Employee Benefits: Islamic Schools League of America Presented by

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Employee BenefitsIslamic Schools League of
AmericaPresented by

• ism
• April 20, 2003

Susan D. Simpson Senior Field Representative
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ism Our Story
Making a difference in independent schools has
been ISMs mission since Dr. W. Rodman Snelling
founded the company over 25 years ago. As an
experienced Headmaster, he determined that, to
grow and prosper, independent schools needed a
resource for practical, forward-looking
management advice, targeted to the schools
specific needs. Today, ISM is the only
comprehensive management support firm for
private-independent schools in the United States
and abroad. Creative Thinking. Proven Results.
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ism A Resource for Private-Independent Schools
Insurance Products include Life, Long Term
Disability, Short Term Disability, Student
Accident Sickness, International Student Health
Accident, Director Officers Liability, and
Section 125 Administrative Services.
Publications Ideas Perspectives, To The
Point, Management Mart Workshops Summer
Institute, School-Year Consulting Tailored to
meet your schools needs Consortium Partnership
between school ISM
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Insurance Products
Group Life Group Long Term Disability
Group Short Term Disability Group Long Term
Care Voluntary Programs Student Accident
Health International Student Health
Accident Director and Officers
Liability/Employment Practices Section 125
Administrative Services
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Field Representative Service Areas
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Why Offer Employee Benefits

• Help employees meet their family and financial
  responsibilities
• Promote hiring of the best employees available
  for your school
• Improve employee retention

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How to Offer Employee Benefits

• Mandatory benefits

• Voluntary benefits

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Mandatory Benefits

• Benefits offered as a condition of employment
• Offered to all employees meeting basic criteria,
  usually hours worked per week
• Considered part of compensation package

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Examples of Mandatory Benefits
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Health Insurance Rising Costs

• Health insurance is a critical component of a
  school benefit package
• Costs are determined by the following criteria
• Location of the school/employee
• Number of employees
• Gender breakdown and average age of the
  group

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Health Coverage Schools and the Formation of a
Consortium

• Health insurance industry is not inclined to
  support association coverage
• Schools represent adverse selection
• High female population
• Mostly secondary wage earners
• Lower group participation
• Generating lower premium dollars
• Less attractive group to insurance carrier

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Health Coverage What Can I Do?

• Investigate local options via the Chamber of
  Commerce
• Contact a local broker who has an understanding
  of private-independent schools
• Become familiar with the health carriers offering
  coverage in your area
• Gather illustrations from these carriers
• Compare information for suitability

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Role of Local Broker in Health Coverage

• Broker should be your advocate in dealing with
  the insurance community
• He/she can help you negotiate and learn about
  product design, pricing, and options also
  assists with the enrollment process and claims
  issues for your staff
• Brokers may have strong relationships with
  specific insurance programs, so you make the
  decision Choose the brokers and determine which
  companies they may contact (avoid overlap)

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Health Coverage Pricing

• Premiums for school-sponsored health coverage are
  part of your employee benefit dollars
• Review health carrier contract many require
  employer contribution of 50 of single premium
  cost to have valid contract

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Section 125 (IRS) Cafeteria Plan

• Program sponsored by the school that allows an
  employee to pay for certain health/welfare costs
  on a pre-tax basis
• School and employees enjoy FICA savings for
  employee dollars placed in the plan
• Employee enjoys a higher disposable income due to
  tax savings on dollars spent in this area

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Typical Section 125 Dollar Usage

• Pre-tax employee dollars used to pay for employee
  portion of health/dental/life/vision premiums
  within a school-sponsored program
• Employee out-of-pocket expenses for health/
  dental costs for self as well as family and
  dependents
• Employee costs for daycare (for dependents up to
  age 13, as well as special need situations)

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Long Term Disability Coverage

• Typically a mandatory benefit
• Cost is determined based on the following
  criteria
• Average age of employee group
• Contract salary volume for the employee group
• Risk factors for job classification

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Why Offer Long Term Disability?

• Living benefit to provide income continuance and
  funds for medical expenses
• Your employees have a 6 times greater likelihood
  of being disabled prior to retirement than of
  dying prematurely
• Guarantee issue if offered in group setting

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Group Life Insurance Employee Benefit

• Term group life coverage
• Typical part of an employee benefit package
  within an independent school
• Low-cost benefit
• Rate is based on the average age of the employee
  as well as the level of insurance coverage
• Benefit design can be a function of salary or a
  flat benefit

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Voluntary Benefits

• Benefits are at no cost to the school
• Employee may pay via payroll deduction
• Employee can rely on the school to choose a
  reliable firm (due diligence)
• Employee can access coverage at a discounted price

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Examples of Voluntary Benefits
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Value of Employee Benefits

• Communicate the value of these coverages, as part
  of compensation, to staff on a regular basis
• Include not only costs such as health insurance
  premium, but also FICA/unemployment/substitute
  teacher cost for sick leave, etc.

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Which Benefits are Right for Your School?

• Health insurance maintains employees personal
  well-being assists in attracting and retaining
  qualified faculty and staff
• Long term disability coverage income
  continuation if unable to work until retirement
  age
• Group life coverage provides additional income
  to family to cover expenses and maintain current
  lifestyle

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Why Offer Employee Benefits (continued)

• Retirement income for employee after he/she has
  completed working years
• Section 125 covers unreminbursed expenses with
  untaxed dollars, which increases employees
  spending power

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Typical Coverages Offered in an Independent School

• Health insurance school may pay 100 of single
  coverage dependent coverage is paid for on a
  partial basis
• Section 125 employee-funded plan
• Group long term disability school usually pays
  100 of premium coverage
• Group life coverage flat benefit amount/paid by
  school

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Typical Benefits (continued)

• Retirement plan contributory/match by school,
  based on years of service

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Communication of Employee Benefits to Staff

• Communication of value of benefits at least
  annually, in group setting
• Written communication of the benefit offerings
  and value to staff versus cost to the school
• Personnel handbook to cover administrative
  aspects of employee benefits

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What Should Your Broker be Doing for You?

• Analyze market and offer the most competitive
  programs goal is to meet the needs of school
• Understand independent school world
• Support Business Manager and address long-range
  needs of school
• Provide day-to-day service support

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Facts to Consider in Employee Benefits

• Update life beneficiary cards annually for all
  faculty and staff
• IRS has not allowed LTD premiums to be paid via a
  Section 125 plan
• What does my DO Liability policy cover?
• Who do I call when I have a claim for life, LTD,
  or group health?

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ISM and The Islamic Schools League

• ISM is dedicated to the independent school
  community and can serve as your broker for health
  coverage in certain jurisdictions.
• In conjunction with the Association, we are also
  offering discounts on various group life, group
  LTD, the Section 125 program, student accident
  coverage, and student health programs.
• For additional information, please go to your
  Islamic Schools League listserv/Web site or
  contact ISM.
• susanism_at_aol.com or 800-942-9560