Holding Area
Powered by Squarespace

Entries in PEO (44)

Monday
Jul082013

PEO Broker Blog Stirs Lively Linkedin Discussion

 

PEOs, The PPACA and Health Care Reform Debated

Our previous blog post on Healthcare Reform and Professional Employer Organizatiions started a lively discussion after we distributed the article to various LinkedIn discussion groups. More than 30 individuals added their comments in the Healthcare Exchange Linkedn discussion group The subject attracted a wide range of opinions from a diverse group of health insurance brokers, HR professionals, and small business owners.

Whose Employees Are They?

Aaron Hoffman Vice President, RSS Insurance Services in Denver, Colorado asked • Bruce- I have a question for you as a PEO. Are the FTE calculations based on the employees reported under the PEO’s UITR or the employees managed by the specific worksite employer?

Jeffrey Buchanan a broker with West Callaway Stotka, Inc. in Pleasant Hill, California agreed • Great question—sort of a double edge sword. If the employees are common law employees of the employer (the business) then the FTE count lies with the business. If the PEO is the common law employer, I believe the PEO has the FTE count to deal with. So if it’s the business whi is the common law employer and the business has 45 FTE’s the business can avoid the shared responsibility payment. If the PEO is held to be the common law employer (must offer coverage), the PEO will have to have a plan in place. Will they, the PEO mandate the business pay for coverage? Small employer may be better off not in the PEO? I really don’t know? The regs are vauge. Any thoughts?

Eric Kane Account Executive at Cool Insuring Agency Inc. in Albany, New York  added • The proposed regulations do not address how the pay or play provisions apply to PEOs. The general rule is that leased employees are not considered employees of the service recipent for purposes of ACA”s pay or play provisions, it is still unclear as to how this applies to PEOs. There is some indication that the pay or play provisions will attach at the client level, thus making the client company the “employer” for this purpose. However, until guidance is issued on the pay or play rules with respect to PEOs, these organizations should use the common law standard to determine whether an employement relationship exists.

Margie Brownlee, RHU, REBC  Account Mgr at OMS Staff Solutions, LLC in Lakeland, Florida followed up • Hi Eric, I am looking at Federal Register Vol 78 page 221 “As noted in Notice 2011-36, section 414(n), which treats leased employees (as defined in section 414(n)(2) as employees of the service recipient for various purposes, does not cross-reference section 4980H (and is not cross-referenced by section 4980H) and accordingly does not apply for section4980H purposes. I am taking this to mean that leased employees are not tied to Section 4980H. The employment relationship may apply to some aspects but not to 4980H. Guess we will have to wait for further clarification as it involves PEOs.

Our Response  @Eric @Margie @Jeff - Great points, and I agree with your observations and interpretations. My understanding is that credit will be applied at the client level. The standard is whoever exercises “care and control” of the “recipient” worksite co-employer.

The IRS is aware of the PEO reporting issue and the need for clarity. They are in the process of implementing guidelines, updating forms, and will be focusing on compliance, not only for the purpose of applying Small Business Health Insurance Credits but for reporting and collecting unemployment taxes as well.
 

http://www.treasury.gov/tigta/auditreports/2011reports/201140103fr.html

PEO Master Group Medical Plans

Armand Smith, CIC Insurance and Employee Benefits Broker Chicago, Illinois stated • I have worked for a couple of PEOs and both of them their plans rates blew up because eventually the claims were more than they could handle and the good groups moved on.

Michael Schunk, CEBS President of Employee Benfits Advisors, LLC in Fort Lauderdale, Florida agreed • Armand, good point. - I’ve seen PEOs place groups in a preferred rating tier simply to write the business. Then at renewal the group gets a huge rate hike. Bottom line is the People with integrity will do the right thing, regardless of whether they are an insurance agent or a PEO salesman.

Our Response • @Michael @ Armand @Dave- You seem shocked that some PEOs and PEO clients may have experienced higher claims than expected. That is what happens when underwriting small group health insurance. Are you telling us that carriers never “lowball” rates to gain market share, then increase rates 40% or 50% at renewal? PEOs to not operate in a vacuum. The are subject to the same market conditions as the carriers, who for the most part, dictate underwriting guidelines and pricing to the PEOs.

Our job, as consultants is knowing which markets can provide our clients with the most favorable rates based on census, underwriting, and your client’s plan preferences.

Gary Whiddon Principal at Digital Benefit Advisors, Los angeles, California wanted to know • Do PEO’s have to adhere to the 85% MedicAl Loss Ratio while small groups insurers require only a 80%?

Our Response @Gary - PEOs are not insurance companies. Less than 10% of the over 700 PEOs operating in the US offer a “master group health insurance policy”. Most of these health plans are available from the larger national and regional PEO’s. They are usually fully insured plans from carries like Aetna, Humana, and the Blues. The larger PEOs work with brokers like Aon and Marsh. Most smaller PEOs provide coverage written in the standard markets using either an in-house agency or a broker relationship.

http://news.regence.com/article_display.cfm?article_id=4755

It is the carriers who must satisfy the MLR rules, not the PEO.

The PEOs handle all of the enrollment, on-boarding, benefits administration, and client support services internally or through established 3rd party relationships. Plan designs, markets, networks, pricing, choice, quality and level of service will vary by PEO.

We wish to thank everyone for their participation in the Linkedin discussion  group. We welcome your questions, comments and contributions. Please submit any questions and comments you may have about The Patient Protection and Afforadable Care Act or Obamacare and how a professional employer organization can help you. We will attempt to address and clarify any issues or concerns you have about co-employment administration, employee leasing, HR outsourcing and professional employer organizations.

 

 

Wednesday
Jun262013

PEOs Help With Health Care Reform and the ACA.

Affordable Care Creates Demand for HR Outsourcing & PEOs

There is no question that  the (PPACA) Patient Protection and Affordable Care Act and Healthcare Reform has created the greatest opportunity for the PEO industry in decades. Employee leasing companies, HR outsourcing firms, benefits administration and health insurance enrollment specialists are ramping up to assist small and mid sized business owners and non profit organizations with implementing the Affordable Care Act, and complying with all the new rules and regulations.

Costs - Credits - Penalties - New Reporting For All

The complexities and costs associated with the Patient Protection and Affordable Care Act can be too overwhelming for the average small and mid-sized companies. Under health care reform, all group health plans are required to provide a minimum level of coverage for medical expenses. This could mean higher premiums for plans providing richer coverage than before. Limited benefit and high deductible health plans will not qualify under the PPACA.

Small business owners, described as 25 employees or less, can qualify for a premium tax credit. The credits are calculated based on the number of employees, average wage base, and the premiums paid by the employer to cover their staff and workers. Low wage paying employers with 15 employees or less, can expect to qualify for a credit of up to 50% of their premiums.

See Tax Credits - Do We Qualify?

The Affordable Care Act requires employers with 50 full-time employees or more (based on 30 hours per week and over) to provide affordable health insurance coverage for their employees or pay a $2,000 penalty per full time employee, excluding the first 30. This is often referred to as “play or pay” by individuals and representatives of the health insurance industry. Businesses and organizations who employ workers at the legal threshold should make certain they are in compliance at all times. The law requires a formula that measures the hours of full and part time workers to determine the total number of full time equivalent workers that an organization employs.

Larger employers must make certain that low wage employees do not contribute more than 9.5% of their earnings for their coverage. In addition to testing for full time workers,there are additional considerations for seasonal and short term workers. This can making testing especially complicated for construction, farming, health care, hotels and restaurants, landscaping, maintenance, schools, and the staffing industry. Under the PPACA, the IRS has instituted new regulations for reporting employer paid contributions for health insurance benefits that affects companies of all sizes.

PEOs - Health Reform’s Best Kept Secret

Employee leasing, personnel management, and Professional Employer Organizations are uniquely qualified to provide the solution. PEO’s provide companies with a comprehensive integrated solution that entails the administration and processing of payroll, they calculate and submit payroll taxes accurately and on time, and submit all payroll reports with the required information to your local, state and federal agencies making certain that your organization is in full compliance.

     “The PEO Industry is in the best position to tackle all the complexities of administering and complying with the Affordable Care Act and Health Care Reform.”

“The trouble is that I don’t hear enough employee leasing companies and professional employer organizations telling the business community exactly what it is that PEOs do, how we can relieve them of problems of dealing with health care reform, and help them stay focused on running their business.”

Rod Diekema - PEO Network

Some larger professional employers offer a choice of health insurance plans that have been tested to assure compliance with the PPACA. Many PEO’s can assist larger companies with testing for determining full time equivalents and contribution strategies to attain “safe harbor” status to avoid facing a $3,000 contribution penalty, should an employee obtain coverage in the public exchange instead of opting for the company’s group health plan. 

Inspirity - Getting The Message Out

 

     “Health care reform has generated over 15,000 pages of regulations filled with increased complexities, compliance and cost for your business. You can spend the time and money to figure it out, or you can  …..”

Paul Sarvardi - CEO Inspirity

Health Care Reform Video

Complying with health care reform will affect every employer in some way. Depending on the size and structure of an organization’s workforce, the remedies and requirements may be unique to your organization, even in the same industry. This is why the administrative capabilities, benefits expertise, human resource information technology, and payroll systems of HR Outsourcing and Professional Employer Organizations can be invaluable today, and in the future.

Saturday
May182013

PEO.com on Health Care Reform

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.

Monday
Dec102012

Employee Management Help For Business Owners

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.

Monday
Nov192012

Workers Compensation Rates Will Increase In 2013

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.