Our135th Anniversary

PROPERTY & CASUALTY AGENTS AGENCY MARKETING • INSURANCE MARKETS • NEW PRODUCTS JULY 2014 benefits company FRINGE BENEFIT GROUP CATERS TO HOURLY WORKERS’ NEEDS Brokers and employers rely on FBG as single source for benefits administration, products and compliance. Photography by Nick Judy

Executives of Fringe Benefit Group: (from left) Travis West, CEO; Adam Bonsky, Executive VP, Government Markets; Tere McCann, CFO; Brian Robertson, Executive VP. The Contractors Plan team for Fringe Benefit Group includes: (seated front to rear then stand- ing left to right) Steve Slade, CPA, CPC, Director, Defined Contribution Plans; Mike Rog- ers, CLU, Chief Compliance Officer; Bill Henson, VP, SCA Markets; Adam Bonsky; and Paul Gaudet Jr. , MBA, Director of Group Benefits, Government Markets.

By Thomas A. McCoy, CLU that are subject to these Acts dealing defined by the Department of Labor. with minimum hourly compensation. A contractor who is out of compliance Its mission is not only to keep these may be subject to fines or debarment,” contractors compliant, but handle this says Bonsky. or most benefits brokers and business in the most tax-efficient and Bonsky continues, “Contractors their clients, the dawn of the effective way possible. working on government projects might Affordable Care Act (ACA) FBG will manage approximately be leaving a lot of money on the table era was the beginning of $250 million in contributions to benefit because they are paying the fringe Ftheir exposure to complicated federal plans nationwide this year, serviced by amount improperly by overpaying regulation of health insurance. Fringe its approximate 100 employees in five taxes or overpaying insurance. They Benefit Group (FBG), an employee offices. It can provide a “single source might be overpaying workers compen- benefits wholesaler and third-party solution” where the contractor deposits sation, allocating time off improperly administrator, has been helping bro- the amount required for the hourly or paying the fringe amount separately kers and their clients comply with worker’s entire fringe package and in addition to benefits.” government regulation of health insur- FBG allocates it among the various Fringe Benefit Group offers a ance and other benefits products for products chosen. product lineup for the prevailing wage more than 30 years. “Compliance with prevailing wage market that includes major medical, FBG’s leading niche is adminis- laws can be complex,” says Adam specialty benefits—dental, vision, life, tering benefit plans for construction Bonsky, executive vice president of disability, etc.—and retirement plans. companies and service contractors government markets for Fringe Benefit Transamerica and Nationwide are working on government-funded proj- Group. “And to the extent the broker its leading 401(k) providers; United ects. An important part of this business and the contractor don’t understand Healthcare, some Blues, and Kaiser for is keeping the construction and ser- everything that’s required, there are major medical; its specialty benefits vice contractors in compliance with lots of problems that can occur.” He carriers include MetLife, Transamerica prevailing wage laws. Those laws, the points out that wage and benefit pay and Ameritas; and for fixed indemnity, Davis-Bacon Act, the Service Contract requirements vary by location and by Nationwide and Standard Security Life. Act and various related state laws, occupation type, and are determined FBG also can serve as a marketing specify minimum compensation levels by surveys in local areas. ally to its brokers by providing them for hourly workers. They apply to fringe “A contractor has to know what with access to its large database on benefits as well as wages for hourly they can bid, what they pay the government-funded work. “For exam- workers. (See sidebar on page 92.) employee, how much can go toward ple,” says Bonsky, “we can provide a FBG currently administers benefit base wages, how much toward benefits, broker with lists of contractors bidding plans for some 600 brokers nation- and what reporting they have to do. on government-funded work in that wide whose clients have businesses The benefits have to be ‘bona fide’ as broker’s geographic area.”

Reprinted from the July 2014 issue of Rough Notes Magazine The Framework team for Fringe Benefit Group includes: (foreground right, then seated left to right) Brian Robertson; Teri Potts, Market- ing Director; John Conkling, VP, National Accounts; and Nat Peniston, VP, Specialty Benefits.

Along comes the ACA employees in the firm. “Business own- “Almost 60% of the workforce in the ers and key employees can count those U.S. is made up of hourly workers, and Like all employers with more than fringe contributions in the discrimina- a high percentage of them are part- 50 employees, those who work on gov- tion testing; you can use it to offset time workers,” says Brian Robertson, ernment-funded projects will have to profit sharing; you can use it to meet executive vice president of FBG. “We provide ACA-compliant health cover- your safe harbor obligations.” think the number of part-time workers age effective January 1, 2015. Bonsky Bottom line, Bonsky says, the will continue to grow.” explains how the Act affects the ben- ACA is providing its brokers with “a Servicing this widely diverse popu- efits decision-making process for them. wonderful opportunity to show their lation of workers requires a strong “If in the past a contractor has clients how making a simple decision infrastructure of administration ser- been paying the fringe amount as of moving all of their fringe money vices and communication channels, wages because the employees prefer from paycheck to bona fide benefits, Robertson points out. “Many of these it that way, now the ACA says ‘it’s the you unlock all sorts of potential eco- employees work multiple jobs, and law; you have to provide benefits or nomic advantages.” keeping track of hours and benefits you get penalized and the employee choices can be a challenge. It’s impor- might get penalized too if they’re not tant to have a strong online presence purchasing it for themselves.’ So it Part-time workers as well as call centers.” takes some of the sting out of putting In the late ‘90s, FBG decided to Robertson heads up Framework, benefits in place in lieu of paying the experiment with operating outside which has built a client list that fringe as cash. Before the employer felt the prevailing wage market. It intro- includes “a lot of national restaurant the full brunt of the decision. Now the duced a hospital indemnity policy firms, other hospitality businesses, employer can say, ‘The ACA is making for staffing companies, a class whose national retail firms and nursing me do it.’ employees had limited funds to spend homes.” The key to its growth, he “We support the broker by explain- on benefits. This led FBG to expand says, is the benefits platform infra- ing to employees how, by putting further into the commercial market structure, which FBG originally built these dollars towards benefits, they (non-government-related jobs) by offer- for its prevailing wage business, and can reap the tax rewards, grow their ing a fixed indemnity limited medical the way it has tailored it for the spe- accounts, meet their obligations under product for hourly and part-time work- cial needs of part-time workers and the Affordable Care Act and help their ers. In response to customer demand, their employers. employer win more jobs because they today that program, called Framework, “Over the years we’ve built online are more competitive now.” provides part-time workers with a enrollment capabilities for part-time Bonsky notes that when new supplemental benefit offering that workers,” Robertson says. “We’ve gone fringe benefit contributions flow into a includes fixed indemnity, MEC, dental, from managing the premium on an retirement plan, they create another vision, critical illness, short-term dis- hourly basis to managing it on a pay- opportunity for the highly compensated ability, and life plans. roll cycle basis so the employer does

Reprinted from the July 2014 issue of Rough Notes Magazine The Operations/Call Center team for Fringe Benefit Group includes: (from left) Tricia Voges, VP, Controller; Tere McCann; and Ron Safarik, VP, Participant Services.

not have to manage a bill. When an on how much premium they paid of part-timers. Others with hourly employer has thousands of employees and create the next file that will and part-time have eliminated all spread across a region, we don’t want go and deduct out of their payroll benefits, at least for now, sending to just send them a bill and ask them again. Our account managers work employees to the exchanges. We to tell us what amount goes to what to handle the discrepancies with the believe that a lot of these will come person and whether or not they’re still HR department versus putting that back to the private market.” working. So we match up our cycle to burden on them. Whatever the Affordable Care their payroll system. “That’s the magic behind what we Act brings to the employee benefits “We enroll the person, and then do. We really shine with these messy, market, Fringe Benefit Group is we send the deduction file to the high turnover cases because we make unlikely to fret about it. It found out employer. That deduction file is then them easy on the broker and on the long ago that helping companies run through that employer’s payroll employer,” says Robertson. with hourly workers stay compliant system, which will create a mass of Robertson notes that the part- with government regulations can deductions. They then send us a remit- time market will be going through present opportunities. n tance file of premium, showing how a transition during the early much the employer was able to deduct stages of the Affordable Care Act. for each employee. “Some employers have reduced For more information: “We’ll take all that and make full-time employees in response to Fringe Benefit Group people eligible for insurance based the Act, increasing their number Website: www.fbg.com

Prevailing wage laws

The Davis-Bacon Act This legislation, passed in 1931, stipulates that federal construction contracts in excess of $2,000 must pay workers locally “prevailing wages” including the “anticipated cost of prevailing benefits.” Generally this is expressed as a per-hour wage and a per-hour cash equivalent value of benefits, often based on a union scale. Prevailing wages are set by the U.S. Department of Labor and are included in the bid specifications of covered contracts.

The Service Contract Act This legislation, first enacted in 1965, specifies minimum hourly compensation levels for a wide range of pri- vate contractors and subcontractors working on federal contracts of at least $2,500. As under Davis-Bacon, the minimum levels must conform to locally prevailing wages and benefits. Often these contractors have multiyear contracts for work at a government facility. For example, says Adam Bonsky, “On a military base you could have food service, security, landscapers, and facilities maintenance services.”

Reprinted from the July 2014 issue of Rough Notes Magazine