Middle class families — those with incomes of between roughly $50,000 and $100,000 per year — are becoming increasingly reliant on workplace benefits to ensure their financial well-being in case of a disability or critical illness.

Simple health insurance is insufficient to carry the load. The loss of a breadwinner’s or caregiver’s financial contribution through death or disability is often devastating.

A recent survey by benefits provider Guardian indicates that families in this category are struggling when it comes to achieving their financial goals. Of those workers surveyed only half believe they would be able to manage if the household lost an income due to death or illness.

Workplace benefits are critical 

According to Guardian’s researchers, the middle-market population is overwhelmingly reliant on the quality and breadth of the benefits they receive at work — over and above cash compensation.

Over 80% of middle-market respondents report that they got their health insurance, disability insurance and retirement plan all through their employer.

Meanwhile, six in 10 have no life insurance in place outside of the workplace. This means that the solid majority of working families are relying entirely on workplace benefits to see them through the death of a family breadwinner.

And in the event of disability ending a breadwinner’s income, the situation is even more dire: Only 7% of the middle market owns any kind of disability insurance protection, outside of what they are able to access via their employer.

Are life insurance benefits adequate? 

For young families, the primary role of life insurance is to replace the income of a deceased breadwinner. But many employers cap life insurance benefits at $50,000 — the maximum figure that allows employers to deduct premiums as a workplace benefit under IRC 7702.

The actual need for many of these families is several hundred thousand to a million dollars, and occasionally more. That’s what it takes to replace the income of a worker who earns $50,000 to $100,000 per year until the children are out of college and a surviving spouse is taken care of.

A solution

One solution is to offer voluntary benefits to workers. These include a menu of benefits, such as:

• Group life insurance
• Group disability insurance
• Long-term care insurance
• Critical illness coverage

Often many of these benefits can be offered at little or no cost to the employer.

Premium costs are simply deducted from the worker’s wages and forwarded to the insurance company via payroll deduction. In this way, workers can purchase much more coverage and provide protection for their families — and it doesn’t cost the employer a dime.

In some instances, it can even save on payroll taxes. To learn more, call us. 

With 2025 just a few months away, it’s important that small employers understand their group health insurance reporting obligations under the Affordable Care Act as they changed at the start of 2024.

Before 2024, only employers that sent out 250 or more Forms 1094-B/1095-B and 1094-C/1095-C were required to file them online with the IRS. But since early 2024 (and affecting the 2023 tax year), employers filing 10 or more ACA reporting forms have been required to file electronically.

It’s important that you understand your filing obligations to avoid fines that can quickly add up.

Here are the deadlines for 2025

Meeting the filing deadlines for Forms 1094-C and 1095-C is critical to complying with ACA requirements. Here are the deadlines for next year:

Jan. 31, 2025 — Employers must by this date have sent Form 1095-C to all of their full-time employees, who must supply the form to the IRS when they file their taxes.

Feb. 28 — This is the deadline to file Forms 1094-C and 1095-C by paper with the IRS for the few employers who are still eligible to do this.

March 31 — This is the deadline to file Forms 1094-C and 1095-C electronically with the IRS.

Filing electronically

You can file your forms electronically on the ACA Information Returns (AIR) Program, which is run by the IRS. This page includes all of the resources and guidance you need to understand and use it.

Hardship waivers

Employers can request a waiver for filing electronically if they can prove that doing so will cause an undue hardship on them or if it goes against their religious beliefs. Employers must submit their waiver request at least 45 days prior to the due date for returns by using this form.

Penalties

Employers who offer their workers health insurance and who fail to file the ACA forms electronically despite being required to do so (and if they don’t have a waiver) can be subject to a fine of $310 per return that was not reported electronically.

There are also other penalties regarding ACA reporting forms:

• Failure to file correct information on a form: $310 per return for which the failure occurs. The maximum penalty an employer may incur under this penalty is nearly $3.8 million per calendar year.
• Failure to provide a correct information return or payee statement: $310 per return for which the failure occurs. The maximum penalty that may be incurred is nearly $3.8 million per calendar year.