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"benefits"/
Uncategorized

Flexible Benefit Plans Give Employees More Options

by Inoventive Solutions
March 31, 2026

One way you can give your staff more choice in the employee benefits they receive is to offer them a cafeteria plan, which allows them to put together a benefits package that works best for them.

Employers fund these flexible benefit plans with funds that are deducted from their employees’ salaries on a pre-tax basis. Since the salary reductions are not received by the employee, they are not considered wages for income tax purposes.

Cafeteria plans are particularly good for participants who have regular expenses related to medical issues and childcare.

The worker can choose from a menu of options into which they want to funnel the funds, and how they want those funds allocated. Options can include:

  • Health insurance,
  • Voluntary benefits premiums (like vision and dental),
  • Life insurance,
  • 401(k), and
  • Flexible spending account.

Besides the fact that your employees use money that hasn’t been taxed to pay for these benefits, the payroll deductions for them also reduce their taxable income while raising take-home pay.

A cafeteria plan is especially attractive because it lets them choose which benefits they want. This is great since one size does not fit all in the world of employee benefits.

Set-up and tax implications

Cafeteria plans are also called Section 125 plans because they were created by Section 125 of the IRS Code.

When a plan is created, the benefits are available to employees, their spouses, and their dependents. Depending on the circumstances and details of the plan, Section 125 benefits may also extend to former employees, but the plan cannot exist primarily for them.

Section 125 plans offer a number of tax-saving benefits for employers. For each participant in the plan, employers save on the Federal Insurance Contributions Act (FICA) tax, the Federal Unemployment Tax Act (FUTA) tax, the State Unemployment Tax Act (SUTA) tax, and workers’ compensation insurance premiums.

Combined with the other tax savings, a Section 125 plan usually funds itself because the cost to open the plan is low.

Also, it’s estimated that participating employees can save 20% to 40% of every dollar put into the plan. The employee chooses how much they want to put into the plan each year and this is deducted from their paycheck automatically for each payroll period.

Remember: Flexible benefit plans are not without their drawbacks. But if you want to attract and retain key personnel with competitive benefit packages while keeping your own costs low, they can be an attractive alternative to standard benefit plans.

Call us for more information on how you can set up a flexible benefit plan for your staff.

There are several types of flexible benefit plans, including cafeteria plans and flexible spending accounts.

Flexible spending accounts

An FSA lets your employees pay for medical-related expenses and dependent care that may not be covered by their health plan. They can later use these funds to pay for an array of expenses such as:

  • Out-of-pocket medical costs,
  • Acupuncture, chiropractic services and the like,
  • Medical equipment,
  • Day-care provider fees,
  • Elder care.

Also, employers can allow the employee to carry over a portion of the funds in an FSA to the first few months of the next year. The maximum permitted carryover amount is $550.

"A
Uncategorized

A Multi-Generational Approach to Employee Benefits

by Inoventive Solutions
March 24, 2026

Open enrollment season can feel like a familiar ritual: publish the guide, send a few e-mails, hold one webinar and hope employees make good choices. But when employers take a one-size-fits-all approach to benefits design and communication, they often leave participation, satisfaction and retention on the table.

The modern workforce spans four generations, each shaped by different life stages, financial pressures and comfort levels with technology. That means the same benefits message and enrollment experience will land differently depending on who is receiving it. Recent surveys have found benefits satisfaction has slipped, suggesting expectations are rising faster than many programs and communications are evolving.

Benefits are complex, personal and often tied to major life decisions. When communications are too generic or the enrollment process feels frustrating, employees may tune out, postpone decisions or default to last year’s elections even when their needs have changed.

The employers that win on engagement typically do three things well:

  • Segment the workforce — Generation, life stage, family status, career stage, location and role
  • Offer multiple ways to learn — Digital, live and self-serve
  • Make the experience easy — Clear choices, fewer clicks and fast answers

Baby boomers

Boomers are often focused on retirement readiness, health care coverage and protecting income. Many are already of retirement age but choose to keep working. They typically appreciate a personal touch and time to digest information before making decisions.

  • Offer live Q&A sessions and phone-based support during enrollment.
  • Provide clear comparisons of medical plan costs, networks and coverage.
  • Highlight catch-up retirement contributions and step-by-step retirement planning resources.
  • Pair complex choices (Medicare coordination, supplemental products and long-term care options) with one-on-one counseling.

Generation X

Gen X employees often juggle competing responsibilities, including kids and aging parents. They tend to value autonomy, straightforward information and tools that respect their time.

  • Use concise e-mails and one-page summaries that link to more details as needed.
  • Offer self-serve decision tools for health plans, FSAs and disability coverage.
  • Emphasize financial protection benefits (life, disability and critical illness) in plain language.
  • Provide flexible office hours for short calls, not long meetings.

Millennials

Millennials commonly look for flexibility and benefits that support evolving family and financial needs. They are comfortable with digital enrollment but still want clarity and proof of value.

  • Build mobile-friendly enrollment processes with short videos and brief explainers.
  • Spotlight flexibility-related benefits such as remote options, caregiving support and paid leave when applicable.
  • Promote financial wellness resources, student loan support or budgeting tools if offered.
  • Tie benefits to career growth, such as tuition support, certification reimbursement, mentorship and internal mobility.

Generation Z

Gen Z is highly responsive to technology-driven experiences and expects speed, transparency and easy access. They also tend to prioritize mental well-being and want information in short, visual formats.

  • Use text message-style reminders, in-app nudges or chat-based help if possible.
  • Provide bite-size content like short videos, FAQs and simple “what it covers” flyers.
  • Make mental health benefits easy to find and use, including EAP access and digital options.
  • Offer guided enrollment portals for those new to employee benefits, including definitions and examples.

Execution

A workable multigenerational strategy does not require building four separate benefits programs. Start by updating how workers access, understand and use existing benefits.

  • Survey and listen: Ask employees what they use, what confuses them and how they prefer to receive information.
  • Offer “digital plus human”: Keep digital enrollment simple but back it up with real-time support for complex questions.
  • Measure what matters: Track participation by benefit type, access methods, call center volume and common questions. Then refine communications year-round.
  • Segment by life stage, not just age: Family status, health needs and financial stress often predict benefit priorities better than age alone.

When employees can engage with benefits in ways that fit them best, enrollment tends to rise, confusion drops and benefits become a more visible driver of satisfaction and retention.

"PBMs"/
Uncategorized

New Law Aims to Rein in PBMs, Reduce Costs

by Inoventive Solutions
March 18, 2026

The federal spending package that President Trump signed into law Feb. 3 includes provisions aimed at reining in pharmacy benefit manager tactics that have drawn fire from employers, insurers and lawmakers for allegedly driving up costs.

The changes in the Consolidated Appropriations Act of 2026 are designed to ensure that manufacturer rebates and other drug-price concessions flow back to plans and self-insured employers, while giving plan fiduciaries better data to evaluate whether PBM contracts actually lower costs. 

The goal is for health plans to pass those funds to employer customers as lower premiums as they have in West Virginia after similar legislation took effect there, according to studies.

PBMs contract with drugmakers, pharmacies and payers, and handle formularies, pharmacy networks and claims processing while negotiating rebates and discounts with manufacturers. Critics across the political spectrum argue that PBMs’ incentives can push plans toward higher list-price drugs with bigger rebates, which PBMs have been accused of pocketing. This means employers and employees pay more overall, especially when cost sharing is tied to list price. 

Skeptics worry that PBMs will adjust to the legislation by replacing lost rebate-related revenue with administrative fees or other contract mechanisms.

The two core reforms

Rebate and discount pass-throughs — The law requires PBMs to pass through 100% of manufacturer rebates, fees, discounts and other remuneration (excluding “bona fide service fees”) to ERISA-covered group health plans or plan sponsors. In practice, it targets business models in which PBMs retain a share of rebates or embed revenue in “spread pricing.” 

The pass-through requirement will apply to PBM contracts entered into, renewed or extended for plan years beginning on or after Aug. 3, 2028. For many calendar-year plans, that effectively means Jan. 1, 2029. 

Transparency and reporting — PBMs will have to provide detailed reporting to group health plans at least twice a year, with an option for quarterly reporting upon request.

Reports are expected to include information that helps sponsors understand drug spending and PBM revenue sources such as rebates, fees and spread pricing, plus data tied to formulary decisions. Civil penalties can apply for failure to disclose information and for knowingly providing false information. 

What’s in it for employers

A key reason employers and other payers are hopeful is the experience in West Virginia, where state officials reported that a rebate pass-through approach was associated with materially smaller group premium increases in the state’s 2026 small-group and large-group filings.

For 2026, the rebate pass-through mandate cut the average group health plan rate increase to 12.6% from 19.5%, according to data calculated by insurers and published in a report compiled by the West Virginia Offices of the Insurance Commissioner. The pass-through mandate caused one insurer to cut its large-group rates by 3% rather than increasing premiums by 5%.

That said, state results can be hard to generalize because plan design, market competition and underlying claims trends differ. 

For employers that purchase group health insurance, the new PBM rules could eventually help reduce prescription drug costs by ensuring that rebates and discounts negotiated by PBMs flow back to health plans instead of being retained by intermediaries.

However, because the reforms do not take effect for several years and PBMs may adjust their pricing models, employers should not expect immediate savings. Employers should also work with us to monitor how their carriers incorporate the new requirements into future pharmacy benefit arrangements.

"No
Uncategorized

No Surprises Act Is Failing and Driving Health Plan Costs

by Inoventive Solutions
March 10, 2026

A coalition of more than 60 employer groups, insurers, patient advocacy organizations and labor groups is urging the federal government to crack down on what they say is widespread abuse of the arbitration process created under the No Surprises Act.

In a Feb. 24, 2026 letter to the U.S. Departments of Treasury, Labor and Health and Human Services (HHS), the organizations asked the Trump administration to tighten oversight of the law’s independent dispute resolution system. The groups argue that the process, which was designed to settle payment disputes between insurers and out-of-network medical providers, is being manipulated in ways that increase health care costs.

A study cited in the letter found that the IDR process generated at least $5 billion in wasteful spending between 2022 and 2024, including administrative fees and arbitration awards that far exceed typical market rates.

How the No Surprises Act works

The No Surprises Act took effect in 2022 and was designed to protect patients from unexpected medical bills. Before the law, patients could receive large bills if they unknowingly received care from out-of-network providers (for example, an out-of-network anesthesiologist at an in-network hospital).

The law prohibits providers from billing patients for these unexpected charges. Instead, insurers and providers must negotiate payment for the service. If they cannot reach an agreement within 30 days, either side can initiate the IDR arbitration process.

Congress intended the process to serve as a limited backstop for resolving occasional disputes, but it has evolved into something far larger.

Federal regulators originally estimated that about 17,000 disputes would enter arbitration each year. Instead, more than 3.3 million disputes were filed between mid-2022 and May 2025, according to a study published in Health Affairs.

Act is a new cost driver

The Office of the Assistant Secretary for Planning and Evaluation, a division of HHS, issued a report in 2026 that found the act is driving up costs for health plans, payers and patients. It found that:

  • About 85% of the disputes that flowed through the system in 2023 involved participants in health plans sponsored by private employers.
  • IDR reviewers took an average of 91 days to handle disputes, and some took more than 300 days to close some disputes.
  • The reviews cost an average of $445 each.
  • The reviewers sided with providers in hospital care cases 80% of the time.
  • When reviewers sided with the providers, they awarded significantly higher payment rates. For example: For colonoscopy anesthesia, health insurers paid providers an average of $300 in 2023. When an IDR reviewer handled a dispute involving the procedure, it awarded an average payment of $1,252.

What the coalition wants

Industry analysts say the growing use of arbitration is already creating new affordability pressures for employer health plans and their employees through higher premiums, deductibles and cost-sharing.

In their letter, the groups urged federal regulators to take several steps to restore the arbitration system to its intended purpose.

They recommended that the agencies:

  • Strengthen enforcement to ensure only eligible claims enter the IDR process.
  • Require arbitrators to explain decisions that deviate significantly from benchmark payment levels.
  • Increase transparency around arbitration outcomes.
  • Penalize providers that repeatedly submit ineligible claims.

The coalition argues that stronger oversight is necessary to ensure the No Surprises Act continues protecting patients without unintentionally driving up health care costs for employers and their workers.

"Umbrella
Uncategorized

Are Your Benefits Enough to See Employees Through a Crisis?

by Inoventive Solutions
March 3, 2026

Middle-class families — those with incomes of between roughly $50,000 and $180,000 per year (depending on where they live) — 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.

Caught in the middle

Families with incomes significantly above $100,000 per year are generally able to create at least some financial cushion against the possibility of death or disability. They also receive a good deal of advice from financial advisors, accountants and insurance agents in managing their financial affairs. 

Working class families – those with incomes below about $50,000 – are often able to access various parts of the social safety net in times of crisis.

The “middle market,” in contrast, must make do without the advantages of the more affluent, with fewer privately owned insurance products and services, and without the same access to the social safety net afforded to working-class families.

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 can 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.

The cap on group life insurance is often not enough to help a family who loses their breadwinner, and the coverage should be considered a stopgap for a more robust life insurance policy purchased in the private market. 

What employers can do

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. 

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