NAPEO
Today’s healthcare landscape is fraught with challenges for both employers and employees. With healthcare costs skyrocketing, there is mounting pressure to reduce spending within health plans.
Employers and PEOs have a great opportunity to help workforces reduce the top stressor in their lives: money. Organizations are looking for opportunities to improve the overall well-being of employees.
Why ICHRAs and why now? The tipping point with individual coverage health reimbursement arrangements (ICHRAs) has been building in recent years, largely due to rising costs of healthcare coverage and changing legislative guidance, which made the introduction of ICHRAs very attractive.
Nothing seems untouched from AI these days. Even PEO risk management. Earlier this year, I had the privilege to join a panel at NAPEO’s Risk Management Workshop on the growing influence of AI and how it impacts the world of PEO risk management.
By educating minority SMBs about the benefits and intricacies of PEO partnerships, we not only foster a deeper understanding of our services but also cultivate trust and transparency.
Of all the business-enhancing services PEOs offer, one is sometimes overlooked, or seen as an overhead expense to be avoided, but never should be. A quality retirement plan can add great value for both the employer and the PEO supporting them.
Most brokers understand that the PEO industry was built on the B2B model. However, there is great opportunity to pivot and adapt, embrace change and evolution, and continue their success while prospering alongside their broker partners.
As we look ahead to 2024, the EPLI landscape is poised for continued evolution. Staying abreast of these trends and developments is key to navigating the market effectively and ensuring that coverage remains aligned with the needs of businesses and their employees.
The vast majority of PEOs and employers want to do right by their employees. Offering the right mix of workplace benefits—with an emphasis on addressing the mind, body, and wallet connection—is one of the most effective tools PEOs can use to support employee well-being.
Financial hardship may affect us all at one point or another in our careers. Empathy, compassion, and thoughtful action are important to maintain a healthy work environment. Economic uncertainty, political strife, and tenuous world events can make employees uneasy and fearful. Employers can do a great service to employees and their bottom line by listening to employee feedback, staying transparent about company goals and their role in success, and showing recognition coupled with rewards.
A strong work culture typically doesn’t happen organically. Leaders must be deliberate and consistent when planning how to define and build a more positive culture. A company’s organizational culture is one of the key defining factors in its identity and ongoing success.
In October of 2023, FrankCrum published a Culture Code to its nearly 500 employees, the most comprehensive work undertaken by the company on the topic of culture to date. Culture begins and ends at the top, meaning that leadership sets culture and then must do the important work of reinforcing or stopping behaviors and practices to support it.
If you had asked me ten years ago about the importance of having a positive workplace culture, I would have laughed out loud. Why would an employer proactively focus on the employee experience when margins were tight for their product or service?
When one-third of your life is spent at the office, work should be fulfilling. At G&A Partners, we know that our employees are the heart and soul of all we do, so we focus on ensuring this is a destination workplace where people want to work, not have to work.
Automation tools can provide some much-needed relief during open enrollment, empowering small business leaders to get it all done. However, many small business leaders seem unsure about the return on the investment of technology in this space.
The evolving landscape of business operations and management signals a significant shift in workplace priorities. PEOs can refine their service offerings to cater to emerging demands.
As we navigate the ever-evolving business landscape, small business owners find themselves confronting a range of pressing concerns. PEOs are well-positioned to assist business owners in overcoming these obstacles to thrive.
With benefits being such a large financial commitment relative to employee pay, employers owe it to themselves to maximize their investment. In 2024, there are three main areas that can drive a better ROI outcome for employers.
In the not-so-distant past, options to provide a pay advance prior to payday were not only limited, but they also were potentially expensive for the employee and were viewed in a negative light by some segments in our society.
As a PEO founder and former owner, I am aware of all the details and moving parts surrounding the co-employment experience. When you focus on growth, it can become easy to lose sight of some of the best paths to pursue. I recall signing up new groups and going through the milieu of employee enrollment processes. Usually at the end of all the HR intake and benefits explanation and enrollment, there’s a discussion on Section 125 and flex plans.
Typically, the enrollees are overloaded at this point, as are the enrollment staff, so less attention is paid to the importance of this benefit to both the participant and to the PEO. To the extent you can encourage participation in the Section 125 pre-tax employee benefits, however, you will provide the participant with an increase in take-home pay, and the PEO (as the W-2 employer) may see FICA tax savings.
IRS code Section 125 allows employers to offer a qualified benefit plan that pays for an employee’s portion of insurance premiums, out of pocket medical expenses, and day care expenses on a pre-tax basis. This means that employees, through a payroll deduction election, can fund accounts to pay for these expenses as they come up during the plan year. The more the participant uses these accounts to pay for items they would be paying for anyway, the more their taxable income decreases for the year.
For instance, if an employee making $45,000 a year elects to set aside $2,500 for out-of-pocket medical expenses and contributes $1,200 yearly for their portion of insurance premiums, these funds are deducted from his or her paychecks over the year, so his or her taxable income in this example will be $41,300 for the year. The $3,700 they elected comes tax free. In this example the PEO would pay FICA taxes on $41,300 instead of the full $45,000, so their tax saving will be approximately $267 for this individual. If there are 500 participants in the Flex Plan at this level, that’s over $133,000 per year in FICA savings! That’s the reward.
There is also risk: the ‘availability rule’ for the health FSA. The health FSA is governed by Section 105 of the IRS code which manages self-insurance. The health FSA is therefore governed by ERISA, and the IRS has instituted regulations that make this account look and act like insurance. The risk component is that the participant, who can elect up to $3,050 in 2023 for the health FSA, is entitled to access and use the entire amount at any time during the plan year.
Since the account is funded through payroll deduction, the account isn’t fully funded until the end of the year. If the employee terms in the middle of the plan year, the account is underfunded. Under IRS regulation the employer cannot recoup the shortfall. This can be a concern for some PEOs that don’t want to take the risk; some will shift the health FSA risk onto the worksite employers. These PEOs generally have very low participation, and they are missing out on the FICA savings reward.
There is also perceived risk to the participant. Consistent with insurance principles, the participant is at risk in losing his or her annual account election if they don’t use the funds. This risk has been mollified with the introduction of the $500 annual rollover option, which has greatly reduced the perceived risk and has fostered greater plan participation across the board. PEOs that incorporate the annual rollover into their plan designs and that effectively communicate this feature have enjoyed higher participation levels and greater overall FICA savings.
Fortunately, most PEOs have learned and recognize that the reward is far greater than the risk. In my 29 years of experience in the PEO industry, first as an owner then affiliated with three TPAs handling FSAs for PEOs, the reward has always been markedly greater than the risk. Contrary to the fears of some, not everyone gets laser surgery in January then quits. Rather, over the plan year, the PEO can expect to save on average $230 per participant per year in FICA. The more participants you have, the more the risk diminishes and your FICA savings increases.
To build a successful Section 125/flex benefit program, you should consider a few key points.
Compliance. Stay on top of plan structure and strategy, plan documents, claims review and non-discrimination testing. While there is no direct recognition of co-employment in Section 125 of the IRS code, thoughtful application of compliance elements will easily put the PEO in good faith compliance with the regulations.
Simplify. Make it easy to explain and easy to use. Effective staff training will bolster awareness of the benefit, and will allow for a consistent manner in communicating the benefits of participation.
Updated Technology. Things like smart phone apps for account access and management and debit card convenience and file integration to off-load internal staff functions can greatly enhance participation levels.
Risk Management. Manage any clients that are insisting on keeping the FICA savings by having them assume the above-mentioned risk components in their CSAs. They are hiring the PEO to manage employment risk, and there are effective methods to encourage them to participate in your program.
Lean on Experts. Work with trusted advisors who can lead you through the regulatory morass and who have a track record of working effectively with PEOs. There is no substitute for experience, and choosing the right partner will greatly enhance your flex benefit program.
Section 125 Plan Flexible Spending Arrangements are a great supplementary benefit PEOs can offer to their worksite employees. If set up and administered correctly, both the participant and the employer/plan sponsor can enjoy significant tax savings. While the co-employment environment can offer unique challenges, proper handling by experienced advisors can ensure a successful experience. So, get your plan tuned up and ready so you can expand your participant base and create a satisfactory participant experience in these benefits.
In today’s interconnected world, scaling globally and building an international workforce offers numerous advantages — from accessing new markets to tapping into diverse talent pools — however, many companies struggle to figure out how to hire global talent easily and compliantly.
In your group health sales cycle, time is of the essence. Shorter sales cycles generally lead to larger volumes, higher revenues, more satisfied account execs, and repeat customers, especially for an annual purchase like group health insurance. You can shrink the time you turn a lead into a customer by adding a speedy new member to your sales team: artificial intelligence. AI can help you close deals faster than your competitors can get their boots on.
In today’s interconnected world, scaling globally and building an international workforce offers numerous advantages — from accessing new markets to tapping into diverse talent pools — however, many companies struggle to figure out how to hire global talent easily and compliantly.
In a previous article, I encouraged PEO operators to take another look at group insurance brokers and even see some PEO brokers as channel partners. In this article I’m going to share with you another secret: How to protect yourself from us brokers. Remember, if you manage this channel correctly, brokers will be your lowest cost of new client acquisition, create longer retention, and create an endless and consistent flow of beautiful new deals. However, if handled poorly, your master plan medical loss ratios (MLR) could be very RED.
