Maximizing Your Dividends – Best Practices and Utilization Strategies

By BeneRe
June 25, 2024


Managing and utilizing your BeneRe Distributions effectively can significantly enhance your employee benefits programs and serve as a powerful hiring and retention tool. This blog post will guide you through best practices and innovative ways to reinvest in your employees’ wellbeing, ensuring that you get the most out of your end-of-year distributions.

Best Practices for Managing Dividends

End-of-year distributions represent premiums not needed for claims that are distributed to benefits plans as a year-end dividend. To manage dividends seamlessly and maximize their impact, it is essential to treat them as plan assets and follow these best practices:

  • Maintain Detailed Records: Keep comprehensive records of all dividend-related activities, including decision-making processes, expenditures, and impacts on employee wellbeing. This can be done easily by using the BeneRe Distribution Spending Tracker.
  • Regular Audits: Conduct regular internal audits to ensure documentation is up-to-date and compliant with relevant regulations. If you have any questions about how to use your dividends, be sure to reach out to your legal counsel.
  • Communication: Increase participation and keep employees informed about how they can receive the most value from their wellness benefits.

Reinvesting dividends in employee benefits can be a powerful retention tool, demonstrating your commitment to employee wellbeing and job satisfaction. By integrating these practices, you can manage dividends effectively and ensure their positive impact on your organization.

Strategies for Utilizing Dividends

Dividends must be used to fund additional employee programs that include the population of active employees that generated the dividends, serving as a valuable hiring and retention strategy Here are strategic ways to utilize these dividends effectively, categorized according to BeneRe’s Distribution Spending Tracker:

Utilization Strategies:

  1. Wellness – Health:
    • Biometric screenings
    • Fitness programs and gym memberships
    • Nutrition and weight management programs
    • On-site wellness programs
    • Employee health and wellness education workshops
  2. Technology and Communications:
  3. Healthcare Services:
    • On-site clinics
    • Preventative care programs
    • Telehealth services
  4. Mental Health / Employee Assistance Programs (EAP):
  5. Premium Offset:
    • Premium holiday for current coverage
    • Offset to cost increase
  6. Additional Coverage:
  7. Point Solutions:
    • Behavioral health
    • Condition management (MSK, Diabetes, Oncology, Cardiac, etc.)

By strategically utilizing dividends in these areas, companies can significantly enhance their employee benefits programs, improve employee wellbeing, and leverage these initiatives as a powerful hiring and retention tool.

Real-World Success Stories

Many organizations have effectively utilized their dividends to improve employee benefits. Here are a few success stories:

  • Leading Title Insurance Company: This company used its dividends to offer 100% subsidized wellness app subscriptions, significantly enhancing employee engagement with wellness resources.
  • Mortgage Financial Services Company: By using funds to offset mental wellbeing programs, this company was able to provide comprehensive mental health support to its employees.
  • Third Party Logistics Company: This organization planned to use its dividends for a new mental health and wellness vendor, showcasing a commitment to employee health.
  • Holding Company: This company offered free on-site biometric screenings for employees and applied distributions to support these initiatives.

FAQs from BeneRe Employer Clients

Question: Do I have to use the dividends for the same employee population enrolled in these voluntary benefits?

Yes, it is generally required to use dividends for generally the same employee population that generated the dividend in order to maintain compliance with regulations. This ensures that the benefits are equitably distributed among all eligible employees and that the use of funds aligns with the intended purpose of the dividend distributions.

Question: How much time do I have to reinvest the distributions in my employee benefits programs?

The timeframe for reinvesting dividends can vary, but it is typically recommended to reinvest them  as soon as reasonably possible after you complete your evaluation of how to reinvest the dividends. This helps in maintaining compliance and demonstrating proactive management of the dividends.

Question: Is there a best practice or template on how to track the spending?

Yes, using a structured spending tracker helps in managing and reporting distributions effectively. Ensure the tracker includes details such as date, distribution amount, spent amount, remaining amount, expense category, and supporting documentation.

Question: What specific expenses related to wellness programs can and cannot be reimbursed?

Reimbursable expenses typically include biometric screenings, fitness programs, and mental health apps. Non-reimbursable expenses mean expenses that benefit the company rather than the participants, for example, this might include certain administrative costs not directly related to the wellness benefit itself.

Question: Can you provide some specific examples of what I can spend the distribution on as a plan asset?

Examples might include funding mental health programs, wellness initiatives, and on-site healthcare services. These investments contribute to employee wellbeing and satisfaction.

Question: Can I use dividends to cover costs related to employee assistance programs (EAP)?

Yes, dividends can be used to fund EAPs, which provide support services such as counseling, crisis management, and referral services, unless an EAP was previously being offered and paid for 100% by the company.

Question: How should I document and report the use of dividends to ensure transparency?

Maintain detailed records of all activities related to dividend usage. Conduct regular audits and keep employees informed about how the funds are being utilized.

Question: What are the potential benefits of reinvesting dividends in employee training and development?

Investing in employee training and development can improve skills, enhance job satisfaction, and reduce turnover, ultimately benefiting the employee’s productivity, job satisfaction, wellbeing, and growth.

Question: How can I effectively communicate the value of dividends to my employees?

Use regular updates, reports, and success stories to show how dividends are being used to enhance their benefits. Transparency and communication help build trust and appreciation among employees.

Make the Most of Your Group Captive Distributions

Managing and utilizing your BeneRe dividends effectively can lead to significant enhancements in your employee benefits programs. By following best practices and investing in your employees’ wellbeing, you can achieve better retention, employee satisfaction, and overall organizational success.

Note: This blog is intended to provide suggestions and guidance on maximizing your dividends. However, it is important to consult with your legal counsel to ensure compliance with ERISA and other applicable regulations. BeneRe is not responsible for any legal compliance issues that may arise from the use of the information provided in this blog.

For more information or to discuss how we can support your efforts, please don’t hesitate to contact us.