Benefit Claims: Why are they required and when is one made?

Benefit Claims: Why are they required and when is one made?

Construction companies elect to use Prevailing Wage (PW) Fringe Supplements for a bona fide benefits program for a variety of reasons, ranging from building increased employee satisfaction to saving on payroll burden.  Whatever the reason may be, there must be a clear audit trail leading to payment of bona fide fringe benefits.  A ke

With that being said, why is a claim required?  Simply put, in order to be considered a bona fide fringe benefit, the participant must make a claim.  Without this claim record, the IRS may rule that even though there was a payment, the payment was not a bona fide fringe benefit.  Ask yourself, would an employee just stay home and expect vacation pay without letting you know they wanted a day of vacation pay?  Absolutely not!  To receive the vacation pay “benefit” an employee must make a request.  At GMR they are participants, not employees.  Participants make benefit claims instead of filling out vacation request forms.

When may a trust participant make a claim?  A trust participant may make a claim any time they wish to receive accrued vacation/PTO or supplemental unemployment benefits.  A vacation/PTO claim can be made anytime there are accrued vacation/PTO funds available.  A supplemental unemployment claim may be made when a participant misses work hours.  Typically supplemental claims in the construction industry are made during a seasonal layoff period, but partial week claims may also be made during the work season.  All claims and records of payment are kept for audit purposes.

When does an employer make a claim?  A monthly medical insurance premium is a great example of an employer submitted benefit claim.  The employer forwards the premium statement to GMR, GMR checks trust account balances, participant by participant.  We then mail a check made out to the insurance company to cover only the trust participant’s portion of the insurance premium.  In this case, the employer submitted the claim (medical insurance monthly bill) and the trust paid it.  The bill and proof of payment are kept for audit purposes.  Please note bona fide benefits plans and their structure vary by company need.

So, bottom line, benefit claims are required in order to pass yearly certified audits as well as many types of government audits and can be made anytime there is a bona fide benefit that must be paid for (employers) or anytime bona fide vacation/PTO or supplemental unemployment funds are available (participants).