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  • I receive this question very often, especially at the beginning of each year. The IRS requires any company with a 401(k) plan to conduct annual compliance testing.

    The testing is conducted after the plan’s year-end. For most plans, this is 12/31.

    Why is plan nondiscrimination testing important?

    According to Transamerica Retirement Services, “Nondiscrimination testing mandates were added to the rules governing 401(k) plans to ensure that these plans are not designed to economically benefit only highly-paid personnel, but are fair for all employees. Not meeting these mandates, or failing to correct any failed year-end compliance test, could mean substantial penalties and possibly even disqualification of the plan’s tax-exempt status.”

    Simply put, 401(k) testing is required to make sure all employees benefit from the plan equally, regardless of their income level. When plans aren’t tested or fail the test, or when plan problems aren’t corrected, the company can be penalized.

    How does 401(k) testing work?

    401(k) testing involves examining the benefits received by all employees. For the purposes of these tests, employees are grouped into three categories:

    • Key Employee – anyone with at least a 5% ownership stake in the company (either last year and/or current year) or a direct relative (spouse, parent, or child) of someone with a 5% ownership stake.
    • Highly Compensated Employee (HCE) – for 2013 testing, anyone who has made $115,000 in 2012.
    • Non-Highly Compensated Employee (NHCE) – anyone that doesn’t fall into the other two categories.

    *Please note that all Key Employees are also considered Highly-Compensated Employees, but not all Highly-Compensated are considered Key Employees.

    What do the tests entail?

    These two tests are probably the ones that effect employers the most.

      1. Average Deferral Percentage Test (ADP)

    This test takes the average deferral rate of the HCE and compares it to the average deferral rate of the NHCE. The HCE can only contribute so much more than the NHCE.

    If you are a HCE and contribute more than the maximum allowed, then you could be subject to a refund or the company might have to make contributions into the NHCE accounts.

      1. Top-Heavy Test

    This test is a little different, in that it is always conducted for the upcoming year. The numbers used are from 12/31/12 to determine if you are Top-Heavy for 2013.

    Key Employees cannot control more than 60% of the entire plan’s assets. If they do, the company will have to make up to a maximum of a 3% non-elective contribution to any eligible employee of the company—even those who aren’t participating in the plan.

    How do I make sure I’m abiding by the rules?

    You need to make sure you are getting the proper guidance from your retirement provider. You also need to take ownership of your plan. Additional Plan Data forms are extremely important, because things change from year to year. It’s important to have the most up-to-date information so that your retirement provider can correctly conduct your testing.

    GMS, as a PEO company, is able to offer clients our 401(k) plan. We assist with administering the testing. Instead of just handing you the results, we will go over them and provide advice. Every company is in a different situation.

    Are you getting the right guidance on your 401(k) plan?

    “Numbers and Finance,” © 2011 Ken Teegardin, used under a Creative Commons Attribution-Share Alike 2.0 Generic License.

  • The Affordable Care Act is in full swing.

    “Now what?”

    I think I’ve heard that question from business owners a million times in the past few weeks.

    The Patient Protection and Affordable Care Act(PPACA or “Obamacare,” as it’s commonly known) means big changes for small businesses.

    Recently, Governor Kasich decided that, despite his initial opposition to the Affordable Care Act, he is going to accept the expansion of Medicaid allowed under that law. He reasons that this will extend insurance to 366,000 uninsured Ohioans while forcing the federal government to pick up the cost— rather than small businesses in Ohio picking up the tab.

    It’s true that this will open the spigot for $1.4 billion of federal funds to flood the Ohio program. But does anyone really believe this will not impact residents and businesses in our state?

    Potential Benefits

    A recent article in Crain’s Cleveland Business — “Expansion of Medicaid could help employers” (subscriber’s ink) — reports that the Greater Cleveland Partnership has thrown its considerable support behind this. They believe that this will allow small businesses to shift low-wage workers to Medicaid, effectively lowering the cost of their healthcare plans. It was this very idea that made government-backed health insurance appealing to many small business owners.

    The benefits of the Medicaid provision in the Affordable Care Act are:

    • The federal government will pick up the full cost of this expansion for the first three years, followed by 95% of the cost and eventually 90%.
    • It will allow low-income employees to opt out of an employer-sponsored plan to go to a “no-cost” (to them) Medicaid plan.
    • Employers would then be off the hook for any kind of penalties associated with a lack of insurance coverage.

    Governor Kasich has stated that if the government doesn’t follow through on their promise, he will back out of the plan.

    Questions Remain

    In that same article, despite its initial support of the expansion, the Ohio Chamber of Commerce says it still has “serious concerns” about the long-term financial stability of the program.

    Is anyone else confused?

    Everyone seems to be hedging their bets, and at this point there are more questions than answers.

    It boils down to this: eight months after the Supreme Court upheld the healthcare overhaul law, small businesses in Ohio and across the country are no less certain about how all of this impacts them and their companies.

    This uncertainty, coupled with a challenging economy, means small business owners still have to assess their options in an uncertain market. They may not have the luxury of having a Benefits Department to advise on what’s right for them. That’s why more and more small businesses are turning to outside help for their employee benefits administration. More companies are relying on PEO companies to navigate these murky waters.

    What do you think about the Medicaid expansion? Tell us about it below!

    “Providence Seaside Hospital in Seaside, Oregon.” ©2010 M.O. Stevens, used under a GNU Free Documentation license.

  • Do any of these sound familiar?

    • Losing good employees to competitors.
    • A cranky work environment.
    • Excessive workplace injuries.
    • Out-of-control healthcare costs.
    • Ridiculously high unemployment insurance costs.

    If you’ve been dealing with any of these issues, no doubt you’ve come to the conclusion that HR is more than just a luxury enjoyed at big corporations. HR is a necessity for small and medium-sized businesses, too.

    It’s possible that you have HR problems. What are you going to do?

    HR Outsourcing

    You’ve heard about HR outsourcing, but maybe you don’t know what it entails or how to learn more about it. How can you tell if it is right for your company?

    You’ve heard about Professional Employer Organizations (PEO). But maybe it sounds a little shaky since you don’t know of anyone who’s using a PEO. How popular are PEOs?

    You might be surprised.

    The HR outsourcing industry has grown from $61 billion in 2002 to $103 billion in 2007 and is projected to grow to $162 billion in 2015. The largest chunk of that is the PEO industry.

    Professional Employer Organizations (PEO)

    PEOs work with small businesses to help reduce time and cost when it comes to the things that an HR department would do at a large company. If you walked into a large corporation with thousands of employees and asked to see their HR department, what do you think you would see? The department would include a payroll department, a benefits department, a risk management department and actual HR manager or department. You might even find a wellness department to work hand-in-hand with the benefits department.

    These huge companies have tons of money to throw at problems and lots of high-priced attorneys to get them out of trouble. Yet they still keep all of these departments active. They know how important HR can be.

    Big corporations realize they need HR departments. It’s even more crucial that small businesses understand that they should have access to these essential HR services.

    Specializing in Small Business HR

    Not all small businesses have the means or the resources to keep all of these HR departments in-house, and that’s when they should begin looking at outsourcing their HR.

    A small business is already probably outsourcing their payroll, their benefits and their Worker’s Comp administration to different companies. All of those departments need to be able to share information with each other. If you can have one vendor do all of that for you, allowing you to focus on growing your business, wouldn’t you? What if you could do that while saving money as well? What if in addition to saving money, you could also offload a lot of your tax and employee liability in the process? Can you see why this industry is growing?

    What about compliancy issues? In the last five years, have you seen an increase or a decrease in the amount of regulations imposed on your business? What about the Affordable Care Act? Do you need to be compliant? If not now, will you someday? What does that mean to you? Do you know who to turn to find out?

    There are tons of HR questions that small businesses have, and PEOs—like GMS—have the answers. Ask us anything.

    ***

    “Footbridge to Canary Wharf,” © 2008 Stephen McKay, used under Creative Commons Attribution-Share Alike 2.0 Generic License.

  • Recently, I turned 48. Forty years ago, the age of 48 looked and sounded ancient. When I hit my 30s, it no longer seemed so old. I’ve been seeing a lot of stories recently about people I know or know of who are dying in their 50s and 60s. As I look at my two daughters, I grow more concerned about the prospect of only being on this planet for another 10-15 years.

    Every morning I curse my 4:55 a.m. alarm when it wakes me so I can meet my buddy Kurt for our 6 a.m. workout. Having a workout partner helps on those cold Cleveland mornings — and there are many! However, as I was making that trek in to work out, I thought how lucky I was to be working for a company that values employee wellness the way GMS does.

    Healthy Employees are Productive Employees

    There definitely is a financial component to this value. Small businesses and large companies alike can see a $3 reduction in their health insurance premiums for every $1 that they spend on employee wellness.

    In addition, healthier, fitter employees tend to be more productive employees. In a recent article, Lee Dukes, president of Principal Wellness Company says “It’s in every employer’s interest to have healthier, happier, more productive employees.” To that end, “Employers have to do more than offer wellness programs; in order to see the benefits, they have to incent participation.”

    Incentivizing Wellness

    In my travels as a sales rep, I talk to business owners across a wide range of industries. I have yet to meet anyone who dismisses wellness as a fad, but most only pay lip service to it. Most are not willing to offer employees incentives to stay healthy.

    Should we as employees be interested in our own health? Absolutely! Can we be more interested if there’s an incentive? Yes.

    I have seen firsthand at GMS an uptick in physical activities among employees every year in the third quarter when we have our annual wellness contest. I have also seen many of those habits in my fellow employees carry on throughout the year.

    Many of these same Ohio small business owners I talk to don’t think about healthier employees being more productive employees. They buy into the idea that it’s none of their business what the employees do with their personal time and habits. However, healthier employees are not just more productive, they also tend to work more injury-free, greatly helping small businesses in their risk management and lowered worker’s compensation claims.

    Long and Healthy Lives

    When I go home at night and I’m too physically tired to do everything my daughters want me to do, I do take some comfort in knowing that I’m doing what I can to make sure that I’ll be around for another 30-40 years.

    Have you thought about these issues? I’d love to hear what others are doing to help ensure they lead long and health lives. What are some ways employers can incentivize wellness?

  • Your PTO Policy

    When an employee calls to say they woke up feeling like death warmed over, do you have to tell them to drag their butt to work because your company doesn’t have a Sick Time Policy? Or when you receive vacation requests, do you have to think twice about how to track it because your Time Off Policy is so complex? Unfortunately, many would answer yes to these questions because of inefficient Paid Time Off (PTO) Policies.

    [more]

    Keep It Simple

    As a benefit that many companies offer to their employees, PTO Policies are constantly evolving to accommodate the changes in the working world. However, many employers fall into the trap of overly complicated policies that are not only difficult for employees to understand, but difficult to track. Keeping a simple policy that will make employees happy and maintain effective workplace attendance is easier than you might think.

    An accrual table based upon tenure is a simple way to track the amount of time an employee may take off. It fosters employee loyalty as they work to climb the ladder to achieve more vacation time, while the accrual method regulates how frequently time off can be taken by not awarding PTO all at once.

    Charmaine Hollaway wrote a recent article addressing increased vacation time requests around the holidays. An organization can effectively manage such requests by creating a time off policy that incorporates the following:

    • Place a cap on the number of days that employees may request during a vacation leave.
    • Regulate the number of employees from within a department that may be out at any given time.
    • Mandate how much notice employees must provide prior to taking vacation.

    Simultaneously tracking a Vacation and Sick policy for employees can be further simplified by automating the accruals through your payroll service. Working with a professional employer organization like GMS makes this possible. Our HR Account Managers can help you design a policy that is tailored to your company’s needs and we can automate the tracking to take that time-consuming task off of your plate. So the next time you look to update your PTO Policy, consider simplifying the process.

    Quote Source: Midwest HR

    Image Source: Call Center Comics

  • Virtually every company in America is bound by the Federal Labor Standards Act of 1938 (FLSA).

    This law “regulates the status of employees (versus independent contractors) and provides for a minimum wage and overtime unless the employee meets an exempt classification.” However, the scope of this law is not simply limited to employees’ wages.

    Protecting Whistle Blowers

    Did you know that an added feature of the FLSA is the protection of employees who may be labeled “whistle blowers”?

    Under the FLSA, an employee cannot be retaliated against for filling an official complaint against their employer with a government agency. According to an article on JD Supra’s legal website, a recent 4th Circuit Court of Appeals ruling has expanded this law to include “intra-company” complaints. They have also stipulated that this complaint can be in written ororal form.

    Forming a Written Policy

    As with any kind of employee-related issue, the best protection for an employer is the proper documentation of any employee events. By documentation, I don’t just mean that a supervisor should write it down and file it. All the documentation in the world doesn’t mean a thing unless the employees know what the rules of the game are.

    That’s why every company should have a written policy on how to handle employee complaints—and every employee should know exactly what that policy is. The tricky part is knowing just how much is too little and when you may have gone too far in setting up your company rules.

    Avoiding FLSA Issues

    Companies with the strongest Human Resource infrastructures in place are the ones who are least susceptible to FLSA penalties or potential employee lawsuits. To help protect themselves from ever-evolving government regulations, companies are looking for assistance in employer liability management.

    For many companies, a Professional Employer Organization like GMS can help.

  • The news channels are flooded with updates on the trials and tribulations of the Affordable Care Act’s website and accompanying registration process. Politics aside, the implementation of this piece of legislation could mean big changes and larger financial challenges for your health benefits plan.

    Most small business owners today are able to provide some form of health insurance coverage for their employees through large commercial healthcare plans. However, with the Affordable Care Act, these plans will come at a cost for business owners. In fact, Ohio businesses are expected to see a 71% increase in these premiums.

    These high increases may force you to reduce or eliminate the health benefits you are able to extend to your employees, forcing them to buy insurance from the government’s healthcare marketplace.

    An Alternative to Government Healthcare

    The appeal that the Affordable Care Act has for many Americans is also one of its biggest challenges for those looking to enroll. Long wait times, sparse customer service and other registration obstacles will make it difficult, not to mention aggravating, for your employees to secure health benefits which match their needs.

    Fortunately, you have another option for your company’s health benefits. You can implement a self-insured plan. Self-insured companies are responsible for their own medical costs, eliminating the need to subsidize the healthcare expenses of other insurance groups.

    How Self-Insured Policies Work

    Self-insured healthcare provides plan flexibility, control and the potential for premium reductions for your business. Companies are responsible for contributing to a claims fund each month and that money is used to cover all employee medical expenses beyond their out-of-pocket costs. With a self-insured plan, you can still provide quality care to your employees and protect them from having to navigate through miles of government red tape.

    An essential component for any self-insured policy is known as the TPA, or third-party administrator. TPAs ensure that your employees are getting all the benefits promised to them in their insurance policy.

    Who Has the Time?

    Of course, if you’re a small-to-medium sized company, you are probably thinking “Sounds great, but we don’t have the time or resources to manage self-insured policies ourselves.”

    That’s where GMS comes in. Our services:

    • Let you focus on growing your business. We cover everything from eligibility to claims management and even customer service.
    • We’ll worry about the policy details. You worry about growing your business.
    • Save you money. We underwrite a custom policy for your group so you won’t pay for extra insurance that you don’t really need.
    • Limit your risk. We offer stop-loss insurance, which minimizes your exposure in the event of an unforeseen and major health claim.

    Learn more on how a self-insured plan administered by GMS can drastically reduce your health care costs, increase the cash flow of your business and ultimately provide better coverage for your employees and their dependents. Contact us today.

    Image credit:

    Creative Commons Image: Images_of_Money

  • With the waters of healthcare becoming murkier every day, employers and employees abdicate many of the cost-auditing responsibilities regarding their healthcare to their insurance company. Unfortunately, placing this level of trust in your company’s health insurance carrier leaves the proverbial fox to mind the hen house.

    Those who purchase health coverage through a commercial provider mistakenly believe their insurance company is actively advocating for them and monitoring the costs incurred for healthcare services. While this is far from the case, the shocking part of this reality is that the insurance companies are forcing you to pay more than you should for your company’s coverage.

    Benefits of Self-Insured Plans

    A self-insured health plan can reduce healthcare premiums for your small business by reducing overhead and other management costs charged by big insurance plans. When you have a third-party administrator like Group Management Services manage your self-insured plan, you ensure your employees receive everything promised to them in their plan and limit you from spending more money than anticipated.

    Negotiate prices: Insurance companies are billed by the hospital based on what the hospital thinks they should charge for their services. On the other hand, TPAs look at what the hospitals pay Medicare – which is often considerably less than what the hospital would bill to an insurance company – and negotiate healthcare costs from there. This can have significant impact on healthcare costs (in your favor). To learn more about this business model, I encourage you to read this article from the New York Times about the “$1,000 toothbrush.”

    Eliminate Price Secrecy: The practice of provider and hospital consolidation in the marketplace creates an uneven playing field for insurance companies to negotiate true cost-savings for their members. A TPA like GMS will underwrite a custom policy for your group so you don’t pay for coverage that the group doesn’t need and monitors all claims to reduce your financial risk.

    Audit bills: TPAs have the resources and knowledge to help your employee check each bill to ensure there is no double billing for equipment or health care services. A TPA can challenge prices for services that are beyond “reasonable and customary,” substantially reducing patient bills and keeping your claims down.

    Employee peace-of-mind: With the changing landscape of healthcare, you can assure your employees have job security along with quality and affordable health coverage. A TPA’s main concern is you and your employees, ensuring a more personable and attentive service experience.

    Increased cash flow: Self-insured plans managed through a TPA brings the control of processing of health claims back in-house, minimizing losses and reducing administrative costs.

    Self-insured plans through a third-party administrator like GMS can give you more control of your coverage and help cut costs, while still providing quality coverage to your employees. Interested in how a self-insured plan could help your business? Get a quote now or speak with one of GMS’ TPA experts.

  • In 2014, small group health insurance premiums in Ohio are expected to increase by 71%. As a business owner, you know that healthcare is already a significant expense, and increases like this are likely keeping you awake at night, wondering how you can keep employees insured AND pay the bills.

    Fortunately, you can start sleeping better again, because Group Management Services has a completely unique and customizable solution that enables you to provide the coverage your group needs while limiting your expenses and business risks associated with healthcare coverage.

    To give you an idea about how GMS can do this, let’s first take a look at how small and medium-sized businesses are covered today: fully insured plans.

    Fully Insured Healthcare Plans

    Under fully insured healthcare plans, the insurance company will determine your business’s premiums based on projected claims, which are determined by the Experience Rating (soon to be Community Rating). In essence, groups are rated on a scale. The closer to 1 the group is, the healthier. The healthier the group, the lower the premium.

    The problem with this scenario is that the insurance company determines how healthy a person is AND how much that person’s premium is going to be. As a business owner, they don’t provide any solutions or alternatives. Self funding with GMS provides options.

    A Healthcare Solution For Business Owners

    As a business owner, this can be pretty daunting.

    Enter our two-step solution, which not only limits your healthcare expenses, but keeps the quality of those benefits at the level your employees deserve.

    Step 1: Self-Insured Healthcare

    GMS is proud to announce the launch of Group Captive Management (GCM), a self-insured captive insurance company that benefits your business in many ways:

    1. Save money: We will underwrite a custom policy for your group so you won’t have to pay for insurance that your group doesn’t need.
    2. Increase cash flow
    3. Limit your risk: Stop-loss insurance will minimize your exposure
    4. Spend time growing the business: GMS covers everything, from eligibility to claims to customer service. Don’t spend time buried in the details. Leave that to us.
    5. Keep employees happy: Instead of dropping insurance altogether, reducing employees’ to part-time hours, laying employees off, or going out of business, you can offer great health benefits while competitors are struggling to cope with the healthcare changes.

    Step 2: Third-Party Administration

    We are also proud to announce today the acquisition of third-party administrators: Ogden Benefits Administration, Employee Benefit Concepts, and Variable Protection Administrators.

    This acquisition, in conjunction with our self-insured plans, provides even more benefits to small and medium-sized business owners:

    1. Further earn your trust: With our TPA services, we hold ourselves accountable for the policies we underwrite for your group. You will know that your employees are getting all the healthcare benefits promised.
    2. Lower your premiums: GMS now has access to tools that can keep your healthcare claims low, which keeps your premiums lower and your cash flow higher.
    3. Centralize points of contact: You no longer have to hire and pay a separate TPA. Now, you can work directly with GMS for all of your healthcare benefits needs.

    Let’s Get in Touch

    Sure, there are a lot of healthcare changes coming your way. But you don’t have to navigate them on your own.

    Regardless of whether you’re a client or a prospect, the time is now to make your business simpler, safer and stronger. Give us a call at 330-659-0100 or contact us for more information about our self-insured and TPA services today.

  • Since the Affordable Care Act (ACA) passed in 2010, many business people and consumers have felt that their insurance costs were going to be going up. I’m sure they have never regretted being so right.

    The deadline looms for Ohio to submit insurance plan options to the federal government for the healthcare exchanges. As the deadline approaches, there have been more and more articles both locally and nationally that talk about projected increases in healthcare premiums.

    ACA Impact in Ohio

    In Ohio, Lt. Governor and Director of Insurance Mary Taylor has talked about small businesses seeing an increase between 50-85%. Some companies may even see an increase as large as 150%, she says. Granted, under the ACA, companies with older or sicker populations may see their premiums shrink by as much as 40%. However, those with populations which were once more desirable will see a huge increase. This is due to the law’s provision that rates must be based on a large community (community rating) with premiums being more equally spread over that community.

    Many news stories are being written about the “unintended consequences” of this law. Some of the ACA’s biggest supporters, like unions and members of President Obama’s party, are beginning to voice serious concerns about the law.

    Understanding the ACA

    Of course, the ACA is now the law of the land thanks to the Supreme Court’s ruling in June of 2012. That means that employers will have to make pretty tough decisions in the next few months as more of the law’s features begin taking effect. Many employers have been taking advantage of what has become a cottage industry of late, the Obamacare seminars. However, those have left many employers even more confused.

    Large companies are also confused, but have more resources to guide them through these waters. Small business owners must learn to navigate them alone, or do what others have done and begin conversations with a Professional Employer Organization (PEO) like GMS. A PEO can provide small businesses the same resources and infrastructure that a large company has without all of the associated costs.

    PEOs Can Help

    For further information on how a PEO can help you deal with the ACA, contact Tim Austin at taustin@groupmgmt.com or 330-659-0101.

    “Stethoscope and Piggy Bank,” ©401(K) 2012, used under Creative Commons Attribution-ShareAlike 2.0 Generic license.