| Professional Employer Organizations offer a one-stop | | | | Those that do not comply with this are subjected to a |
| solution for companies averaging 5 to 100 employees. | | | | noncompliance penalty of $50 for each missed |
| They provide HR consulting, employee benefits, payroll, | | | | statement to an employee to a maximum of $100,000. |
| workers comp insurance, and many other | | | | How PEOs help: |
| employer-related services. As more regulations are | | | | PEOs are often the plan sponsor for all their clients' |
| created, and managing them becomes more difficult | | | | healthcare, unless they "carve out" benefits, which |
| for employers, the PEO value proposition become | | | | would mean they are not the plan sponsor, and the |
| more attractive. | | | | client maintains their own health insurance. Should a |
| 2010 | | | | client be receiving healthcare through a PEO |
| · Small business tax credit - This tax credit is | | | | sponsored plan, each of these mandates falls squarely |
| applicable for businesses with less than 25 full-time | | | | on the shoulders of the PEO. Notice the trend, due to |
| employees with an average wage below $50,000. The | | | | co-employment, many of the additional requirements |
| maximum credit equals 35 percent of the employer's | | | | put forth by health care reform are burdens for the |
| contribution to health insurance premiums, but it is | | | | PEO. |
| unlikely the maximum credit will be applied. Calculating | | | | 2014 |
| exactly what an employer qualifies for is an extremely | | | | · State-based insurance exchanges open - |
| sensitive process. | | | | State-based insurance exchanges are planned to pool |
| How PEOs help: | | | | employers together into one large group much like |
| PEOs proactively consider whether their clients qualify | | | | PEOs have done for years in order to reduce overall |
| for the credit and pass the total amount directly to the | | | | premiums. However the exchange program has been |
| client. Since most PEOs manage their clients' payroll | | | | attempted in other states and has not had the same |
| and insurance plans, calculating the credit amount is | | | | success that PEOs have had. As with many public |
| much easier. | | | | programs, cost-efficiency and timely service is inferior |
| 2011 | | | | to that offered by private entities. We don't foresee |
| · W-2 provision - Employers must report the | | | | this principle changing. |
| aggregate cost of employer-provided coverage on | | | | How PEOs help: |
| employees' W-2s for informational purposes. | | | | PEOs have long pooled employers together for |
| How PEOs help: | | | | cooperative purchases of many items including health |
| PEOs manage all aspects of their clients; payroll and | | | | insurance, the result is lower cost. There is one key |
| benefits, so complying with this provision is | | | | component to a PEO's pool that will make it far |
| synergistically efficient - the amount will be shown on | | | | cheaper and more efficient than a public pool of |
| all PEO work-site employees' paychecks. | | | | employers - choice. PEOs have the ability to select |
| · Wellness Grants are available for businesses with | | | | which companies they bring into their pool, and have a |
| fewer than 100 employees to assist in implementing | | | | natural propensity to decline less healthy groups, or |
| employee wellness programs. There is $200 million | | | | provide them with a higher tiered price that reflects |
| dollars that will be distributed over a five year period. | | | | their risk. It is doubtful that the public pool will have the |
| How PEOs help: | | | | choice as to who comes into their pool, much like a |
| Since many PEOs partially self-insure their health | | | | community-rated health plan, the burden of the sick will |
| insurance policies, they have always had a vested | | | | be paid for by the healthy, and just like |
| interest in proving their clients' employee easy access | | | | community-rated plans, they will be more expensive |
| to wellness programs. Most PEOs have long offered | | | | overall. I knew I didn't like public pools! |
| robust wellness programs that help employees live | | | | · Mandated Coverage - Companies with 50 or more |
| healthier lives, and consequently, make less medical | | | | full-time workers will be required to either provide |
| claims - which is cheaper for everyone. | | | | "qualified" health coverage or pay a $2000 fine for |
| In 2013 | | | | each employee. |
| · FSA limits - all employee contributions to the FSA or | | | | · Free rider surcharge coincides with mandated |
| Flexible Spending Account are limited to $2,500 per | | | | coverage and is applicable for businesses with an |
| year. The penalty for using Flexible Spending Accounts | | | | average of 50 or more full time employees. There are |
| incorrectly will be an increase from 10 percent to 20 | | | | three major components: |
| percent. | | | | 1. The plan design is expected to pay at least 60% of |
| How PEOs help: | | | | allowed charges. |
| PEOs manage all aspects of FSA administration for | | | | 2. Employee contribution must not exceed 9.8% of |
| their clients - all FSAs offered to client employees will | | | | employee's household income. |
| be adjusted seamlessly to comply with this provision. | | | | 3. Voucher Requirement if employee contribution is |
| · Tax increases - Medicare payroll tax increase of | | | | more than 8% and the employee's household income |
| 0.9% on self-employed individuals and employees with | | | | is less than or equal 400% of the Federal Poverty |
| respect to earnings and wages received during the | | | | Level. |
| year above $200,000 for individuals above $250,000 | | | | How PEOs help: |
| for joint filers will go into effect. The new tax does not | | | | Most PEO plans have long offered 60% cost sharing |
| change the employer's tax obligations, but | | | | in even their weakest plans. Employee contribution |
| self-employed individuals are not permitted to deduct | | | | strategies are something PEOs consult their clients |
| any portion of the additional tax. In addition, there will be | | | | with each year to meet company goals while still |
| a new 3.8% Medicare contribution on certain unearned | | | | complying with ERISA. This provision will make things a |
| income from individuals with AGI over $200,000 | | | | bit more complicated to deal with, however PEOs will |
| ($250,000 for joint filers). | | | | be ready for it, and will consult their clients towards a |
| How PEOs help: | | | | compliant strategy. |
| Professional Employer Organizations are responsible | | | | · Auto enrollment for employers with 200 employees |
| for deducting and filing all payroll taxes to the | | | | or more- This provision states that employers must |
| appropriate governing body. Unlike a payroll service, | | | | automatically enroll new, full-time employees in its |
| PEOs are often responsible and liable for calculating | | | | health plan. Employees may opt out. |
| and deducting the proper amounts. | | | | How PEOs help: |
| · Notices & Fines | | | | Most PEOs utilize internally, and also offer access to a |
| 1. Plan sponsors must supply participants at enrollment | | | | Human Resources Information System (HRIS) to enjoy |
| or re-enrollment a new form of plan summary that | | | | the benefits of technology when managing employees. |
| must include information on benefits, exclusions, and | | | | Automatically enrolling employees in the cheapest plan |
| cost-sharing requirements. Those that do not comply | | | | available is very easily done. |
| with this provision are subject to a noncompliance fee | | | | The overall theme in this article is simple; it will become |
| of $1,000 for each failure. | | | | more costly, and more difficult for American |
| 2. Employers must provide a written notice regarding | | | | employers to manage around the red tape their |
| the existence of the Insurance Exchange and that the | | | | governments create. Professional Employer |
| employee might qualify for subsidies by March 1, 2013. | | | | Organizations have helped thousands of clients |
| 3. Plan sponsors will be required to provide an annual | | | | maintain compliance with today's litany of regulations. |
| statement to the government and covered individuals | | | | Dumping more regulations on top only makes their |
| reflecting the months during the calendar year for | | | | solution for employers more attractive. |
| which the individual had "minimum essential coverage". | | | | |