He thinks he cracked the code, but I think his idea’s cracked. Let me tell you what I mean.

Mr. Brown runs a company within the transportation industry and has nearly 75 people working for him. He offers a full benefits package to his staff, for which he pays nearly 90%.

His idea? Simply split up the company into separate, stand-alone entities, each containing fewer than the 50 Full-Time Equivalent employees the law (which takes effect 1/1/2014) mandates. With each entity employing fewer than 50 employees, the Affordable Care Act would be all but forgotten. Not so fast Mr. Brown!

First of all, there is a loophole-closer written into the plan: for affiliated or commonly owned companies, employees will be pooled for the purpose of calculating Full-Time Equivalents. So maybe Mr. Brown and every other employer out there with close to 50 full-time employees should either cut everyone’s hours to less than 30 or shut their doors?

All this ruckus and strategizing really is for naught. Mr. Brown is already doing everything he needs to do to remain in full compliance with the PPAACA. His company already offers health care to its employees and pays 90% of that care, leaving employees to pay less than $50 per month for individual coverage. His HR provider ensured that Summaries of Benefits and Coverage were distributed to his staff at renewal time, and the W-2 reporting requirements of employer-sponsored contributions were fulfilled in 2012 and will continue to be met in years to come. Sure, he may need to work the annual deductible on the plan down from $3000 to $2000, but his company is, for all intents and purposes, already compliant and has been for many years.

This is true for a vast majority of my client base.

Although certain industries—such as staffing, restaurants, and home health care—will undoubtedly be hit hard by Health Care Reform, a vast majority of businesses will simply continue to do what they have always done: provide a livable wage and benefits for employees and their families so that they can attract and retain competitive talent.

We can all argue about how rates are going to skyrocket even further and products and services are going to increase in cost to cover additional compliance expenses, but why waste time and energy in speculation?

Let’s continue to do business and generate profit. As always, we will learn to navigate in the current political and legal environment.

If you are interested in learning more about Health Care Reform, its mandates or how it applies to your specific business situation, feel free to reach out to me directly at Axiom Human Resource Solutions.

The Social Security program is currently funded by a 12.4% tax on wages up to $110,100. This number rises to $113,700 in 2013. Historically, half of that tax was paid by employers, and workers pay the other half. In 2011, Congress and President Obama instituted a “tax holiday” that cut the share paid by workers from 6.2% to 4.2% putting the difference back into the pockets of most of the American workforce. A household with $100,000 saw $2,000 (or $38 a week) go right back into their pockets.

Barring some unforeseeable action in Washington, this money will disappear as of January 1, 2013.

In addition to the expiration of the tax holiday comes an additional Medicare payroll tax on “high” wage earners. Employees and business owners who earn at least $200,000 a year (or $250,000 if filing jointly) will be subject to an additional .9% tax in 2013.

Expect also to lose some tax benefit from flexible spending programs. New limits on those accounts decrease in 2013 to $2,500 per employee. ($5,000 for those who use flex accounts for dependent care.)

Make sure you notify employees of this change, which will affect every staff member moving forward—kinda like a late Christmas gift on any pay date following the close of 2012.

The tax news may not be great, but our wishes for your festive holiday season sure are. All the best!

Here are the regulations that this year brought.

W-2 Reporting

An important thing to note: starting with the 2012 Form W-2s, all employers must include the total cost of health care coverage received by their employees—both the employer and employee contribution amounts. That total is specific to each employee’s coverage classification(s) for the year.

If, for example, there was a change in an employee’s coverage election or a rate change mid-year, you have to take those things into consideration when calculating the contribution figure.

Some types of benefit plans (such as HSAs and certain stand-alone dental and vision plans) are exempt from this reporting requirement.

If you file fewer than 250 Form W-2s, you’re eligible for transitional relief.

Summary of Benefits & Coverage

Effective for plan years beginning on or after September 23, 2012, employers must provide a Summary of Benefits & Coverage (SBC) to plan participants, including all eligible employees and all enrolled dependents.

When do you provide an SBC? Depends on the situation:

• For plan participants who enroll or re-enroll for coverage during an open enrollment period, you need to provide an SBC on or before the first day of the open enrollment period.
• If the plan has no open enrollment time period for changing coverage elections, you need to provide the SBC 30 days prior to the plan year-end.
• When a plan participant requests one, you must furnish an SBC within seven business days.

Additional Medicare Tax

Effective January 1, 2013, the Medicare tax rises by 0.9% to 2.35% for wages exceeding $200,000 for single filers, or $250,000 for joint filers. This additional withholding over $200,000 applies even though the employee’s wages combined with his or her spouse’s wages may fall below the $250,000 threshold for joint filers.

New FSA Limits

Effective for plan years beginning on or after January 1, 2013, employee salary reduction contributions made to a flexible spending arrangement (FSA) account are limited to $2,500.

This limit does not include insurance premiums withheld on a before-tax basis under a cafeteria plan. In addition, if the employee or the employee’s spouse is eligible for more than one FSA account participation, the $2,500 limit is applied to each account instead of to the joint total.

Annual Notice Requirements

Don’t forget to furnish the following notices before the year is out:

• “Grandfathered” Plan Notice: This notice is required every year that the plan retains “grandfathered” status.
• Women’s Health & Cancer Rights Act Notice: Distribute at least once each year to all covered persons.
• HIPAA Notice of Privacy Practices: Distribute to plan members at the time of initial enrollment in the group health plan and every three years thereafter.
• Children’s Health Insurance Program Reauthorization Act Notice. Distribute at least annually to all eligible employees who reside in a state where there is a premium assistance subsidy available under Medicaid or CHIP, whether or not they are enrolled for group health coverage,

If you have questions about new regulations under health care reform, give us a call. We’re here to keep our clients compliant with the ever-changing regulations that affect health care.

Speculation about the effect of Health Care Reform’s mandates has insurers rating groups up. And soon business owners and HR managers will be immersed in the miserable process of weeding through the bad news of a renewal and trying to ease the pain of the increasing cost of doing business in the United States.

This year—more than any other—is the one for you and your HR manager to align closely with your broker and become part of the shopping and procurement process. This is the year to make sure no stone goes unturned.

So how do you ensure that you are presented with the best alternatives? Take the following steps, and take them now:

1. Get an early start. Unless you tell your broker now that you want to look at all available options for 2013, you might miss out. If you don’t find out about renewal rates early, you might not have time to do the comprehensive shopping you need to do this year.

2. Use Form Fire or another automated platform. Automated benefits pricing and procurement platforms are taking over the marketplace. These systems have been around for several years, and all brokers who are worth their salt in the group health arena are subscribers to one of these systems.

Demanding this service eliminates the need for paper applications and enrollment paperwork, removes HIPAA-protected data from the workplace, and enables the broker of record to shop all the major providers off the same form. Some platforms through payroll providers are even implementing self-service enrollment tools.

Ask for a list of all providers your broker is shopping, and if one of the majors is not listed, question that motivation.

3. Demand to see traditional Preferred Provider (PPO) as well as High Deductible Health Plan (HDHP) options from the top three or four insurers who quoted. Doing so forces your broker to put together a comparison that lays out all the top options. The “hot hand” in the group health insurance markets can change from year to year, so it is important to explore options on carriers as well as strategies. Adjusting deductibles, adding coinsurance or increasing out-of-pocket maximums can greatly impact what is “affordable.” Myriad additional strategies and alternatives to health insurance for small businesses can also make sense, but they don’t pay commission. Do you wonder why your broker has never brought them up?

4. After the choices have been whittled down, find another set of eyes. Make sure you’re not missing anything of substance by enlisting a licensed agent–or anyone else who has knowledge of how health plans work—to compare your top picks. Double-check now to keep surprises out of what can be a very expensive equation.

5. Educate employees completely. Make sure all existing employees and new hires throughout the year are educated on the health plan, the network, and how to use the chosen product or products. I often find situations in which employees overuse or misuse their insurance because they don’t really understand how it works. Time spent explaining benefits to employees not only makes long-run financial sense by minimizing claims, but it shows a vested interest in the lives of employees and their families. A good broker will make this happen every year regardless of the size of your business.

The time to start to weigh options for 2013 is now—right now. If you’re interested in a free consultation with an impartial third party who is a licensed agent but doesn’t make a living selling insurance products, call us today.

The Indiana Department of Workforce Development is aggressively pursuing companies that have engaged in SUTA dumping. It is much less widely understood than blatant forms of tax evasion, avoidance or fraud, but SUTA dumping is no less harmful or criminal, and it has become somewhat rampant—especially in the PEO industry. If you have considered strategies to lower your company’s State Unemployment Tax rate or are in a co-employment relationship with a PEO, read on.

What is SUTA dumping?

SUTA is an acronym for the State Unemployment Tax Act. SUTA dumping is a form of tax avoidance through “dumping” or exchanging a relatively high unemployment tax rate for a lower one by setting up a shell company, shifting employees, or other fraudulent schemes.

In Indiana, a new company is subject to an unemployment tax rate of 2.5% of the first $9,500 in wages for each employee. As a company matures and gains “unemployment experience,” the Department of Workforce Development either adjusts the rate up or down. Like any insurance premium, more claims mean a higher rate.

Until 2010 that tax was assessed on the first $7,000 in wages with a maximum rate of 5.6%, but for obvious reasons, Indiana’s pool of unemployment insurance money has run dry forcing the state to manipulate rates.

For 2012, the tax is assessed on the first $9,500 in wages with a maximum rate of 10.072%. A company with good experience may push its rate down under 2% while a company with bad experience and unemployment claims stretching out to nearly two years will inevitably feel the pain of a max rate—a whole lot of pain for companies with numerous employees.

SUTA dumping can come in many forms; let me give you an example: Example Company (or EC) has 200 employees after having to lay off 100 during the recession. Before that, EC employed 300 and had a SUTA rate of 1.9%. EC’s total SUTA exposure was 300 x $7,000 x 1.9% = $39,900 per year. Following three solid years of layoffs and continuing unemployment insurance claims, EC’s business has begun to stabilize, and the company has even begun to add heads again, but the Department of Workforce Development has sent notice raising EC’s SUTA rate to 10%. With only 200 employees and the new $9,500 wage limits, EC pays 200 x $9,500 x 10% = $190,000 per year. There goes the ability to add heads.

PEOs and SUTA dumping

Within the PEO model, there’s a relationship of co-employment and a much higher motivation to manipulate SUTA rates. A PEO engages in the business of providing human resource support and sometimes reduced cost of employee benefits and workers’ compensation through pooling of employees and elements of self-insurance. While the initial cost savings may lure employers into the fold, there are often untold future implications of becoming a member of a large pool. Because the PEO becomes the employer of record, employment-related tax filings, including State Unemployment Insurance payments are filed on the PEO’s tax account.

All employers within the pool are subject to the PEO’s SUTA rate, which is calculated as the aggregate of all the participating employers’ experience.

What if a PEO with 300 client companies, many of which were engaged in blue-collar industries, went into the recession with a SUTA rate of 2%? As many of those client companies laid off large percentages of their workforces or even shut their doors, that PEO probably hit the max rate.

What if you were owned one of those companies, had 100 employees, and did not terminate any of your workforce? Would you concede to a 10.1% SUTA rate? I doubt it, and so do key personnel and management within the PEO industry.

And if the owner of that PEO—faced with a shrinking book and the possibility of losing remaining and best clients due to max SUTA rates—decides not to face the music but to find a way to “dump”? To open a shell company and dump clients into it? To purchase an existing business simply to obtain access to an existing account with lower SUTA rates to retain revenue?

If a PEO owner “dumps,” he or she subjects the entire pool of remaining clients to that decision—and to the liabilities and penalties from getting caught. According the Indiana Department of Workforce Development, all client companies of a PEO are jointly severally liable for this decision.

So let me ask again: How well do you know your PEO?

A multiple employer plan (MEP) is a 401(k) option that enables companies that otherwise might not be able to manage their own plans to merge under one oversight umbrella. There’s one plan sponsor covering many unrelated employers, meaning one entity deals with audits, fund selection, and maintenance. . . and holds nearly all the liability for the plan.

Because that one entity isn’t you, work life gets better without getting busier, employees get happier, and you grab a celebratory corndog.

Can it really be that easy? Pretty much.

With today’s MEPs, you still get flexibility in choosing your plan and making decisions about vesting, matching, and employee eligibility. Usually for a low cost of admission.

The downsides come if you already have a plan with a well-documented fiduciary process and aren’t particularly put out by an annual audit. Or if giving up plan oversight doesn’t appeal to you; getting into an MEP does come with a trade-off in control. For instance, you won’t have a say in the fund menu. In many cases, employers are happy to let that go to reap the benefits that come from handing off liability and audits.

And I don’t want to oversell it. You don’t choose an MEP and then move on without ever giving it another thought. There’s still an annual 5500 form (but just one) to file. Your company still is responsible for some due diligence of monitoring the MEP and for keeping participants up to date by distributing necessary notices.

Plus, you can’t underestimate the importance of finding a diversified MEP with low and transparent costs. Without that, the whole endeavor falls apart. But we can help you sort through the options. It’s what we’re here for.

Maybe your organization has been getting by just fine without job descriptions. Maybe your team is made up of nothing but wildly functional and productive individuals. Even you need job descriptions. Every organization does, and the reasons that’s true extend beyond ensuring that each employee understands exactly what’s expected of him or her. (Although, in my book, that’s enough reason right there.) Here’s what I mean:

• Job descriptions help keep you in compliance with the Americans with Disabilities Act (ADA) and ADA Amendments Act (ADAA). The 2008 ADAA shifted the focus from whether a candidate or employee has a disability to whether that person can perform the essential functions of a job. If you don’t have those essential functions mapped out clearly in a job description, you are in a weak position should any discrimination charges arise. You have no obligation to hire someone who can’t do the job you need, but don’t you have an obligation to protect yourself, your company, and your employees?
• Job descriptions ensure that employees are fit to return to work after workers’ compensation, disability, or other leave. You need a clear set of duties on file to make viable any physician’s approval of an employee’s readiness to come back to work. Having an employee back on the job before he or she should legitimately be released by a physician is a clear danger—not just for that employee but for everyone at the company and for your liability.
• Compensation, recognition, and discipline make much more sense to everyone involved when there’s a clear job description behind them. How can you keep compensation fair and ensure that it accurately reflects performance without an outline of expectations—and the goals you can clearly outline based on them? There’s no solid way of identifying performance that falls short of—or exceeds—expectations if those expectations haven’t been defined.
• Fostering employee development depends on job descriptions. Show an employee where he or she stands and can go with job descriptions. A clear path from one position to another depends on knowing exactly where education or other career development is required. And for an employee, knowing where the road leads is great motivation to take initiative and get to the next level.

A thorough job description needs to include

• Title
• Supervisor
• FLSA status (and which exemption applies, if any)
• Job purpose (that is, the reason the position exists)
• The essential duties of the position
• Physical requirements and education/knowledge requirements

After it has been introduced and agreed upon, a job description should be signed by the employee and his or her supervisor, so that it’s clear everyone has been made aware of the information. Otherwise, you lose a lot of the benefit to this whole endeavor, which—did I mention?—is extremely important. So, please, go forth and describe.

Still, conflict is practically a mark of success. It says that you’ve built a team of highly engaged, thoughtful, intelligent, and confident individuals. People who are invested in the company and their roles within it.

All that is good for business. However, conflicts that get out of control or go unaddressed not only chip away at energy and productivity, they leave your organization vulnerable. It’s your job, after all, to provide a nonhostile workplace, one where employees feel safe and free to speak their minds. If conflict escalates to the point where an employee feels bullied or otherwise harassed, the trouble extends far beyond some awkward moments in the break room.

Theories for addressing conflict are numerous and well-documented. (In my experience, they essentially boil down to “listen, be respectful, address your concerns with the party you have trouble with.”) I’d rather address policies around conflict, because you can go a long way toward creating an atmosphere where conflict cannot fester and where respect is paramount.

A conflict resolution policy lays out a clear method for addressing and reporting issues so that no employee feels singled out, helpless, or discriminated against when inevitable conflict arises. Simply putting a policy in place and making sure everyone knows it can help set a tone of respectful communication. In general, a conflict resolution policy starts with acknowledgment of the issue. What happens next depends on which method you instate for reporting. Common policies require one of the following or even a progression through these three methods:

• Informal complaint: An employee reports the issue to his or her immediate supervisor. If you arm your managers with conflict resolution information, this can be a highly effective method of giving employees a forum and suggestions for addressing the issue. Follow-up to make sure the issue has been resolved is essential.
• Formal complaint: A designated employee fields written or oral complaints, investigates the complaint, and then recommends a solution.
• Mediation: An objective third party (from within or outside the organization) who has been trained in conflict resolution guides the parties in trouble toward a resolution.

The Society for Human Resources Management offers a sample conflict resolution policy that you might find useful. As with a lot of workplace procedures, most of the magic comes from having a clear policy that everyone is aware of. Overlook this aspect of human resources, and you leave yourself open to uncertainty within the staff and potential liability for your company.

So what can you do?

There is just one answer—just one effective, sustainable approach: Get proactive and focus on injury prevention and loss mitigation.

Baseline OSHA compliance is the place to start for a company in its infancy or a mature company that lacks basic safety programs and initiative. In any high-risk industry, OSHA compliance is mandatory and relatively inexpensive. Non-compliance, on the other hand, is costly in the form of penalties, fines, and increasing insurance premiums.

But that’s just a starting point. Truly minimizing risk requires a loss-limitation program, too. In other words, when an inevitable loss does occur, a business needs set procedures for addressing it. OSHA refers to this as an “Emergency Action Plan,” and as with many of the basic requirements of the Act, it doesn’t quite go far enough.

Employers who are serious about minimizing loss from workplace injury need a structured Return to Work program. That program should include guidelines and expectations for workers’ compensation claimants and dedicate personnel to follow up with injured employees who are out of work.

Even insurance adjusters who are very good at what they do have a large caseload of injured employees, many of whom enjoy a bit of paid time off of work; therefore, companies are wise to employ someone who can act as a liaison between the insurance company, the medical providers, and the insured when it comes time for the employee to return to work.

Businesses reduce claims when they enact an Emergency Action Plan and a Return to Work program that lay out detailed guidelines from accident all the way through the employee’s return.

So where do you start? For companies in which key personnel are too busy generating revenue to build a structured and compliant safety program, outsourcing is likely the answer. For companies adamant about keeping these functions in house, OSHA provides a multitude of free resources to help those who wish to help themselves. OSHA will even send out a consultant to review programs and procedures—free—under complete anonymity and under firm restriction from assessing fines and penalties.

Axiom provides these services on a regular basis, and there are myriad Human Resource Outsourcing firms and Human Resource Consultants who put together these programs for companies in need. Whether you are a do it yourselfer or prefer to outsource such headaches, an ounce of prevention regarding workers’ compensation is worth a lot more than a pound of cure.

But to think only about saving money is to sell short the greater value of contracting out human resource management services to outsourcing companies like Axiom Human Resource Solutions.

1) Narrowing your focus to your core business.
When you take human resources functions off your plate, you and your team can get back to focusing on your core business. Training, claims processing, and so on—contracting out for these services, and you pave the way for more efficiency within your staff and ensure all focus is on the core expertise of your business. 

2) Enlisting expertise.
Unless your business is human resources, HR work is probably not your strong point. That’s okay. We don’t manufacture microchips or develop office parks. We’re too busy making sure that we know everything there is to know about HR as it (constantly and forever) changes. We’re experts, because that’s all we do. And so you can feel good that you’re getting the utmost knowledge and premium service from a human resources management expert. No matter how great you are at chiropractic or restaurant management or whatever it is you do, you probably can’t call yourself an HR expert, to boot. Why continue to settle for less than the best you can have? 

3) Utilizing up-to-the-minute technology.
Your company may not have the most current programs used for human resource management. A dedicated human resources company does. Our systems can reduce the risk of error and duplication. Because we work with them day in and day out, we also know them thoroughly, know how to help you get the most out of them and to customize any program so that it gives you exactly what you want. Get the information you need, keep the records you want, and do it all with service from a team that’s passionate about the technology. 

4) Bringing better customer service to your employees.
You can hand over your human resources administration much more easily than you can replace members of your team. Offering employees professional, dedicated human resources services makes worklife a lot easier for them. They get reliable answers fast, and they have a consistent, knowledgeable resource at their fingertips whenever issues arise. We help with benefits administration and smooth out enrollment processes—two services that employees can’t miss.

In addition to making sure HR happens quickly and accurately, you free up employees’ time to focus on the tasks you hired them for—an approach that benefits your company while it shows employees you value them. That’s a win-win-win, in our book.