A guide to health benefits in the construction industry
The construction industry is known for its physically demanding, fast-paced work environment. As a result, construction professionals need to prioritize their health and well-being to stay safe and productive on the job. Does your benefits package help them achieve this?
Learn how PeopleKeep can help you build an outstanding health benefit for your construction company.
Health benefits for your construction crew
Health benefits are a valuable asset that can set your company apart in the construction field and make it more appealing to potential employees. Understanding what options are available to you as a construction company owner can help you make informed decisions and create a strong benefits package for your workforce.
Let's explore your different health coverage options, the advantages of providing them, and how to navigate the intricacies of health benefits in the construction sector.
The importance of offering health benefits
Health benefits are the most valued employee benefit you can offer. According to PeopleKeep’s 2024 Employee Benefits Survey, 92% of employees rated health benefits as important. As the owner of a construction company, offering health benefits to your W-2 employees and 1099 contractors can have a positive impact on their health, job satisfaction, and overall well-being.
Here are a few reasons health benefits are particularly important in the construction industry:
- From working along busy highways to hauling heavy materials, construction workers are at high risk for injuries. The nature of their work is more dangerous than other industries.
- When construction workers are out sick, it has a ripple effect. Taking time off to recover extends project timelines, which isn’t good for business.
- According to the Bureau of Labor Statistics, 78% of private industry construction workers are given access to a medical benefit. If you don’t offer your workers a health benefit, they’ll find another employer who will.
By providing a range of health benefits to your team, you can attract and retain top talent, improve workplace morale, and create a supportive and healthy work environment for everyone involved in your construction company.
Group health insurance
With traditional group health insurance, you can offer coverage to your entire construction crew under a single, one-size-fits-all policy. Medical insurance policies can vary in coverage and cost, so it's important to research different options and choose a plan that meets the needs of your employees.
But, group health insurance comes at a steep cost, making it unaffordable for smaller firms in the construction field. According to KFF’s health benefits report, in 2023, the average cost of employee health insurance premiums for family coverage was $23,968. The average family premium has increased 47% since 2013. You may not even have enough employees to qualify for group health insurance plans. Additionally, group health insurance plans are more limited in terms of coverage options and flexibility compared to individual health insurance plans.
If you’re looking for a more affordable and flexible way to offer health benefits to your workers, our next option can help.
Health reimbursement arrangements (HRAs)
Instead of offering a group plan to your W-2 employees, you can reimburse them for the cost of their individual health plans. A health reimbursement arrangement (HRA) is a type of employer-funded health benefit that reimburses employees for eligible out-of-pocket medical expenses, including individual health insurance premiums. You set aside an allowance of tax-free money. Your employees then purchase the medical items and services they need. They submit claims for reimbursement, and after verifying the expense meets IRS guidelines, you reimburse them up to their allowance amount.
HRAs are funded solely by the employer. There are no salary reductions or employee contributions.
Here are some of the benefits of using an HRA for your construction firm:
- An HRA empowers employees. An HRA is appealing to all types of W-2 construction workers and support staff of all ages since it gives them the flexibility to choose the health insurance and eligible expenses that best suit them.
- An HRA works for all budgets. We understand that no construction project is the same and that small construction firms operate differently than most small businesses. Flexibility is key to managing your cash flow successfully. Your small business can decide in advance the amount of money to contribute.
- An HRA is tax-advantaged. An HRA is a good fit for a small construction company like yours because it offers your W-2 workers tax-free money for their healthcare.
- An HRA promotes employee retention and recruitment. With construction workers spanning from baby boomers to millennials, offering a health benefit that works for all types of employees is crucial, especially when it comes to recruitment and retention in a tight labor market.
Several HRAs are available, making it easy to find the one that best suits your business's needs.
Here are the two types of HRAs you can offer instead of a group plan:
- The qualified small employer HRA (QSEHRA): The QSEHRA is for small businesses with fewer than 50 full-time equivalent employees (FTEs). Employers must offer a QSEHRA to all W-2 full-time employees. But you can choose whether to extend it to part-time employees. The IRS sets maximum annual contribution limits for the QSEHRA. Employees must have a health plan with minimum essential coverage (MEC) to participate. This can be in the form of individual health insurance or coverage from a parent’s or spouse’s group plan.
- The individual coverage HRA (ICHRA): The ICHRA is similar to the QSEHRA but comes with more flexibility. It's for employers of all sizes and doesn't have any limits on contributions, so you can offer your employees as much as you'd like. Plus, you can differ allowances and benefit eligibility with 11 employee classes, such as full-time or salaried workers. Offering an affordable ICHRA allowance can help you satisfy the Affordable Care Act’s employer mandate if your organization has 50 or more FTEs.
If you like the familiarity of a group plan but want to ensure your employees’ needs are met, you can use a group coverage HRA (GCHRA). The GCHRA, also known as an integrated HRA, works alongside a group health insurance policy. It helps cover out-of-pocket expenses your group plan doesn’t fully pay for. This makes it an excellent supplement for a high deductible health plan (HDHP) so you can save on monthly premiums while giving your employees a way to pay for their increased out-of-pocket costs.
When you offer an HRA through PeopleKeep, our team of experts generates legal plan documents, reviews employee expenses based on IRS guidelines, and sends necessary notices automatically for your convenience. This frees up more time for you to focus on running your business.
Learn more about PeopleKeep's HRA administration software
Qualified small employer HRA
A powerful alternative to group health insurance made specifically for small employers.
Individual coverage HRA
A health benefit that enables employers to cover the individual insurance plans their employees choose.
Group coverage
HRA
A health benefit that employers can use to help employees with their out-of-pocket expenses.
Health savings accounts (HSAs)
A health savings account (HSA) is a tax-advantaged savings account you can offer in conjunction with an HSA-qualified HDHP to pay for qualified medical expenses. Employers and employees can make contributions to an HSA on a pre-tax basis, reducing the employee’s taxable income for the year.
Employees can use the funds in the account to pay for a wide range of medical expenses, including deductibles, copayments, and coinsurance. Any unused funds can roll over from year to year, making the account a valuable tool for saving for future healthcare expenses. Additionally, funds withdrawn for qualified medical expenses aren't subject to federal income tax.
Flexible spending accounts (FSAs)
A flexible spending account (FSA) is a type of savings account that allows employees to set aside a portion of their pre-tax earnings to pay for eligible medical expenses. The funds deposited into an FSA aren’t subject to income tax, Social Security tax, or Medicare tax, which can result in significant savings for the account holder.
Your employees can use an FSA to cover a wide range of medical expenses, such as copays, deductibles, prescription medications, and certain over-the-counter items. However, it's important to note that they need to use their funds in an FSA within the plan year or they'll be forfeited, so careful planning and budgeting are necessary to maximize the benefits of this type of account.
Did you know you can use an HRA and HSA together? See how in our guide.
See what makes HRAs different from HSAs and FSAs in our easy-to-follow chart.
Health stipends
A health stipend is a monetary benefit added to your employee's regular wages. For this reason, a health stipend is taxable. You can provide this benefit to employees to help cover the costs of health-related expenses. This can include expenses such as monthly gym memberships, wellness programs, medical check-ups, and other healthcare-related services.
While it's not as cost-effective as an HRA, a health stipend is another way for companies to invest in the well-being of their employees and promote a healthy work-life balance. They can be a good option for organizations with many employees who qualify for premium tax credits (PTCs) or those who employ 1099 contractors.
How to navigate the complexities of offering health benefits
It takes a lot of time and effort to run a small construction business. With massive amounts of records, regulations, and timelines to stay on top of, it's no surprise that work-life balance is especially tricky for small firms.
Fortunately, PeopleKeep can help lighten the load for you. With our HRA administration platform, you can set up and manage personalized health benefits in just minutes each month. Our hassle-free software helps thousands of employers easily reimburse their employees for their medical expenses.
Offer a personalized health benefit with PeopleKeep for a happier, healthier team
Learn how PeopleKeep’s HRA software can help you build and manage a hassle-free, affordable health benefit your team will love. Learn more about how PeopleKeep serves small employers, or book a live demo of our software.
