Top 10 Criteria for choosing a prevailing wage benefit plan provider
Construction companies that work on public works projects covered by the Davis-Bacon Act or state prevailing wage laws are required to follow very specific rules related to bona fide fringe benefits. Choosing the right benefit plan provider / consultant takes careful analysis. Following are 10 criteria that should be considering factors:
This is at the top of the list because plans must be in compliance with the rules set forth in the Davis-Bacon Act, state prevailing wage laws, IRS and ERISA. Davis-Bacon and state prevailing wage laws often have complex annualization methodologies which can limit the amount of credit a contractor receives for the payment of benefits which can often lead to unintentional underpayments and fines. Annualization is commonly ignored or misunderstood by benefit plan providers.
2. Conflicts of Interest
Does a benefit plan provider have inherent conflicts of interest built into their business model? If so, is it properly disclosed in an easily understood manner to both you and your employees?
Does the benefit plan provider fully explain what services they charge for, how they get paid, and who is responsible for paying? If commissions are being paid, who is paying them and who are they being paid to? A transparent benefit plan provider should be able to explain this clearly and it should be very easy (transparent) for both you and your employees to verify this on a regular basis.
4. Employer & Employee Portal / Statements
This relates to transparency. Does the benefit plan provider provide a comprehensive portal so that you and your employees can see exactly how benefits are being provided and how they are funded? Does it show the fees that are being paid? If a portal is not being provided, do you and the employees receive a statement or other periodic reporting showing this information clearly?
5. Participant Services
Where do your employees go when they have questions related to their prevailing wage funded benefit plans? Do they rely on you to be the intermediary between them and your plan provider or do they have a team that is dedicated to making sure your employees questions are answered in a friendly and understandable way?
6. Flexibility / Non-Captive
Does the benefit plan provider require you to disrupt your existing relationships with your other benefit plan advisors and consultants or can they work in concert with them?
Does the benefit plan provider offer a full range of benefits or is it restricted? Can you decide which health, dental, life, disability insurer to utilize or are you forced to select from limited options? Can you continue your existing retirement plan or are you forced to utilize one offered by the benefit plan provider? If the benefit plan provider is brokering or advising on your retirement plan, is it through an insurance company with limited options or is it an open-architecture type plan where you have maximum flexibility in the investment offerings?
Can the provider offer cash benefits such as paid-time off, supplemental unemployment benefits and/or payment of training expenses?
7. Audit Assistance
Inquiries and audits from the federal or state government or other contracting agencies are regular occurences. How will your benefit plan provider assist you to make sure your internal team doesn’t get overburdened.
8. Professional Liability Insurance / Safety & Security of Funds
Does the benefit plan provider have the proper bonding, errors & omissions and other coverages to protect your company and employees in the event of a mistake or theft?
9. Contractual Obligations / Escape Clause
Does the benefit plan provider have reasonable terms to terminate the agreement? Are you required to give more than 30 days-notice? Are there surrender fees or other punitive charges if you decide to leave? Always have your attorney review the written agreement to insure reasonableness of the terms.
10. Ice Cream
Does the benefit plan provider send an ice cream truck to serve your team on occasion? Because ice cream makes everyone happy!
In the interest of full disclosure and transparency….. DirectAdvisors loves to thank clients with ice cream
How we can help
DirectAdvisors, established in 2001 and located in Albany, New York provides bona fide benefit plan consulting and third party administrative services to merit shop (non-union) construction companies that are subject to the Davis-Bacon Act, Service Contract Act and state prevailing wage regulations. Our clients are located throughout the United States and range in size from 10 to 3,000 employees.
This year, our construction company clients will contribute tens of millions of dollars of prevailing wage fringe benefit contributions to The DirectAdvisors Trust (health & welfare benefits) and retirement plans managed by our team.
Our solutions are free from any conflict of interest as we do not sell any financial or insurance products. We work with existing agents, brokers and insurance companies.