Jayne Gest

After signing a contract for your commercial building purchase, you begin due diligence, which is usually a 45- to 60-day period you and your broker use to inspect every possible issue, use or aspect of the property. There are a number of key areas to consider and you only have a limited time to do so.

“Next to negotiating the purchase price, the due diligence period is probably the most important part of the transaction from the buyer side,” says Simon Caplan, SIOR, principal at CRESCO Real Estate.

Smart Business spoke with Caplan about the critical points to check — or re-check — during the due diligence period.

Who do you check with about property use and government concerns? 

Every community has different zoning codes and definitions vary from city to city. It’s imperative to check with the mayor or local zoning official that your planned use of the property fits within the current zoning and to ascertain what you need to do to get all required occupancy permits to operate your business. This would include building permits if major renovations or an addition are part of either your short- or long-term plans. It’s also important to ensure your building will pass fire and building inspections. In addition, some cities require a point of sale inspection; for the most part, these are the inner ring suburbs bordering the city of Cleveland such as Bedford and Garfield Heights.

Usually the availability of a tax abatement, income tax credits or other economic incentives are mentioned in the purchase agreement. However, the due diligence period is most likely when the incentives are actually granted.

What are some best practices to follow with the title?

Review your property’s title commitment to find problem areas that could include liens, deed restrictions, easements, mineral rights, etc. Make sure you understand your rights. For example, property easements may benefit you or may hinder your use. Know who is responsible for repairs and how they relate to planned expansion. Some issues, which you may already be aware of, need to be discussed with the title company and/or seller and should be removed from the title insurance policy. Ninety-nine percent of the time you want to get an owner’s fee policy.

What should be surveyed?

The best survey is an American Land Title Association (ALTA) survey, which lets you know what you are buying. An ALTA survey shows property lines, exterior building lines, paving, curbing, catch basins, parking, fencing, utilities, landscaping, etc., as well as easements or encroachments. The title commitment only gives easements in hard-to-understand legal terms. On an ALTA you can actually see how they affect property. Other areas to study are parking, expandability and storm drainage.

How should building owners assess environmental factors?

When buying commercial property, even if everything appears clean, you should have an environmental Phase I study done. Phase I is a historical assessment and a physical walkthrough of the property by a certified environmental consultant.

If Phase I recommends further inspection, you move on to Phase II, which involves taking samples of soil, ground water, concrete, potential asbestos-containing materials or other suspicious environmental conditions. Phase III is the actual cleanup, which can be costly. Environmental factors are one of the biggest deal killers and lengtheners.

What's critical regarding the building?

The building inspection is essential, parts of which can may be taken into account earlier. The major issues are the condition and life expectancy of the roof system; the structural components of the building, especially walls and floor; and that the mechanicals — fire suppression sprinkler, HVAC, plumbing, electrical — are working and to code. These relate to the building’s integrity and can be expensive to fix.

What if there are many problems?

If problems or obstacles are discovered that have serious economic impact or use impact on the property, you should walk away from the deal or get the seller to renegotiate the purchase price.

Simon Caplan, SIOR, is a principal at CRESCO Real Estate. Reach him at (216) 525-1472 or scaplan@crescorealestate.com.

Insights Real Estate is brought to you by CRESCO

According to the U.S. Department of Labor, Bureau of Labor Statistics, the longer a worker is off, the less likely he or she is to return to work.

• After a six-month leave, there is only a 50 percent chance an employee will return to work.

• After a one-year leave, the chances drop to 25 percent.

• More than half of employees away from work more than 14 days experience financial difficulty.

A formalized return to work program is designed to help injured workers get back to work quickly and safely. Often, this will speed the employee’s recovery, avoid costly litigation and even improve employee relations.

“It’s beneficial because the employee wants to get back to work; they want to get healthy,” says Craig Hassinger, President of SeibertKeck. “Because you’re engaging them in the process, it helps with a positive mental attitude — they’re active, they’re involved and they’re getting better.”

Smart Business spoke with Hassinger — with assistance from Westfield Insurance — about how to set up and run your return to work program.

How does workers’ compensation affect insurance rates?

Rates are determined based on your loss experience. As your claims activity and the amount of claims paid increases, your premium rises. Although equally important, the payout probably has a bigger effect on overall rates.

That’s why return to work programs are so important because the quicker you can get people back to work, the less payout you’ll have. Back at work, they can do work that benefits the company and removes them from the workers’ compensation payroll.

How should an employer manage injuries right after they happen?

With early injury management, have a process for employees to immediately report when they get hurt. Communicating early reinforces the employer’s interest in the employee’s health and well-being.

Sometimes employees think they are doing you a favor by not telling you, or they don’t report a claim for fear of losing their jobs. Clearly lay out to employees that injuries happen, and you want to get them healthy again and learn from it so you can make improvements.

What role does the medical provider play?

The key is to communicate with physicians, ensuring they understand what kind of return to work program you’ve established. The medical provider can assist in identifying a position within the company that doesn’t hinder the employee’s recovery.

When should you make the return to work offer?

When possible, after physician approval, offer work to the injured employee. The offer should be in writing and describe the temporary work and conditions. It also should outline the expectations for employee and supervisor.

Once the employee is back at work, how should the case be managed?

A case manager should be assigned and work with the injured employee, physicians, your insurance carrier and management team. Typically the case manager is somebody in the human resources department or, depending on the size of company, anybody with a leadership role.

What’s the key to continually improving your return to work program?

As with any program, continually review successes and trends with all workers’ compensation claims. Adjust your return to work program and safety manuals to reduce future claims.

Your insurance broker can play a vital role in developing a return to work program or assisting to improve a current program. Look for a carrier with a strong risk management department.

If you rarely have workers’ compensation claims should you still have a return to work program?

Everybody should have some type of return to work program. In most cases, everybody is going to have a claim at some point.

Craig Hassinger is President of SeibertKeck. Reach him at (330) 867-3140 or chassinger@seibertkeck.com.

Visit Westfield Insurance at www.westfieldinsurance.com.

Insights Business Insurance is brought to you by SeibertKeck

According to the U.S. Department of Labor, Bureau of Labor Statistics, the longer a worker is off, the less likely he or she is to return to work.

• After a six-month leave, there is only a 50 percent chance an employee will return to work.

• After a one-year leave, the chances drop to 25 percent.

• More than half of employees away from work more than 14 days experience financial difficulty.

A formalized return to work program is designed to help injured workers get back to work quickly and safely. Often, this will speed the employee’s recovery, avoid costly litigation and even improve employee relations.

“It’s beneficial because the employee wants to get back to work; they want to get healthy,” says Cliff Baseler, Vice President at Best Hoovler Insurance Services, Inc., a SeibertKeck company. “Because you’re engaging them in the process, it helps with a positive mental attitude — they’re active, they’re involved and they’re getting better.”

Smart Business spoke with Baseler — with assistance from Westfield Insurance — about how to set up and run your return to work program.

How does workers’ compensation affect insurance rates?

Rates are determined based on your loss experience. As your claims activity and the amount of claims paid increases, your premium rises. Although equally important, the payout probably has a bigger effect on overall rates.

That’s why return to work programs are so important because the quicker you can get people back to work, the less payout you’ll have. Back at work, they can do work that benefits the company and removes them from the workers’ compensation payroll.

How should an employer manage injuries right after they happen?

With early injury management, have a process for employees to immediately report when they get hurt. Communicating early reinforces the employer’s interest in the employee’s health and well-being.

Sometimes employees think they are doing you a favor by not telling you, or they don’t report a claim for fear of losing their jobs. Clearly lay out to employees that injuries happen, and you want to get them healthy again and learn from it so you can make improvements.

What role does the medical provider play?

The key is to communicate with physicians, ensuring they understand what kind of return to work program you’ve established. The medical provider can assist in identifying a position within the company that doesn’t hinder the employee’s recovery.

When should you make the return to work offer?

When possible, after physician approval, offer work to the injured employee. The offer should be in writing and describe the temporary work and conditions. It also should outline the expectations for employee and supervisor.

Once the employee is back at work, how should the case be managed?

A case manager should be assigned and work with the injured employee, physicians, your insurance carrier and management team. Typically the case manager is somebody in the human resources department or, depending on the size of company, anybody with a leadership role.

What’s the key to continually improving your return to work program?

As with any program, continually review successes and trends with all workers’ compensation claims. Adjust your return to work program and safety manuals to reduce future claims.

Your insurance broker can play a vital role in developing a return to work program or assisting to improve a current program. Look for a carrier with a strong risk management department.

If you rarely have workers’ compensation claims should you still have a return to work program?

Everybody should have some type of return to work program. In most cases, everybody is going to have a claim at some point.

Cliff Baseler is vice president at Best Hoovler Insurance Services Inc., a SeibertKeck company. Reach him at (614) 246-7475 or cbaseler@bhmins.com.

Visit Westfield Insurance at www.westfieldinsurance.com.

Insights Business Insurance is brought to you by SeibertKeck

Yes, there are still many companies that maintain defined benefit plans, but most ceased crediting benefits years ago to stop the pension liability growth. However, even though the majority of Fortune 100 and 500 companies have frozen their plans, they often still have contributions due for what participants have already accrued, as plans typically aren’t 100 percent funded at the time they are frozen. If a company hasn’t settled its obligation or transferred the risk, then it still owns it.

Rich McCleary, Director, Actuarial Service, at Tegrit Group, says, “It’s a popular discussion topic. Our firm has over 300 defined benefit plan clients with whom we work, and many traditional plan sponsors we talk to want to find a way to terminate their plan.”

Smart Business spoke with McCleary about how business owners can mitigate their defined benefit plan risk.

How do defined benefit plans differ from other retirement plans?

A defined benefit plan promises a certain amount of benefits, typically in an annuity form, at retirement to plan participants. The company contributes to the plan and maintains the obligation to provide those benefits once they are earned or accrued. Much like the Social Security system, promises to plan participants are virtually irrevocable. If a company can’t fulfill them, the Pension Benefit Guaranty Corporation (PBGC), the governmental agency that insures pension plans, will step in.

What’s the current situation for defined benefit plans?

On the investment side, pension plan performance has been lackluster over the last decade, remaining steady or decreasing slightly against expectations. In addition, in this severely declining interest rate environment, liabilities have consistently gone up. Along with that, the federal government has continually passed regulations to make the funding requirements more stringent.

Companies maintain this liability and risk on their balance sheets, and the liability remains until the last participant or contingent beneficiary is paid out. Manufacturing in particular has been hit hard, as the industry often used these plans to meet union benefit demands. Also, the liabilities on the balance sheet don’t truly reflect the entire economic cost of the plan. There are numerous administrative expenses, such as fees for investment management, actuarial, legal and accounting, as well as PBGC premiums, which can add 3 to 5 percent to the liabilities.

What are some strategies for plan sponsors to mitigate risk?

Liability-driven investments are a popular way to drive down the risk. Investment managers can help with transferring the risk into fixed income investments that closely match the duration of the pension liabilities.

In order to reduce their pension risk, some large companies have offered lump sum payments to retirees and beneficiaries. Although there might be a higher initial cost, the pension liability is transferred either directly to the participant or an insurance company, which improves the stability of the balance sheet and ultimately, shareholder value. Amazingly, some companies have pension plans with liabilities that approach or exceed the total market capitalization of the company, creating volatility and jeopardizing profits.

Although a smaller company may not be publicly traded, it can find ways to get the necessary cash from other sources besides loan covenants or issuing bonds. As an example, one business took out a second mortgage on its building because it happened to be cheaper at the current mortgage interest rates and loan period than paying down the pension plan liability. However, there are accounting and tax implications that occur when transferring risk, so use expert advisers to carefully review the balance sheet and make sure the risk transfer makes sense.

Rich McCleary is Director, Actuarial Service at Tegrit Group. Reach him at (330) 983-0539 or richard.mccleary@tegritgroup.com.

Insights Retirement Planning Services is brought to you by Tegrit Group

[caption id="attachment_59379" align="alignright" width="200"] Neil Harrison, AGRC, group managing director, Risk Control, Claims & Engineering, Aon Risk Solutions

Ron O'Neill, senior claims consultant, Aon Risk Solutions[/caption]

Learning how to deal with disaster during a crisis is not a good idea. Hurricane Sandy’s aftermath reminds employers of the importance of insurance, disaster planning and claim preparation.

“Always at a time like this, organizations who were not affected need to take a step back and ask themselves, ‘What if?’” says Neil Harrison, AGRC, group managing director, Risk Control, Claims & Engineering, at Aon Risk Solutions.

Smart Business spoke with Harrison and Ron O’Neill, senior claim consultant at Aon Risk Solutions, about best practices business owners can use to ride out any disaster.

How did Hurricane Sandy affect the insurance industry?

With an event like Sandy, the insurance industry plays a role in business specific and general economic recovery. Brokers and insurance companies expect to be judged on their performance and response. With a significant amount of claims, there is a lot of resource pressure. Resource scale and leverage become key, and operational efficiency is a prerequisite for success.

It’s too early to comment on the longer-term impacts of insurance pricing or coverage availability. With these events, everybody has an opinion, but nobody knows at this early stage. Property damage, business interruption and contingent business interruption all create the overall cost. Also, just because a company is based in Detroit or somewhere out of Sandy’s way doesn’t mean businesses didn’t have customers, suppliers or vendors affected.

How should you handle an insurance policy?

The first step is ensuring you’ve got the right insurance coverage — the terms, the conditions in place, definitions of perils — and that you understand items such as limits and exclusions. Business owners should aim to have claims preparation coverage on the property cover. Then you can engage an expert for accounting work critical to quantifying and making the claim, and, generally, the process runs more smoothly.

Also ensure the values at risk — asset values and business interruption values — are understood and accurate. Too often, an organization has a claim and is underinsured or overinsured. A best practice is having an external expert work with you on assessing values during your policy renewal process. The business interruption is particularly important because it’s complicated to work out in post-loss panic mode. Since the recession, everybody has different values at risk, but organizations may have continued to index link their values or sums insured.

Beyond insurance, what can businesses do to respond well to disasters?

Organizations that have responded well are those with business continuity plans that are well defined, kept up to date, frequently tested and broad. The plans cover not just the direct issues of building damage but also employee safety and welfare issues, supplier issues, customer issues, etc.

Insurance is an outcome, in many ways, of business continuity. Take a broad look at the business, plan for every eventuality, make sure everyone knows what to do and have restoration firms on contract, as well as access to alternative power.

How should a business submit claims if it suffers damage?

When a significant incident hits, the company has some responsibility to mitigate the damage and cost. Much of it is common sense, but that’s easier to apply when it’s written down with clear responsibilities. Make sure that you:

• Report the loss to a broker or insurer immediately and there are clear lines of communication.

• Take immediate action to minimize loss.

• Keep documents, invoices or receipts, which become part of the insurance claim.

• Take photographs of the damage.

• Engage an external expert, if needed. When a business is in trouble mode, it’s all about recovery. Outside expertise allows you to talk to customers, suppliers and staff, while the expert handles the tactical, and somewhat more mundane, issues.

It’s important to have continuity planning, follow insurance best practices, consider a claim preparation clause and ensure common sense is applied after a loss. Disaster response, claim response and claim preparation are specialist technical disciplines, and businesses find investments in these areas have a positive return.

Neil Harrison, AGRC, is group managing director, Risk Control, Claims & Engineering, at Aon Risk Solutions. Reach him at neil.harrison@aon.com.

Ron O’Neill is a senior claim consultant at Aon Risk Solutions. Reach him at (248) 936-5243 or ron.oneill@aon.com.

For information from the Aon Situation Room, Post-Tropical Sandy, including videos on claim steps and business interruption, visit http://insight.aon.com/?elqPURLPage=3422 For an archived webinar on Post-Tropical Sandy, visit http://www.visualwebcaster.com/event.asp?id=90768.

Insights Risk Management is brought to you by Aon Risk Solutions

Entrepreneurial companies are facing headwinds going into 2013, including fiscal cliff uncertainty, the prospect of higher taxes, more regulation and continued slow economic growth, says Tullus Miller, Bay Area partner-in-charge at Moss Adams.

“Having a trusted business adviser to help navigate these uncertainties and measure the impact on your key business decisions is most important,” he says.

Smart Business spoke with Miller about how a trusted business adviser gives you the information you need to know — not what you want to hear.

What should entrepreneurial companies consider in a trusted business adviser?

Entrepreneurial companies are very dynamic and have various business needs during their life cycle, including, but not limited to, expanding business offerings nationally or internationally, developing new revenue sources and restructuring operations. These types of activities are generally complex and require substantial capital investment, so trusted business advice can help make decisions simpler, while shortening the timeline. For example, with a growing startup company, an entrepreneur can get advice on what kind of systems to use; how many people to have in the back office; or what kind of tax structure to implement, e.g. a pass-through or corporation.

In considering a trusted business adviser, weigh a few key questions:

  • Does the adviser understand your business and how the activities might fit into your long-term goals?
  • Does the adviser have insight into complex areas such as tax consequences and how it affects profitability?
  • Has the adviser provided sound, practical advice over time that helped the business?
  • Does the adviser have your best interest at heart and tells you what you need to hear as opposed to what you want to hear?
  • Does the adviser have a deep network of professionals from which to help provide you with appropriate counsel, including legal, banking, etc.?

Having appropriate business advice — based on your medium- to long-term goals and objectives — from an unbiased, trustworthy and experienced source is, and should be, an important part of any decision-making process.

What mistakes do some entrepreneurs make when seeking an adviser?

A lot of times entrepreneurs are impatient, just by nature, as they are go-getters who want things to happen. Therefore, they need to guard against not taking the appropriate time to vet the business adviser. It’s critical to talk to two or three different advisers to ensure you find the right fit, looking at your personality and their knowledge base and reputation, etc. And, then it’s going to come down to pretty much a judgment call. There’s very little science in this. It’s mostly art.

You want to get as much information, even in a dynamic environment, as possible because you must minimize capital-intensive mistakes in an entrepreneurial company.

Do you have any tips on how to organize your adviser(s)?

Depending where you are in your business life cycle, the more nascent you are, the more external advisers you want to use, while making sure you control their costs, too. As you move up the business life cycle curve to maturity — even in a high growth mode — you have to decide at some point to bring experts in-house, and there’s no bright line on how to do that.

A trusted adviser with integrity will tell you what you need to hear, even at the short-term expense of his or her own business. Someone who says, ‘It looks like you’re spending a lot of money here, and you’re starting to grow. You either need to upgrade your staffing, getting people who are more experienced, or expand the number of folks to help you do what you need to do.’

Once advisers are in place, what can be done to maximize the relationship?

Before you close a deal — even if you’re anxious to move ahead on an expansion, re-organization or a new compensation plan with more performance indicators — you allow your trusted adviser to look at the agreements being drawn up. It may not be in the adviser’s area of expertise, but he or she, or others in that firm, could see something that needs to be changed, allowing you to avoid unintended consequences.

Tullus Miller is Bay Area partner-in-charge at Moss Adams. Reach him at (415) 956-1500 or tullus.miller@mossadams.com.

Insights Accounting & Consulting is brought to you by Moss Adams

Some people are in denial about their personal finances, thinking that they’ll get to it one of these days.

“You need to have a lot of discipline around your finances because getting into financial shape is tough,” says Jeanine Fallon, Senior Vice President and Market Executive, First Commonwealth Bank®. “It requires focus, planning and a lot of sweat, but the end result is a happier and more fulfilled life.”

Smart Business spoke with Fallon about taking control of your debt and spending habits.

How should you assess your debt situation? 

Look at your current obligations by gathering monthly statements and listing loans and debt. Think about the creditor and your balances, interest rates and payments. Total all payments and divide your gross income by the debt to find your debt to income ratio. The target should be around 36 percent, but those with high disposable income can go a few percent higher. Then, use your partnership with a lender you trust to create a solid financial plan.

It’s also helpful to pull your credit report three times per year from annualcreditreport.com because not all credit reports are free.

What are some warning signs your finances are heading out of control?

Some warning signs are if you have no emergency fund, typically three to six months of your income, to fall back on; you experience stress when thinking about your debt; you don’t know what you owe; and/or you continually charge more on your credit cards than you can pay back.

How can a debt consolidation loan help?

Consolidation loans don’t reduce your debt but can reduce your payments. You take your debt and consolidate it into one big loan to simplify your payment and tracking. Your banker will help you decide on a secured loan or an unsecured loan, the right term to quickly pay off your debt without creating hardship, and choosing between a term loan or line of credit. Keep the end number in mind, which is what you’re paying back with principal and interest.

What are some best practices to help stay debt free?

Even if you consolidate your debt, it’s important to take steps to ensure you don’t end up right back in the same financial bind you were in before. Manage your expenses by establishing a budget. Keep a spending diary of every penny you spend for at least a month — similar to a food diary when on a diet. When looking at your funds, break it into percentages:

• Foundation expenses, such as shelter, groceries and transportation, should be 45 percent of your take-home income.

• Include 15 percent for fun, vacation, dinner, clothes or whatever your passion is.

• Typically at least 25 percent is used for taxes.

• Keep about 15 percent for savings — 10 percent for retirement and 5 percent for emergency or big-ticket items.

Then, manage, reduce and eliminate debt. It is important to make wise decisions when assuming new debt by using good debt to improve your net worth. Tie savings and spending plans with what’s important to helping you to live with a purpose. For example, if vacation time away with your extended family is important to you, yet you own a huge, expensive house, your financial obligations may not be in line with your values. Also, prepare for life events by taking a disciplined approach to building up the money you put into your retirement plan as well as your emergency fund. Ultimately, if you don’t change the way that you’re spending money when you experience significant life changes, it can cause hardship in the end.

Jeanine Fallon is a senior vice president and market executive at First Commonwealth Bank. Reach her at (412) 886-2540 or JFallon@fcbanking.com.

For a debt consolidation calculator, visit http://www.fcbanking.com/planning/calculators.html?CALCULATORID=PC10&TEMPLATE_ID=www.fcbanking.com_1.

Insights Wealth Management is brought to you by First Commonwealth Bank

Stop-loss or reinsurance is a “backup” policy designed to limit claim coverage or losses to a specific amount. This type of coverage ensures catastrophic (specific stop-loss) claims or numerous (aggregate stop-loss) claims don’t deplete your reserves in a self-funded arrangement.

“There are a lot of companies in this stop-loss space, and there are more and more getting into it because the health care law eliminated lifetime limits, and health care costs are driving employers into self-funding,” says Mark Haegele, director, sales and account management at HealthLink.

Smart Business spoke with Haegele about what employers should look for when shopping for reinsurance.

What should employers know about the fixed cost of reinsurance?

The main components of a partially self-funded model are the third-party administrator (TPA) that pays claims; pharmacy benefit manager (PBM) network that contracts with doctors and hospitals for discounts; and the reinsurance carrier, which has the highest cost.

Stop-loss represents a disproportionate amount of the fixed costs for an employer. The smaller the employer, the less risk they’re willing to take, the more stop-loss they’ll need to buy and the more expensive it is. For smaller employers, the reinsurance purchasing decision becomes more relative and important. For example, a self-funded employer with a 500-life health policy might purchase specific stop-loss, paying $200,000 in claims for every member before the insurance kicks in. However, if a 20-life employer purchases $10,000 specific stop-loss, the stop-loss cost will be higher.

How can employers and brokers negotiate with stop-loss carriers?

In the eyes of the reinsurance carriers, there is no perfect model of self-funding components. This opens the door for the employer and broker to play a vital role in controlling the premium and overall stop-loss cost. If you can sell the reinsurance carrier on your vendor alignment — your TPA, network and PBM — you can decrease the premium.

Don’t go to the stop-loss carrier and say ‘I’m a 300-life employer and I want to buy $125,000 specific stop-loss,’ while providing your claims experience. Instead, demonstrate, in a refined and focused way, how you are working to lower the impact of large claims. Your premium might have been X, but you could now get X minus 20 percent. Employers and brokers don’t realize how much negotiation room is available.

How can you demonstrate your management of large claims?

Some ways to control large claim costs are having a dialysis or transplant carve out. You pay a small premium for a transplant insurance policy where any transplant will be completely covered, and then the reinsurance carrier gives you a credit, which often pays for the transplant policy premium.

Another option is working with your PBM. For one reinsurance carrier, more than 25 percent of all of the large claims is represented by prescription drugs. For instance, J-codes — high-cost injectable drugs used for hormone therapy or to treat cancer — often run through the medical plan. Finding a PBM that will further negotiate these J-codes while having a focused managed program can reduce that expense by upward of 30 percent.

When you follow these practices, it helps you when you’re paying your premium upfront with the stop loss carrier and downstream by controlling your overall claims.

How should employers and brokers examine stop-loss carriers to find the best price?

It’s important to know how reinsurance carriers have networks rated. If your network is that stop-loss carrier’s best-rated network, the premium will be lower. Reinsurance carriers evaluate networks with different levels of intensity, and therefore get wide ranging results.

Also, carriers give networks different levels of credibility with respect to discounts. For example, if your network gets a 52 percent discount in metro St. Louis, but the carrier only gives 60 percent credibility to that, that’s only a 31 percent discount. Some carriers give 100 percent credibility to the network.

Mark Haegele, director, sales and account management HealthLink. Reach him at (314) 753-2100 or mark.haegele@healthlink.com

Insights Health Care is brought to you by HealthLink

As the Patient Protection and Affordable Care Act (PPACA) implementation unfolds, health lawyers continue to answer employers’ questions about its impact.

“The act has multiple potential penalties for failure to comply with its various requirements. The risk of not complying is a financial risk,” says Jules S. Henshell, of counsel at Semanoff Ormsby Greenberg & Torchia, LLC.

Smart Business spoke with Henshell about what employers need to be aware of as they take their next steps under the PPACA.

What do employers most frequently ask? 

The most frequent questions relate to the ‘pay or play’ penalties in the law. The majority of employers are currently providing health care coverage through group insurance plans. However, it’s too early to determine whether to provide coverage at levels required by the act or pay the penalties because future premium costs and the affordability of employer offerings through health exchanges are uncertain.

Employers also are concerned about reporting health care benefits on W-2 forms, whether they qualify for transitional relief, and the provisions against discrimination in favor of highly compensated individuals.

What’s important to know about W-2 reporting and IRS transitional relief?

In 2012, employers are required to report health care costs to the employer and employee on employee W-2 forms or face a $200 per-form penalty.

The IRS has provided transitional relief from reporting for employers that file fewer than 250 W-2 forms. Some employers question if they are entitled to relief from reporting when their company files fewer than 250 W-2 forms but is one of a number of related companies. The IRS’s informational Q&A suggests that it will not aggregate among related companies to calculate the threshold for reporting.

Whether the W-2 reporting currently applies or not, it’s a good idea to formalize the practice of tracking these health insurance costs to better enable retrieval of information in the future.

How do provisions about non-discrimination impact employers?

The PPACA prohibits discriminatory practices in favor of highly compensated individuals. Prohibited practices include providing benefits to highly compensated individuals that are not provided to other employees as well as affording greater choice, higher amounts, lower premiums, a higher employer subsidy or more favorable benefits. Many companies have used such practices to create competitive compensation packages for executives and management. Penalties include an excise tax or civil monetary penalty or civil action to compel provision of nondiscriminatory benefits.

The IRS, U.S. Department of Labor and U.S. Department of Health and Human Services (HHS) have stated that non-discrimination requirements will not be enforced until the first plan year after regulations are issued. And so far, they have not issued regulations.

Employer health plans with grandfather status are not impacted, but should be conscious of how their status could be jeopardized. Raising co-insurance, significantly raising co-pays and deductibles, lowering employer contributions, and adding or tightening annual limits on what the insurer pays will result in loss of grandfather status. Those without grandfather status need to review their compensation packages and practices in anticipation of future regulation and enforcement.

Do any significant PPACA cases remain?

The most active litigation challenging the PPACA in multiple jurisdictions target the requirement that new, non-grandfathered group insurance plans provide contraceptive coverage. The lawsuits focus on alleged violations of either the First Amendment right to free exercise of religion or the Religious Freedom Restoration Act.

Regulations have granted exceptions for certain religious employers and provided a one-year safe harbor for religiously affiliated institutions that wouldn’t otherwise qualify for exemption. HHS has stated it will provide further accommodations before the end of the safe harbor period.

Jules S. Henshell, of counsel, Semanoff Ormsby Greenberg & Torchia, LLC. Reach him at (215) 887-3754 or jhenshell@sogtlaw.com.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

Your company’s goals aren’t just a to-do list of action steps, they’re a vision of where you want to be. Employee engagement can be a way to make your business exciting while unleashing the creativity of your intellectual capital.

“It can seem overwhelming if you don’t have experience setting goals, especially if you’re a business owner who is really working in business,” says Ricci M. Victorio, CSP, CPCC, managing partner at Mosaic Family Business Center. “So, it’s not a sign of weaknesses to ask for help and bring in someone who knows how to coach you, train your organization and facilitate those discussions. If it can move your business forward, energize it and make your life easier so you can enjoy being in the business, it’s really worth it.”

Smart Business spoke with Victorio about what steps to take when setting goals and following through to ensure your vision comes to fruition.

How should business owners set goals?

Once the company’s growth and revenue goals have been established, ask your team for their ideas regarding how to get there. Engage your employees in building the road map to success.

Create breakout groups to work on an annual Strength, Weakness, Opportunity and Threats (SWOT) analysis. By graphing these and seeing correlations, employees help prioritize the two to five opportunities that will significantly help your company. With employees sufficiently motivated to take full ownership in the idea, they can then work in teams to help see the project through development and ultimately reach the goal, which is done in addition to the day-to-day duties.

How can you tell employees aren’t engaged?

There will be complacency and all kinds of reasons, excuses and blame for why employees can’t accomplish the goals set before them. They sit around waiting to be told what to do. There’s a sense of isolation and feeling that nobody is paying attention. You’ll see flat production and even downward trends, as well as higher absentee rates.

Lead employees, rather than dictate assignments, and then get out of their way. A leader removes obstacles so the team can achieve the goal. By giving employees authority, you show respect for their intelligence and ability to solve problems. Successful organizations recognize intellectual capital goes beyond the executive circle. If all employees engage in the company’s vision, regardless of their level or position within the organization, then leadership trickles down so everyone contributes to furthering the company’s goals, which are their goals, too. Actively engaged employees do more than you would have asked and hold themselves accountable to goals they helped set.

In addition to treating employees with respect, acknowledge what’s being done right. Recognize that if there’s failure, it’s more the manager’s failure than the employee’s.

Once you’ve set goals, what’s the key to keeping on track throughout the year?

At minimum, hold quarterly or monthly check-ins that provide opportunities to make course corrections. With the business plan and goals, you can create an action spreadsheet to see progress and identify what’s stopping forward movement. The more intimate the check-ins, the more effective they’ll be.

Also, communicate back to employees to keep them engaged. Some companies have adopted a report card with updates on strategic projects. The strategic projects that change the way you do business are exciting, creative and generate a lot of energy.

How can you learn how to lead this way?

There are books and successful examples, and you can work with a coach who knows the process, can motivate people and teach managers how to lead meetings. It’s hard to facilitate your own meeting and take an objective, honest look at how you’re doing.

Setting and achieving goals doesn’t have to be difficult. Once you put these practices in place and overcome the learning curve, life will be easier. You won’t have to spend all your time feeling like you are grasping at loose ends — and you’ll begin to see the grand design weaving together into a cohesive and beautiful creation.

Ricci M. Victorio, CSP, CPCC, is managing partner at Mosaic Family Business Center. Reach her at (415) 788-1952 or ricci@mosaicfbc.com.

Insights Wealth Management & Finance is brought to you by Mosaic Financial Partners