HR Outsourcing Solutions

Health Insurance Marketplaces Are Coming - Are You Ready?

2013-05-26T14:38:02Z

What PEOs and Small Business Owners Should Know

With 2013 almost halfway over, our attention turns to 2014, when the Affordable Care and Patient Protection Act goes into effect. The individual mandate kicks in, requiring all Americans to purchase health insurance or face a fine. Employers with 50 employees or more will also face penalties of $2,000 per employee (the first 30 employees don’t count) for not providing a minimum level of health insurance coverage.

Small business owners, or employers with less than 50 full time employees (defined as 30 hours or more) are exempt from any penalties, fines or requirements to provide coverage to their employees. To the contrary, smaller businesses (defined as 25 employees or less) are rewarded for offering coverage to their workers. In 2014, companies can receive a credit of up to 50% of their premiums. The credits are calculated on a sliding scale which favors lower wage employers with 15 employees and less.

Most small business owners in America employ less than 50 full time employees. Those companies will not be subject to most of the provisions of the Affordable Care Act. This doesn’t necessarily relieve employers from any it’s responsibilities when it comes to guiding and assisting their workforce to comply with the individual mandate. Many lower wage employees will qualify for premium support in the form of credits that will offset their cost of coverage.

According to statistics compiled by the PEO Network, www.peonetwork.com, there are over 700 employee leasing, personnel management companies, and professional employer organizations operating throughout the United States. Approximately 90% - 95% of their client companies are firms with less than 50 full time employees. Many of their clients, small business owners, will be seeking the employee benefits and health insurance expertise these companies provide. PEOs are uniquely qualified to handle the additional compliance, reporting and analysis that business executives, HR professionals and tax professionals will require.

Health insurance marketplaces, formerly referred to as exchanges are being implemented in all 50 states. Some will be operated by the states individually, like California’s health insurance exchange called “Covered California” http://www.coveredca.com. Other states, like Florida, will introduce marketplaces which will be operated by the federal government, while other states will manage marketplaces as a joint partnership.

Are you ready?

PEO.com on Health Care Reform

2013-05-18T09:46:00Z

Are Employers and PEOs Ready For Health Care Reform?

Our friends at PEO.com make an interesting point about health care reform. Everyday, employers who are searching for employee leasing or trying to find a professional employer organization rely on PEO.com to locate an HR outsourcing provider. Rod Diekema, the founder of PEO.com, is an industry veteran who speaks with small and midsize business owners across the country daily. This gives him a unique prospective on what is going on in the business community.

“The number one issue today is health care reform” he told me in a conversation last week. “Employers are just waking up to all the additional responsiblities, compliance and reporting that will be required. The regulations are complicated for sure”. After our discussion, Rod wasted no time in writing about his experience and suggestions in his blog on PEO.com.

Click on this link to his blog post entitled “Health Care Confusion Making You Crazy”.

Hope you enjoy it.

Employee Management Help For Business Owners

2012-12-10T12:32:00Z

HR Outsourcing Firms Ease The Pain

Business owners and executives have many areas of their business to focus on. Opening the door every morning with a to-do list of tasks is challenging enough, having to be concerned with employee administration and compliance can be overwhelming for most. A recent article in The NY Times highlights some of the issues facing corporations larges and small.

Look at the wide-ranging duties of human resources, it’s no wonder that companies are seeking outside help. “H.R. is supposed to be responsible for finding, developing, retaining and training the best people,” Suzanne Lucas, author of a blog called the Evil HR Lady. “It can also be responsible for benefits, compensation, employee and labor relations, business partners, data collection and legal issues.”

Fortunately, there are companies whose mission is to help small and midsize business owners and executives comply with the myriad of local, state and federal employment regulations.

Human Resource Outsourcing is a broad term that defines the performance of an HR service by a third party provider. It could be simply an ASO - Administrative Service Organization that provides a single service such as payroll processing, COBRA or 401k administration. Some are Information Technology firms who have developed software programs to ease the burden of employee administration and HR compliance. Many HRIS - Human Resource Information Systems, Labor Management, Recruiting and Staffing software platforms can be customized to the requirements of any businesss or association. Some firms offer a hybrid of technology combined with professional HR support services.

Employee leasing or PEO - Professional Employer Organizations deliver a comprehensive integrated model called co-employment which enable business owners and corporations to transfer most of their personnel administration, benefits and human resource compliance to a qualified HR partner. The entire focus of these companies is making sure your business operates a safe and secure workplace, and complies with all of the latest employment rules and regulations.

“Outsourcing firms can take up various tasks, from payroll to benefits to recruiting, to free up a client to focus on its strengths, said Don Weinstein, senior vice president for product management at ADP, a large H.R. outsourcing firm. The new health care reform legislation, for example, will have a big impact on employers, some of whom may be overwhelmed by its complexities.”

It is important that business owners, executives and HR directors determine what services they require today and in the future, or as I like to say “identify what’s broken”. There are many providers to choose from, offering different HR service models and pricing formulas. Trying to identify the right fit for your organization can be a daunting task, but once you do, you will never go back to managing your employees on your own.

Workers Compensation Rates Will Increase In 2013

2012-11-19T14:52:07Z

Small Business WC Premiums To Rise By 25% For Some Industries

Many small and midsize companies will experience an increase in their workers compensation insurance premiums in 2013. The effects will not be felt equally across the broad range of industries. Companies and business owners who employ blue-collar occupations may see increases of 25-30 percent. Business operations that involve staffing, home health care, landscaping, and maintenance may find that they are unable to obtain workers compensation coverage in the standard insurance markets. Companies who are faced with this situation may be forced to consider their state’s Joint Underwriters Association (JUA), the insurance pool of last resort, where premiums could be triple.

Workers’ compensation insurance provides coverage for an employee who is injured on the job. Coverage for injured employees typically includes medical and rehabilitation costs, as well as lost wages. In Connecticut, some employers are facing another significant rate increase for workers compensation insurance next year, potentially as high as 30 percent, if approved by state regulators. The proposed rate changes would go into effect January 1st 2013. Businesses in the manufacturing industry, for example, face an average rate increase of 6.8 percent, but the range includes increases as high as 27 percent and rate decreases of 13 percent, according to the rate filing submitted by National Council on Compensation Insurance (NCCI). The contracting industry faces an average 9.9 percent increase in premiums, with rate increases topping out at 30 percent.

The goods and services industry faces an average 7.6 percent rate increase, with the maximum rate hike of 28 percent and a rate decrease as low as 12 percent. Employers in Connecticut are grappling with the second highest workers compensation costs in the nation, until now.

In Delaware, a 40 percent increase in their workers comp premium rates is set to take effect on December 1st, making that state’s rates the second highest in the nation, behind Illinois. The greatest concern is the effect an increase of 40 percent will have on small business owners. A business now paying $20,000 in workers’ compensation rates will be paying nearly $30,000, and a company paying $70,000 would be paying close to $100,000. This is conditioned on a business owner’s ability to find coverage at all.

After Hurrican Sandy - Capacity May Dry Up

Hurricane Sandy swept across the East Coast destroying businesses and homes in Connecticut, New Jersey, and New York. The damage is expected to be billions of dollars. The industry states it can withstand claims of $50 billion dollars. What if claims exceed current projections? Insurers and investors allocate reserves to the various lines of coverage. When significant claims are paid, all lines of insurance are affected. Here is the current view of the market by Marsh, the world’s largest insurance broker.

Tracey Ant, primary placement leader in Marsh U.S. casualty practice, says that the workers compensation line of business “leads all commercial lines with the highest combined ratio” and results continue to deteriorate. The result is workers’ comp rates are on the increase. Insurers are taking other measures besides increasing rates by placing tighter controls over placements. “Profitability is more of a priority than growing their book of business.”

Business Owners Should Consider Alternative Options

Although, workers compensation will cost more next year, and some employers in blue-collar industries may not be able to secure coverage, there are still options available. Some employee leasing or staff leasing companies and professional employer organizations are still accepting certain risks at affordable rates. Companies who are faced with skyrocketing workers comp rate increases or non-renewals should consider working with an experienced PEO broker or employee leasing consultant for an alternative solution to their worker compensation problems.

Health Care Reform - The New Reality for PEOs

2012-11-09T12:59:14Z

The End of Denial for Employee Leasing and PEO Companies?

NAPEO, The National Association for Professional Employer Organizations has published on their website napeo.org an announcement entitled;

PROFESSIONAL EMPLOYER ORGANIZATIONS CONGRATULATE PRESIDENT OBAMA ON REELECTION, LOOK FORWARD TO WORKING WITH ADMINISTRATION ON HEALTHCARE.

I had to clean my glasses. This is an industry where many of it’s owners and executives, (over 98% of all employee leasing companies and PEOs are privately held) have fought health care reform every step of the way. Large contributions were made to The National Federation of Independent Business, The Chamber of Commerce, (click on this link to see the NFIB position) and a host of Republican PACs and lobbyists. We reported on their attitudes and views about Health Care Reform and the PPACA in our earlier blog post Want to Repeal Health Insurance Reform, Not Likely!!!.

NAPEO President and CEO Pat Cleary is quoted as saying “PEOs are already the go-to source for small businesses looking for help in preparing for and complying with the healthcare benefits changes brought on by reform, so we feel we have an important role to play as the implementation of the ACA proceeds” and offered its industry’s expertise as the Obama administration moves forward with implement the Patient Protection and Affordable Care Act (ACA).

Only time will tell if NAPEO, and the industry as a whole embraces Health Care Reform or not. My opinion is that the PPACA is one more reason small business owners should consider the services of proactive, qualified and responsible employee leasing companies and professional employer organizations.

Gallagher and Liazon Team Up on Health Insurance Exchange

2012-07-28T14:59:58Z

Two Industry Leaders Join Forces to Simplify Health Insurance

Arthur J Gallagher, one the oldest and most respected insurance brokers announced their launch of Bright Choices®, the innovative benefits platform powered by the Liazon Corporation. Gallagher Benefit Services, Inc. (GBS), their employee benefit consulting division, made official their decision to partner with Liazon Corporation in a press release where Anthony F. Hernandez, GBS Chief Information Officer, stated “We’ve selected a proven, comprehensive solution in the Bright Choices® Exchange—one that is easy to deploy, easy for the employee to use and built on outstanding technology.”

At Employers Rx, we could not agree more. We discovered Liazon’s remarkable technology, more than 3 years ago, and have proclaimed the virtues of the platform’s easy, user friendly interface from it’s inception. In May 2010, we wrote about Liazon’s unique Bright Choices® platform in a blog entitled Worried About Health Insurance Reform …. In it, I wrote how we believed then, as we do now, that Liazon’s Benefits Store and other health insurance exchanges will revolutionize the way medical plans are purchased in this country.

Liazon’s online benefits store enables employers to save money on their healthcare costs by setting predictable budgets, while enabling employees to select health, dental, vision, life and disability coverage, among other benefits, from various national and regional insurance providers.

Founded by Arthur Gallagher, a successful insurance agent in Chicago on October 1, 1927, the company was originally focused on commercial insurance and pioneered the concept of risk management. Today, Arthur J. Gallagher & Co. is an international insurance brokerage and risk management services firm, with a network of correspondent brokers and consultants serving more than 110 countries. In 2010, Gallagher ranked 4th largest in the world based on revenue.

Health Care Reform - Is Your Company Ready?

2012-07-23T19:26:17Z

The waiting is finally over, and the Supreme Court of the United States has ruled that the individual mandate and the Patient Protection and Affordable Health Care Act is legal under the constitution.

This ruling came as a big suprise to many. Despite an early warning in our blog entitled “Want to Repeal Health Insurance Reform … Not Likely”. The majority of employee leasing companies, professional employer organizations, and small and midsized employers are just starting to learn all the aspects of the law, and understand how it pertains to their particular situation.

Kathyrn Mayer, a staff writer for BenefitsPro, www.benefitspro.com has written an excellent article to guide you through some of the changes. She quotes employee benefits specialist, Tony Tilelli, who works with the Sihle Insurance Group.

• Be aware that states currently making no attempt to implement the state exchange will get a plan administered by the federal government.

• Businesses with 50 or more employees cannot fall into the trap of thinking that on Dec. 31, 2013, they can just reduce their employee roster to 49 FTE (full time equivalent). The IRS will be watching.

• Review your health plan documents. You should have a binder containing all of the information you need to legally administer your health benefits plan, and you should thoroughly review that data to guide you in the steps you now need to take.

• Be ready for health plan audits. They will become more popular under the new law.

• Beginning in 2013, depending on the size of your group, you will be required to report the value of your employee’s health plan premium on their W2s.

• You must have your benefits summaries in all of the languages spoken by your employees. This means that if you have employees whose first language is not English, you need to provide a benefit summary in their primary language.

• Be careful of what is called work force realignment. In the past, employers have attempted to skirt compliance by reducing the hours of some illness-prone employees to part-time status. Downsizing to avoid providing benefits is a violation of the Employee Retirement Income Security Act (ERISA).

• Review the cost of your health plan. Make sure you have a health plan that does not cost your employee more than 9.5 percent of his or her income.

This is only a small portion of what to expect to come from health care insurance reform. Stay tuned for more information in the weeks to follow. As always, your comments are welcome.

Employers, Healthcare and PR - Personal Responsibility

2012-03-16T15:28:53Z

Can Employers Promote Personal Responsibility? Should They?

Business owners, CFO’s and HR executives across the country are troubled over the escalating costs of providing health insurance for their employees. Unfortunately, the statistics for the future look grim. Some estimate that the United States health-care system will cost $4.6 trillion dollars, (that’s Trillion with a T) by the year 2020. However, buried deep down among all of the statistics, may be a shining ray of light.

Bloomberg Businessweek Chairman Norman Pearlstine invited a panel of health care industry experts to address the question “How do we fix health care?”. The discussion revealed many of the issues that contribute to the cost of providing medical care in America. The most enlightening facts were not how much medical care in the US costs, but who is actually using the care … and why.

Click here to view the panel discussion.

The Ten Percent (10%) Solution

Dr. Ralph De La Torre, Chairman and CEO of Steward Health Care System reported Medicare data which indicates that twenty to thirty percent (20% - 30%) of patients utilize eighty percent (80%) of our medical resources. Dr. Greg Curfman, Executive Editor for the New England Journal of Medicine drilled down even deeper. He states “The numbers are very clear. Ten percent (10%) of the population consumes sixty three percent (63%) of the total health-care dollars in this country. One percent (1%) consumes twenty percent (20%) of the health-care dollars. Fifty percent (50%) of them consume nothing at all. So this is the issue, and we have to get a better handle on the ten percent (10%).”

The answer seems clear, identify the ten percent (10%) of Americans that are utilizing more than sixty percent (60%) of the nation’s medical resources, then control or eliminate the causes. If we can cut the ten percent (10%) in half through lifestyle changes, patient advocacy and therapy, America’s health care costs can be reduced by thirty percent (30%).

Lower Company Medical Costs with PR

Is it the responsibility of business owners and corporations to promote personal responsibility? What can an organization gain by motivating employees to exercise, eat a healthy diet, and to get 7-8 hours of sleep? Studies have shown that improvements in mental and physical fitness contributes to a more cognitive, effective, and productive workforce. How can employers’ start to reduce their medical costs, and lower health insurance premiums?

Today, it is easy and inexpensive for companies to improve employee engagement and identify your ten percent (10%) at the same time. With no more effort than clicking on a website, anyone can discover their projected longevity. Individuals with medical conditions - present and future can receive a personalized health care protocol designed specifically for them.

Benjamin Franklin, one of the nation’s founding fathers, inventor and statesman is quoted as saying “An ounce of prevention … is worth a pound of cure”. I think it’s time America took his advice.

Here are a few ways that employers can take the lead.

The Real Age Test

A calculation of your body’s health age. Created by top doctors, including Dr. Mike Roizen and Dr. Mehmet Oz. It uses the latest medical research to develop personalized tips and action plans based on one’s answers. By linking behaviors to increasing or decreasing your age, the approach allows anyone to compare different lifestyle factors and prioritize their efforts.

The Prevention Plan

Annual subscription to The Prevention Plan web-based program
Comprehensive online Health Risk Assessment
Extensive blood panel at a Quest Diagnostics® Patient Service Center including 25 results* for cholesterol (heart), fasting blood glucose (diabetes), liver, kidney and thyroid function, bones, and fluids and electrolytes.
Personalized Prevention Plan that explains and prioritizes your health risks and recommends the steps you should take to improve your health.
Recommended prevention screenings, schedule and alerts based on age, gender and risks.
Personal Prevention Score roadmap to track your progress and motivate you over time
24/7 Nurse Line …. and much more.

We welcome your comments and contributions. Let us know how you are engaging your employees and promoting personal responsibility among your workforce.

Employee Leasing for Franchise Business Owners

2012-02-29T13:49:50Z

PEOs Offer Employee Management Solutions for Franchise Owners

While attending the 2012 Franchise Expo South at the Miami Convention Center, I was amazed to see all the new and exciting franchise opportunities that were present this year. Every aisle featured a wide array of franchise enterprises offering almost every category of business and consumer products and services. The Expo represented a who’s who of the franchise industry.

Exhibitors included well known veteran operators like Baskin-Robbins Ice Cream and Sign-A-Rama, as well as two new entrants from Palm Beach County, FL. The Original Brooklyn Water Bagel Company and Hurricane Grill and Wings, were rolling out fresh new restaurant concepts with delicious and original menu items that are sure to please the entire family.

A variety of personal service concepts were on hand, from accounting and financial services to health care, home care, and personal security, to beauty services and spas. There was one common theme throughout—the franchise industry was alive and well despite a weak economy and tight credit environment.

The Advantages to Owning a Franchise

The advantages that successful franchise systems offer are numerous. First time business owners acquire a franchise system’s time-tested formula. Individuals willing to invest their time and money can purchase a recognized brand within a protected territory from an organization that provides training, marketing support, and a proven business model.

There is no shortage of potential franchise business owners either. The economic downturn and high unemployment has created a large pool of potential entrepreneurs yearning to operate their own business. Thousands of returning American Veterans can take advantage of special financing and training programs from over 400 franchise systems who participate in the International Franchise Association’s VetFran (www.vetfran.org) program.

Leading franchisors help entrepreneurial servicemen and women, and inexperienced business owners to hit the ground running by offering a “turn-key” operation. The franchise team supplies all the required expertise, guidance and support, beginning with site selection through vendor relations, making certain that every new franchisee is generating revenue from day one.

Congratulations Franchise Owner - Now What?

Most franchise systems help franchise owners get up and running. They provide the model and the franchisee operates the business. However, many franchised business models can’t operate without employees, and many owners have never recruited, trained or managed a workforce before. Fortunately, small business owners can turn to HR outsourcing companies, called professional employer organizations, which can pick-up where the franchise system leaves off. PEOs or staff-leasing firms assume many of the employment responsibilities that franchise owners must contend with.

The majority of new franchise operators are unaware of the myriad of Federal and State laws imposed on small businesses today. Failure to comply with labor and wage and hour rules, submitting timely payroll reports and tax payments can result in severe penalties and fines. Defending your firm against a wrongful termination, independent contractor dispute, or sexual harassment can lead to expensive litigation, and have a catastrophic effect on your bottom line. All too often, a business owner hires a ‘bad apple’ whose behavior causes accidents, costly claims, and disrupts your ability to maintain an engaged and productive workforce.

PEO - Not Just a Payroll Company

Just as a successful franchise system provides a “One Stop” solution for operating a business, employee leasing and PEO companies are the answer to managing franchise employees. They are true HR companies providing comprehensive human resource services to employers under a co-employment agreement. Franchise owners operate the business, while the HRO or PEO acts as the administrative employer of record. Employment-related reporting, HR compliance, payroll administration, workers compensation and workplace safety are handled by an experienced staff of HR and payroll professionals. Highly trained safety engineers and risk managers are assigned to examine and evaluate any worksite for potential hazards.

Another advantage employee leasing and professional employer organizations share with the franchise industry is that they both achieve economic efficiencies by bringing together large numbers of subscribers. By serving thousands of small business owners, many PEOs offer franchise operators a wide range of discounted insurance programs, employee benefit plans, and workers’ compensation coverage at significant savings to small business group rates. Franchisees gain a high level of HR and safety expertise, valuable employee benefit and incentive programs, and the latest HRIS technology at one low cost. Outsourcing your tedious and non-productive employee administration responsibilities to a comprehensive HR company is a win-win for the franchise owner and franchise employee alike.

For additional information click here.

Independent Contractors and Co-Employer Agreements

2012-01-10T14:02:51Z

Can PEOs Protect Against Misclassified Independent Contractors?

There are many questions surrounding Independent Contractors these days. Do services rendered by an individual for your company constitute an act of employment, or are they truly services being provided by an independent party? What types of occupations are clearly recognized as independent contractors in the eyes of the Internal Revenue Service? How can I protect my business when paying independent contractors? What are my risks for misclassification?

IRS enforcement actions against small and midsize corporations for misclassifying employees are on the rise, and the penalty for non-compliance can be substantial. Employers who have misclassified workers are responsible for the payment of all back taxes. This includes not only the employers 7.65% share of federal taxes for Medicare and Social Security, but a portion of the employee’s share of FICA as well. Now add state and local unemployment taxes then compound for 3 or 4 years. When your finished, multiply this figure by 5 or 10 employees and it’s easy to see why so many business executives are concerned when confronting this issue. With the stakes so high, many companies are seeking ways to eliminate this exposure.

Professional Employer Organizations and Independent Contactors

There are several strategies that employers are using to insulate themselves from exposure to the IRS. Some business owners and HR executives have turned to outsourcing the payroll and administration of their independent contractors to administrative employers, employee leasing companies, professional employer organizations, and staffing companies.

The mere fact that a third party handles a company’s payroll administration does not absolve them from their obligation for collecting and paying employment taxes. The decision whether an individual performing a service on behalf of your company is an employee usually comes down to control. Who controls whom, how, where, when and what work is performed. While it is only one of several factors considered by the Internal Revenue, in most cases it is the determining factor.

Engaging the services of a professional employer organization is a matter of contract law. Most of the contracts from the country’s leading PEOs have language in their co-employer agreements which specifically exclude independent contractors. Some PEO’s and many employee leasing companies will provide payroll and administrative services for companies who employ independent contractors, however they are not the employer.

Most co-employment agreements spell out the terms of shared responsibility for employment related functions between the PEO and client company, and assigns responsibilities for each party to the contract. The PEO acts the administrative employer of record. The client or co-employer is the work site employer who assigns where each employee reports, hours they work, and job function. Payroll, employee leasing companies, or professional employers cannot protect employers if audited by the IRS for misclassified employees, the burden of proof and liability is with the business and the employer.

IRS Guidelines for Hiring Independent Contractors

Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another. The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

Don’t Guess - Ask the IRS

If an employer or employee is unsure, either party can submit Form SS-8 to the IRS. They will make a final determination and notify you of the worker’s status.

Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding

Be aware that it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the form.

Contact us for additional information on independent contractors and HR outsourcing.