In this corner, we have traditional coverage, arguably the most popular plan. The cornerstone of this classic plan is the freedom to use any dentist. With the frequency of at least two preventive visits a year, many people's relationship with their dentist has become more important than that with their medical doctor.
Even so, traditional plans have been changing over the years from pure indemnity to passive dental PPO plans. They are referred to as passive because there is no penalty for using nonnetwork providers. If an employee does not use a network dentist, he or she has the same benefits as with the age-old indemnity plan.
Driven in part by some state laws, most dental PPO plans must offer the same deductibles, co-insurance and maximum payment limits whether patients use a network provider or not. Many times, employees who are enrolled in a passive dental PPO plan don't even know or remember they have an incentive to use network providers.
The primary advantage of using network providers is that the employee participates in an average discount from UC&R charges of 25 percent, as well as no balance billing from the dentist. Despite this incentive, many employees are not motivated enough to change dentists. Even the largest networks in the country only cover one-third of licensed dentists. As a result, the reductions in premiums for these passive PPO plans compared to pure indemnity is only 4 percent to 8 percent. Nevertheless, Passive PPO is the current champion of dental plans.
The Achilles' heal of these plans is their limit on benefit payments. The most common plan has a maximum calendar year benefit of $1,000. Although less than 7.5 percent of people enrolled have more than $1,000 a year in claims, over a five-year period, you could have 37.5 percent of your employees find the $1,000 limit a problem. Increasing the maximum to as much as $2,000 does not resolve this issue.
Because of this benefit cap, I refer to traditional dental plans and PPO plans as dental "assistance" not dental "insurance."
In the other corner we have the challenger, the leaner, tougher dental HMO.
The typical DHMO has no deductibles, no claim forms, uses predictable co-pays versus co-insurance, protects you from UC&R cutbacks and has no dollar limit on dental services. If you require $5,000 of dental services, you'll get it. Last but not least, the premiums can be 50 percent less than those of traditional or PPO plans.
Many companies have purchased a DHMO on this simple comparison, but you must truly understand the limits of DHMOs before determining if it's right for your employees.
The biggest hurdle is the network. You must receive services exclusively from providers within the network. The lists are much smaller than those for even PPO networks, and in some rural areas, they are non-existent.
The other concern is that procedures outlined in the benefit summaries are the only services covered. There are hundreds of different procedure codes for dental services. If a procedure is performed that does not match one on the list, it's not covered. This is one of the reasons employees should take their benefit summaries with them to DHMO dental appointments.
Some employees may also find difficulty in scheduling their first preventive service. Although not uncommon with any dentist, DHMO dentists typically push preventive services like your semi-annual teeth cleaning four to six months out. Of course, if you have any pain or require immediate attention, a DHMO patient will be seen immediately.
The DHMO is not the best fit for everyone. If you're interested in a DHMO, consider offering both it and a traditional plan, letting employees choose which is right for them. Typically, 30 percent of employees will choose the DHMO over the more expensive traditional or PPO dental plan.
Educating employees on the advantages and disadvantages of the DHMO is critical to a successful DHMO program. If you want a dental plan that can go 15 rounds, like Rocky Balboa, then the DHMO and its unlimited benefits can be the champion. Bruce Bishop (email@example.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.
Developers know their audiences and what sells, and what's selling today includes convenient locations, fashionable in-town lifestyles and, of course, competitive price points. The popularity of buying and living in a condominium is growing among all generations, from baby boomers to second homeowners and entry-level buyers.
So what do you need to know when considering a condominium purchase?
Benefits of a shared-living environment
When you live in a single-family home, the interior and exterior maintenance of your property is completely your responsibility. Whether it is mowing the lawn or repairing the roof, you, as the homeowner, need to either do it yourself or pay an outside contractor.
This is not necessarily so in condominium living. You usually pay a monthly fee to your condominium association or property management company. It is their responsibility to maintain common areas (typically defined as "anything on the outside of the walls of a homeowner's unit"). The association will handle regular upkeep such as landscaping, exterior painting, and maintenance of lobbies, hallways and any recreational facilities. The fee often covers trash collection, as well.
Your responsibility will always be the interior of your individual unit -- whether it is a high-rise, townhome or loft. Every association offers slightly different amenities and services, so carefully read the condominium documents that pertain to your project.
The right condominium for your lifestyle
There all kinds of condominiums, from luxury high-rise buildings offering exemplary service to townhome or cluster homes that feel almost like a single-family home. It is important to talk to your real estate professional about choosing what fits your needs.
For example, if you are trying to keep the monthly fee to a minimum, look for a project with few recreational amenities and simple common areas. But if you enjoy tennis or swimming, easy access to those facilities may be important to you. Keep in mind that elevators, elegant lobbies, doormen, swimming pools and exercise rooms with high-quality equipment usually come with a maintenance cost.
Ask the right questions
It is important to review the condominium rules prior to making your purchase. Your real estate sales associate should obtain a copy of the condo association bylaws so you know and understand the rules and guidelines. For example, some associations do not allow pets over a certain size or have regulations about what can be placed on exterior walls or on the lawn.
In addition, obtain a copy of the certificate of insurance that summarizes the association's policy. Review it with your insurance agent or attorney so you know exactly what is covered. Don't forget that you will need to insure your personal items with a homeowner's policy.
Many developers are building loft and condo properties in some of the key areas in Atlanta -- downtown, midtown, Buckhead and Virginia-Highland. The competition within the market means that developers are offering more for less.
What used to be considered an upgrade -- granite countertops, hardwood floors and stainless steel appliances -- now comes standard in many loft and condo homes. Buyers have the opportunity to purchase quality homes with extra features at reasonable prices.
The bottom line is that condos offer simplicity. In a competitive market like Atlanta, they come in all shapes and sizes, with varying amenities, upgrades and services. Industry analysts project interest rates will remain low and sales will remain high in 2004. These projections - combined with products that are better-suited to today's consumer and developers that offer more standard features than ever - indicate 2004 is shaping up to be a great time to buy a condominium.
David Tufts is executive vice president of Coldwell Banker The Condo Store, a division of Coldwell Banker Residential Brokerage. He and his team provide turnkey on-site sales and marketing from concept to closing. The two resale offices feature sales associates trained in the nuances of condominium sales. The company has successfully marketed hundreds of new construction and conversion developments ranging from luxury high-rise to garden style communities. With more than 50 percent of the Atlanta condo market share, Coldwell Banker Residential Brokerage has expanded its operations for The Condo Store throughout Florida and to Boston. For more information, call (404) 705-1570 or visit condostore.com or ColdwellBankerAtlanta.com
Don Knauss was named president of Coca-Cola North America. He will oversee strategic direction of the unit's operating performance and handle day-to-day operations of the beverage company's oldest business segment.
"Don brings unmatched skills, leadership and relationships to the job, along with heartfelt belief in the culture we are instilling across our flagship operating unit," says Steve Heyer, Coca Cola's president and COO.
Knauss joined Coca-Cola in 1994 as senior vice president of marketing for The Minute Maid Co., and was named senior vice president and general manager, U.S. Division, in 1996. He served nearly two years as president of the Southern Africa Division, managing the company's business in 10 countries of Southern Africa, before being named president and CEO of The Minute Maid Co. in 2000. Knauss was named president of the Retail Division of Coca-Cola North America in 2003.
Knauss served as an officer in the U.S. Marine Corps and received a bachelor of arts degree in history from Indiana University. He serves on the board of trustees for the United States Marine Corps University Foundation and the board of trustees for Camp Coca-Cola.
Randy Martinez was named chairman and CEO of World Airways Inc. and will succeed retiring Chairman and CEO Hollis Harris. Martinez, 48, became president and COO of World Airways in November 2003. He joined the airline in 1998 as director, crew resources, was appointed as the special assistant to the chairman in May 1999, and in August 1999 was named CIO. In 2002, he was promoted to executive vice president of marketing and administration.
Previously, he had a 21-year career with the U.S. Air Force, retiring as a colonel and command pilot. He holds a B.S. degree in organizational behavior from the U.S. Air Force Academy, an M.S. degree in operations management from the University of Arkansas and an M.S. degree in national resource strategy from the National Defense University.
Powell, Goldstein, Frazer & Murphy LLP
Powell, Goldstein, Frazer & Murphy LLP elected James J. McAlpin Jr. to succeed Armin G. Brecher as firm chair. McAlpin has served in a number of leadership positions, most recently as chair of the Corporate and Technology Department and as a member of the executive committee. He joined the firm in 1985 and was the youngest member to be elected to the board of partners, the firm's governing body, in 1997. He previously led the Business Transactions and Corporate Finance Practice and has chaired the Compensation Committee.
McAlpin, 45, is a double graduate from the University of Alabama, receiving his undergraduate degree in 1981 and his J.D. in 1984. He is involved in the Association for Corporate Growth (and is a past- president of the Atlanta Chapter), as well as the Atlanta Venture Forum, the Carter Center Board of Councilors and various banking associations.
Southern Company Services
Mark Crosswhite was named vice president and associate general counsel for Southern Co. Services. He also will serve as senior vice president and general counsel for Southern Co. Generation and Energy Marketing, a business unit of Southern Co. that works to manage and generate electricity for the company's retail customers and markets energy in the competitive wholesale supply business. He will also serve as general counsel for Southern Power, the Southern Co. subsidiary that builds, owns and manages the company's competitive generation assets.
Crosswhite will direct legal services and external affairs efforts for Southern Co. Generation and Energy Marketing and Southern Power. He will oversee regulatory, federal and state interactions, as well as internal and external communication. He will work closely with Southern Co.'s external affairs, governmental relations and corporate communication groups. He also will manage the company's legal services group.
Hellmann Worldwide Logistics
Hellmann Worldwide Logistics appointed Pat Nelms branch manager of the firm's Atlanta offices. Nelms will focus on new business accounts, managing local operations and sales, identifying markets to be developed or maintained through appropriate business strategies, and ensuring Hellmann's quality system is implemented and maintained in the branch.
Nelms has held a number of senior positions within the international transport arena, most recently as director of global sales, southeast region, for Geologistics, Atlanta. Prior to joining Geologistics, Nelms spent more than 20 years in the logistics industry serving in various sales positions, including general manager for Phoenix International in Los Angeles and development manager for Thyssen Haniel/ABX.
Michael Wood was appointed Worldspan CFO and senior vice president. Wood assumes responsibility for Worldspan's worldwide financial operations, including accounting and financial reporting, investor relations, financial analysis, budgeting, taxes, treasury, purchasing and all Worldspan facilities.
Prior to joining Worldspan, Wood served as senior vice president and general manager-emerging technologies for ChoicePoint, the nation's leading provider of identification and credential verification services. Wood commenced his tenure at ChoicePoint as senior vice president and CFO, responsible for finance, investor relations, human resources and administration.
Previously, he served in management roles, including as CFO at Lane Bryant, where his responsibilities included all areas of finance, distribution and information technology. In addition, he held corporate finance and auditing positions with Primerica Corporation and General Electric Co.
Wood received a MBA from Loyola College and a B.S. in accounting from Villanova University.
The Weather Channel
Debora Wilson was named president of the Weather Channel, replacing Bill Burke, who resigned in March. Wilson, 46, previously ran the Weather Channel's interactive unit. She was promoted to COO in September 2003 and has worked at the Weather Channel since 1994. Previously, she spent 15 years with Bell Atlantic -- now Verizon -- and worked in operations and product management.
Glen Rollins was named president and COO of Orkin Inc. Gary W. Rollins will become Orkin chairman. Glen Rollins, grandson of Rollins Inc. founder O. Wayne Rollins, began his career with Orkin in 1979 at the age of 14, assisting a termite technician during summers. Since joining the company full time in 1990, he has held positions as salesman, branch manager, region manager, division vice president, and most recently as executive vice president. PCT magazine, the pest control industry's news leader, named Rollins to its distinguished "40 Under 40" list late last year.
Rollins is a founding member of the board of directors of the Professional Pest Management Alliance, an arm of the National Pest Management Association established in 1997 to increase awareness among consumers of the value of professional pest management services. He is a graduate of Princeton University.
Title VII of the Civil Rights Act of 1964 prohibits discrimination against both minority and majority employees on the basis of race, color, religion, sex or national origin. From the perspective of a manager contemplating an affirmative action plan, this broad prohibition creates an unfortunate dilemma.
On the one hand, organizations with nondiverse work forces face potential liability to minority employees if they fail to take adequate steps to achieve workplace diversity. On the other, these organizations are reluctant to adopt personnel policies that take minority status and/or gender into account in making personnel decisions because majority employees are increasingly likely to sue for so-called reverse discrimination.
The law has long recognized this dilemma, but little has been done to resolve it. Twenty-five years ago, in the landmark decision recognizing the limited legality of voluntary affirmative action plans, the United States Supreme Court noted that the expansive antidiscrimination provisions of Title VII often place managers on "a high tightrope with no net beneath them."
In that decision, and in subsequent pronouncements, the Supreme Court has offered only vague advice to those struggling to maintain their balance atop the tightrope toward workplace diversity.
First, affirmative action plans must mirror the remedial purpose of Title VII; they must, in the Supreme Court's parlance, be "designed to eliminate a conspicuous imbalance in traditionally segregated job categories."
This language has been widely interpreted to mean that affirmative action plans that create preferences in favor of minorities and women are only permissible when intended to redress the effects of past discrimination against those same minorities. The precise implications of this necessary precondition, however, are not well settled.
How is a "conspicuous imbalance" shown?
The method by which an employer demonstrates a conspicuous imbalance depends upon the skill level of the positions at issue.
Where positions are unskilled, it is proper to separately compare the percentage of minority and women employees currently in the position with the percentage of those groups in the work force of the surrounding area.
Where the positions are more skilled, however, the percentage of minorities and women in the position must be compared with the percentage of minorities in the work force of the surrounding area that are qualified to fill the position.
How the surrounding area is defined depends on a variety of factors.
What constitutes a conspicuous imbalance?
Despite the guidance concerning proper comparisons, it remains unclear what minimum ratio constitutes a conspicuous imbalance.
Many practitioners follow the rule of thumb that two or three standard deviations is sufficient, but this standard is not infallible and should not be relied upon without exercising caution.
It is also unclear whether statistics alone will suffice to show a conspicuous imbalance. Many courts require additional, qualitative evidence of past discrimination in addition to numbers.
What facts suffice to show past discrimination against minority and women employees?
Evidence of nonparticularized societal discrimination against a particular minority group is not sufficient to support an affirmative action plan. However, most courts do not require that employers show that they themselves have discriminated against minorities in the past before affirmative action plans can be adopted to correct the resulting imbalances.
Aside from these general guidelines, it remains unclear when evidence of past discrimination in a given industry, craft or geographic area -- or some combination of these three -- will be sufficient. It is also unclear whether, or the extent to which, minority or women employees benefited by affirmative action plans must show that they themselves were the victims of the past discrimination alleged.
Second, as a corollary of the first directive, affirmative action plans must be temporary measures; they must be intended to eliminate a conspicuous imbalance, not maintain an existing balance.
While not a per se requirement, affirmative action plans that contain explicit, flexible diversity goals, and/or a system of periodic checks to measure progress toward goals are more likely to survive challenge than those that are open-ended.
Third, affirmative action plans cannot "unnecessarily trammel" the interests of majority employees. Plans that absolutely bar the hiring or promotion of majority candidates or require the immediate displacement of majority employees and their replacement with minority employees are not permissible.
Plans that use inflexible set-asides or quotas to achieve diversity are also unlikely to withstand challenge.
While helpful, these imprecise guidelines provide little comfort to managers contemplating a perilous walk across the tightrope toward diversity. In fact, divining the Supreme Court's guidelines can prove disastrous.
Much to their surprise, managers have found that the same evidence they amass in determining whether a conspicuous imbalance exists in their work force can be used against them both by minority and women employees in traditional discrimination suits and by majority employees in reverse discrimination cases that challenge the validity of affirmative action plans.
This additional Catch-22 only deepens the manager's dilemma. To the extent an organization compiles data, managers must reflect that past discrimination has produced a conspicuous imbalance in its work force. This process is necessary to ensure that a preference-based affirmative action program is legally permissible under the Supreme Court's guidelines. In compiling this data, however, the company may be building a case for minority and/or women employees who sue for discrimination.
Moreover, once a company has determined that affirmative action is warranted, the dangers attendant in following the Supreme Court's imprecise guidelines do not end. The same information used to justify an affirmative action plan often aids majority employees in challenging any system of preferences that is adopted to address workplace imbalances.
Indeed, this information is frequently used in so-called reverse discrimination cases to demonstrate that an organization considered race and/or gender in hiring minority employees.
Many companies have found the Supreme Court's vague, conflicting guidelines unworkable. Indeed, because existing law offers poor guidance on the propriety of using preferences in hiring and promotion to achieve workplace diversity, it is safer from a legal standpoint and potentially more effective over the long term to address workplace imbalances using a more creative, two-pronged approach that centers on recruiting and retention efforts.
First, managers should take steps to ensure that they select employees from a diverse pool of qualified applicants. They should review their recruiting and referral practices to ensure that those efforts are directed at a diverse audience of potential employees. They should use search firms that consistently provide diverse pools of well-qualified applicants.
Managers should diversify the pool of search firms they use to include those that specialize in the recruitment of minorities and/or women.
Managers should advertise employment opportunities in media that reach a diverse audience of potential employees, and should consider participating in, or creating, community-wide initiatives that focus on minority and female recruitment.
Second, managers should take steps to ensure that they retain minority and women employees by combatting attrition.
Companies should institute training programs that ensure that workplace diversity is valued by all employees (mandatory diversity training, for example) and that its potential advantages are maximized.
They should review their general employment policies and procedures and consider updating policies to address the unique concerns of minority and women employees. They should review their training and mentoring programs, both formal and informal, to ensure that minority and women employees receive the same sponsorship, coaching and support that majority employees receive.
Companies should facilitate the creation of minority- and women-focused networks that connect minority employees inside and outside their companies.
This two-pronged approach to creating workplace diversity offers significant advantages over preference-based affirmative action plans.
If done correctly, this approach ensures that organizations select from a diverse pool of well-qualified potential employees and avoid reliance on a preference system, thus decreasing the likelihood of reverse discrimination suits. From a business standpoint, this approach increases the likelihood that, once hired, minority and women employees will thrive.
Sam Matchett is a partner in the Atlanta office of King & Spalding LLP, where he is a member of the Labor & Employment Practice Group. Reach him at (404) 572-2414 or SMatchett@KSLAW.com.
But he waited, and it was worth it.
"I got the sandwich and I got soup, and it was just absolutely phenomenal," Couvaras recalls.
Couvaras, who immigrated to Atlanta in 1994, went back to the sandwich shop and talked the owners into allowing him to open a third restaurant. But he wanted to improve the business systems so the restaurant would run more efficiently and sell more food in less time.
His efforts paid off, and today the Atlanta Bread Co. is one of the fastest growing quick-casual chains in the country, with 170 restaurants in 24 states and $214.5 million in sales.
Courvaras wants to take the chain to 500 restaurants in the next four years. The trick, he says, will be finding the right kind of franchisee.
"We aren't looking for someone who's getting in to get out," Couvaras says. "We're looking for someone who wants to stay the distance with us."
Couvaras spoke with Smart Business about building his franchise and how he plans to become the major player in the quick-casual restaurant industry.
What was the idea behind Atlanta Bread Co.?
I'm an investment banker by profession. What I did in my previous life back in South Africa, part of my investment banking investments were in food.
I was involved in a fried chicken franchise in South Africa; I was involved in a couple steak houses; I started the first Mexican restaurant in South Africa. That was a good part of our investment portfolio.
When I came here, I was taken to a small sandwich shop called the Atlanta Bread Company, and they had two cash registers, they had five sandwiches, one soup and one salad, and people were waiting in line -- I just couldn't believe it. People were waiting in line; there was very slow service.
As they would ring up the receipt, they would take money and send the receipt down the sandwich line. In the end, they would call No. 25, and the guy would come to pick up his sandwich. It would just take forever.
I didn't even want to wait in this line. I was with a business broker, looking for a business when I immigrated here 10 years ago. When eventually I got the sandwich and I got soup, it was just absolutely phenomenal. I said, 'Wow, I'm glad I waited. These guys have really got it down.'
I went back a few times and spoke to the owner, and we started a joint venture together where we opened our third store. They had two stores and I opened up the third. Our store did almost triple what their store was doing.
We put monitors in, we put systems in -- it was just phenomenal. We had different kinds of soups, salads and different things, and no one had to wait anymore. We got rid of the lines. and we thought the stores weren't busy, but the stores were doing three times more.
Then we started concentrating on the staff, the training. We took the commissary that was in the back of the shop and we put it into real industrial facility. We had state-of-the-art bread-making machinery. And we just put a lot into it -- a lot of expertise, a lot of money, and took it to the next level.
What was your expansion strategy in the early days?
The investment banker in me, I thought this should be on every street corner. I thought what I needed to do is to get it right first because obviously we had a limited source of income, we had limited funds, we were immigrants.
The best way to do it, I thought, was to get involved and understand the business. For the first nine months to a year, I was stuck in the business, understanding and really putting a UFOC (Uniform Franchise Offering Circular) together, and getting a good understanding of what this whole thing took. Once I did that, then we started opening stores just in Atlanta, and two years after that, we went down to South Carolina, we started in Greenville, we went to North Carolina, so we just started growing in concentric circles around Atlanta.
We have 170 stories in 24 states, and we're going to five more states this year. We'll open about 50 stores this year. Ultimately, we think this country will hold 1,500 stores, and we'd like to have 500 in the next four years.
How have you controlled growth?
We have good franchisees, we have a good support center, and we have great people within the company who are able to execute that.
You control it by virtue of the caliber of the franchisee you allow into your system. You control it by the real estate you get.
It's everything. The model itself has got to work. The actual system should work. Our system does work. It obviously works better in some places than others, and with certain people than it does with other people. The trick we have is to find the right people who fit our model and our culture, and the second thing is to find the right real estate, and everything else should just work.
What do you look for in a franchisee?
We look for someone who shares the same sort of core values that we have. We look for someone who shares the same vision for business as what we do -- the same philosophy. We aren't looking for someone who's getting in to get out.
We're looking at people who are looking at this as a long-term business, which we believe. Wealth comes with longevity in the same business role, rather than wheeling and dealing in different businesses. We're looking for someone who wants to stay the distance with us, and someone who enjoys doing what our franchisees are doing, which is going out and negotiating real estate, building the store and ultimately selling soup, salads, and sandwiches.
We want someone who enjoys people, and who cares, and that's a big word in our culture. Not only for us and for the business, but also for the guests. And being in the hospitality business, that's one of the single most important things that we look for are caring people.
At the end of the day, you need to love what you're doing. How to reach: Atlanta Bread Co. (800) 398-3728 or www.atlantabread.com
Owners and officers waiving workers' compensation coverage
Owners and officers can and often do waive workers' compensation insurance. However, medical plans do not automatically cover work-related medical claims, unless a rider is elected. Medical carriers seldom inquire about workers' compensation coverage on group paperwork, so this problem can slip through the cracks.
The cost to add 24-hour coverage to the medical plan is many times more expensive than the workers' compensation premium. The most common solution is to keep the owners and officers on workers' compensation.
Offering severance packages that include continuation of benefits
From time to time, employers offer severance packages to ex-employees that include a continuation of benefits for a period of time.
Unless you have set up your eligibility language in the carrier's contracts to include severance package timetables, the ex-employee no longer qualifies for coverage based on your group contract. The problem typically doesn't surface until the end of the normal COBRA timetable (assuming the employee takes COBRA for the maximum duration.)
The employee assumes and may even have been notified by the employer that the COBRA qualifying event was at the end of their severance package timetable. The actual timetable, according to common carrier contracts and COBRA law, is the beginning of the severance timetable, when the employee's hours were reduced. The carrier has every right to decline any claims that were incurred beyond the normal timetables.
The solution is to simply agree to pay for the ex-employee's COBRA premium.
Waiving waiting periods for new hires without written approval from the carrier
Requests for exceptions to established eligibility waiting periods should be rare. Although most requests are approved, they are not guaranteed. Carriers are starting to ask for evidence of insurability on the prospective employee before waiving waiting periods.
The best solution for offering benefits to new employees sooner than normal is to offer to pay their current COBRA premium until they have satisfied the normal waiting period. This typically accomplishes
the ultimate goal of the prospective employee. We recommend requiring the employee to pay his or her normal employee contributions as soon as the company starts paying the COBRA premium.
Canceling current coverage before receiving written approval from your new carrier
This problem occurs more often than people think. Every insurance carrier has some level of underwriting before it will approve coverage. Carriers can take anywhere from 24 hours to 30 days to process your application(s) before the underwriting department approves or declines coverage.
The gravest of problems arises from declining your application for coverage with the new carrier. If you cancel current coverage and afterward are declined by your new carrier, you may be uninsurable. Some carriers are glad to get rid of your risk and would not automatically reinstate your canceled coverage. The end result could include absorbing the entire risk that even the insurance carriers didn't want.
The most common solution is to start your renewal cycle early enough to complete all the required tasks. Every insurance carrier will need some amount of time to process forms and applications before issuing an approval letter.
When employers wait too long to complete these requirements, they are pressed with a new problem, paying premiums for both new and old coverage for a period of time.
You can wait to renew group coverage up to the last working day of your plan year. On the other hand, you are required to give 30 to 60 days notice on canceling coverage, which is any time after the anniversary date.
As you approach your anniversary date without an approval letter for new coverage, your choices are to either double pay your premiums or cancel coverage assuming you will be approved. Can you hear the click of the landmine?
Starting your renewal process and open enrollment early enough is the key to avoiding this problem.
Bruce Bishop (firstname.lastname@example.org) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.
In the past, many business owners have felt the 401(k) plan failed to meet their needs. First, the costs for administrative, compliance testing and recordkeeping could be prohibitive.
Second, the nondiscrimination requirements of the IRS restricted the amount that could be set aside by the business owner and other key executives.
Simultaneously the top-heavy rules could require the employer to make contributions to the plan without receiving much, if any, benefit for the employer. Thus, a significant number of business owners found 401(k) plans to be expensive and unsuitable.
The answer for these companies became a profit-sharing plan, in which the entire burden of funding fell on the shoulders of the employer, or a SIMPLE, in which contributions were severely limited.
In 1998, a provision was added to the IRS code that allows employers to offer a 401(k) plan that incorporates a standard, nondiscretionary employer contribution formula and thus removes the need to satisfy nondiscrimination and top-heavy testing. In other words, highly compensated employees are allowed to contribute the maximum ($13,000 in 2004) without regard to the amount contributed by nonhighly compensated employees.
They are also eligible to receive the employer contribution, which may, combined with their own deferral, in aggregate be more than the $13,000 limit. If a participant is 50 years of age or older, a special "catch-up" provision allows for an additional $3,000 contribution for a total of $16,000.
This is a significant increase over the $9,000 contribution limit for SIMPLE plans in 2004.
Employers establishing a safe harbor 401(k) have two options for making the nondiscretionary contribution. Both require the contributions be fully vested, although they may be limited to full-time employees who have completed one year of service and attained age 21. The method chosen is dependent upon the specific circumstances of the employer.
* Matching contribution The employer matches 100 percent of employee deferrals up to 3 percent of compensation, and the next 2 percent of compensation deferred is matched at 50 percent. This equates to a 4 percent match for an employee who defers 5 percent or more of their compensation.
* Nonelective contribution The employer contributes 3 percent of employee compensation to the plan regardless of participation.
One of the most significant benefits of the safe harbor plan is that the plan sponsor can calculate the total contribution that will be required in a given year, eliminating surprise end-of-year required contributions. In addition, the plan sponsor can choose to make discretionary contributions to the plan each year over and above the safe harbor contribution.
These can be cross-tested, Social Security integrated or traditional profit-sharing. A vesting schedule can be applied to these contributions in order to reward long-term employees.
Since the safe harbor 401(k) plan is a qualified retirement plan, it retains all of the beneficial characteristics of other qualified plans. Assets are exempt from all personal creditors, account balances are transferable to other tax-deferred vehicles, and loans as well as hardship distributions are available.
As these plans have become more popular and widely utilized, there has been a gradual reduction in costs associated with their implementation and administration. Safe harbor 401(k) plans are no longer cost-prohibitive for most employers, and have become a great alternative for sponsors who wish to eliminate discrimination testing in their plan, as well as give their employees the opportunity to participate in their own retirement planning.
It may be time to re-evaluate your company's plan.
Blake Flood serves as vice president of investments for Consolidated Planning Corp. in Atlanta. His responsibilities include securities analysis and selection, as well as portfolio construction. He also manages the company's pension and profit-sharing consulting practice. Reach him at email@example.com. Maggi M. Heffernan, CPC, is president of Applied Financial Concepts Inc., a consulting and administration firm for qualified retirement plans. Her expertise is designing and maintaining all types of retirement plans for sole proprietors, partnerships and corporations. Reach her at (770) 641-1429.
Making money in one's own business and losing it in someone else's is too often the case for successful businesspeople. To help you avoid this misfortune, this article will address common misconceptions.
In managing business, we are used to looking at measurements over defined, relatively short periods. We ask what the profits were last quarter, how much did a salesperson sell last month or other such questions. Measurement of investment results is a trickier matter.
For example, we may put money in a company that is in an industry that is consolidating. The investment may produce meager results for several years until the company is acquired at a premium, which results in a very satisfactory rate of return for the entire period. Real estate investors in raw land will recognize the investment strategy.
Similarly, an investment in a company whose industry is out of favor may not produce a satisfactory result until its industry returns to favor even though the company was doing well. Remember that even sound thrift institutions were out of favor until the savings and loan crisis was resolved.
My point about the fickleness of measurement intervals is well illustrated by this year's extraordinary returns. Clearly, a percentage of this year's returns is making up for the excess in last year's decline. In effect, last year's returns were too low and this year's are too high. Expand the time period and you have a better measure of investment performance.
Looking forward to the next few years, it is apparent to me that success will require diversification, and I mean diversification for the purpose of improving returns, not just lowering risks.
At current levels, U.S. stock markets challenge us to make heroic estimates about revenue growth and profitability enhancement. If the U.S. stock market promises subpar returns, higher returns must come from other avenues. Our firm is constantly searching for the investment area where returns are superior on a risk-adjusted basis, and we then place some of our money in that area.
A few years ago, real estate had better returns than common stock, and we bought REITs and real estate operating companies. More recently, foreign stock markets promised better risk-adjusted returns, and therefore received more allocation.
Two other categories to place funds are in arbitrage and distressed securities. Arbitrage takes advantage of price discrepancies between related securities. Investing in distressed securities requires careful research to find opportunities, usually in the bonds of companies that have encountered severe problems.
Managers of a business usually should stay focused on their markets. In portfolio investing, it is wiser to scan the investment horizon and diversify into different areas.
Marc Heilweil is president and CEO of Spectrum Advisory Services Inc. The firm manages approximately $260 million in assets, including the Marathon Value Portfolio mutual fund. Reach him at (770) 393-8725.
Record numbers of baby boomers are buying second homes. In 2002, 460,000 consumers joined the ranks of second-home owners.
According to the National Association of Realtors, one in 10 Americans owns more than one house. More than half of those say they use the second home as their vacation getaway, while 18 percent plan to retire there, 16 percent are diversifying their income and 15 percent plan to earn income from renting it.
Because buying a second home can be a different experience than buying your primary residence, here are some tips and thoughts to consider.
* Location, location, location. Still a real estate mainstay, you need to determine the best place for you. The most popular settings are near bodies of water and mountains, in more rural settings rather than urban. However, a growing trend has long-time suburbanites buying in-town residences as a getaway or investment.
Research locations for climate, affordability and demographics. Also, think about how long you want to travel to get to your second home. Most experts agree that the ideal distance is two to two-and-a-half hours, with four hours being the outside limit if you want to use it as weekend escape.
* Make a list of your interests. Remember, the point is to enjoy life more and spend it with those you love, so identify the pastimes you enjoy -- boating, skiing, golf, hiking, etc. Your second home should give you the chance to spend your leisure time doing the things you like to do.
* Know the income tax laws. Vacation homes used primarily by the owner may be considered personal residences, and individuals may be allowed to deduct mortgage interest of up to $1 million of mortgage debt on two personal residences and up to an additional $100,000 for home equity loans. Additionally, you may be able to rent your second home for up to two weeks and still take advantage of the deductions in property taxes. Consult your tax adviser for answers to all of your questions.
* Timing is everything. Almost all real estate markets, especially vacation/resort markets, have a seasonal slump, when buyers may be scarce and purchase prices lower. Talk to a real estate professional who knows the market and can educate you in making the best decision.
* Make a vacation out of the search. Spend time in the destinations you are looking at to get a feel for the travel time, the culture and amenities. Talk to a real estate professional about possible rentals in the area so you can gain a better sense of what it would be like to live there.
Time and money are two of our most valuable assets. Investing in a second home may be a great way to increase both.
Jim Schmidt is president and CEO of Coldwell Banker Residential Brokerage. His company includes 27 real estate branches plus specialty divisions - The Condo Store, Builder Developer Services, Commercial and Corporate Relocation. Additionally, the firm offers mortgage, title and closing services through its affiliated companies. Coldwell Banker Residential Brokerage is a member of the NRT family of companies.
For more information, call (404) 705-1500 or visit www.ColdwellBankerAtlanta.com
While that may seem unusual to the average diner, once people learn the identity of the restaurant owner, it doesn't seem odd at all.
The "Ted" of Ted's Montana Grill is Atlanta's own media mogul and philanthropist Ted Turner, an entrepreneur and personality that few people would consider ordinary. The food service venture is a first for Turner, but not for his business partner, restaurant entrepreneur George McKerrow Jr., who founded LongHorn Steakhouse Inc.
What's curious, though, is that the chain of restaurants owned by these two Atlanta men began operations with its first location not in their hometown, but in Columbus -- that's Columbus, Ohio. Both Turner and McKerrow are familiar with the Ohio market -- Turner was born and spent part of his childhood in Cincinnati; McKerrow is an Ohio native and graduated from The Ohio State University.
And while the restaurant business may appear to be outside Turner's realm of expertise, he says the opposite is true.
"It's all about happy customers," says Turner. "That's what television viewers and restaurant customers have in common. If they're not happy, they won't tune in or come back."
So far, customers and critics alike are happy.
"The food is good, the fine detailing great, and the crowds leave happy," wrote Journal-Constitution food critic John Kessler.
Ted's Montana Grill was also named Best New Concept for 2003 by Nation's Restaurant News, and sales are brisk.
The restaurant business is a good fit for Turner's business portfolio because it allows him to sell the 32,000 head of bison he raises on his Montana ranch, "Bar None."
"Turner's ranch is one of the largest commercial bison ranches in the world," says McKerrow.
Bison figures prominently on the restaurant's menu, and with recent health scares concerning the nation's beef industry, that might not be a bad thing.
Why not restaurants?
A look at Turner's history shows that he is a man who is not afraid of trying new things. In January 1980, he created CNN, the first live, in-depth, round-the-clock news television network. A second all-news service, Headline News, began operation in January 1982, offering updated newscasts every half hour.
Turner then originated the Goodwill Games in 1985 as an international, quadrennial, multisport competition.
From news and sports, he turned to entertainment, and continued to build his cable empire. In March 1986, Tuner Broadcasting Station acquired the MGM library of film and television properties for a reported $1.5 billion. This library formed the initial programming cornerstone of TNT, launched in October 1988.
In December 1991, Time magazine's then-"Man of the Year," acquired the rights, library and production facilities of Hanna-Barbera Cartoons. The Cartoon Network launched in October 1992.
Turner attributes his voracious work ethic to his experience growing up working for his father's company.
"I worked for him when I was going to school," Turner says. "I started working for him when I was 12 years old, and in the summer I worked at his billboard business in every area. I was a full-time employee. He paid me 20 cents an hour under minimum wage. I learned a lot. By the time I was 21, 22, I knew the billboard business inside and out, every facet of it."
Turner's empire took its largest jump in October 1996, when he became vice chairman of Time Warner with the merger of Time Warner Inc. and Turner Broadcasting System Inc. He oversaw Time Warner's Cable Networks division, which included the assets of Turner Broadcasting System Inc., the CNN Newsgroup, HBO, Cinemax and the company's interests in Comedy Central and Court TV. At the time, Turner's net worth was estimated at $9.1 billion.
Outside of his business ventures, Turner has made his mark as one of America's most influential philanthropists. In September 1997, Turner announced his historic pledge of up to $1 billion to the United Nations Foundation. To date, he has awarded more than $575 million to the United Nations.
Turner also teamed with former U.S. Sen. Sam Nunn to launch the Nuclear Threat Initiative, a foundation dedicated to reducing the threat of nuclear weapons. The Turner Endangered Species Fund works to save animals threatened by extinction, including the black-footed ferret, condors and desert bighorn sheep.
During all this, Turner, in January 2002, managed to find time to launch Ted's Montana Grill.
"Businesses have an awful lot in common," Turner says. "Basically, it's the same philosophy: Customers come first, work hard, provide a great service at a competitive price, and then service the daylights out of your customers so they're always happy that they're getting great service. That's the only way you can be successful over time."
Where the bison roam
Turner knows business, but a restaurant expert he wasn't. That's where his partner McKerrow, who introduced Turner to the restaurant's concept, comes in.
McKerrow has 30 years of experience in the restaurant business. Nation's Restaurant News credits him with giving "birth to an entire casual-dining segment" when he founded LongHorn Steakhouse Inc. more than 20 years ago.
McKerrow opened LongHorn Steakhouse as a neighborhood restaurant in 1981, at a time when Atlanta had few choices in casual dining. He successfully evolved that single Atlanta location into RARE Hospitality International, a nationwide casual dining group with 190 locations that includes the Bugaboo Creek and Capital Grille chains.
Recently McKerrow, along with other partners, opened a new restaurant in the Buckhead area called Blais, named after its chef and creator Richard Blais.
So far, the Ted's Montana Grill chain is a hit in all of its 15 locations. Each restaurant generates $2 million to $2.5 million in sales a year, according to company estimates.
"The one that's grossing the most is in Littleton, Colo., by a little bit," Turner says. "They're all doing well, but Littleton has been the most successful. Denver is where the National Bison Association is headquartered. It's been historically the center of the bison industry. It's right out there in the middle of the Rocky Mountain time zone where the bison are most prevalent."
But Turner isn't ignoring his hometown. There are eight restaurants in the Metro Atlanta area, with two more coming soon. The duo plans to open 24 locations this year and double the number of openings every year, with the ultimate goal of 500 restaurants.
"We're learning, as a lot of other restaurants have, that the suburbs are generally a more fertile area for casual dining business than an industrial business area downtown, which is, to a large extent, vacant at night when people go home," Turner says. "But we're still successful, even in those locations. It's just that the grosses aren't quite as high as when you're closer to where people live.
"It's a lot easier for them to jump in the car and drive a couple of blocks instead of a couple of miles."
Food for thought
The key to the chain's success, though, is not only in choosing the right location, but in its employee education strategy.
"We started a centralized training facility in Atlanta," McKerrow says. "It's university style training ... Typically, restaurants offer in-store training, with the new teaching the new. With our approach, we hope our people will grow into a culture of success -- with high standards. We want to be leaders in the industry and to have a place where people can have fun and know they are respected. At the training facility, Ted can be there and I can be there more regularly and inspire these people.
"We hope our people will feel good about what they're doing, work harder and be more successful. We've made a big investment in that university."
The men recognize, however, that competition for your food dollar is a major factor. Restaurants are expected to generate $440.1 billion in sales this year -- $1.2 billion a day -- according to the National Restaurant Association's industry forecast.
"Every restaurant is a competitor," Turner says. "But no one has the niche that we do. We've got the authentic Old West motif, and we feature bison. We have all the other stuff, too. But we've got a niche and we're all fresh. There are others that use fresh ingredients, but they're all chef-driven and very expensive. At our price point, we're the only restaurant I know of."
After all, being unique, launching innovative products, is what has made Ted Turner a success since he introduced then-unheard-of around-the-clock news in 1980.
"At the end of the day, it's this -- we did try to create a niche," says McKerrow. "That's what I did with LongHorn Steakhouse. Just like what Ted did at CNN. It wasn't that news wasn't being broadcast, he just did it a different way.
"That's what we're doing here. We're trying to do it a different way, and we're trying to do it better than anyone else. That's what we have in common. We both like to win, and we like to do things better than anyone else, and we're driven to get that done."
HOW TO REACH: Ted's Montana Grill, (404) 266-1344 or www.tedsmontanagrill.com