Benefit Comparison

"Mainstream" to the "Hour Bank"

A case study

What is the hour bank?

Primarily focused on the construction industry, the hour bank meets the needs of the seasonal and transient worker but allow coverage to be maintained during the in between times, layoffs, and the like. Loosely explained, an hour bank system first blends rates between single and family coverage and converts the monthly benefit premium into an hourly amount. Then the employer/employee premium spit is assigned based on the hours an employee works over a week.

Paying without access

What first strikes me about comparing the hour bank to the more mainstream coverage is how when new employees are hired, payment into the plan occurs immediately; however, the employee is not eligible to access the benefit plan for claims purposes.

Employees typically won’t qualify for coverage until they meet the 600-hour eligibility, and as it is understood, they must maintain 200-hours per month for continuing access.

Note that on more traditional plans, benefits typically require a min of 20-hours, on average, per week to qualify, and are set between 37.5-40-hours a week for full-time active staff. These hours are primarily used to determine "actively at work" status and applied for the disability coverage in working out the payment eligibility at the point of claim. [Rate per hour, multiplied by hours worked]

This means that a traditional plan is based on 160-hours a month, whereas the hour bank plans require an additional 40-hours a month for qualification.

Administration & Billing

The administration on any benefit plan includes many things, including, but not limited to, wage adjustments, life changes, like family status, etc. and the billing may change from month to month depending on the aspect of the change, the addition or termination of staff members. However, in addition to these changes, administrators within hour bank system also must update the monthly hours per employee on a weekly basis and the billing will be adjusted accordingly.

Unlike a traditional plan, the hour bank providers usually also add in a “membership / administration” fee monthly per employee that the more mainstream benefit plans. This could be as much or more than $9.70 per month, per employee and is not attached to any benefit.

The additional hours (over 200 hours/month) do not initiate added benefit coverage. Instead, the additional hours are “banked” for the employee to use when they are no longer “actively at work”.

Not just Attraction, but more importantly, retention

Hour bank benefit programs?allow employees to maintain their benefits during lay off, or between jobs or when they join another employer.

Remember those first three months where both employer and employee contribute to the benefit plan without access to coverage…this is where those hours go. Isn’t this like giving your competition money to undercut your business? Paying for someone to benefit from knowledge of your business, training, and perhaps customers.

Disability doesn’t happen only “on the job”

But it does impact the job.

Consider an employee who experiencing a disability that is not work related. Assuming they have been able to maintain their hours for qualifying, many of the plans are limited to $2,500 a month and the hour accumulation usually runs out at three months. Most qualifying periods for long term disability are 17-weeks, or four months. This means the employee runs short and the employer will need to fund the last month of qualifying.

On the other hand, consider the employee who may have suffered a neck, hip, or spinal injury, perhaps an illness that has impacted their ability to maintain their 200-hours a month to continue benefits … could it be, that by the time they leave work due to disability, there is no coverage because they don’t have any hours “banked” and depending on the employer, they may need to fund these additional months?

Food for thought when considering which plan is the best plan for your organization.

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Note: this was written without the aid of Artificial Intelligence (AI)

Disclaimer:?Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and employment, taxation, legal vary accordingly. Please seek legal, accounting, and human resources counsel from qualified professionals to make certain your legal/accounting/compliance interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.

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