What You Need to Know About: The SECURE Act

In December of 2019, President Donald Trump passed the Setting Every Community Up for Retirement Enhancement Act or SECURE Act. Some of the Act aims as making it easier for small business owners to create more affordable and easier to administer retirement plans. Key takeaways from the SECURE Act include:

  • Small Business Tax Credits have increased for businesses who start a 401(k) Plan, thus making starting a plan more affordable.
  • New automatic enrollment plan tax credit created.
  • Removes the annual notice requirement for Safe Harbor 401(k) Plans that utilize the nonelective contribution instead of the match.
  • 401(k) Nonelective Safe Harbor Plans can be adopted up until 30 days before plan year end, instead of 90 days prior.
  • Maximum automatic contribution rate is increased to 15% from 10% in Qualified Automatic Contribution Arrangements (QACAs).
  • Pushes the age of 70 ½ to 72 for retirement plan participants needing to take RMDs or ‘required minimum distributions.
  • Part-time employees will be eligible to participate after completing 500 hours of service in each of 3 consecutive 12-month periods, if at least age 21 at the end of that time. These employees do not have to share in company contributions.
  • Pooled Employer Plans (PEPs) will be allowed which could make it easier for small businesses to administer their retirement plan.

“There is a lot of hype in the government and media about how the SECURE Act will make it cheaper to sponsor a plan. I don’t know if recordkeepers could lower their annual costs any more than they have over the last 8 or 9 years; but it definitely will provide lower start-up costs through the tax credits, and make it easier to administer plans if utilizing a Safe Harbor approach or a PEP,” stated Todd Yawit, Director / Retirement Plans at Saxon Financial Services, Inc.

For most plans and provisions, the SECURE Act became effective on January 1, 2020. However, for Pooled Employer Plans (PEPs), the SECURE Act will go into effect on January 1, 2021. For further information on how the SECURE Act will affect your retirement plans, contact Todd Yawit at (513) 573-0129 or tyawit@gosaxon.com.


The case for self-funded health benefit plans and reference-based pricing

Small businesses are starting to explore self-funded plan designs that use reference-based pricing. Continue reading for more about self-funding and reference-based pricing.


Self-funding and reference-based pricing are hot topics with small businesses. They are so popular, in fact, that a recent survey shows an overall increase in their 2019 projection of small employer clients having a reference-based pricing health benefit plan design. Small businesses are seeing these savings, and they’re starting to explore how reference-based pricing can help them, too.

Before we get to why self-funded plan designs that use reference-based pricing are becoming more popular for small businesses, let’s review the basics.

Reference-based pricing is a methodology of calculating payment to providers for covered treatments and services using a “reasonable fee” based on a reference point. A common reference point is the Medicare fee schedule. Some self-funded health benefit plans calculate the reasonable fee as a percentage of the Medicare fee schedule to determine reimbursement for services rendered.

Bottom line: Self-funded health benefit plan designs that use reference-based pricing can allow for a great deal of flexibility with a variety of arrangements and overall cost-savings.

So, what’s behind the recent trend toward reference-based pricing for smaller employers? A few key factors.

First, a self-funded health benefit plan design that uses referenced-based pricing can mean less expensive coverage for employees and employers.

When coupling a self-funded health benefit plan with stop-loss insurance, reference-based pricing provides an affordable way to extend coverage to employees through lower employee contributions. So, employees are happy because they’re saving money.

And employers are happy, too, because they’re allowing for more coverage to more employees. There’s a refund potential for employers if claims dollars are less than funded. There’s also a premium tax savings of around 2% since self-funded claim dollars are not subject to state health insurance premium taxes.

Moreover, self-funded health benefit plan designs that utilize reference-based pricing may also include transparency reports with aggregate health claims data and demographic information, which allow employers to better manage costs. Overall, anytime you can design a plan that’s beneficial for employees and employers, it’s a win.
Second, reference-based pricing can provide employees more flexibility when it comes to choosing a provider. Typically, an important feature of any health benefit plan design for employees is the ability to choose the provider they want. Some self-funded plan designs that use reference-based pricing give employees the chance to pick the provider that’s right for them. And, when employees are happy with their health plan, employers are usually pretty happy, too.

Finally, self-funded plan designs that use reference-based pricing can help employees become smarter healthcare consumers because of all the transparency and choice involved. When employees better understand the healthcare processes and system, costs come down for both the employee and employer. In fact, just understanding their coverage better may help employees better use their health benefit plans.

For example, using telemedicine when appropriate, establishing a relationship with a primary care doctor and using client advocacy services can all help employees better utilize their health benefit plans. In the end, employees get smarter about how they manage their care, and employers win with reduced costs.

These factors are driving more small businesses to consider reference-based pricing self-funded health benefit plan designs with stop-loss insurance. And, for good reason. These plan designs can give employers the opportunity to offer their employees affordable health benefits, provide more choice in their health plans and providers, and encourage more employee engagement. While moving to reference-based pricing may be too big of a leap for some employers, self-funding continues to provide a means for employers to offer comprehensive major medical health benefits at lower costs.

SOURCE: MacLeod, D. (6 December 2018) "The case for self-funded health benefit plans and reference-based pricing" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/the-case-for-self-funded-health-benefit-plans-and-reference-based-pricing


5 things small business owners should know about this year's open enrollment

For small business owners, the benefits they offer are crucial to the way they attract and retain employees. Read this blog post for five things small business owners should know for 2019 open enrollment.


As a small business owner, offering competitive employee benefits is a crucial way to attract and retain strong talent. Whether you currently provide them and are planning next year’s renewal, or you are thinking of offering them for the first time, here are five things you should consider before your employees enter the open enrollment period for next year on November 1st:

1. Small businesses don’t have to wait until open enrollment to offer benefits to their employees

While your employees won’t be able to enroll in health insurance plans until November comes along, small business owners don’t have to wait at all to secure health insurance for their employees. The sooner you act, the better, to guarantee that you and your employees are protected. According to recent studies, healthier employees are happier employees, and as a result, will contribute to a more productive workplace. And a more positive and constructive work environment is better for you, your employees, and your business as a whole.

2. Health literacy is important

Whether you’ve provided health insurance to your employees before, or you’re looking into doing so for the first time, it is always worthwhile to prioritize health insurance literacy. There is a host of terminology and acronyms, not to mention rules and regulations that can be overwhelming to wrap your head around.

Thankfully, the internet is full of relevant information, ranging from articles to explainer videos, that should have you up to speed in no time. Having a good understanding of insurance concepts such as essential health benefits, employer contributions, out-of-pocket maximums, coinsurance, provider networks, co-pays, premiums, and deductibles is a necessary step to being better equipped to view and compare health plan options side-by-side. A thorough familiarization with health insurance practices and terms will allow you to make the most knowledgeable decisions for your employees and your business.

3. Offering health insurance increases employee retention

Employees want to feel like their health is a priority, and are more likely to join a company and stay for longer if their health care needs are being met. A current survey shows that 56 percent of Americans whose employers were sponsoring their health care considered whether or not they were happy with their benefits to be a significant factor in choosing to stay with a particular job. The Employee Benefit Research Institute released a survey in 2016 which showed a powerful connection between decent workplace health benefits and overall employee happiness and team spirit—59 percent percent of employees who were pleased with their benefits were also pleased with their jobs. And only 8 percent of employees who were dissatisfied with their benefits were satisfied with their jobs.

4. Alleviate health insurance costs

High insurance costs can be an obstacle for small business owners. A new survey suggests that 53 percent of American small business owners stress over the costs of providing health care to their employees. The 2017 eHealth report reveals that nearly 80 percent of small businesses owners are concerned about health insurance costs, and 62 percent would consider a 15 percent increase in premiums to make small group health insurance impossible to afford. However, there are resources in place to help reduce these costs, so they aren’t too much of a barrier. One helpful way to cut down on health insurance costs is to take advantage of potential tax breaks available to small business owners. All of the financial contributions that employers make to their employees’ premiums are tax-deductible, and employees’ financial contributions are made pre-tax, which will successfully decrease a small business’ payroll taxes.

Additionally, if your small business consists of fewer than 25 employees, you may be eligible for tax credits if the average yearly income for your employees is below $53,000. It is also beneficial to note that for small business owners, the biggest driver on insurance cost will be the type of plan chosen in addition to the average age of your employees. Your employees’ health is not a relevant factor.

5. Utilize digital resources

You don’t have to be an insurance industry expert to shop for medical plans. There are resources and tools available that make buying medical plans as easy as purchasing a plane ticket or buying a pair of shoes online – Simple, transparent. Insurance is a very complex industry that can easily be simplified with the use of the advanced technology and design of online marketplaces. These platforms are great tools for small business owners to compare prices and benefits of different plans side-by-side. Be confident while shopping for insurance because all of the information is laid out on the table. Technological solutions such as digital marketplaces serve as useful tools to modernize the insurance shopping process and ensure that you and your team are covered without going over your budget.

SOURCE: Poblete, S. (15 October 2018) "5 things small business owners should know about this year's open enrollment" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/10/15/5-things-small-business-owners-should-know-about-t/


What It Means to Think Big As a Small Business

Sabrina Baker defines what it means for Small Business to Think Big in the article below.

I’ve been using this tag line of “small business who think big” for just under a year now. I took some time last year to really understand my target audience and focus my work and thought that best defines the clients I want to work with. It seems to be resonating because when potential clients reach out, they often mention how they really like that line and thought it fit them well.

And then they ask me what it means.

Funny, isn’t it, how something can speak to us, but then we wonder if it means the same to us as it was intended? Over lunch last week a new acquaintance asked what I did. I gave her the tagline and she, quite enthusiastically (which I don’t think was feigned), said she really liked that….and then asked me what it meant.

I told her and realized that maybe it would be worth sharing with you. I’ve explained it on the website, but never through the blog, where most of you meet me. So here’s the story.

When this business first began, I hadn’t really defined my target market. I always tell people who ask how I got started to never, ever, start a business like I did. I had no idea what I was doing, did not do any of the conventional things that people tell you to do (like, you know, have an actual plan) and somehow stumbled and fumbled into a growing business.

In the beginning, I would take almost any project. I knew I wanted to focus on small businesses, but that’s about all I knew; and very early on, most small businesses only wanted me to write a handbook or be someone they could call to talk through a termination. All of those things are necessary, but not indicative of businesses who think big. With these clients I would deliver on the service they asked for and then talk to them about other things. For the client who only wanted a handbook, I would ask them what message they wanted the handbook to send. What policies did we absolutely need and what could we leave out. For the business that wanted an employee termination hotline, I would ask them to think about leadership training or better onboarding so that we could maybe come to the place of termination a little less often. And often I would be met with the same response.

“Sabrina, that’s all great, but that’s big business stuff. We are too small to worry about that right now or put any of that in place. It will just change when we grow anyway.”

I would get so frustrated thinking about what they could do. I would try to explain that setting those things up now would be easier than doing it when they were big.

About two years in, I received a call from a potential client for onboarding help. He had 14 employees, but had just received his second round of funding and would be adding nearly 40 more in the coming year. He wanted to get all of the “HR stuff” setup, but most importantly really wanted to talk about onboarding. He felt that he needed to start these 40 employees off right and wanted to establish a process for future growth.

I was in love. In a total, business sense of course.

I decided right then and there that these would be the clients I chose to work with going forward. Not that I wouldn’t write a handbook or be on call for term issues, I still do those things, but I do them with businesses who also care about setting up what have been traditionally held as big business issues, even though they are still small.

Things like onboarding.

Culture.

Leadership Development.

Employee Development.

Branding.

Workforce strategy.

I know it’s hard to think about some of this stuff when you are just trying to get a business off the ground, but I firmly believe it’s even harder when that business is grown and some of these things have created themselves – and not in the manner the leader would have intended.

Or worse, you find out way too late that your business is behind the competition and cannot compete for talent because some of these human capital strategy areas weren’t addressed.

So a business who thinks big is a business who realizes, regardless of employee population, they can still think about and focus on advanced human capital concepts. They think about how they want the business to look in five, ten or twenty years when the population size may be double, triple or more and decide what they want things to look like then, and put practices in place now to make sure they do.

They are businesses who realize that regardless of whether they have one employee or 2,000, they are the spirit of the business, the thing that keeps customers coming back for more. They realize it and let that drive their strategy from day one.

Thinking big as a small business means not limiting your actions to the size you are now, but the size you can be.

And those are the small businesses I most want to work with.

Originally posted on Acacia HR Solutions blog.

Source:

Baker, S. (2016, August 03). What it means to think big as a small business [Web log post]. Retrieved from http://blog.shrm.org/blog/what-it-means-to-think-big-as-a-small-business.


Employers' Greatest Fears: PPACA & Compliance

Original post benefitspro.com

The last few years have put employers in the position of becoming compliance officers. The Department of Labor, Health and Human Services, and the Internal Revenue Service have actively been pursuing small- and mid-size businesses about various issues, from PPACA reporting to wage and hour miscalculations.

It is becoming a full-time job for manager HR representatives to keep up with the requirements of a compliant business.

The average employer cannot tell you what the affordability test is compared to the value test, but they know that it is now a requirement. Most important is the employer's concern for their employees to have the best health insurance available for the least expensive price. The employees are now looking for jobs that will provide them with health insurance in order to not be penalized at tax filing time. Employers are trying to understand what exactly they should be providing under health care reform in order to not pay additional fines for doing it incorrectly.

IRS fines are increasing in 2016 for employees to either $695 or 2.5 percent of adjusted family income per uninsured adult, whichever is greater. Employers will have to pay $2,160 per employee (after the first 30) if not providing health insurance or for an incorrect plan, and $3,240 for each employee getting a subsidy through the marketplace. Penalties for not filing certain documents in time, such as form 5500 or form 1094C, can add up to $1,100 per late day.

Insurance agents are becoming consultants in a very different world than we first began. Employers are asking accounting and legal questions which are requiring research and partnerships with other professionals.

Employers want to know the difference now in using a professional employer organization (PEO) versus outsourcing their HR and payroll departments. If the employer decides to do it themselves, questions they ask are:

  • How long do I keep the necessary paperwork?
  • Should I use the qualifying offer method or the 98 percent offer method?
  • Which Safe Harbor would be best for my situation?

Insurance consultants will be the ones answering these questions with their employers as well as reviewing the documents and procedures.

Education and wisdom are the most important values for an insurance consultant’s job security. Just about the time you learn it, it will change.


How Agents Can Help Comply with PPACA

Original post benefitspro.com

“You can help your employer clients comply with the Patient Protection and Affordable Care Act [PPACA] by becoming their trusted advisors,” Julie L. Hulsey, CLU, LUTCF, president and CEO, Zynia Business Solutions, Amarillo, Texas, told her audience in her presentation, “Employers’ Greatest Fears: PPACA and Compliance.”

As of Jan. 1, 2016, Hulsey reminded the audience, employers of 50 or more full-time equivalent (FTE) employees are required to provide health insurance to at least 95% of their employees or face a penalty. One key issue for employers is that many federal government entities are auditing small businesses with little to no coordination, for example:

1. Department of Labor, including the Wage and Hour Division, the Equal Employment Opportunity Commission and the Occupational Safety and Health Administration

2. Internal Revenue Service

3. Office for Civil Rights

4. Immigration Customs Enforcement

5. Department of Transportation

“Smaller employers, those with less than 50 employees, or 50 to 100 employees, don’t have an HR department or even an HR professional on staff,” Hulsey observed. One way agents and brokers can demonstrate their value is by providing clients with charts showing affordable coverage employee wage calculations for a 40-hour work week and for a 30-hour work week, she explained, showing the charts she had created for her clients.

Penalties 101 for agents and brokers

Hulsey reminded the audience that for 2016 the employer shared responsibility penalty of $2,000 is now $2,160, and the $3,000 penalty is now $3,240. If an employer is considering paying the penalty instead of offering insurance, you can point out that the penalty is not a tax deductible business expense but health insurance premiums are, which may affect the employer’s decision.

“Penalties will be calculated on a monthly basis so if you are out of compliance for just one month, you will only be penalized for that month,” Hulsey pointed out. “Therefore, become compliant as soon as possible to avoid accumulating more monthly penalties.”

If an employer offers a “minimum essential coverage” plan that meets the “affordable” and “minimum value” tests to an employee who declines it, no employer penalty will be owed for that employee. “Tell the employer to keep a copy of the signed waiver of coverage form, and get a signed waiver every year!” Hulsey said.

It’s important to let our clients know what the Department of Labor and the Department of Justice are targeting, Hulsey said. Quoting from a recent presentation by the DOL and DOJ that she attended, Hulsey said that the DOL’s FY 2013 Strategic Plan has a goal to generate $1,172,108,000 in enforcement results through 4,330 reporting compliance reviews. They indicated their enforcement program will use a series of approaches (including national/regional priorities, civil/criminal litigation, and sample Investigation Programs) to achieve this goal. The current strategic plan is under review and that enforcement goal is likely to increase.

Hulsey acknowledged that agents and brokers are losing commissions but you can take some action to limit those losses “Connect with professionals like TPAs and payroll vendors to offer some of those third party services,” she suggested. “Also, be sure you understand your clients’ needs so you can answer their questions.” Employers need answers about PPACA and compliance, and they’ll be calling you or their attorneys. “It’s better if they call you,” she said.


ACA Makes Tax Season Tougher For Small Companies

Original post insurancenewsnet.com

As more requirements of the health care law take effect, income tax filing season becomes more complex for small businesses.

Companies required to offer health insurance have new forms to complete providing details of their coverage. Owners whose payrolls have hovered around the threshold where insurance is mandatory need to be sure their coverage — if they offered it last year — was sufficient to avoid penalties.

Here are some of the issues related to the health care law that small businesses need to be aware of:

HOW MANY EMPLOYEES DO YOU HAVE?

Companies with 100 or more workers were required to offer affordable health insurance to employees and their dependents, but not their spouses, starting in 2015. Businesses with 50 to 99 workers must offer coverage starting this year; those with under 50 are exempt.

Owners who were on the hook for affordable insurance last year but didn't provide it may face thousands of dollars in penalties — $2,000 per employee per year, not counting the first 80 employees for the 2015 tax year, and the first 30 for 2016. So it's critical for them to know what their head count was — and many may not realize the calculations are based on a company's 2014 payroll, not 2015.

Here's where it gets complicated: Part-time workers and those fired during the course of the year can all be counted toward the threshold where coverage is required. So can some seasonal workers.

Part-timers work fewer than 30 hours a week under the health care law. They must be counted toward what are called full-time equivalent workers. If, for example, a company has two people who each work an average 15 hours a week, they count as one full-time equivalent employee working 30 hours. A company with 30 full-timers and 40 part-timers who average 15 hours a week each has 50 full-time equivalent workers and is required to offer insurance.

Another wrinkle: Owners with multiple companies that combined have 50 or more workers may be required to offer insurance, even if each of the individual companies has fewer than 50.

NEW TAX FORMS

Starting this year, businesses required to comply with the health care law must complete forms that detail the cost of their coverage and the names and Social Security numbers of employees and their dependents. The government will use the information to determine whether a company provided coverage that was affordable under the law, or whether it must pay a penalty.

Accountants have described the forms as labor-intensive, because they require information from a number of sources including payroll and health insurance records. Many companies have had to hire workers or payroll services to complete the forms.

The IRS, recognizing the forms' complexity, has extended the deadlines for the forms to be filed. Forms 1095-B and 1095-C, which must be given to workers, are now due March 31. Forms 1094-B and 1094-C, required to be filed with the IRS, are due by May 31 if they're not being submitted on paper, and June 30 if filed online.

WELL-INTENTIONED BUT ILLEGAL

Some employers with fewer than 50 workers and who don't offer insurance have tried to help staffers with the costs of coverage by giving them money toward their premiums, with the intention that the money will be tax-free. That could get owners into expensive trouble with the IRS — they can be fined $100 per day per employee receiving the money, a total of $36,500 per year for each worker.

The problem is that some employers treat this money as a health benefit, but it's not coverage that complies with the law. So they can be penalized.

Companies can help employees with their premium costs by giving them a raise or a more traditional bonus, says Mark Luscombe, a tax analyst with the business information company Wolters Kluwer. That means withholding income and what's known as payroll taxes — Social Security and Medicare — from employees' paychecks, and for companies to pay their payroll tax share.


IRS Clarifies Prior Guidance on Premium Reimbursement Arrangements; Provides Limited Relief

Originally posted February 24, 2015 by Daimon Myers, Proskauer - ERISA Practice Center on www.jdsupra.com.

Continuing its focus on so-called “premium reimbursement” or “employer payment plans”, the Internal Revenue Service (IRS) released IRS Notice 2015-17 on February 18, 2015. In this Notice, which was previewed and approved by both the Department of Labor (DOL) and Department of Health and Human Services (collectively with the IRS, the “Agencies”) clarifies the Agencies’ perspective on the limits of certain employer payment plans and offers some limited relief for small employers.

Prior guidance, released as DOL FAQs Part XXII and described in our November 7, 2014 Practice Center Blog entry, established that premium reimbursement arrangements are group health plans subject to the Affordable Care Act’s (ACA’s) market reforms. Because these premium reimbursement arrangements are unlikely to satisfy the market reform requirements, particularly with respect to preventive services and annual dollar limits, employers using these arrangements would be required to self-report their use and then be subject to ACA penalties, including an excise tax of $100 per employee per day.

Since DOL FAQs Part XXII was released, the Agencies’ stance has been the subject of frequent commentary and requests for clarification. With Notice 2015-17, it appears that the Agencies have elected to expand on the prior guidance on a piecemeal basis, with IRS Notice 2015-17 being the first in what may be a series of guidance. The following are the key aspects of Notice 2015-17:

  • Wage Increases In Lieu of Health Coverage. The IRS confirmed the widely-held understanding that providing increased wages in lieu of employer-sponsored health benefits does not create a group health plan subject to market reforms, provided that receipt of the additional wages is not conditioned on the purchase of health coverage. Quelling concerns that any communication regarding individual insurance options could create a group health plan, the IRS stated that merely providing employees with information regarding the health exchange marketplaces and availability of premium credits is not an endorsement of a particular insurance policy. Although this practice may be attractive for a small employer, an employer with more than 50 full-time employees (i.e., an “applicable large employer” or “ALE”) should be mindful of the ACA’s employer shared responsibility requirements if it adopts this approach.  ALEs are required to offer group health coverage meeting certain requirements to at least 95% (70% in 2015) of its full-time employees or potentially pay penalties under the ACA. Increasing wages in lieu of benefits will not shield ALEs from those penalties.
  • Treatment of Employer Payment Plans as Taxable Compensation. Some employers and commentators have tried to argue that “after-tax” premium reimbursement arrangements should not be treated as group health plans.  In Notice 2015-17, the IRS confirmed its disagreement. In the Notice, the IRS acknowledges that its long-standing guidance excluded from an employee’s gross income premium payment reimbursements for non-employer provided medical coverage, regardless of whether an employer treated the premium reimbursements as taxable wage payments. However, in Notice 2015-17, the IRS provides a reminder that the ACA, in the Agencies’ view, has significantly changed the law, including, among other things, by implementing substantial market reforms that were not in place when prior guidance had been released. The result:  the Agencies have reiterated and clarified their view that premium reimbursement arrangements tied directly to the purchase of individual insurance policies are employer group health plans that are subject to, and fail to meet, the ACA’s market reforms (such as the preventive services and annual limits requirements). This is the case whether or not the reimbursements or payments are treated by an employer as pre-tax or after-tax to employees. (This is in contrast to simply providing employees with additional taxable compensation not tied to the purchase of insurance coverage, as described above.)
  • Integration of Medicare and TRICARE Premium Reimbursement Arrangements. On the other hand, although the Notice confirms that arrangements that reimburse employees for Medicare or TRICARE premiums may be group health plans subject to market place reforms, the Agencies also provide for a bit of a safe harbor relief from that result. As long as those employees enrolled in Medicare Part B or Part D or TRICARE coverage are offered coverage that is minimum value and not solely excepted benefits, they can also be offered a premium reimbursement arrangement to assist them with the payment of the Medicare or TRICARE premiums. (The IRS appropriately cautions employers to consider restrictions on financial incentives for employees to obtain Medicare or TRICARE coverage.)
  • Transition Relief for Small Employers and S Corporations. Although many comments on the prior guidance concerning employer payment plans requested an exclusion for small employers (those with fewer than 50 full-time equivalent employees), the IRS refused to provide blanket relief. The IRS notes that the SHOP Marketplace should address the small employers’ concerns. However, because the SHOP Marketplace has not been fully implemented, no excise tax will be incurred by a small employer offering an employer payment plan for 2014 or for the first half of 2015 (i.e., until June 30, 2015). (This relief does not cover stand-alone health reimbursement arrangements or other arrangements to reimburse employees for expenses other than insurance premiums.) This is welcome relief to small employers who adopted these arrangements notwithstanding the Agencies’ prior guidance that they violated certain ACA marketplace provisions.
  • In addition to granting temporary relief to small employers, the IRS also provided relief through 2015 for S corporations with premium reimbursement arrangements benefiting 2% shareholders. In general, reimbursements paid to 2% shareholders must be included in income, but the underlying premiums are deductible by the 2% shareholder. The IRS indicated that additional guidance for S corporations is likely forthcoming.

The circumstances under which premium reimbursement arrangements are permitted appears to be rapidly dwindling, and the IRS indicated that more guidance will be released in the near future. Employers offering these arrangements should consult with qualified counsel to ensure continuing compliance with applicable laws.


Voluntary benefits help small businesses think big

Originally posted August 18, 2014 by Rich Williams on http://ebn.benefitnews.com

On a typical Saturday, you may drop off your car with your trusted mechanic, stop by the hardware store for a few supplies, grab lunch at a local sandwich shop and pick up some groceries on the way home. Every day, we enjoy the products and services delivered by small businesses.

Small business is the engine that powers our economy. Of the nation’s private enterprises, only 2% employ 100 or more workers, and 90% employ no more than 20. Behind each small business is an owner who wears many hats and relies on employees to deliver their best work every day — there aren’t a lot of extra employees to pick up the slack if someone is sick, injured or leaving the company for good.

Recent economic times magnified bottom-line concerns of small business owners. Many who weathered the downturn did so with lean staffs willing to work harder and longer to keep the job. But as the economy improves, those hard-working employees are apt to look for opportunities with larger firms that offer richer benefits and better life balance. Benefits play an important role in this consideration; half of employees recently surveyed say benefits are an important reason they remain with their employer. Small business owners who don’t pay attention to benefits risk losing their best workers.

Smaller, but with similar concerns

Small companies experience all the employee retention and recruitment headaches that big employers do, but often without reserve resources and staff to help shoulder benefits responsibilities. Few have dedicated staff to assess current benefits and consider changes or additions employees desire; many don’t offer benefits beyond compensation. According to LIMRA, small firms that do offer benefits tend to give fewer choices than their larger counterparts. The benefits offered most often are coverage for medical (44%) and prescription drugs (40%). Only one in four small businesses surveyed offered dental or life insurance coverage.

But employees at small firms have the same life needs and concerns as big-firm workers. A survey of more than 1,000 small business employees conducted by Harris Poll on behalf of Colonial Life found that many more employees are concerned about retirement savings (50%) and financially surviving a temporary work disability (39%) than losing their jobs (33%).

Voluntary benefits: More choices, not higher costs

Without realizing the human resource cost, too many small businesses fail to offer employees access to the very choices that could nurture employee loyalty and tenure.Experts say that doesn’t have to be the case: With voluntary benefits, small business can — and many do — offer a wide range of benefits geared toward the unique company culture.

The key is keeping up with what employees want and need. Younger workers might not invest in a 401(k) retirement option, but they’re probably interested in a cafeteria plan that gives them flexibility to save for unexpected, big-ticket needs. Older workers are typically more keen to invest in disability and retirement savings opportunities. You can help your clients understand their employee demographics and make connections to the right benefit options.

Many small employers would like to offer or enhance existing benefits, but cite cost as a deterrent. The good news is the same employees who would like better benefits are also willing to pay for them. A 2014 Colonial Life-Harris Poll found employees at small firms are quite interested in additional, reasonably priced insurance benefits such as life, short-term disability, critical illness, accident and cancer coverage.

Voluntary benefits — personal insurance coverage workers can buy through employers at a lower rate than they could get on their own — are a great way for your clients to offer a range of competitive benefits without damaging the bottom line. The value for employees starts with group rates, and they gain extra points in the employee loyalty ledger for convenience with payroll deduction options. And that can translate into enhanced employee retention: Small business workers who are satisfied with their benefits are more likely to feel loyal to their company.

Expanded benefit choices, low cost, and convenience are three very big reasons for small employers to dive into voluntary benefits. If keeping top talent motivated and productive is important to your clients, then find out today how easy it is to offer the benefits those highly valued employees crave most.


The Morning Rituals Of 15 Highly Successful Small Business Owners

Originally posted February 13, 2014 by Richard Feloni on http://www.businessinsider.com

Each morning, small business owners awake with a fresh determination to continue growing their companies, developing their employees, and keeping their customers happy.

This unique intimacy with both staff and clients requires a high level of effective time management that starts as soon as they get out of bed.

We spoke with 15 successful entrepreneurs who have developed morning routines that clear their minds, energize their bodies, and prepare them for the day ahead.

Jeffrey Zurofsky, CEO and co-founder of 'wichcraft, Riverpark, and Riverpark Farm, is 'an animal' about his rituals.

Zurofsky is a co-founder of the gourmet sandwich chain 'wichcraft, which started in New York City in 2003 and grew to 15 locations spread over New York, San Francisco, and Las Vegas. He and his two business partners, Tom Colicchio and Sisha Ortuzar, also opened the restaurant Riverpark and its accompanying urban farm.

Zurofsky is so passionate about his morning ritual that he prepares the night before, when he writes out his to-do list and organizes emails. Before he goes to sleep sometime between midnight and 2 a.m., he eats two scoops of almond butter because he says it helps build energy for the following morning.

After he wakes up at 5:30 (he makes up for the limited sleep with a nap later in the day), he walks his dog and does some kind of exercise, whether it's running, a workout, or squash. He follows it up with some meditation, and then he's ready for an intense meal. "I have an enormous breakfast: 1,000 calories, 30 grams of protein," he says. "It changes cuisines, but it's always eggs, a cup of legumes, veggies, and typically some meats — whether it's chicken breast or leftover something." He washes it all down with a glass of green juice with ginger.

Jeffrey 'jeffstaple' Ng, founder and owner of Staple Design, starts his day with a Japanese pour-over coffee.

Ng, who goes by jeffstaple, started his cutting edge design brand in New York City with a single T-shirt back in 1997. Staple Design has worked with international clients such as Nike, HBO, Puma, and Uniqlo, and his signature pigeon logo has made Staple Clothing an instantly recognizable brand in streetwear.

Ng brings the same energy to his mornings as he does to his business. He wakes at 8 every day and scans his phone for urgent emails or messages while still in bed. And rather than settling for a cup of Folgers, he hand grinds quality coffee beans and then does a Japanese pour-over, a style of drip brewing that takes five to 10 minutes for a single cup.

In the shower, he uses AquaNotes, a waterproof notepad, to jot down ideas as his mind wanders. Three times a week, he'll work out with his personal trainer after coffee.

And of course, his outfit is a top priority, which he said he starts from the bottom up: "I get dressed by choosing my footwear first, then build my outfit based on which shoes I'm going to be wearing. Luckily, my wardrobe is mostly clothing I've designed...so it's pretty straightforward."

Jamie Walker, co-founder and CEO of Fit Approach and SweatGuru, starts her day with a 'good sweat session.'

Walker and her cousin Alyse Mason-Brill started Fit Approach in 2010 as a San Francisco-based fitness "boot camp" that has grown to a network of over 4,000 "ambassadors" throughout the country. The two then launched SweatGuru last year as a tool to set up workouts with friends and colleagues. Walker says that over 1,500 businesses are using SweatGuru's services.

Taking a dose of her own medicine, Walker gets up at 5:30 each morning to get in a "good sweat session," which can mean running, working out, or yoga. It helps her begin her day "on a refreshed and calm note," and making exercise her first priority ensures that it doesn't fall off the to-do list later, "since things tend to come up throughout the day when you own two businesses."

Dave Gilboa, co-founder and co-CEO of Warby Parker, gets going by riding his bike to work.

Gilboa founded the innovative eyewear company Warby Parker with Neil Blumenthal, Andrew Hunt, and Jeffrey Raider back in 2010. Since that time, the brand has sold over half a million frames, a healthy number for an online startup competing against the near-monopolistic Luxottica prescription eyewear corporation.

Gilboa's not really a morning person, but he thinks he's found a solution: "I'm usually a little groggy in the morning, but I find that anytime I exercise to get the blood flowing, I have more energy throughout the day. So I've been riding my bike to work, even in the winter." He usually makes it to the office by 8 a.m., with his brain "woken up" by the bike ride.

Geoff McQueen, CEO of AffinityLive, holds stand-up meetings each morning in the office.

AffinityLive is a growing small business in Silicon Valley that creates business automation software. It doubled its business last year and the team made significant software upgrades.

McQueen hates meetings that serve only as status updates, because he finds that they waste time and lower efficiency. But he also knows the importance of checking in with his team. His solution is a stand-up meeting to start each day.

"We all gather in the middle of our office and stand while bringing up any urgent updates that need to be discussed," McQueen says. "Standing enforces a sense of urgency, so these meetings are quick and efficient, and I'm still able to get a sense of exactly what's going on with my business.

Elle Kaplan, founding partner and CEO of LexION Capital Management, draws inspirations from watching the sun rise over New York.

Kaplan started LexION in 2010, making it one of the few American asset management firms owned by a woman. Within her first month, she achieved $1 million in assets, due to the network she established at firms she had previously worked for.

Kaplan wakes up some time before dawn to make coffee and give her dog Magic a bone. She then gets to reading the news and sifting through emails.

"Although I have technically begun working, the dog at my feet and the rising orange sun evoke a time before the work day begins," she says. "I look out over the park at Lincoln Center and see New York waking up, the energy invigorating me, too, and I get excited for the day. And I am ready to work."

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