Katie Carter, executive director of the Columbus Affiliate of Susan G. Komen for the Cure, hears stories all the time from volunteers about how they or someone in their lives have been touched by breast cancer. But one in particular sticks out.
A Columbus-area woman with young children was struggling with her stage IV breast cancer, undergoing chemotherapy and radiation. She received a drug that was developed in part through the donations of Susan G. Komen for the Cure.
“She’s doing well now,” Carter says, “but when you’re talking about a drug that Komen was a part of — that saves someone’s life and continues to make them live longer — that’s what it is really about.”
Susan G. Komen for the Cure, which seeks to help find a cure for breast cancer, is the largest non-government funder of breast cancer research in the world, having donated $58 million to research last year.
“We’re here to save lives, but we’re also making an impact from a local level,” she says.
Komen has been involved, at least in some way, in every one of the breakthrough cancer treatment drugs, according to Carter.
“Again, there are lots of collaborations, so you need the researchers, and you need the pharmacy to create it and mass produce it and get it back into the hands of the patients, but it’s a fact that everyone who was a part of that breakthrough helped save her life. And we had a small part in that.
“That’s what really matters, and the impact we make every day in the lives of so many that we don’t hear stories about. We know that we’re continuing to do great work, and we do make a difference.
“But we need help,” she says. “We need to continue to make that help through our community and continue to raise more money, so we can give more to research, and we can give more to our local programming to continue that.”
Such goals and the many volunteers at Komen Columbus helped the affiliate win the Affiliate of the Year award for 2013 from the national organization.
The affiliate strived to diversify funding, increase awareness and expand outreach communication activities to be visible throughout the year. Through the collaboration with corporate sponsors, community support and dedicated volunteers, Komen Columbus was able to fund 20 breast health programs in Central Ohio and invest its 20 millionth dollar toward the organization’s mission — to save lives and end breast cancer.
Here’s how Carter and her staff manage 1,000 volunteers as a team and engage them on the mission of one of the most widely known brands in its field.
Getting in position
One of the keys to keeping a workforce engaged is finding an opportunity for employees to exercise their talents. “Do the work you love, and love the work you do.” is more than an aphorism — it’s the attitude the employees at a successful organization exhibit.
Likewise, Carter finds matching volunteers with a role that makes the best use of his or her aptitudes leads to successful outcomes.
“As long as you place everyone in the right position and in the right seat, you’re going to be successful,” Carter says.
The Columbus affiliate has new people coming in all the time who want to be involved. Carter says they don’t just say, “Great, thanks for joining. Here’s a job for you.”
If they aren’t in the right position, the volunteer might get bored or lose interest.
Instead, a Komen Columbus staff member interviews the volunteer, a procedure that is almost like a job interview, to get an understanding of his or hers passion and why the person is interested in volunteering. Finding out the story is the first step.
“Usually the volunteer has a story — my mom was diagnosed or my aunt or my grandmother or my wife, or I myself am a survivor,” Carter says. “And they say, ‘I just want to give back,’
“Anytime you have a volunteer, they have to be engaged in your mission, and believe in it and entrust in it, and know that they are there to help,” Carter says.
The second matter is asking what the person has done, and finding out about his or her background and interests.
“I think we all know that whether you’re in a job or volunteering, you have to love what you do. And if you don’t, then it’s very hard to motivate someone,” Carter says.
“You want to sit down and ask the right questions, and make sure that it’s a good fit for the organization and that it’s a good fit for that volunteer.”
Although communication skills are helpful because there are a lot of jobs where volunteers interact with other people, there are other ways to make an impact, Carter says. Whatever roles they fill, volunteers, staff members, board members and corporate partners know the strength of the organization’s mission.
Keeping the engagement
The mission and vision statements of a company, when used properly, guide an organization to inspire employees to reach its goals.
But how you maintain inspiration in any organization, for-profit or not-for-profit, where burnout is a concern, may be a large factor in your success.
Susan G. Komen for the Cure allows people to help in many ways, whether by donating money, participating in events or donating their time and talents to make the organization grow and be what it is today, Carter says.
That flexibility keeps the nonprofit strong — as long as it stays true to its vision of a breast cancer-free world.
The affiliate works with volunteers’ schedules, and seeks to let them know that whatever they can give helps.
“As organizations grow, people come and go, and they serve their time. But they are still always connected by it,” Carter says.
“And once you leave, you don’t really leave. It’s one of those things where you’re always connected by Komen or breast cancer,” she says. “So we always say that even though people maybe don’t stay with us every day, they are still with us in spirit, and support the organization.”
For example, the Columbus affiliate’s founders still come to the annual race and are engaged with overall community support, even though they may not be involved with day-to-day operations.
Carter says it’s just like anything else, whether it’s a job or an organization, you’re going to have turnover in terms of people coming and going. As others get involved, however, new ideas and innovation can come out of it.
“That’s OK with us as long as we know that we always have a core volunteer base, as our go-to,” she says. “Then as people move on, they get replaced and that’s OK. It’s good to have change and get others involved.”
Stay true to your mission
There are always potential challenges facing an organization. They can range from financial woes to straying away from the mission. But once you notice a growing challenge, it’s time to execute your response.
“I think everybody always has challenges,” Carter says. “I think you have to adapt, and I think that’s the biggest thing. You have to know why things are changing, whether it’s good or bad.”
The next step is to take an introspective look at the situation.
“Evaluate where you’re at and what needs to happen to make those changes, because in any organization, whether it’s nonprofit or business, things do change,” Carter says. “Whether it’s through financial crisis, the economy has issues, or there are changes in laws, or there are just changes in how people give — you have to adapt.
“Make sure that your vision and your mission are true. It’s the same vision, but the way we’re going to adapt is we’re just going to do it a little differently. But our vision stays the same, and we just adapt and make those changes that we need to make to continue that vision and make sure it goes forward.”
In any organization you are going to have times that are difficult or challenging.
“You just have to make important decisions that go toward that vision,” Carter says. “And I would hope that our organization shows that. We are great stewards of our funds, and we try to continue to say that to the public, and to our sponsors and to everyone that we serve. We do it the right way, and make sure that it goes right to the mission, which is research as well as providing direct service and funding that money here to keep it local.” ●
- Matching the right person with the right job allows you to succeed.
- Be flexible, and know that new ideas can come out of change.
- Adapt, but stay true to your mission.
The Carter File:
Name: Katie Carter
Title: Executive director
Company: Columbus Affiliate of Susan G. Komen for the Cure
Education: Undergraduate degree in psychology from Capital University, and a master’s degree in public administration from Ohio University.
What was your first job and what did you learn from it? I worked at an IGA grocery store. When you’re young, you’re happy to have a job and finally have your own money, but as you grow you realize those first jobs were stepping-stones that added to the experience of your life. One of the great things about it was interacting with people.
I think that’s what I love about my job now and what I’ve always loved about jobs — the interaction with individuals, whether it’s employees, volunteers or corporate partners.
From every job I’ve ever had, one of the most important takeaways has been treating people with respect.
Who do you admire in the business world? I’ve been surrounded by great board members in our community, and I think from each and every one of them you learn something different. Being here 13 years, I’ve been engaged with probably a few hundred people. So, I would probably have to say they’ve been a big influence on my life — some more than others — but I think you have certain people who you’ve taken more from. They’ve made me grow as a person. How do you repay that? It’s really hard to.
What’s the best advice you’ve ever received? The biggest advice that I’ve always tried to emulate is to just treat others how you want to be treated; work hard and good things will happen. It’s simple but true.
What’s your definition of success? I think for me, success is if you’re looking around the room, knowing that you’ve got the right people in the right place, and they support you every day. You love working with them, and they love working with you for one common goal — and that is to end breast cancer. It’s not just one person. It’s thousands of people that make it all possible.
Learn more about Komen Columbus at:
How to reach: Columbus Affiliate of Susan G. Komen for the Cure, (614) 297-8155 or www.komencolumbus.org
Elmer’s School Glue is synonymous with education. We all remember buying school supplies in the fall and packing the iconic white bottle with its orange cap in our backpacks.
“Elmer’s has been a staple in schools for many years, and we’ve been asked, ‘How do you make glue?’ many times,” says Terri Brown, director of consumer engagement at Elmer’s Products Inc.
The Westerville-based company understands that students and teachers are one of its core user groups — and to help solidify that relationship between business and consumer, Elmer’s works extensively with the education community.
“Through the Elmer’s Teachers Club, we provide lesson plans, creative classroom project ideas, discussion boards and more. Being a trusted resource for this community helps to solidify Elmer’s as the brand of choice,” Brown says. “Nationwide, school systems have been affected by massive budget cuts. If we want to see students succeed, we consider it a responsibility to provide the resources we can to make that happen.”
Having a two-way conversation
Developing a two-way dialog between your company and consumers not only solidifies brand awareness, it also helps with development.
“Elmer’s has always been true to its desire to be the most trusted school glue in the classroom,” Brown says. “It’s in our DNA to be a part of classrooms, and Elmer’s has been able to accomplish this by providing resources, being authentic and developing beneficial content for parents and teachers.
“The Elmer’s Teachers Club has given us the opportunity to have a two-way conversation with educators. We get to learn their needs and respond to these through the content we develop. The feedback we receive from this highly influential user group is invaluable.”
Educating the future workforce
Reaching out to the education community isn’t just about teachers; it’s about educating students, who are future employees.
The latest interactive lesson plan developed by Elmer’s, “The World of Glue: An Investigation of Adhesives,” teaches students about the science of polymers and common adhesives. It’s supported with hands-on activities and the award-winning children’s book, “Too Much Glue,” by Jason Lefebvre.
“Now, students can think of Elmer’s glue in a more holistic way from its ingredients to how it makes things stick. Glue is more than the adhesive used to make an art project — it’s science in and of itself,” Brown says. “Glue is fun for kids, and this lesson plan helps students understand how an everyday item like glue actually works.”
Another example is Elmer’s Presentation Ready microsite, which provides parents and students with steps for creating presentations, such as science fair projects, and connects them with the right products to put the assignment together.
“Elmer’s becomes a better company through initiatives like this because we’re providing innovative content that helps advance and educate students, and ultimately our future workforce,” Brown says. ●
How to reach: Elmer’s Products, Inc., (888) 435-6377 or www.elmers.com
Tyler’s Light creates its own blueprint for the silent stigma of addiction
Wayne Campbell, the founder and president of Tyler’s Light, knew when he started the nonprofit in 2011 the group needed to be about more than his son’s death, which shocked the Pickerington community.
In order to create longevity, the organization had to become more about the issue than the personal story.
“There are organizations out there trying to do what we’re doing, but they are two-person, five-person operations that were basically the same thing: Born out of a tragedy in a family and community,” Campbell says. “They start with a lot of activity and emotion towards it, and then in a year or two it fades away because the shock is gone, and then funding becomes an issue.
“We’re obviously different because we’ve been here for 2 1/2 years and we continue to grow — going out to more places, reaching more people and collaborating with more organizations,” he says.
Tyler’s Light has spawned other organizations, including an affiliate in Cleveland called Robbie’s Voice. Groups on the West Virginia/Ohio border and in Kokomo, Ind., have expressed interest in starting their own organizations as well.
“It’s almost like franchising. Since we can’t be everywhere, if we can help start other little satellite operations that would make our numbers grow,” Campbell says.
Looking at the bigger picture
Started after Tyler’s death from a heroin overdose two years ago, the volunteer-based grass-roots organization serves as a forum to equip parents and youth with information and resources to help them choose a drug-free life, while providing resources for family members and/or friends who are involved in the battle to defeat drug abuse.
Since its founding, the organization has slowly moved away from being about Tyler. It’s about the issue — all the other faces, the Matts, the Janes, the Marys — children’s lives that have been wrecked by addiction.
Addiction is looked at as a poor choice, bad character or bad parenting. But it’s a disease, no different than cancer, HIV/AIDS or Alzheimer’s — only more prevalent.
Managing and attracting volunteers is extremely difficult, Campbell says. If you don’t have a personal connection, it’s hard to spend the amount of time that’s needed.
“Everybody wants to volunteer for the cancer walks. It’s easy to tell a story about a cancer survivor or fatality,” he says. “But people won’t volunteer unless they feel comfortable with the subject.”
And, according to Campbell, people in high profile positions or with status can’t do it yet. The CEO of a company, the mayor of a town or the owner of a small business may have it in their house, but they can’t tell anybody about it.
It’s getting better though, Campbell says. The governor and attorney’s general office are openly, via the media, taking addiction on. On Jan. 8, Gov. John Kasich’s office came out with the “Start Talking” initiative to try and help communities in seven Ohio counties fight the opiate epidemic.
When those things happen, Tyler’s Light makes more sense. You just need to keep moving forward, Campbell says. You connect dots, and then you keep bumping into new and talented people who can help you. ●
How to reach: Tyler’s Light, www.tylerslight.com
A 52-year-old businessman has sole ownership of a business and his wife takes care of their home. They have three children, ages pre-teen through early college. One or two of the kids have voiced an interest in working in the business, but the businessman realizes his children won’t be ready to take his place, even the oldest, as talented as she is, for a while.
So, what does he do over the next 10 or 15 years? Does he need to stay until they are ready to take over? What if something takes him out of work for a year, such as an illness or injury?
“Having a long-term plan is always important, but you’ve got to think of the contingency. What if something unexpected happens?” says Ricci M. Victorio, CSP, CPCC, ACC, managing partner at Mosaic Family Business Center. “And if you don’t want to close the doors, then you have to start thinking: ‘What’s my backup plan?’”
Smart Business spoke with Victorio about creating a leadership team to bridge the gap between your leadership and when your successor can start running the company.
What’s the first step to creating a backup succession plan?
First, establish a path for your children so they know what’s expected of them — if, of course, they are even interested in joining the company. What kind of education and experience do they need to be a qualified applicant?
If you have more than one child interested in working for the company, you’d be wise to understand how they can best contribute without stepping on each other’s toes. Don’t set them up to compete with each other. Let them know that there are no elevators to the top. Once they come to work, it is important to you that they learn the business from the ground up, earning their promotions and respect of their co-workers.
Then, if there is a gap, you need to think about how to protect your company.
How can you ensure the company stays successful, no matter the situation?
Generally, small businesses are run in a hub and spoke management style. Lots of people have responsibilities, but the business owner makes the decisions.
Some of these owners are partners with a family member, which can provide a built-in succession fail-safe. However, many may need to establish a leadership team comprising trusted key managers capable of running the business in their absence to bridge the succession gap.
Rather than relying on one person who could, despite all good intentions, fail miserably or leave for a better offer, a management advisory team with executives and managers from various departments is the perfect leadership contingency platform. Then, if you go down, for whatever reason, you have people who can run your business as if you were there. And this leadership team can mentor your children when, or if, they join the business.
In order to get them to think beyond their regular management duties, incentivize them for stepping into a leadership role. For example, put a percentage of profits into a deferred compensation retirement plan. If you make it a 15-year vested policy, it ensures they stay interested in the company’s performance long term.
The team will need to meet on a regular basis to learn how to work together, share resources and be able to have a round-table discussion where everybody isn’t looking at the boss like a deer in the headlights. It’s like bringing an MBA training program to your conference room, tailored to fit your business and group.
You will also need to create a charter agreement that identifies your vision for the advisory board, along with specific objectives, expectations, benchmarks and incentives. Create a five- to 10-year strategic plan that will guide the team in decision-making. Begin transferring authority to make decisions as you become comfortable with this team.
Over a period of time, usually three to five years, there will be a gradual transition as trust develops between the owner and managers. Managers will respond to your trust and feel respected as they step up in responsibility to make operational decisions. You will have passed on the core values and decision-making criteria that made your business so successful in the first place to a team of people who can protect your legacy to survive and thrive into the next generation. ●
Insights Wealth Management & Finance is brought to you by Mosaic Financial Partners Inc.
Historically, private business owners overestimate what their comprehensive general liability (CGL) policy covers, and therefore don’t buy the additional insurance they need.
According to the Chubb 2013 Private Company Risk Survey, 44 percent of private companies have experienced at least one claim in directors and officers (D&O), employment practices, fiduciary liability, employee fraud, workplace violence and cyber liability in the past three years. More than half of the executives interviewed mistakenly believed they had some form of coverage under their CGL policy.
As business owners run into a wide range of costly lawsuits, government fees, data theft, criminal activity and employment claims, they must deal with these disruptive issues, which tax their administrative capabilities and put a financial drain on the institution. Until a company experiences an event that isn’t covered by CGL, however, a business owner may not realize where the coverage gaps are.
“They are starting to understand that they have a problem but very few of them actually buy the extra insurance,” says James A. Misselwitz, CPCU, vice president at ECBM.
Smart Business spoke with Misselwitz about where CGL falls short and what to do about it.
What do private business owners need to know about CGL coverage?
- Cover legal liability arising out of bodily injury and property damage, and also advertising injury and personal injury (libel and slander).
- Defend the company from lawsuits rising out of their operations.
- Defend against infringement on a trademark or copyright.
- Defend and litigate publications that involve liable and slander.
However, it doesn’t protect against:
- Wrongdoings of a director or officer of the company.
- Employment-related lawsuits, such as retaliation, harassment or sexual bias.
- The personal liabilities arising out of mismanagement of a pension or 401(k) plan.
- Professional liability risk arising out of services rendered for a fee, such as charging for estimates and quotes.
With D&O liability, why would a privately owned company be affected?
It only takes a marriage, divorce and/or another generation to get involved for a company to become vulnerable. Let’s say a second-generation heir is going through a divorce that isn’t amiable. Now, their spouse may feel like they have a right to an asset that they think is being mismanaged.
Almost all CGL forms exclude cyber liability arising out of social networking and social media, even as defamation and copyright infringement lawsuits increase in this arena. With social media, nothing is as simple as it seems and the ramifications of doing something wrong can be devastating.
In addition, business owners may believe their required ERISA bond covers fiduciary liability. An ERISA bond only protects a retirement plan’s assets from theft. It doesn’t protect the personal assets of fiduciaries who are found in breach of duty, such as making poor investment decisions. For that, you need to buy fiduciary liability insurance.
What’s your advice for business owners who may not have enough coverage?
You need to examine the activities of your company closely, while comparing current insurance policies, so that large holes in coverage don’t crop up. Basically, business owners need to discuss with a knowledgeable insurance broker what risk they can effectively transfer to an insurance company.
But as business owners start becoming aware of areas where coverage is a concern, some still fail to pull the trigger on an up-to-date insurance program. Many think this kind of additional coverage is expensive. However, the marketplace has already responded with insurance companies forming management liability packages that combine risks and lower costs.
The other problem is that some insurance brokers are unable to have an in-depth discussion about these types of coverage. Interview your broker to assess your risks,
and whether or not those risks have been transferred. If you feel your broker is not knowledgeable, then it may be time to call another broker. ●
Insights Risk Management is brought to you by ECBM
Two years ago, multiple bidders for commercial property in Northeast Ohio would have been unheard of. Now, market power has shifted from the buyer/tenant to owner/landlord. Vacancy rates have dipped and the quality of the product on the market has significantly decreased, says George J. Pofok, CCIM, SIOR, senior vice president at CRESCO.
“As the market and the economy continue to improve, with the lack of quality product out in the market, I think we’re going to see more multiple-bid situations,” Pofok says.
Smart Business spoke with Pofok about what to do when you’re competing for commercial property.
What determines if a property might have multiple bidders? Is it the type of building or location?
Right now, multiple offers are happening more with industrial properties as opposed to office — and a lot of that has to do with the quality of the building. Class A Industrial buildings are in limited supply. So, a property’s cleanliness, building amenities and ceiling height make it more desirable and thus more likely to be competitive.
Location is important, including freeway accessibility, being near public transportation and your labor force, but amenities to a building sometimes outweigh location. If you were to build a new industrial building today versus purchasing another facility already equipped, there are cost savings in addition to being able to get widgets to the market quicker.
How does the bidding process typically work with more than one bidder?
Everything ends up being a one or two-step process, usually. The seller might give you a revised counter or just send you a letter saying, ‘We have multiple bids. Give us your highest and best offer.’ Then, you’ll have a couple of days to a week to respond. Obviously, getting your response in by the timeline the seller dictates is critical, but the terms of the offer are what drives everything.
There can be a lot of back and forth or the seller may end up picking a lead horse, and then try to fine-tune the economics with that bidder. They may like your offer but have one objection. They’ll come back to you about that objection.
So, how can you make your offer the most attractive one?
You’ll need to consult with your broker and your lawyer, and most importantly not play games. If you’re going to play games, you’re going to lose. Many buyers or tenants still think, ‘I’m going to get this great deal on this building.’ When in fact, the market has shifted in favor of an owner/landlord.
You want to be as highly competitive and flexible as possible. In addition to increasing your offer, some advantages a buyer or tenant can use are to pay cash or increase the amount of earnest money. Earnest money is put toward the down payment when the transaction is finalized but may be kept by the seller if the buyer defaults on the purchase.
It helps if you’re able to shorten the amount of days you have requested for due diligence or financing contingency, where you apply for lending. For example, 90 days may be too long under these circumstances; something in the 45-day range is better.
Also be flexible when negotiating reps and warranties. Buyers sometimes ask for the owner to warranty and represent various issues regarding the title or environmental concerns for an extended period of time. However, owners just want to sell, cut the cord and be done. Consult with your attorney when discussing these issues. Money talks. So, increasing your offer from a purchase price perspective is critical, but it’s not the ultimate factor. If an owner has two offers and one is for $50,000 less, but the terms in the lower offer are much more palatable with less due diligence and more earnest money, he or she may be willing to take the lower offer. Sellers and landlords are going to look at everything.
Are buyers assuming more risk under these circumstances?
At times, yes, it’s riskier. You may take a little more risk than you’d prefer. If the terms of the deal get too onerous, walk away. There will be other opportunities, but it needs to make sense. That’s why you definitely want to leave the emotional part out of it. Look at it from a business perspective, and put together the best offer you can. ●
Insights Real Estate is brought to you by CRESCO
Technology is impacting business owners at jet speed with accelerating volatility and rate of change — and it’s caught some off guard.
Historically, if you were making a product or providing a service, your only job was taking care of your customers, says Bill Julka, vice president of Blue Technologies Smart Solutions.
“Now, technology has become so pervasive, it has become the business. If business owners neglect technology, they do it at their own peril,” he says. “They have to pay attention — hiring the right people and interfacing with the right vendors who can help them navigate through technology and all its myriad uses in their own business.”
Smart Business spoke with Julka about business technology and IT budgets today.
What has changed with technology?
Technology has gotten complex. The days of needing computers and an IT department for just basic accounting functions are gone. With social media and mobile devices, the world is connected any time, anywhere. Employees want to print from their mobile devices and access office computers, information and databases when on vacation.
This makes it difficult for business owners to do everything in-house. Companies depend on reliable technology vendors, which act almost like business partners. By partnering with somebody attuned to technology, business owners aren’t spending time in areas they aren’t comfortable with.
When creating an IT budget, what’s important to understand?
Many business owners feel their largest discretionary expense is IT. But you need a consistent IT budget, good times or bad. In good times, it helps you run your business and create satisfied customers. In bad times, you need to spend the IT dollars wisely to improve efficiency to gain a competitive advantage and provide better service at a lower cost.
When setting IT budgets, management needs to understand and be able to measure the direct relationship between IT and productivity. A trusted, proven vendor can help provide analytics that show the results of technology adoption.
What are common IT budget concerns?
Many business owners feel IT budgets keep increasing, while the level of service deteriorates. They also complain about the unpredictability. For example, software upgrades aren’t easy to manage.
In addition, companies are finding they need electronic content management software to take full advantage of their technology, research and data. Without software to rapidly search the enterprise’s servers, efforts are duplicated or wasted, further stressing IT budgets.
Why is outsourcing a good answer, and when doesn’t it work?
Technology has indirect costs often left off IT budgets. The budget needs to account for the energy it takes to house infrastructure or the cost of rolling out technology. With labor, outsourced support can provide services more efficiently. The outside provider monitors a network cost effectively with better-trained people assigned over a large number of clients. Also, what if you need one-eighth of a network engineer and half of a firewall expert? Outsourcing helps a company only pay for what it actually needs.
One company switched to an outsourced vendor and its IT budget went from increasing 10 or 20 percent annually to 3 percent. Customer service went up in a measurable manner. With an outsourced vendor, costs are predictable, no matter the technology and how often it’s upgraded.
However, there are exceptions, based on the product or service. If your unique product or service doesn’t have skilled vendors for your particular area, you won’t achieve economies of scale. Also, you may not want to share proprietary knowledge with anyone, even an outsourced vendor.
What’s key to measuring ROI?
First, calculate where you are now. Then, implement the technology and gauge key performance efficiency measures, with help from your vendor. Certain efficiencies are instantly noticeable, such as customer service or costs. Other complex technologies may take a few months or a year to generate results. It’s a matter of developing a strategic plan, following it and then measuring the results. ●
Bill Julka is vice president at Blue Technologies Smart Solutions. Reach him at (216) 765-1122, ext. 8211 or firstname.lastname@example.org.
Insights Technology is brought to you by Blue Technologies
If your company sponsors a pre-approved defined contribution retirement plan, such as a 401(k), money purchase or profit sharing plan, your plan documents will need to be completely revised and restated sometime between May 2014 and April 2016.
The IRS requires this restatement process every six years to incorporate all of the regulatory and legal changes that have been imposed by Congress. Without it, the plan will lose its tax-favored status.
Your retirement plan administrator should be having a dialog with you about this already, says Bonny Lightner, J.D., Manager of Technical and Legal Compliance at Tegrit Group.
“We try to get to people right away, especially if they haven’t done anything with their plan in the past six years,” she says. “If plan sponsors know in advance, they can budget for it and have time to be able to really look at it.”
Smart Business spoke with Lightner about what employers need to know regarding restatements, and how to take full advantage of this opportunity.
Which plans must undergo restatement?
About 80 percent of all retirement plans rely on pre-approval letters from the IRS, where the IRS gives its ‘blessing’ to a plan document format with certain limited elections for plan provisions. While all plan documents are extremely complex, a pre-approved document can make a plan less expensive to create and operate than an individually designed document.
All pre-approved defined contribution plans must undergo the restatement process during the upcoming two-year period.
What does the restatement process involve?
This process involves the document drafter — such as a third-party administrator — reviewing, rewriting and updating the plan and summary plan descriptions (SPD), and then assembling and delivering the plan, SPD and related policies to the plan sponsor for approval and signature. Related policies may include separate loan policies, qualified domestic relations orders policies — which are used as part of divorce settlements to divide up a participant’s 401(k) benefits — or withdrawal policies.
How else can business owners benefit from going through a restatement, aside from retaining their IRS tax-favored status?
The plan restatement process is an opportune time for a comprehensive plan review. Don’t just update and restate the document, have your document drafter take an in-depth look at the plan in order to see if it is really meeting your needs. Use this time to:
- Confirm the document provisions match the actions of how the plan is being operated.
- Identify whether changes are necessary or wanted going forward, such as wanting to add a Roth feature.
- Enhance the plan design to be more in line with your objectives, such as tax and retirement objectives, based on workforce demographics. For example, if a person is 50 years or older, he or she can defer catch-up contributions on top of his or her regular deferral amounts. If an employer sees its workforce is aging, the company might want to add that.
- Maximize the value of the plan by making sure that it still meets the needs of your company and its employees.
This type of consulting may or may not be part of the restatement fee, but either way it’s something to strongly consider. Otherwise, six months down the road, the plan sponsor might say, ‘I really don’t like X provision.’ The change will then require an amendment — and amendments have a fee.
Even if you love your plan the way it is and want to keep all plan provisions the same, you still must have your plan updated during the restatement period from May 2014 to April 2016. The fee to restate the plan for IRS compliance may be paid from the plan’s assets if the plan document permits.
Remember, failure to restate a pre-approved plan could result in loss of the plan’s tax-favored status with the IRS. This in turn could result in loss of deductibility of employer contributions to the plan, immediate recognition of income to plan participants on vested account balances and loss of tax-exempt status to the plan’s trust. Missing the restatement deadline is a serious matter. ●
Bonny Lightner, J.D., is manager of Technical and Legal Compliance at Tegrit Group. Reach her at (330) 983-0560 or email@example.com.
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Emergency room overutilization is a prevailing problem for most employers. For example, looking at HealthLink’s book of business, almost invariably more than 65 percent of ER visits are for non-emergency reasons. They fall into the categories of disease and virus or symptom, such as headaches, gastroenteritis, sinusitis and influenza.
“The cost of an average ER visit ranges from $1,300 to $1,500, but the average urgent care or client visit ranges anywhere from $120 to $500,” says Mark Haegele, director of sales and account management at HealthLink.
“If you move any of those visits from the ER to other care settings, you’re saving roughly $1,000 per visit,” he says. “And hundreds of visits add up to hundreds of thousands of dollars.”
Smart Business spoke with Haegele about turning member information into intelligence, in order to control plan costs.
What’s the first step to creating a strategy to decrease ER utilization?
It’s important to look at your health plan membership data to find patterns. Then you can focus on a communication strategy and specific messaging to change behavior. It helps if your health care plan is partially self-funded or self-funded because you typically have access to more data.
To determine what actions to take to control ER utilization and cost, first look at the number of visits your group has in 12 months, comparing that year-over-year. Even if you’re not seeing an increase, there will be opportunities for cost containment.
Also, find out if you have a frequent flier issue. Are people going to the ER three or more times in a given year? Are some going five or more times? Determine what days of the week people are visiting the ER. If there’s a spike on weekends, educate members on how to access other care settings on Saturday or Sunday. You can look at where the emergency care is taking place. Is it isolated to a particular community or split across a region of the country? Finally, break the visits down by disease, virus and symptom versus injuries and poisonings. If someone breaks an arm, for example, he or she is going to go — and should go — to the emergency room.
Once you’ve examined the data, what’s next?
Once the data is gathered, and you’ve discovered some of the challenges, set up metrics. If your average number of ER visits have been consistently at X per 1,000, or X per year if your membership has been consistent, then the question becomes can you eliminate 30 or 40 percent of the visits for disease, virus or symptoms? That’s your target for the following year.
How can employers educate and influence health plan members?
You need to come up with a multi-faceted communication strategy. Create one piece of communication that goes to all members, such as a flier on the proper use of the ER. But you also should reach out to certain groups differently, such as frequent fliers.
Use the information about what hospitals members are visiting to generate a directory of urgent cares and clients in and around the same zip code. Nearly 80 percent of adults ages 18 to 64 visited the ER in 2011 due to lack of access to another provider, according to Amerigroup. Another way to influence members is to ensure they know the number for the health plan’s 24-hour informational nurse line, which most plans have.
The more you share specific costs in your communications, the better people will respond. Include a grid that specifically shows the cost to the employer and member for all different care settings.
Another idea is to communicate a list of non-emergency diseases or symptoms that create overutilization. This gives people food for thought. And put it in plain English. Don’t say gastroenteritis; say stomach pain. Don’t say urinary tract infection; say kidney pain. However, be careful how you coach this; you don’t want to tell people not to go to the ER. It’s more about awareness and education.
What about raising co-pays?
Yes, higher co-pays get people out of the ER, but raising the cost has become too abused — and it often gets shifted from the employer to members. Before you start digging into the member’s pocket, give them the opportunity to do the right thing on their own. ●
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Health care reform news, and the ever-present talk of delays, has created confusion for employers and employees alike, but they still must consider certain tax issues for 2013 and 2014.
“There’s so much information, you might ask yourself, ‘Where do I turn?’” says Kimberly Flett, CPA, QPA, QKA, director of retirement plan services at SS&G.
Beyond starting with the major federal governmental agencies — the IRS, Department of Labor (DOL) and Department of Health and Human Services (HHS) — for the rules, employers need a team of well-informed advisers.
“A plan sponsor’s burden is to make sure that they have the right players,” she says.
Smart Business spoke with Flett about tax implications of health care reform that everyone needs to know.
What do taxpayers need to know for their 2013 taxes?
High wage earners — a $250,000 threshold for married filing jointly, $125,000 for married filing separately and $200,000 for all other taxpayers — must pay a Medicare tax of an additional 0.9 percent, for a total tax of 2.35 percent. Those with $200,000 or more of income had this tax withheld at the payroll level during the year, but it doesn’t take into account spousal income. As you get your tax information together, review your W-2 to ensure payroll withheld enough, and work with your tax adviser to determine if adjustments are needed on Form 1040.
A second Medicare tax of 3.8 percent will be assessed on net investment income of high wage earners, which includes gross income from interest dividends, royalties, rents and annuities; other gross income derived from a trade or business; and gain attributable to the disposition of property. This applies to many business owners who need to make sure they’ve kept good records for their tax advisers.
Another change is with the itemized deductions on Schedule A of Form 1040. The medical expense deduction increases from 7.5 to 10 percent for those under 65.
Is the individual mandate still going ahead?
The individual mandate is still going into effect for 2014 taxes, on an individual’s Form 1040, with few exemptions. Those without health insurance coverage will pay a penalty based on the household, so a taxpayer could be paying penalties for dependents as well. The 2014 penalty is the greater of either $95 or 1 percent of modified adjusted gross income. Over time, the $95 increases to $695.
What’s crucial for employers to understand about the upcoming year?
There’s a lot of confusion surrounding the Patient Centered Outcomes Research Institute (PCORI) fee, which helps pay for the Affordable Care Act. If your company sponsors a fully insured health plan, the carrier was required to pay $1 per covered life by July 31. An additional fee of $2 per covered life is due by July 31, 2014.
However, if your company self-funds its health plan, it was required to pay the PCORI fee in July. Many businesses missed this, and therefore need to talk to their tax advisers immediately. Although guidance is still evolving, the IRS may assess penalties.
If your company has a health reimbursement arrangement (HRA) or flexible spending account (FSA) that’s not affiliated with a medical program, it’s considered self-funded and could be subject to PCORI fees for employees. Again, many employers missed these fees.
Other areas to watch are:
- FSAs have been capped at $2,500, but an employer sponsoring one of those plans must have all document amendments related to this in place by the end of 2014.
- Self-funded health plan sponsors must pay a reinsurance fee — $63 times the covered lives — by the end of 2014. A head count is due to HHS by Nov. 15, 2014.
- The employer mandate may have been delayed, but 2014 is the time to plan. Start realizing how you can count your employees, and fulfill the requirements.
Finally, the DOL is now auditing health and welfare plans. They are looking to see if medical plans, HRAs and FSAs all have updated Summary Plan Descriptions. They also are checking on notice requirements, such as the Summary of Benefits and Coverage given to employees. This has been a highly unregulated area, but the DOL is starting to be active — and companies are coming under scrutiny. ●
Kimberly Flett, CPA, QPA, QKA, is director of retirement plan services at SS&G. Reach her at (330) 668-9696 or KFlett@SSandG.com.
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