Small Business:

December 29, 2011 8:30 PM By JAMIE HERZLICH. Special to Newsday

Small businesses on Long Island, already struggling with high health insurance costs, are dreading Empire BlueCross BlueShield’s looming cutbacks in coverage.

The changes will mean hard decisions for many employers, who may have to limit coverage or offer high-deductible plans. Companies will need to take a hard look at employee needs if they’re going to try to manage costs, with the likelihood of even more of the burden being shifted to employees, say experts.

“Gone are the days of rich health plans with very little out-of-pocket for the policy holders,” says Lou Basso of Alcott HR Group, a Farmingdale organization that provides human resources services to businesses, including managing their health plans. “The options in New York State will now be significantly less based on the Blue’s decision to eliminate these plans.”

Empire has announced it is eliminating about seven of its 13 small-group plans. It has since added two small-business products back, says spokeswoman Sally Kweskin. Empire also has said it will discontinue the products on their renewal dates, rather than the originally announced April 1.

Still, many of those products being eliminated were “pretty competitive,” says Basso, noting there’s no magical solution to lower costs.

For starters, some companies may have to choose a high-deductible health plan, which carries greater upfront out-of-pocket costs for employees than a traditional managed care plan but could be 5-10 percent less in annual premiums depending upon the deductible, he notes.

Bill Tobia, owner of Home Medical Equipment in Garden City, says he will have to consider a high-deductible plan once he can no longer stay within his Empire plan.

Limited choices

“My company is under 50 employees, so I don’t have a lot of options,” says Tobia, noting each year he sees double-digit premium increases and has had to pass on more costs to employees. The company, which has renewed with Empire’s Prism EPO for now at a 16 percent average increase in premiums, pays about $163,000 annually in health insurance costs, he says. He’s not sure how long he’ll be allowed to remain in the Empire plan.

“People who are generally healthy might find the transition to a high-deductible plan effective,” says Paul Essner, a certified financial planner and a partner at The Signature Group of Companies, a Garden City insurance, employee benefits and financial services firm with 100 clients impacted by Empire’s decision, including Tobia’s company. Signature is working with clients to help them make plans, says Essner.

Employers can help offset increased upfront costs to workers by creating an employer-funded health reimbursement arrangement (HRA), he says. These are often paired with high-deductible plans and offer employers a tax-advantaged savings vehicle to help fund employees’ unreimbursed medical expenses, says Essner.

Other options

Other options include joining a private health insurance exchange, which offers multiple plan and provider choices to members and allows employees to choose the plans that best suit their needs, rather than have the employer select one plan for everyone, says Vince Ashton, chief executive of HealthPass New York, a not-for-profit commercial exchange.

“We work with insurance carriers to pick the best plans with the best value,” adds Paula Calame, interim executive director of the LIA Health Alliance in Melville, a private exchange, noting they offer plans including Emblem that are competitive with the Empire plans being phased out.

If you can’t afford to offer health insurance, there are options like Healthy NY, a reduced-cost health insurance program sponsored by New York State (see dfs.ny.gov), and Transparent Health Network (transparenthealth.com), which provides access to a network of doctors who have agreed to offer services at a lower, contracted rate if paid at the time of service.

And some employers could qualify for a federal tax credit for providing health coverage to employees (see irs. gov/newsroom/article/0,,id= 220839,00.html).

A Kaiser Family Foundation survey of over 2,000 employers found that group health plan premiums increased 9% in 2011 or to an average cost of $15,703 for family coverage. A state-by-state analysis performed by the Commonwealth Fund (a nonprofit organization that studies health care quality, access and affordability) found that health insurance premiums for employer-based plans increased 50% from 2003 to 2010. The analysis also found that the increase in premiums was greater than the growth in the median household income for every state. The Commonwealth Fund’s analysis projected an additional 72% increase by 2020 if no reforms were made.

According to a National Center for Health Statistics finding, the percentage of group health plan enrollees in high-deductible health plans (e.g., those with deductibles of $1,200 for self-only coverage and $2,400 for family coverage based on how the Department of Health and Human Services defines them), grew from 12.9% in 2007 to 20.3% in the first quarter (Q1) of 2011. Enrollment in consumer-driven health plans — high-deductible plans linked to an HSA or HRA – experienced even greater growth, going from 4.5% in 2007 to 8.8% of group plan participants in Q1 of 2011. FSAs growth grew from 16.7% of group plan participants in 2007 to 20.7% in the Q1 of 2011. The National Center for Health Statistics cited healthcare reform as one of the primary drivers for the growth in consumer-driven health plans.

Based on employers surveyed by Mercer LLC regarding their rising group health plan premiums, 47% said they planned to raise their plans’ deductibles or increase the percentage of plan premiums paid by their employees in 2012. Using high deductible health care plans is a way to contain costs and provide an incentive for employees to be more conscientious health care consumers. A Towers Watson & Co. survey, conducted in the fall of 2010, found that 66% of employers were planning to offer a consumer-driven health plan in 2012.

Consumer-driven healthcare plans offer a win-win for employers and employees alike. They provide financial and tax advantages for both employer and employees, while also encouraging employees to become better informed and more prudent consumers of health care.

PEOs can be a tremendous resource in helping businesses with the due diligence and compliance aspect of the new legislation. Compliance with complex tax-related changes, changes pertaining to certain health care plans such as health savings accounts (HSAs), and associated tax reporting is assumed by the PEO and is one less worry for business owners. Additionally, through their health care offerings, PEOs give businesses access to a menu of competitive health insurance options for their employees, including the most cost-effective consumer-driven plans such as HSAs . Additionally, and in view of the higher healthcare insurance burden now placed on businesses, the PEO’s wellness programs and other related value-added benefits such as discounts to health and fitness clubs, which help contain healthcare costs, are another strong incentive. This, in turn, helps businesses attract and retain the best employees.

A Mercer LLC survey found that small employers (i.e., those with between 10 and 499 employees) experienced an average 9.9% increase in health care plan costs compared with 3.6% increase in plans offered by larger employers. One of the primary reasons cited for the differential was compliance with the new health care reform legislation, which is impacting smaller employers’ more than larger employers. When served by a PEO, the playing field becomes much more level for small businesses.

Tax Credits for Qualifying Small Businesses and Nonprofits

One of the bright sides of health care reform for small businesses are the tax credits for which they may qualify and which will make it more affordable for them to provide health insurance for their employees. To qualify for the PPACA tax credit an employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible). Additionally, the employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.  And, the employer  must pay annual average wages under $50,000. Currently, the credit is up to 35% of a small business’ premium costs, and for nonprofits meeting the same criteria the tax credit would be up to 25%. In 2014, the tax credit increases to 50% for qualifying small businesses and 35% for nonprofits.  However, the credit phases out gradually for businesses with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Guaranteed Renewals

Group plans can no longer be cancelled by insurers due to the illness of a covered member of their group. As for the overall key components of the “Patient Protection and Affordable Care Act” affecting all individuals with health insurance, following are some key points already in effect:

• Insurers can’t drop people from coverage when they become sick.
• Lifetime coverage limits are eliminated and annual limits restricted.
• Children can’t be excluded from coverage due to pre-existing conditions.
• Young adults can remain on their parents’ health plans until age 26 (versus being dropped at age 19 or after finishing college).
• Uninsured adults with pre-existing conditions can obtain health coverage through a new program. Note: The program will expire once the insurance exchanges start operating in 2014.
• Medicare drug beneficiaries who fall into the “donut hole” coverage gap can get a fifty percent discount when purchasing covered brand name prescription drugs.
• New health plans are required to cover preventive services at no or little cost to patients.

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Moxxie Network (www.moxxienetwork.com) is a Long Island-based women’s business community comprised of women and girls from 8 to 70 years old. The mentor award is an outgrowth of the organization’s Mentor Program, which began in January 2010, and was designed to help young female college students learn how to network and gain skills that would help them in their future job search and business career. Through the program, the mentees obtain a mentor as well as gain access to the broader Moxxie community.

As part of its program, the Moxxie Network has workshops on Dressing for Success and field trips to let the students meet successful women representing diverse industries and leading organizations. Other components of the Moxxie Network Mentor Program for mentees include monthly email discussions with their mentors and attendance at various business and networking meetings accompanied by their mentors.

Currently, Moxxie Network has approximately 100 members. For more information about Moxxie Network and its Mentor Program, click here.

Linked In® and Twitter® and Facebook® – oh my!!  Frightened of social media issues in the workplace?  You’re not alone.  Businesses, especially small businesses, don’t often know where to turn with regard to establishing workplace rules or guidelines when it comes  to social media.  Indeed sometimes they don’t even know what they don’t know.  In a world where the state of the law is having trouble keeping pace with technology, this is not unusual.  This area of workplace law is perhaps the most dynamic ever, and it is wreaking havoc with employers.

Workplace Violence – What Every Employer Should Know

Violence in the workplace is an objectionable event that all employers should be prepared for. In this webinar, we will discuss best practices on preventing a situation, diffusing heightened tensions and ultimately handling the aftermath of an incident. We will also discuss OSHA’s guidelines for workplace violence and future regulations that will be enacted.

 Thursday, March 22, 2012
10:00 AM – 11:00 AM EDT
Registration Web Link: https://www1.gotomeeting.com/register/866506753

Tuesday, March 27, 2012
2:00 PM – 3:00 PM EDT
Registration Web Link: https://www1.gotomeeting.com/register/847493753

Recruiting and Hiring – Practical Tips and Techniques

In this informative webinar, you will learn techniques and methods for making good hiring decisions.  We will discuss preparing for recruiting, defining competencies, sourcing candidates, screening, proper and effective interviewing, and finally, selecting a candidate.  This webinar will provide you with the tools to make better hiring decisions which ultimately affect your bottom line.

 Tuesday, June 12, 2012
10:00 AM – 11:00 AM EDT
Registration Web Link: https://www1.gotomeeting.com/register/550497672

 Thursday, June 21, 2012
2:00 PM – 3:00 PM EDT
Registration Web Link: https://www1.gotomeeting.com/register/997330120

 Performance Management For Your Human Capital

We will discuss the building blocks of performance management including the importance of defining expectations through job descriptions, policies and performance reviews.  You will learn how to properly counsel and discipline employees, as well as when and how to terminate employment if necessary.

 Tuesday, October 16, 2012
10:00 AM – 11:00 AM EDT
Registration Web Link: https://www1.gotomeeting.com/register/675814720

 Thursday, October 25, 2012
2:00 PM – 3:00 PM EDT
Registration Web Link: https://www1.gotomeeting.com/register/636883833

According to Basso, who currently serves as NAPEO Leadership Council Chair for New York State, and a Member of the Board of ESAC, the PEO credentialing body and who has served as NAPEO President and Chairman of its Federal Legislation Committee, “The Small Business Efficiency Act is a vital piece of legislation and another step in the right direction following the passage of other PEO legislation at the state level, including our state’s  PEO registration legislation – the New York Professional Employer Act – for which Rep. Paul Tonko also took a leading role. H.R. 2466, in conjunction with state legislation and other industry measures such as ESAC accreditation, helps protect the interests of small businesses, enable them to rely on a PEO with confidence and focus on growing their businesses and creating new jobs for America.”

Basso noted that H.R. 2466 specifically would clarify the rights and responsibilities of PEOs pertaining to their role in withholding and remittance of payroll taxes and regulatory tax compliance on behalf of their clients.

Basso continued, “Since the New York Professional Employer Act became effective in September of 2002, we have seen a direct correlation between the growth and job creation of small businesses being served by registered PEOs. That legislation, which was championed by one of our state’s most dedicated small business and job growth advocates, Representative Paul Tonko (D-NY), recognized PEOs as being valuable catalysts to commerce through their services to small businesses. By establishing minimum requirements for companies who call themselves PEOs in New York State, the legislation and similar laws passed in other states gave further credibility to the industry and reassurance to businesses who want to establish relationships with fiscally responsible PEOs.”

He continued, “By providing statutory clarity in the Internal Revenue Code regarding the PEO arrangement and the PEO’s role in the employment tax withholding and remitting for its clients, H.R. 2466 takes it to another level and more importantly, provides even greater assurances for small businesses who want to turn over their HR and employee management function to a resource dedicated to this area.”

On November 18, 2011, Senators Charles Grassley (R-IA) and Bill Nelson (D-FL) introduced their version of the “Small Business Efficiency Act”, S. 1908 and then referred to the Committee on Finance.

Currently, there are an estimated 350 PEO members of NAPEO serving in all 50 states and representing over 90% of the industry’s entire 2010 $81 billion in gross revenues. Businesses in diverse industries turn to PEOs to alleviate the burden of employment administration and to access a comprehensive and competitively-priced employee benefits and services solution beyond what they could offer on their own. Through the services of a PEO, owners and executives of small businesses can improve their overall productivity by focusing on core revenue-producing functions, growing their business and, in turn, creating new employment opportunities for their region.

For additional information on the “Small Business Efficiency Act of 2011,” click here or visit www.napeo.org

Photo Caption: LI Office – Pictured here, from left to right, are members from Alcott HR Group’s Farmingdale location (back row):  Barry Shorten, Bob Chanin, Dawn Davidson Drantch, Anthony Bryan, Michelle Dean and Ken Jacoby; (front row) Barbara Kern, Pat Patane, Cara Calvin, Doreen Herold, Madeleine Marambio and Ryan Patane.  

Photo Caption: WNY Office – Picture here, from left to right, are members from Alcott HR Group’s Western New York Division in Buffalo: Holly Nowak, Rob Hamel, Cathy Glinski, Kim Hamm, Stacey Payne and John Bradley.