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  • The state of family medical leave has been in flux in New Jersey over the past year. In February, Governor Phil Murphy signed an amendment to expand both New Jersey’s Family Leave Act (NJFLA) and Family Leave Insurance law (NJFLI). Those changes went into effect back on June 30, 2019, but they wouldn’t be the only adjustments to leave laws during the years.

    As of Oct. 7, 2019, business owners have a pair of new laws to plan for when it comes to how the state processes leave applications. With so many changes, it can be hard to keep all the new family leave updates straight. To help, here’s a breakdown of what business owners need to know about the changes to family leave in New Jersey over the course of 2019 – and why it might be important to business outside the Garden State as well.

    A mother taking family medical leave from work after the birth of her new child.

    What’s Going on with Family Leave Laws in New Jersey?

    Changes to the NJFLA and NJFLI

    While New Jersey previously had the NJFLA and NJFLI both in place, the new amendments essentially increased the level of benefits and protections for any eligible employees who wish to use family leave. As was the case before, New Jersey employers must provide family leave to eligible workers and cannot terminate them as a result of this leave. These employees must meet the following requirements to be considered eligible for family leave. 

    • Their employer has at least 30 employees (it was 50 employees prior to June 30, 2019) or is a government entity of any size
    • The employee has worked for that employer for at least a year, amassing at least 1,000 hours over the course of the last 12 months
    • The family leave is used to care for a child of younger than 1 year old or to care for a family member, or someone equivalent to family, with a serious health condition

    In addition to reducing the employer size threshold found in the federal Family and Medical Leave Act (FMLA), many other changes went into effect for both NJFLA and NJFLI in June. Here are some of the more notable differences that directly impact employers.

    Reduced notice requirements

    The FMLA requires advance notice of 30 days for leave requests. However, New Jersey’s amendment drops the advance notice requirement to 15 days for an intermittent leave request for family members with serious health conditions.

    Additional time for paid leave benefits

    Originally, New Jersey employees were only allowed six weeks of paid family leave within a 12-month period. The amendments double that amount to 12 weeks. It also increased intermittent paid leave benefits from 42 to 56 days in that same 12-month period, while extending intermittent use to foster care placement in addition to care for newborns or adopted children.

    Higher weekly benefit amount cap

    Employees taking paid leave earn a portion of their weekly salary. Currently, that rate is two-thirds of an employee’s weekly salary, with weekly payments capped at 53 percent of New Jersey’s statewide weekly remuneration. As of July 1, 2020, that pay will increase to 80 percent of a weekly salary, with weekly payments capped at 70 percent of the statewide remuneration.

    No more PTO mandates

    Previously, employers had the option to require employees to use up to two weeks of PTO in place of paid leave time. The new amendment bars employers from mandating PTO use, although it still gives employees the option to do so at their own discretion.

    October amendments

    While the latest amendments don’t offer as many changes as the ones that took effect in June, they do institute a pair of notable updates that aim to speed up the leave application process for people with new children.

    The first change saves employees the trouble of completing multiple applications for leave. With the new rules, the state will automatically process applications for leave insurance after an employee applies for temporary disability. The second update allows employees to submit pregnancy-related temporary disability claims up to 60 days ahead of the actual claim period as long as they know when they’ll expect to start their period of leave.

    Why Family Leave Changes Matter to Business Owners

    As with any legislative changes that affect businesses, the updates to NJFLA and NJFLI mean that business owners in New Jersey need to take precautions to make sure that their company is compliant with the new family leave rules. If your company falls in the 30-employees or more threshold, you’ll need to abide by all the new rules listed above. You’ll also want to update your employee handbook to include these new policies.

    If your company employs fewer than 30 people, you don’t have to follow the same details. However, you can mirror the new family leave laws even if you aren’t legally required to do so. Matching the new family leave rules can serve as a sign of good faith to your current employees – and help you stay competitive with bigger companies that have to honor the new rules. Whether you decide to modify your family leave policy or not, it’s important to document it in your handbook as well. 

    While these new updates only affect business owners in New Jersey, they may serve as a sign of things to come for people in other states. It’s not uncommon for New Jersey to act as a testing ground for legislative changes. As such, other states may mimic similar changes to their Family Medical Leave Act laws in the future.

    Whether it’s family leave or something else, it’s never easy to stay on top of all the legislative changes that can impact your business. At GMS, our team of experts can help you stay compliant with any new rules and regulations while helping your business simplify key HR functions like payroll and risk management. Contact our New Jersey office or one of our other locations today to talk to one of our experts about how we can help you save time and money through professional HR administration.

  • Retirement plans are one of the most valuable employee benefits offered by organizations today. According to the Society for Human Resource Management (SHRM), the vast majority of workers say having a retirement plan is critical to their overall job satisfaction. Perhaps that’s why this benefit is such a deal breaker for job hunters and one of the main reasons why so many workers stay with their current employers. 

    It can be challenging for small businesses, however, to manage the administrative costs and compliance requirements associated with offering retirement savings plans. Only 53 percent of small-to-mid-sized businesses offer a retirement plan, with approximately 38 million private-sector employees without access to one through their employers.

    The good news is that may be about to change. In July 2019, the Department of Labor (DOL) clarified the definition of “employer” within the Employee Retirement Income Security Act (ERISA) in sponsoring a multiple employer contribution pension plan. In establishing the ‘final rule’, which goes into effect Sept. 30, 2019, the DOL has made it easier and more cost-effective for small businesses to offer retirement plans to employees through Association Retirement Plans (ARPs).

     Retirement savings.

    What is an Association Retirement Plan?

    Per the final rule, ARPs allow small and mid-size businesses to band together to offer joint 401(k) retirement plans. By using the purchasing power of the combined businesses, they can bargain for lower administrative and investment fees that would otherwise prevent them from offering retirement savings plans.

    “Many small businesses would like to offer retirement benefits for their employees but are discouraged by the cost and complexity of running their own plans,” Acting Secretary of Labor Patrick Pizzella, said in a statement. “Association Retirement Plans offer valuable retirement security to small businesses’ employees through their retirement years.”

    According to the DOL’s final rule, ARPs can be offered by associations of employers in a city, county, state, multi-state metropolitan area, or nationwide industry. ARPs can also be sponsored through a Professional Employer Organization (PEO), which is a company that provides comprehensive HR services for businesses. While many PEOs have been sponsoring retirement plans for some time, this final rule provides the validation needed to continue doing so.

    What it Means for Small Business Owners

    Prior to this rule, such retirement plans were limited to employers with an affiliation or connection, such as a shared owner or being members of an industry trade group. However, these changes now mean that, for example, a landscaping company and a marketing agency located in the same area could create a joint retirement plan.

    With a more cost-effective solution, small business owners can reap the benefits of offering retirement plans, including:

    • Attracting quality talent.
    • Improving employee satisfaction.
    • Reducing new employee training.
    • Retaining high performers.

    Additionally, businesses can also receive tax credits from the IRS for starting a retirement plan. 

    Retirement Plans Assistance

    Offering retirement plans is important to attracting and retaining quality employees, but it’s a benefit with a lot of complexity and risk. Need assistance? A PEO like Group Management Services (GMS) can help cut costs, reduce stress, and save time when it comes to establishing retirement plans. We can help you set up fully customizable plans to easily establish eligibility requirements, vesting, profit-sharing contributions, and more.

    In addition, GMS offers comprehensive services, including human resources, payroll, risk management, employee benefits, and more. Contact GMS today to request a consultation.

  • “Normalcy”, “Normality”, “Normal”; No more. I’ve never heard the verbal and written abuse of a seemingly, well, normal, word as much as the six-letter description of what is supposed to be over the past three months. For those of us familiar with the U.S. healthcare system, we’ve discarded the word “normal” from our vocabulary long ago.

    As many of us anxiously await the “end” of the most recent global pandemic one common phrase has stood out among healthcare industry experts as the most detrimental aspect of the recent outbreak: “overwhelming the healthcare system.” In short, overwhelming the healthcare system can be illustrated by imagining the hospitals in our areas completely overrun with so many COVID diagnoses that it affects the ability for facilities to manage and effectively treat regular hospital patients (not spurred by the pandemic) resulting in worsened health outcomes for all. Luckily, we will avoid a blanketed overwhelming scenario in the U.S. due to this pandemic, but that doesn’t relieve the concern of a looming explosion of chronic illness that is likely to take a similar path within the American population.

    An overlay of helathcare system charts from overwhelming chronic illness over basic medical equipment. 

    The Potential Impacts of Overwhelming Chronic Illness on the U.S. Healthcare System

    For the remainder of this post, we’ll isolate one of these chronic illnesses to get an idea of what overwhelming our healthcare system with chronic illness would look like financially. In its various forms, this illness affects, has affected, or will affect approximately 152.3 million Americans. Of those 152.3 million individuals:

    • 68.3 million are currently diagnosed, previously have been diagnosed, or have the disease but have yet to be officially diagnosed
    • 84 million are in a “pre-disease” situation where they are at high risk of being diagnosed or are on a quick path to the fully blown disease
    • 90 percent of those 84 M in the pre-disease stage aren’t even aware they’re at risk 

    To put these numbers into perspective, below is a graph comparing the number of COVID-19 diagnosis in the United States (as of 4/25/20) vs. the aforementioned chronic illness:

    A chart comparing COVID-19 cases to a chronic illness. 

    From sheer diagnosis numbers alone, this chronic illness should appear way more drastic to our hospital system than our current pandemic (obviously, the numbers surrounding COVID are subject to change as we learn more). This would assume that all diagnosed patients end up in our hospital system which isn’t a guarantee. To compensate for that lack of future clinical data, we’ll substitute what we know from a financial aspect on how impactful this chronic disease could be to our HC system. To do this I’m going to use some “creative” arithmetic. Bear with me.

    A Hypothetical Financial Projection

    To try and make this as accurate as possible, we’re going to take inflation into account. To do so, we’ll use the generation markers for Baby Boomers (55 – 76 years old) as a starting point for our projection. The financial data surrounding this chronic illness is largely from 2017 so we’ll use three years of inflation projections to get us into 2020 USD, and then another 21 years of projections to completely age-out the current Baby Boomer population (ending in 2041). 

    From 2017 – 2020 we’ve experienced about $0.05 in inflation. Now, unrealistically, we’re going to assume that every three years we will continue to have a $0.05 inflation hike. This projection would put the U.S. at a $0.35 inflation hike between 2020 and 2041. 

    Now we can apply our existing data. According to an organization specializing in this disease, $327 billion is spent annually to treat those diagnosed. Referencing our population data, those diagnosed represents a small minority of those likely to develop the disease as a whole: 34.2 million diagnoses vs. 152.3 million diagnoses, pre-diagnoses, and former diagnoses. If we can break down our data to represent the cost of an individual diagnosis, we can then scale for inflation and a more accurate financial point to include all of those at risk, not just those who have been officially diagnosed. Here’s the math step by step:

    1. $327 Billion spent in 2017 for all American Diagnoses * 1.05 =  $343.35 Billion USD in 2020 currency (1.05 represents the inflation rate between 2017-2020).
    2. $343.35 Billion (2020 Dollars) * 1.35 = $463.5225 Billion (2041 Dollars – Assuming we see a $0.05 inflation hike every 3 years between 2020 and 2041). 
    3. $463 Billion dollars is a huge chunk of change even on a national scale. What this figure doesn’t include are the pre-diagnosed, un-diagnosed, and formerly diagnosed Americans that are at a higher likelihood to develop or re-develop the disease. This $463 Billion figure represents only 34.2 million of the 152.3 million Americans at risk:
    4. $463,522,500,000 / 34,200,000 diagnosed = $13,553.29 per diagnosis per year. It’s important to keep in mind that these costs are the total impact on the healthcare system.
    5. $13,553.29/diagnosis * 152.3 Million Americans at risk = $2.064 Trillion per year in theoretical financial impact towards the US healthcare system in 2041 for this chronic illness. 

    If you’re still wondering which chronic illness we’ve used to project these outcomes, it’s Diabetes Mellitus. These figures represent solely the cost of treating diabetes itself (insulin, test strip, A1C monitors, physician services, glucose monitors, etc.), not the complications that can stem from the disease. Some common complications are stroke, heart disease, neuropathy, eye and skin complications (like glaucoma and deep skin infections or sepsis), etc.

    These numbers are meant to be staggering. This is a projection for one chronic illness out of hundreds, with hundreds more to be developed or contracted between now and 2041. If our healthcare system was at the brink of being overwhelmed during the COVID pandemic, what capacity can we expect the system to hold for a chronic illness that will affect 197.58 percent more Americans and cost billions if not trillions of dollars? The good news, type II Diabetes (a heavy, heavy majority of diabetes diagnoses statistics) is reversible through proper medication, diet, exercise, and lifestyle changes. The bad news? Many other chronic illnesses are not. 

    Steps for a Sustainable Healthcare System

    If this pandemic has shown us some shortfalls within our healthcare system, now is the time to correct them. Individual education and individual ownership of lifestyle choices are immediately impactful changes we can all make to ensure the healthcare system is sustainable for future generations. If we can successfully manage our own health, we won’t need to rely on a potentially ineffective healthcare system. 

    Contact GMS to discuss how we are partnering with local businesses to control and stabilize their healthcare programs for years to come. Our industry experts are prepared to discuss the future of healthcare and how it may affect your business, your employees, and you.

  • Health Insurance renewals may be one of the most important decisions an employer makes each year. For most small businesses, group health insurance is one of the largest expenses they incur, meaning the process can be quite stressful. To help, we put together some guidance on the renewal period and what you can do to streamline the process for your business.

    Small business owners reviewing the different elements of the health insurance renewal process. 

    Why Do Renewals Happen on an Annual Basis?

    The renewal process is designed to give insurance carriers, employers, and employees the ability to make adjustments on an annual basis. However, those adjustments differ depending on the party involved. Insurance carriers use the yearly renewal process to keep plans compliant with any new regulations and calculate new health insurance plan premiums.

    As an employer, yearly renewals allow you to adjust your benefits plans as your business evolves. Over time, you may have grown or your employees’ benefits needs may change. Annual renewals allow you to add or adjust your plans, change contributions, and make any other changes to benefit both your business and your employees. 

    Likewise, your employees can use the renewal period to change their plan selection or renew the same plan as before. Potential changes include swapping plans if you offer more than one, adding a dependent, or even opting out to join a spouse’s plan.

    What are the Different Stages of the Health Insurance Renewal Process?

    The renewal process is made up of five main steps from start to completion. This process begins with health insurance carriers before turning to you and your employees.

    Stage 1: Reassessment 

    Before you see any new plan options, your insurance carrier needs reevaluate its new pricing for the upcoming year. This can  often involve the insurance carrier adjusting premiums because of new doctor’s fees, medical technology, general inflation, and other reasons. The insurance company will also assess your company for any change in risk levels and other factors that impact your potential premiums.

    Stage 2: Presentation 

    Once your insurance carrier reassesses its rates, it’s time to apply those rates to new plans. At this point, your insurance carrier will present you with different options for your company to use in the upcoming year.

    Stage 3: Selection 

    Now that you have a variety of plan options, you’ll want to figure out which is best for you and your employees. You’ll also need to determine how much your company will contribute to each employee’s plan after you decide on a plan.

    Stage 4: Employee enrollment 

    After you’re done making a plan selection and identifying contribution amounts, it’s time for open enrollment. At this point, you will present your employees with the plans you’ve chosen so they can weigh costs, compare coverage, and weigh any other factors that may impact their decision to enroll in one of your options or find coverage elsewhere.

    Stage 5: Completion 

    At some point, your employees will need to select a plan or opt out of your plans. Your insurance provider will then make sure that any eligible member of the company who selected a plan is effectively covered throughout the course of the new plan year.

    How Can I Prepare for a Smooth Health Insurance Renewal Process?

    While the renewal process may sound like a fairly simple five-step process, it can be anything but if you’re not careful. It’s important to prepare ahead of time to limit the stress renewals can place upon both you and your employees. Here are a few tips to help you get your company ready for renewal season.

    Communicate with your employees ahead of time

    It never hurts to give your employees advance notice about open enrollment. While some of your employees may be aware of your annual renewal season, others may not. As you or your health care provider go through the presentation and plan selection process, it’s good to send a message to your employees that open enrollment is approaching and share some basic info about what that means for them. This will help eliminate any confusion from employees who may not be as knowledgeable about insurance renewal season.

    Not only should you communicate with your employees ahead of the open enrollment period, you should also talk to them once they’re presented with new plan options. It’s good to educate eligible employees about any plan changes, whether it’s a new offering or something that’s no longer a part of the new coverage options. By explaining these changes, you can be upfront with employees, which can help mitigate any hard feelings from employees upset about surprise changes.

    Evaluate your company’s needs

    There’s a good chance that your company isn’t in the same position it was a year ago. Whether you’ve grown or not, you and your employees may have different health insurance needs than before. As such, it’s best to plan ahead to determine some specific goals for the plan selection process.

    As an employer, one of the first factors you need to identify is your budget. Has that number changed since this time last year? If so, that will likely impact the quality of the plan you select. You’ll also need to account for any potential rate increases given the aforementioned possibility of higher plan costs due to internal or external factors.

    You’ll also want to account for your employees as well. According to the Society for Human Resource Management, “56 percent of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay at their current job.” In addition, 46 percent of that same group said their health insurance was the deciding factor or a major reason why they chose their current job. Health insurance is a key retention and recruitment tool, so you’ll want to balance your employees’ preferences with your budget to have a plan in place during the renewal process.

    Find the right coverage options for your organization

    One of the most important parts of the renewal process comes long before you’ve ever presented plans. Finding the right group health insurance partner plays a massive role in not only the quality of your benefits package, but also the cost of your premiums. Small and mid-sized businesses may be subject to higher premiums since they have fewer employees than big companies that can spread risk out across larger group sizes. Fortunately, a Professional Employer Organization (PEO) can help your company enjoy some of the same advantages as a big business. 

    At GMS, we represent tens of thousands of employees, which allows you to leverage our greater group buying power to attain more cost-effective insurance rates. In addition to getting more bang for your buck, we also offer supplemental insurance coverage to tailor your plan around your employees. Our experts can also take the burden of employee benefits administration off your shoulders, making sure your company is covered and compliant while you use your new free time to focus on other business matters.

    Ready to revitalize your health insurance coverage? Contact us today to talk to one of our experts about what we can do to protect you and your business.

  • Retirement plans can be a great benefit for small business owners looking to attract and retain employees. But between IRAs and 401(k)s, it can be challenging to decide which is the best plan suited for your organizational needs. For greater ease, some employers might prefer the SIMPLE IRA. For flexibility, though, the variety of choices available in a 401(k) can make this retirement plan a more attractive option. 

    Choosing a retirement plan is often one of the most important financial decisions a business owner can make. To help with your decision, we explained the differences between a SIMPLE IRA and a 401(k) as well as the pros and cons of each retirement savings plan.

     Retirement savings plan.

    What is a SIMPLE IRA?

    A Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA is a tax-deferred retirement savings account that can be established by employers, as well as self-employed individuals. As the name implies, many employers prefer this plan for its simplicity in that it’s quick to set up and ongoing maintenance is straightforward and inexpensive from an administrative standpoint.

    The Difference between a SIMPLE IRA and a Traditional IRA

    While SIMPLE IRAs and Traditional IRAs are similar, SIMPLE IRAs are aimed more toward small business owners and self-employed individuals. With a SIMPLE IRA, employers must match part of their employees’ contribution. Employers have two options for matching according to Motley Fool: They can either match contributions up to 3% of their employees’ compensation, or contribute a fixed rate of 2% of compensation regardless of employee participation in the plan. The contribution limits are also different. The amount an employee contributes from their salary to a SIMPLE IRA cannot exceed $13,500 in 2020 and 2021. Conversely, for a Traditional IRA, the total contribution limit can’t be more than $6,000 in 2020 and 2021 ($7,000 if you’re age 50 or older).

    The Difference between a SIMPLE IRA and a SIMPLE 401(k)

     

    A SIMPLE 401(k) plan is a cross between a SIMPLE IRA and a traditional 401(k) plan. The same eligibility rules that apply to a SIMPLE IRA apply to a SIMPLE 401(k). One key difference is the employer contribution limits. All employer contributions to a SIMPLE 401(k) are subject to a compensation cap ($290,000 for 2021); with a SIMPLE IRA, only non-elective employer contributions are subject to a compensation cap.

    Eligibility

    To qualify for a SIMPLE IRA, employers can have no more than 100 employees who have received at least $5,000 in compensation from the employer for the previous year. There is also no age limit with a SIMPLE IRA, making it available to all employees within the company. By choosing a SIMPLE IRA, employers are not allowed to maintain any other plan. 

    Contributions

    Employer contributions are mandatory with a SIMPLE IRA and are deductible on your business tax return. Regardless of whether an employee contributes, employers must either match up to 3 percent of an employee’s pay or match a contribution equal to 2 percent of an employee’s compensation. For two out of every five years, an employer who elects to make matching contributions has the option to reduce their contribution amount to one that is between 1 and 2.99 percent. With a SIMPLE IRA, all contributions vest immediately.

    As with any retirement savings plan, there are some limits to how much can be contributed to a SIMPLE IRA. For 2020, the annual contribution limit is set at $13,500 (up $500 from 2019) for employees. Workers that are 50 years in age or older can contribute $3,000 more, for an annual total of $16,500. Meanwhile, there is no limit on employer matching contributions, with one exception. Employers using the 2 percent contribution based compensation model can only match their contribution on up to $280,000 salary.

    Administrative responsibilities and fees

    As previously alluded to, there are minimal administrative requirements associated with SIMPLE IRAs. There are no annual tax filing requirements, either – business owners just need to be sure to send annual plan details to employees. Another advantage of SIMPLE IRAs is the low cost of setup and maintenance.

    What is a 401(k)?

    A 401(k) is a defined contribution retirement plan that comes with a lot of flexibility for employers who would like to offer it as a benefit to employees. While this type of retirement savings plan can be more complex to establish and maintain, being able to choose how you want to contribute to employee accounts as well as having the option of a Roth 401(k) can sway employers to select this plan.

    Eligibility

    Any company with one or more employees is eligible to offer a 401(k). However, 401(k)s are limited to employees at least 21 years old who worked at least 1,000 hours in the previous year. 

    Contributions

    Under a 401(k), employees have the option to set aside a portion of their income and invest it in a qualifying retirement account. This money is tax-deferred, meaning that the employee doesn’t pay federal income taxes on their contributions.

    Perhaps one of the biggest advantages of offering a 401(k) is that employer contributions aren’t mandatory. Rather, employers have the option to match none, some, or all of their employees’ 401(k) contributions. Usually, business owners will set limits on how much they’ll match. For example, you might match employee contributions up to 6 percent of an employee’s salary, and only have your contributions fully vest after two years. 

    Employer contributions are deductible up to IRS limits. As of 2020, combined contributions of employee and employer are limited to less than 100 percent of compensation, or $56,000. For workers aged 50 and older, that limit is raised to $62,000. Should an employer chose not to contribute, employee contributions are limited to $19,000, or $25,000 for those aged 50 and older.

    Additional provisions

    In addition to the traditional 401(k) as mentioned above, there are additional provisions that can be made, such as a Roth option or profit-sharing.

    Roth 401(k)

    The option of a Roth 401(k) can be a major deciding factor in selecting this retirement plan. A Roth option for your 401(k) plan allows you and your employees to contribute post-tax earnings toward retirement and face no additional taxes on those savings or investment earnings when the money is withdrawn at retirement. 

    Having the Roth option can be a cost-effective way to make your retirement savings plan more attractive because you and other highly-compensated employees won’t be subject to an income cap. Furthermore, contributions to the account are taxed up-front, rather than at the time of withdrawal. While certainly a plus, the additional tasks associated with the administration and taxation of a Roth 401(k) can be burdensome on a small business. 

    Profit Sharing

    Profit-sharing is another option that can be added to a 401(k) plan with a simple amendment. Profit-sharing allows business owners to contribute pre-tax dollars to employee retirement accounts based on how well their business did in the year. For profit-sharing 401(k) plans, the annual contribution limit is $56,000 per employee (or 100 percent of their salary, if it’s lower). 

    Profit-sharing plans can serve as a great motivation tactic for employees to work hard toward meeting your goals. As with all other types of 401(k)s, implementing a profit-sharing 401(k) plan can also allow small business owners to benefit from lower tax liability, controlled contributions, and improved talent acquisition and retention.

    Administrative responsibilities and fees

    With more flexibility comes greater administrative duties and plan fees associated with 401(k)s. For one, employers that offer 401(k)s are subject to a compliance audit every year to ensure that plans don’t favor highly-compensated employees over those who are paid less. In addition, employers are subject to higher setup and maintenance costs. Generally, plan fees tend to expensive, even more so for small businesses.

    SIMPLE IRA vs 401(k): How to Decide

    As described above, there are many pros and cons to each retirement plan. To help decide which plan is best for your company, ask yourself the following questions:

    Why are you setting up a retirement plan?

    There are many benefits to setting up a retirement plan, which you’re likely considering. For instance, retirement benefits are listed among the most important employee benefits, according to Monster’s 2019 State of the Candidate survey. Beyond employee acquisition and retention, you may be trying to save for your own retirement as a small business owner. Contribution limits may be a factor here, especially for profitable owners who may prefer the 401(k) for the higher contribution limit.

    Will you need to adjust employer contributions?

    In an uncertain economy, mandatory employer contributions can be both a detriment and a benefit to small business owners. While mandatory contributions can certainly help attract employees, maintaining contributions could present some challenges, should your business fall on hard times. That’s where 401(k)s provide an advantage to employers who may need to make adjustments to their contributions in the future. With a 401(k), you would also have the option to set vesting terms, which allows you to require employees to remain employed by you for a set time before taking ownership of your contributions to their accounts.

    Retirement Planning for Small Business Owners

    Offering retirement plans is important to attracting and retaining quality employees, but is a benefit that can come with a lot of complexity and risk. That’s where a professional employer organization (PEO) like Group Management Services (GMS) can help. From cutting costs to reducing stress to saving valuable time, GMS can take on the administrative burdens associated with retirement plans, in addition to other employee benefits and HR responsibilities like payroll, human resources, and risk management, to allow you to focus on growing your business. 

    Contact GMS today to see how we can help make retirement plans simpler for your small business.

  • Over time, it’s becoming more apparent that people’s personal and professional lives will occasionally overlap. The Bureau of Labor Statistics found that 63 percent of families with children under the age of 18 had both parents employed. Add in millions of single parents trying to balance home and work responsibilities and you have a lot of employees who seriously value a family-friendly workplace. 

    Managing work and family obligations can take a serious toll on people, which can have a direct impact on your business. Not only can this balance impact the quality of their work, but it can also lead frustrated mothers and fathers to look for more family-friendly workplaces. Fortunately, family-friendly policies are beneficial to employers as well as employees. According to the University of Kansas, a family-friendly workplace can help you:

    • Make employees more productive
    • Create a less stressful work environment
    • Attract more top talent
    • Retain quality employees

    So what can you do to make your business more family-friendly? Here are four policies that can help your business appeal to existing and potential family-oriented employees.

    An employee working at home with her daughter thanks to a family-friendly workplace policy.

    Flexible Schedules

    A little flexibility can go a long way. Back in 2017, the Harvard Business Review asked 2,000 U.S. workers which benefits they’d consider when deciding between a higher-paying job and a lower-paying job with better perks. According to that survey, a whopping 88 percent of people said they’d consider a lower-paying job that offered more flexible hours, with roughly 40 percent of them giving the offer heavy consideration.

    While the Department of Labor defines a traditional schedule as a 9-to-5, 40-hour workweek, family responsibilities can wreak havoc on such a schedule. Whether employees need to drop off or pick up kids at school, stay home to watch over the little ones, or adjust their hours for any other reason, a flexible schedule can help them maintain a regular workload (and their sanity). 

    Another option is to offer employees the ability to opt for condensed workweeks. Instead of five eight-hour days, your workers can choose to work four 10-hour days and take off Friday, do four nine-hour days and work a half-day Friday, or some other weekly schedule. Regardless of which option(s) work best for your employees, having the flexibility to come in late or leave early can help relieve stress, reduce absenteeism, and increase productivity for workers who now have less to worry about while they’re at work. 

    Another big advantage is that flexible hours are a free benefit you can offer. It doesn’t cost extra money for you to provide employees some wiggle room and you can offer ground rules as to what is and isn’t allowed, such as maintaining core hours where employees must be present. In return, you’ll have a happier workforce that recognizes that you know that there’s life outside of work.

    Work From Home

    Similar to flex time, the ability to work from home gives employees a chance to be home when they need to for their families. In fact, that same HBR survey found that 80 percent of people would consider taking less money in exchange for work-from-home options.

    This interest in telecommuting is embraced by more than just employees. The number of people who telecommute has more than doubled over the past decade, with millions of people spending at least half their schedule working outside the office. Over time, business owners have recognized the value of allowing employees to work off site if possible. 

    Not only does telecommuting help out any employees who need to stay home with young or sick kids, it can even boost productivity. According to Global Workplace Analytics, two-thirds of businesses reported increased productivity among telecommuting employees. Whether it’s because those workers had more control over their personal and professional lives or some other reason, allowing employees to work from home can make your business a more family-friendly place for people who need to be home during business hours.

    Daycare Assistance

    Childcare is a major commitment, both in terms of time and money. Whether you opt to provide work flexibility or not, daycare assistance is another way to develop a family-friendly workplace.

    Between the daycare costs and conflicting schedules, childcare issues can have a direct impact on whether an employee decides to join or leave your company. According to Care.com’s Cost of Care report, 69 percent of parents have said that childcare has influenced their career decisions. That’s a lot of talent hanging in the balance depending on your benefits plan. To help out these employees, consider offering one or a combination of the following perks:

    • On-site daycare services
    • Child care subsidies
    • Flexible spending accounts for dependent care

    Parental Leave

    Welcoming a new child into the family is an exciting time for any parent, but it can also be incredibly stressful. A parental leave policy can help you take some of the stress out of the situation. As an employer, you have a few options if you decide to offer parental leave:

    • Unpaid parental leave
    • Paid parental leave
    • A combination of paid and unpaid parental leave

    As expected, paid leave is the most attractive option for employees, but it means you’re still on the hook for paying the new parent while he or she is out. On the flip side, not having a parental leave plan – or one that doesn’t offer any form of paid leave – makes it much more likely that prospective parents will look for better benefits elsewhere. Regardless of which route you chose, adding a parental leave policy to your company’s benefits plan will help show your workers that you care about them and their families outside of work, which can go a long way toward creating a family-friendly culture.

    Make Your Company a Destination for Good Employees

    The average employee spends more time at work than home, but that doesn’t mean your company can’t make it a bit easier to maintain a healthy work-life balance. Establishing family-friendly workplace policies can help you attract and retain top talent so that you have the right people in place at your business.

    Of course, your employees aren’t the only people who deserve a little help maintaining a good work-life balance. In addition to employee benefits administration, there are several key business functions that can eat up your schedule. Fortunately, a PEO can provide the comprehensive HR administrative service you need to manage your business’ HR needs so that you can focus on your business – and the occasional day off – instead of handling payroll or some other time-consuming task.

    Ready to focus on growing your work family? Contact us today to talk to one of our experts about how we can take on the burden of HR administration for you.

  • While businesses with fewer than 50 full-time equivalent employees aren’t required to provide health insurance to employees, it can certainly be a good idea to do so. 95 percent of HR professionals named health care benefits as one of the most important benefits businesses can offer, making it a powerful tool to attract and retain top talent.

    It’s not always easy to decide the best path forward when it comes to weighing health insurance options. Here are four different factors you need to consider when comparing health insurance options for your business.

    A woman stacking health insurance options for a small business.

    Individual vs. Group Health Insurance Plans

    The first consideration you need to make is simple: do you offer health insurance or not? This scenario breaks down to whether you want employees to purchase health insurance for themselves or if you want to offer a group health insurance plan. 

    The difference between individual and group health plans

    While you may not need to offer health insurance, the Affordable Care Act (ACA) mandates that Americans have it. If you don’t offer health insurance, your employees will need to purchase an individual health insurance policy for them and their families. 

    A group health insurance plan allows businesses to provide coverage to a group of members, which is comprised of members of your organization and potentially their families. Businesses that do offer these plans must offer it to every full-time equivalent employee – you can’t pick and choose who gets coverage and who doesn’t. However, employees can choose to opt out to pursue an individual plan or join another plan if eligible.

    What makes the most sense for my business?

    This decision comes down to your employees and costs. While individual health insurance is the least costly route for employers, it comes with the caveat that nearly half of employees named health insurance as either a positive influence or the sole deciding factor in choosing their current job.  

    Meanwhile, group health insurance gives you and your employees benefits an individual plan would not. Individual plans have higher out-of-pocket limits. The Affordable Care Act caps these at $7,350, while individual limits could be as high as $10,000. In addition, the increased buying power of group plans can offer a higher-quality overall plan design than what you and your employees could get at the same cost in individual coverage.

    Some companies may be tempted to combat the lack of health insurance benefits by providing a bonus for employees to help pay their indiviual premiums. While this offers a level of financial support to employees, it is not viewed that way by other government and financial institutions and is strongly advised against. Group health plans allow employers and employees to pay premiums with pre-tax dollars. Anything spent on group healthcare costs is tax-deductible, whereas individual plans are not. 

    Another issue with individual plans is that renewals are typically high if you utilize the coverage at all. The size and health of a group affects health insurance premiums, potentially giving group health plans more stability than a plan built for one person or family. When you tie in the tax benefits, group plans often end up being more cost effective than individual plans, all while offering a key perk to new and existing employees. This makes group health plans a much more attractive long-term option for many small businesses.

    Plan Design

    Every health insurance plan can differ in terms of what is covered and you and your employees’ financial responsibilities for doctors’ visits and other medical costs. When comparing plan design, there are two different routes you can go: 

    • Traditional plans
    • High deductible health plans (HDHP)

    The differences between traditional and high deductible health plans

    A traditional plan operates on a system with copayments (also called copays) and deductibles. The plan helps you and your employees pay for doctor’s visits, prescriptions, and other in-network medical costs. Meanwhile, group members are responsible for paying any copays, coinsurance, and deductibles associated with your specific plan. Once an individual has met their deductible, that person is typically only responsible for coinsurance payments up to the listed out-of-pocket maximum.

    An HDHP also has deductibles, but no copays involved. With these plans, individuals must meet a higher deductible before insurance pays its share of in-network medical costs. However, HDHP plans are eligible for a health savings account (HSA). Employees can use an HSA to set aside money from their paychecks and pay medical costs with tax-free dollars. 

    What plan design makes the most sense for my business?

    Of the two options, most people are more familiar with traditional plans – HDHP designs are a newer design that started with the Affordable Care Act. Because of this, some employees may be more comfortable with traditional copay plans due to familiarity and the lower deductibles.

    While newer, HDHP designs open both employers and employees up to lower premiums and potential tax savings through the HSA. In fact, HDHPs are sometimes called HSA plans because of this particular advantage. Some employers even choose to contribute to employees’ HSAs – this gives employees some funds to pay medical bills while allowing employers to receive the tax benefit.

    Both plan designs offer certain advantages, so your decision comes down to costs and comfort level. People who are used to having copays will often prefer traditional plans. Meanwhile, others may realize the benefits of an HSA with some education around how HDHPs help them. Take some time to estimate how your employees would use the plan and what you and your employees need when it comes to healthcare coverage. 

    Health Insurance Network

    When comparing health insurance, you also need to weigh how much freedom you need when it comes to which facilities, providers, and suppliers are available to you and your employees. A health insurance network is the group of medical care providers that have a contract with your plan. There are three levels of health insurance networks:

    • Preferred provider organization (PPO)
    • Exclusive provider organization (EPO)
    • Health maintenance organization (HMO)

    The differences between PPO, EPO, and HMO networks

    A PPO network does not limit you in terms of medical facilities or caregivers as long as you’re with an in-network provider. In this type of network, you won’t need your primary care physician to refer you to another specialist or other provider outside of your network – you can simply go see that person for an additional out-of-network cost. 

    An EPO network adds some additional limitations to this process. A typical EPO may limit your group members to one major hospital network in your region, except in the case of an emergency. Essentially, that group of doctors negotiated a contract to be the exclusive providers for that network. As such, you’re limited to that hospital network and may need referrals to see outside providers. 

    An HMO network limits in-network care to a specific location. Some HMOs require employees to live or work in a certain service area for coverage and can range from specific hospitals to a broader circle of locations and providers. People with an HMO network will need referrals to see any specialists or other providers outside your primary care or emergency room needs. 

    What health insurance network makes the most sense for my business?

    Your choice of health insurance network comes down to desired flexibility and nationwide accessibility. PPOs offer the greatest amount of freedom in terms of access, whereas HMOs offer the least. An HMO may work for a small business where everyone is located in the same small area, but it’s likely not an option if your employees are spread out. 

    You also need to consider what happens if you ever leave a certain area. With an EPO or HMO, you may not have coverage options if you go on vacation or have college-age children in different areas. For that reason, PPO networks tend to be more popular with employees.

    Healthcare Administration

    If you do decide to offer health insurance, you’ll need to consider how to handle the benefits administration process. A business can turn to a broker for group health insurance or find an organization like a PEO that can manage both benefits and payroll administration.

    The difference between administrative options

    If you opt for a broker that can’t manage payroll, that will place the responsibility of benefits administration in your hands. This means that you or someone else at your company would need to administer your plan, handle adding new hires to the plan, and manage the renewal process.

    If an employer goes with a broker that also houses payroll, everything would be done for them and automated so that they didn’t have to administer the plan themselves. This type of relationship offers you full administrative management and support for new hires, compliance tracking, and reporting.

    What makes the most sense for my business?

    It depends on how much time and expertise you have. Benefits administration is a major endeavor for a small business. Not only do you need to oversee benefits administration, but also key aspects of payroll management for your small business. You can opt to hire someone internally to oversee these responsibilities, but that does require increasing payroll for administrative efforts.

    Meanwhile, an organization like a PEO is a natural fit for health insurance administration. A PEO can offer you greater buying power and educate employees about how your plan works, your network, and ways to keep premiums down. It also gives you and your employees experts to talk to whenever there’s a question.

    Ready to offer a competitive benefits package without taking on the administrative burden? Contact GMS today to find out how we can quality group health insurance at a lower cost. 

  • Between offering competitive benefits and combating rising premiums, managing your business’ healthcare needs is a complex situation. Group health insurance plays a key part in attracting and retaining top talent. However, selecting and managing the right health plans for your company and employees takes an enormous amount of time and effort. It’s a delicate balancing act that can be difficult for any small business owner.

    Fortunately, you don’t need to go through this balancing act alone. A Professional Employer Organization (PEO) can not only help you offer quality, cost-effective healthcare benefits, but also give you the support necessary to develop benefits strategies and navigate any future changes. Let’s break down seven major reasons why a good PEO is a great choice for your small business’ health insurance.

    Cost savings from a PEO processing a claim for a small business’ health insurance plan. 

    Greater Buying Power

    It’s not easy dealing with health insurance companies directly. Policy administration and billing is not only difficult, but also expensive. For small and mid-sized businesses with fewer employees, you could end up being charged higher premiums because you simply don’t have the buying power of a bigger organization.

    That’s where PEOs can help. A PEO represents multiple organizations and all the employees hired by those groups. As such, PEOs can leverage their collective buying power to act as one large company. This arrangement means that small to mid-size companies working with a PEO can get the competitive benefits and smaller premiums of a big business, all thanks to a convenient partnership.

    Of course, your partnership with a PEO should be about more than just added buying power. You should also consider how the PEOs pool the participants and how it affects your premiums. For example, GMS represents tens of thousands of employees, but it does not pool all those employees together. Instead, GMS built our own plan designs.

    What does this arrangement mean for employers? Essentially, your company is rated for your own group based on your own demographic and your health instead of being grouped in with every other company. This process means that your premiums are dictated by your group’s rating, so you don’t need to settle for a lesser plan to see both short and long-term cost savings. With the right PEO, you can focus on cutting costs, not coverage.

    Ancillary Advantages

    Group health insurance isn’t the only benefit that PEOs can help deliver at competitive pricing. Greater buying power also allows PEOs to offer ancillary options on a mass level. This arrangement is especially advantageous for certain groups where certain ancillary benefits would be cost-prohibitive or even unattainable. 

    For example, imagine you ran a small roofing company. A lot of times, your SIC code serves as the basis for your rate. Because of this, you may not be able to get disability coverage at a reasonable cost through traditional means. However, a PEO’s group buying power can give at-risk employers or small groups cost-effective access to multiple lines of coverage, healthcare, and ancillary benefits.

    Benefits and Payroll Under the Same Roof

    Organizationally, it’s a huge benefit to have healthcare and payroll administration talking to one another through the administrative systems. Non-PEOs typically have a payroll processor or some other system and need someone to manually enter healthcare rates for a new employee or during renewal. When it’s all under one roof, you have one group handling everything instead of needing two different entities to hopefully stay in sync.

    With a PEO, your payroll and healthcare administration have the means to work with one another through the systems and streamline this process. Automatic payroll deductions are set up when your benefits kick in for new hires or at open enrollment. The two systems will also be able to automate paycheck deductions and identify which items should be pre-tax and which shouldn’t.

    By having both payroll and healthcare administration working together, you do more than just streamline the process. This scenario lessens the amount of manual entry required, which frees you or a key employee up for other tasks. Automating the process can also help eliminate potential data error – humans make mistakes, after all. In addition, having payroll and benefits administrators work together allows a PEO to directly resolve any issues for you instead of having you involved in every step of the process.

    Online Enrollment

    Another advantage of having payroll and benefits together is that it allows for online enrollment. The automated system of a PEO can help guide employees during the renewal process and educate them about the products they can elect. Since healthcare and payroll administration is tied together, the online enrollment process allows employees to see exactly how their choices impact them in terms of coverage and pricing. 

    From there, employees can confirm their selections right then and there without ever needing any paper documents. This situation simplifies the process for not only the employees, but also you and any office administrators who would have to deal with the headaches associated with enrollment documents. With a PEO, that’s all generated for the employee to handle and deal with, saving you time and plenty of frustration.

    Audit and Process Claims for You

    Depending on the PEO you choose, these organizations can offer another key benefit: auditing and processing claims for you. While some vendors utilize the fully-insured market and Affordable Care Act plans, this scenario can leave your company at the mercy of the providers. Instead, it’s better to partner with all major insurance providers and provide a better experience for small businesses.

    How can a PEO do this? At GMS, we built our own plan with internal administration to give us more control over that plan and the costs. This arrangement gives us the ability to audit and process all our own claims. In this process, your PEO can make sure that the usual customary rate was charged or fight on your behalf to get a discount or reduction on that claim. 

    The ability to audit claims also opens up opportunities to find other ways to save. Part of the audit is used to analyze how the individuals in your group use your plan. The results of this analysis can indicate certain trends that add avoidable costs – for example, using telemedicine services for free doctor’s calls to avoid copays. Not only will this analysis educate your group on the best, most cost-effective way to utilize the plan, it will also help you save in the long run.

    Free Administration

    If you were to turn to an accountant or lawyer with compliance, legal, or administration questions, that extra time will typically cost you. That’s a very unfortunate arrangement for a business owner. Rules and regulations change every day, so it’s only natural to have some inquiries about how they can impact your business. You also can’t be expected to know everything about healthcare and payroll administration – that’s why people train specifically for those fields. 

    With most PEOs, the time spent answering those questions is covered as part of your main fees. Not only that, but you’ll also have a team of experts on hand to answer whatever questions pop up about healthcare, payroll, or other administrative needs. You get the answers you need, without the fear of having those questions affect your bottom line.

    Ability to Lighten Other Administrative Burdens

    When you run a business, there are a multitude of administrative burdens that rest on your shoulders. A PEO is a tremendous solution for companies that don’t have the time or expertise to effectively manage more than group health insurance.

    While you can turn to a PEO for just health insurance and payroll, an organization like GMS can help you easily take additional administrative burdens off your shoulders when you’re ready. This gives you the ability to have one team expertly run risk management, employee recruiting, and other key HR functions as your company grows.

    Ready to simplify your business’ administrative needs? Contact GMS today to talk to our experts about small business health insurance today.