Smart Business October Insight 2014

1 October 2014 Posted by Danone Simpson Press No Comments

The 2015 Affordable Care Act transitional guidance — in laymen’s terms

By Tobias Kennedy

“As we head into 2015, I’m encountering several employer groups who are coming to me to make sure they know what needs to be done to stay compliant with the latest Affordable Care Act regulations,” says Tobias Kennedy, executive vice president at Montage Insurance Solutions.

Let’s assume you already know the broad strokes of the legislation. You understand the Employer Shared Responsibility (ESR) provision, which says if you add the total of your full-time employees plus your full-time equivalent employees and that equals 50 or more, you need to offer insurance — good insurance that doesn’t make your employees pay too much for coverage.

Your biggest questions now may concern clarifying some of the transitional pieces of the legislation.

Smart Business spoke with Kennedy to get a high-level look at the employer who is trying to pin down his or her needs for the rest of 2014 and the beginning of 2015.

What’s the first step to understanding transitional relief?

The transitional relief you get depends on your employee size, so it’s important to calculate that correctly. If you are unsure, there are good resources available, but you basically average the month-by-month totals for your full-time employees and add your full-time equivalents.

The good news is that 2014 has some ‘one time only’ relief where you can pick any continuous six months for the determination. In other words, you can do the calculation based on data from January through June, and take the remaining few months of 2014 to plan for what you need to do next year.

Once you’ve calculated your size, what are the rules?

If you have less than 50 employees, don’t worry at all — the ESR provision doesn’t apply to you.

If you have 100 or more employees, the rules begin for you in 2015, so be sure you’re offering affordable coverage. If you are offering coverage to at least 70 percent of your eligible employees, you’ll be considered compliant for 2015.

What about employers with between 50 and 99 employees?

This is really the most complex piece of the transitional guidance. Basically, if you meet a few conditions, you don’t have to worry about the ESR provision until your first renewal in 2016. Those conditions are related to your workforce size and benefits.

If you can check off each of the bullet points below, and you’re in this size range, you can hold off on being ESR compliance until your 2016 plan renewal:

  • You did not reduce workforce just to qualify. You can reduce workforce for other reasons, but you need to be able to justify the reduction.
  • You keep your in-force coverage the same or similar to what you had on Feb. 9, 2014, the day before they released this news. By ‘the same or similar’ they mean that when you look at the employee only tier of your benefits on Feb. 9, 2014, you either cover the same percentage of the cost or cover 95 percent of the same dollar amount. You can change the benefits themselves, such as co-pays, deductibles, carrier, etc. The government just wants you to keep the premium split in line and be sure that if any changes are made, the new plans are still above a 60 percent actuarial value.

Assuming you can check these boxes, it’s business as usual until your 2016 plan renewal without fear of penalties levied from the ESR compliance.

Smart Business September Insight 2014

19 September 2014 Posted by Danone Simpson Press No Comments

Spread the culture: What the C-suite needs from HR

By Danone Simpson

CEOs, CFOs and COOs all require specific things from their HR department.

The CEO develops the mission, vision and direction of the company, fine-tuning the key words that express “why” you do what you do and for whom, and then where you are going as a company.

CFOs then have to budget and balance the dreams, and COOs create action plans with every department.

So while the C-suite is busy creating their 20 Mile Marches, per Jim Collins in his book “Great by Choice,” how does all of this truly get to the most important person in the company — the employee?

You don’t want CEOs just espousing this message from their office without ensuring the employees are a part of the planning, whether that’s in an intimate forum for a smaller office or throughout the world for large companies.

Beyond the C-suite, the answer is one of the most important departments — HR, the heart of the company.

Smart Business spoke with Danone Simpson, CEO of Montage Insurance Solutions, about getting your team involved in company planning and ensuring they understand and are committed to the plan, via HR.

Why is employee buy-in important?

Every employee has to understand the mission, purpose and values of the company. They have to want to be a part of the journey.

Zappos.com Inc. CEO Tony Hsieh identifies employees who are not on the same track with his mission and literally pays them to quit. Now, others have joined in such as Jeff Bezos, CEO of Amazon, who offers $2,000 to any new employee that wants to leave, and up to $5,000 for more veteran employees who would prefer to seek employment elsewhere, according to a Huffington Post article.

Even here at Montage Insurance Solutions, employees know that we want to retain people who want to be a part of the team, and they should feel free to move on if that is where they feel they’d be more successful.

Companies today cannot afford to have employees who don’t care or show up just for the paycheck.

So, is creating the right culture the key?

Hsieh understood culture was where he had to start and created an internationally recognized three-day culture boot camp to train other CEOs how he did it. When Zappos was first started, it sounded strange to think of women buying shoes online. Yet today he not only proved the naysayers wrong, he built a profoundly successful business.

In 2011, Jamie Naughton, Zappos’ speaker of the house, spoke at the Pepperdine University Graziadio School of Business and Management, where she shared the Zappos value proposition that, “Zappos is committed to WOWing every customer.” At that time they had over 10 million customers to wow.

Naughton clearly understood what Hsieh needed, and she became the courier of that message. She spoke at universities and HR organizations worldwide, ultimately becoming the company’s chief culture ambassador. This is what CEOs, presidents and business owners want and need.

How do you recommend HR help spread the culture?

The HR team should begin with this end in mind and hold no hostages — either the employee joins in or doesn’t.

HR executives who partner with their C-suite are the ones that work to ensure the company’s mission and vision are communicated consistently, from the first interview and continuing often thereafter.

It takes first wanting to be a part of that culture yourself, and then spreading it like wildfire. A company can be dry without a cohesive culture. It takes both ingredients, vision and culture, to create a company that can make a difference in this world — and is on the lips of its employees and customers.

Smart Business July Insight 2014

1 July 2014 Posted by Danone Simpson Press No Comments

How Your Business is Impacted by New ACA Reporting Requirements

by Tobias Kennedy

There are a few new reporting requirements the Affordable Care Act (ACA) has created, but with the overwhelming amount of disparate information on the topic, many employers still have more questions than answers.

They want to know which are necessary for them, when the reporting is to be done and whether or not there are fees involved.

“Companies need to be sure their team understands what is required to satisfy these new ACA regulations,” says Tobias Kennedy, executive vice president, Montage Insurance Solutions.

Smart Business spoke with Kennedy about a few of the key points of the ACA from a reporting standpoint.

What do employers need to understand about the Patient Centered Outcomes Research Institute fees?

Patient Centered Outcomes Research Institute fees are also known as PCOR, PICORI, PCORI or CERF fees. This is a relatively small fee that fully insured companies can be assured their carrier handles automatically. However, companies who are self-funded and have a health reimbursement arrangement (HRA) are responsible for this fee.

If your company is self-funded and has an HRA, or if you are unsure if this applies to you, ask your broker or work with a CPA to ask about the second quarter Form 720, which is due by July 31. Depending on the plan anniversary, the fee is either $1 per year per covered life or $2 per year per covered life with most companies using a ‘snapshot average’ method of calculating the figure of lives covered in the fee — although there are a few different safe harbors.

How is the reinsurance fee being handled under the ACA?

A reinsurance fee is also calculated off of the number of covered lives, but it is a substantially higher amount. The fee for 2014 is $63 per year per covered life with 2015 and 2016 fees not announced yet, other than to say they ‘will decrease.’ The calculation for the number of covered lives is due by Nov. 15 and is submitted to the Department of Health and Human Services (HHS).

Similar to the PCOR fees, fully insured groups will have this done for them by their carriers, whereas self-funded companies will need to take action. Also, similar to the PCOR fees, there are a few different safe harbors and companies will want to work with their consultants to correctly apply whichever they deem most suitable.

Within 30 days of submitting the count to HHS, companies will be notified of the amount they owe, and that payment will be due back within 30 days of the company’s receipt of notice.

What about Forms 6055 and 6056?

Forms 6055 and 6056 are simply reporting measures and do not levy fees. The first time this comes into play is in 2016 for the 2015, so companies have a little more time on this than the PCOR/reinsurance fees.

The 6055 is where insurance carriers and self-funded companies report all of the people they cover, and it deals with the individual mandate. Basically, it is a resource for the government to double-check that people who claim to have an insurance policy — and thus to have satisfied the individual mandate — are indeed covered.

The 6056 is a report where companies list out all of the employees they offer coverage to, which helps the government with the subsidies. This is required by all applicable large employers — fully insured or self-funded. Because subsidies are only available to people not otherwise offered affordable coverage, this helps the exchange track people that might be applying for subsidies but who are actually ineligible because of their employer’s offering.

Remember if you need any additional help or have any questions about ACA reporting requirements, don’t hesitate to contact your health care reform experts.

Smart Business May Insight 2014

1 May 2014 Posted by Danone Simpson Press No Comments

A look at how ERISA affects benefits today — and how a wrap product can help

by Tobias Kennedy

The Employee Retirement Income Security Act of 1974 (ERISA) was originally designed for the protection of individuals enrolled in pension plans.

In fact, ERISA actually has a pretty interesting history. Back in the ’60s pension reform gained some momentum after the Studebaker Corporation (the automotive manufacturer) closed its plant and due to a poorly funded program, thousands of people were left with no pensions at all. Thousands more received lump sum settlement payments valued at a fraction of the proper amount.

“The basics of the law require employers to meet certain standards for employee benefits programs, and the responsibility really does extend beyond just the retirement piece,” says Tobias Kennedy, executive vice president, Montage Insurance Solutions. “To comply with all of the regulations that ERISA levies, employers need to take action on their benefits products as well, such as the group medical, dental, life insurance, etc.”

Smart Business spoke with Kennedy about what you need to know about ERISA, including how ERISA wrap products can help you manage your obligations.

What’s surprising to many employers regarding ERISA?

While a lot employers know about ERISA broadly, many don’t realize that it is a federal law affecting all employers regardless of size. It also doesn’t matter whether the plans are fully insured or self-funded. And it impacts all employers including private sector, corporations and partnerships.

Why it even more important today to stay on top of your ERISA obligations?

Not only are there are a lot of employers out there who are a little under informed, but at the same time the Department of Labor (DOL) has been awarded funds to audit groups who may not be fully ERISA compliant by cross-referencing retirement with health and welfare.

So, it’s really a perfect storm where employers are being hit hard for thousands, sometime hundreds of thousands of dollars. The DOL has the authority to assess penalties up to $1,100 per day, per line of insurance with no maximum cap and no statute of limitations, so non-compliance can be expensive.

What can employers do about this?

Unfortunately, master contracts, certificates and benefit summaries do not qualify as a written plan document. A proper ERISA wrap product is really your best solution because it will include much of the required information all in one place.

A wrap document is where any required ERISA language — and any additional items that are needed — are added, or wrapped, to the insurance carrier’s certificate.

A good ERISA wrap will gather things like the plan administrator’s name, how the plan is funded, eligibility requirements for employees, rules about protected health information, required notifications such as WHCRA (Women’s Health and Cancer Rights Act) enrollment, Newborn’s Acts and Michelle’s Law, information regarding COBRA administration and more.

To make sure this is done properly, the easiest thing to do is simply call your broker. This isn’t just one document and then you’re good to go. It’s an annual upkeep, and you’ll want to be sure you’re working with a partner versed in the arena to ensure this gets properly completed after each renewal period. •

Tobias Kennedy is an executive vice president at Montage Insurance Solutions. Reach him at 1 (888) 839-2147 or [email protected].