct, and that your payroll crediting is accurate. Not to mention the help we can provide with everything from compliance to certified payroll reports.
Why don’t you just contact us (or have us contact you!) and let us help you to determine the best benefit plans for your business. You and your accountant will be glad you did!
