President Barack Obama’s re-election means health care reform is certain, and businesses need to plan to meet Patient Protection and Affordable Care Act (PPACA) mandates, most of which will be effective on Jan. 1, 2014.
There are ways companies can structure themselves to avoid any type of penalty and maintain their employees’ benefits, says Stefan Thomas, an associate with Kegler, Brown, Hill & Ritter.
“Because of the ambiguity of the law, it’s a difficult subject matter for companies to understand. Some are opting in or opting out of insurance plans, some are self-insured and some are privately insured. It’s really specific and handled on a case-by-case basis.”
Smart Business spoke with Thomas about steps that companies should take in order to meet PPACA mandates.
What steps do companies need to take in order to be prepared for the PPACA requirements?
First,companies need to determine if the law will affect them. Depending on the size of the company, it might not. They would have to be an applicable large employer, which means having 50 or more employees, including full time, full-time equivalent and seasonal workers.
There are other things to consider, such as whether the seasonal exception is applicable or whether full-time-equivalent workers (2-to-1) or seasonal employees, defined as those who work four or more months, have caused them to become large employers.
If a company is subject to PPACA mandates, what is their logical next step?
The next thing for a company to do is to figure out whether or not they’re providing any insurance and, if they are, whether it’s adequate. If it’s not adequate, it needs to be, meaning that they’re paying a certain percentage of the premium, which should be 60 percent.
If they’re large and have insurance that meets the 60 percent threshold, then they don’t have to worry about anything. But if they fail to provide the adequate amount, they have to pay a tax penalty, which is based on a ratio and can be $2,000 or $3,000 per employee. On top of that, they have to determine whether an employee has opted into an exchange. However, if the employee hasn’t gone through the exchange, the company still might not be penalized.
Some businesses are trying to limit hours employees are working or they’re changing the way they are providing health insurance in order to avoid penalties.
Is there anything smaller companies need to know about the PPACA?
Small employers could be eligible for a tax credit if they have 25 or fewer employees, with salaries averaging $50,000 or less and they provide insurance. They also have to fill out tax form 990T to determine whether they qualify for credits.
Have all the regulations of the PPACA been determined now or are provisions still subject to change?
There is still quite a lot of ambiguity regarding the new law and that is just how it is going to be for the next few years. For example, it has recently been discovered that the Medicaid expansion is mandated.
If states fail to expand coverage to people up to 138 percent of poverty level, those states will not be able to receive full funding from the federal government. That is a big issue because Medicaid is one of the largest items in state budgets.
The health care reform law is evolving every day, so companies are advised to pay close attention to the regulations as they are rolled out. Consider dedicating staff to monitoring the act’s developments, otherwise your company could be missing tax credits or penalties that could be incurred because of lack of knowledge.
Stefan Thomas is an associate at Kegler, Brown, Hill & Ritter. Reach him at (614) 462-5484 or email@example.com.
Insights Legal Affairs is brought to you by Kegler, Brown, Hill & Ritter
Social media has pervaded the workplace. With more than 1 billion people on Facebook and 140 million Twitter users generating 340 million tweets a day, companies see the potential of social networking and often rush to get on board without formulating a comprehensive policy.
“Take a step back and consider the implications of posting — whether officially in your business, unofficially by employees, or about your business by disgruntled customers or competitors. Develop a plan for protecting your interests on all those fronts,” says Karen C. Lefton, a partner at Brouse McDowell. “That means drafting, implementing and, where appropriate, disseminating your policy before you are the target of a nasty post.”
Smart Business spoke with Lefton about what companies should consider now with social media.
What can companies do to protect themselves against disparaging statements made by customers or competitors?
Anyone who posts defamatory statements about your business may be subject to a defamation action. There must be a false statement of fact, published to at least one other person, with the requisite degree of fault — negligence or actual malice — resulting in damages. It is important to recognize that ‘opinion’ is protected. This is especially significant in the social media context, where reviews are pervasive and even encouraged on companies’ websites. When you do this, you invite potentially negative comments, but not ones that would be actionable in defamation.
Does that mean reviews are exempt from defamation lawsuits?
Reviews are usually excluded because opinions are protected speech. A false statement of fact is essential to a successful defamation claim. However, if someone says, ‘There was a cockroach in my oatmeal,’ that is demonstrably a statement of fact. If it is false, the restaurant where the oatmeal was served would have a potential defamation claim.
Whom would you sue?
The poster. Internet Service Providers generally have immunity for the posts on their sites, but the poster does not. Historically, defamed entities were reluctant to take action against an individual poster because the cost far exceeded the payoff. However, many homeowners’ insurance policies cover individuals for actions in defamation, which may provide some recompense for defamatory posts.
What if the harmful statements are made by your own employees? Can you fire them?
Be very cautious. Section 7 of the National Labor Relations Act protects employees who engage in concerted activity, so employees who post disparaging comments about wages and working conditions — including bad things about the boss or the business — are usually protected. This applies as much to employees in nonunion settings as to those in unionized workplaces.
An employer may be found to have violated the act not only by disciplining a worker for what he posts but for merely having a policy that could be interpreted as chilling an employee’s Section 7 rights. Your policy governing employees’ use of social media must be very carefully drafted.
Are there pitfalls if employees post as part of their job, sanctioned by the company?
Absolutely. According to the Society of Human Resource Management, 68 percent of businesses require employees to use social media as part of their job. Of those, 73 percent give no training in how to use it appropriately.
Every company with a social media presence should have a policy governing its official website and social media accounts, including identifying those employees authorized to speak on behalf of the company and training them to ensure that private information — whether about employees, business plans or anything else — does not leak out. This is a growing problem because communication on social media is so quick and casual that it often does not get the same attention as a printed marketing piece. It should get more, as it will last virtually forever.
How can you avoid social media pitfalls?
Get expert help drafting your policies. Implement them. Follow them.
Karen C. Lefton is a partner at Brouse McDowell. Reach her at (330) 535-5711, ext. 341 or firstname.lastname@example.org.
For information on Brouse McDowell’s Labor and Employment Group, visit http://www.brouse.com/OurPracticeAreas/tabid/55/MainAreaId/5/Default.aspx.
For a complete bio of Karen C. Lefton, visit http://www.brouse.com/OurAttorneys/AttorneyProfile/tabid/90/aid/252/Default.aspx.
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True diversity is not found in numbers. It is found in people with varying backgrounds using their experience to everyone’s benefit, says Lizabeth Ardisana, CEO, ASG Renaissance.
“What we’re trying to achieve is not actually diversity, although that’s the buzzword for all of this, it’s really inclusion,” Ardisana says. “It is one thing to say you have employees who are minorities, old, young, African-American, Latino or Asian, but you have to value those differences and use them to your advantage, not just tolerate them. That’s what it takes to be successful with diversity.”
She says inclusion adds value to companies by providing diversity of thought, access to understanding other markets and a more interesting workplace.
“If no one told me I should do this, I would still seek out people who are different than I am because it would add significant value to me and my company. Until we get to that level of understanding and position, we have not truly experienced the value of diversity,” Ardisana says.
Smart Business spoke with Ardisana about diversity and its value in the workplace.
You hear a lot of talk about diversity, but do companies follow through by taking action?
Counting the number of people you have who come from different backgrounds or putting a diversity section on your website isn’t enough. It doesn’t give you the value. You have to follow the talk with action. You have to move past diversity to a level of value in order to truly have inclusion.
Does that mean you need diversity in promotions as well?
Absolutely. You can’t just talk about it; you have to do it from the bottom up. If you’re going to embrace diversity of thought and diversity of ideas, you must also embrace it at the senior management level. Otherwise, you are not valuing it. If you’ve never promoted someone of a different background, you would be sending the wrong message to the rest of your company.
How do diversity and inclusion benefit companies?
First, you have to accept that an innovative and creative business is going to be a more profitable business and that new ideas, new capabilities and new markets all add profitability. Diversity of thinking comes from a diversity of backgrounds and cultures and that creates more new ideas and more innovation.
Additionally, if you have a reputation for being an interesting and creative place to work, it attracts better overall talent. We’re all in a race to get the best talent and you have to make yourself attractive. Look at the companies that post one job and get hundreds of applications. These companies have a reputation for innovation, for being fun and interesting. If you look at really successful companies today, they have a significant amount of diversity, or inclusion, in what they do.
Are workplaces becoming more inclusive?
It is improving. One thing that’s dramatically improved is companies are valuing age and experience, combining older employees with employees who are young and aggressive. This creates unique opportunities when they are blended together.
Diversity has to be looked at as broadly as possible and some of it is simply awareness. When I started my company, I looked around and thought about how all the people in this department look alike and all the people in this other department look alike but they don’t look like each other. We hire people we’re most comfortable with and don’t think about it. We weren’t getting the benefits of diversity and inclusion so we consciously started to think about it and took actions to practice it, and it has made a huge difference in our success as a company.
Lizabeth Ardisana is CEO at ASG Renaissance. Reach her at (313) 565-4700 or email@example.com.
To view more about ASG Renaissance’s Diversity Services, visit http://asgren.com/diversityServices/diversityServices.asp.
The election is over and full implementation of the Patient Protection and Affordable Care Act (PPACA) is expected to proceed. What does this mean for employers? The health care decisions made during 2013 will determine the financial impact of this legislation, and employers that plan to continue to sponsor group health plans must prepare for upcoming deadlines.
“Pay or play” penalties provide some incentive for employers to continue coverage, as they will be at risk for significant penalties if they do not, says Chuck Whitford, Client Advisor at JRG Advisors, the management arm of ChamberChoice.
“The first step is to determine which, if any, penalties will apply by determining the number of employees that regularly work an average of 120 hours or more per month for each month of the preceding year,” says Whitford. “Penalties will apply only to employers with 50 or more full-time-equivalent employees during the preceding calendar year, with full time under PPACA defined as 30 hours per week.”
Smart Business spoke with Whitford about the changes that employers need to be aware of.
What is the goal of PPACA?
Ultimately, PPACA seeks to achieve and sustain the availability and affordability of employer-sponsored group health care benefits. Otherwise, full-time employees become eligible for a subsidy from the government to purchase insurance through an exchange.
A full-time employee becomes eligible for subsidy if his or her household income is less than four times the poverty level and one of the following is true: the employee is not eligible for a group health plan that meets minimum standards (thus failing the requirement that coverage must be available) or the monthly employee contribution for single coverage is greater than 9.5 percent of household income (thus failing the affordability requirement). In 2012, four times the federal poverty level was $44,680 for a single individual and $92,200 for a family of four.
At issue is the fact that many employers are not likely to know employees’ total household income, nor may employees be willing to share this information. To that end, employers will most likely use the wages paid to the employee as a basis for determining the affordability requirement.
For example, an employee earning $30,000 would be limited to a monthly contribution for single coverage of approximately $238. Any higher contribution would exceed the 9.5 percent level.
What are the penalties for employers that fail to either make the coverage available or fail to provide affordable coverage?
If one or more employees are eligible for your group health plan and they qualify for a subsidy on the exchange, your penalty is equal to $2,000 per year times the number of full-time employees, minus 30. For example, an employer with 100 full-time employees would pay a penalty of $140,000.
If, on the other hand, you make coverage available and an employee still qualifies for a subsidy on the exchange because the employee contribution is more than 9.5 percent of household income, your penalty is $3,000 per year for each full-time employee eligible for the exchange.
Has everything been settled?
Regulations on many issues remain outstanding. All of the uncertainty has left many employers reluctant to make any large-scale changes.
The regulatory agencies responsible for implementation and enforcement of health care reform (departments of Labor, Internal Revenue Service and Health and Human Services) will issue additional guidance to help determine how to comply with new provisions of the law.
ChamberChoice will continue to monitor the progress of PPACA and its implementation and keep you informed of important developments.
Chuck Whitford is a client advisor at JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7257 or firstname.lastname@example.org.
Insights Employee Benefits is brought to you by ChamberChoice
Rising health care costs have companies looking everywhere for ways to get expenses under control.
“In years past, we would meet with human resources personnel and explain their renewal increase to them. Nowadays, with benefits costs rising so quickly, it’s an important and high-dollar line item on budgets and profit and loss statements. CFOs and CEOs are asking how to stem the tide of these increases. It’s captured everyone’s attention,” says Dan Wilke, Director of Underwriting at Benefitdecisions, Inc. Wilke says solutions can be found by analyzing medical claims to identify problem areas that can be addressed through plan changes and wellness programs.
Smart Business spoke with Wilke about reviewing claims data and what to do with the results.
What are the major categories of medical claims that impact insurance costs?
Most employee groups are going to have medical claims that fall into six major categories:
• Coronary heart disease
• High blood pressure
How do you gather claims data to analyze?
Most companies can obtain this data from their insurance carrier if the group is larger. There are also analytical tools that mine this data and produce reports that can be reviewed to pinpoint areas of concern that show extraordinary claims history or occurrences. These analytical tools provide detailed claims benchmarks in comparison to other companies of your size and industry. Your benefits consultant should be doing this analysis on a regular basis to advise you on the best strategies for your company.
How can companies use the claims data to lower health care costs?
One method for fully insured plans is to obtain Size of Payments reports from your insurance carriers. These categorize how many claimants incur medical claims in specific dollar ranges. Upon reviewing the data, employers may be able to capture significant premium savings of 25 to 30 percent by pairing a Health Reimbursement Arrangement (HRA) with a High-Deductible Health Plan (HDHP), with limited impact to total out-of-pocket costs.
Can you look at claims reports and tailor wellness programs to fit problem areas?
Absolutely. Some programs, such as smoking cessation, will affect all claim categories and chronic conditions. Companies can educate employees on the damage smoking and poor lifestyles can do, since on average, employees incur three to four times more claims per year if they have negative lifestyles.
When the claims incurred are higher than average in the high blood pressure category, strategies such as a walking program with pedometers can target high blood pressure and help reduce the risk of heart failure.
What else can you do to manage rising costs of health insurance?
The other direct way to manage costs is to have a healthy employee group. Getting employees to participate in a wellness program is the first step, and money can help motivate them. Give them choices whereby if they take a health risk assessment or participate in a wellness program, they’ll get a reduction in their medical insurance premiums, and you’ll start to get their attention.
HR departments also need to work with the C-suite and the owners of the company. When management buys into the concept of wellness, it goes a long way toward improving the culture and motivating employees to change their lifestyles. Even the healthiest groups will include people who have claims resulting from the lifestyles they lead. Companies should promote wellness by changing the culture and getting employees to change their lifestyles, whether it starts with a simple walking program or charging different premium rates based on whether they’re a smoker or nonsmoker.
Claims can be analyzed in a variety of ways to provide cost saving ideas to help manage your medical insurance costs. Work with your benefits consultant to strategize and develop cost-savings options.
Dan Wilke is director of underwriting at Benefitdecisions, Inc. Reach him at (312) 376-0437 or email@example.com.
Insights Employee Benefits is brought to you by Benefitdecisions, Inc.
It’s common for businesses to attain some measure of success and reach a point where they need to take strategic action in order to continue to grow.
“Basically, you’ve run the business to a certain point. What do you do next with a successful company? You could sell it, just keep the status quo — which I don’t think is a good idea — or you could grow it,” says Mario O. Vicari, director at Kreischer Miller.
Vicari says there are four options owners can consider to keep growing: Acquire a similar company; diversify by acquiring a company in a different industry; leverage what you have by figuring out how to cut costs or increase efficiency; or leverage your position by expanding into new markets.
“There could be a lot of different strategies under these four areas, but that covers the basics,” says Vicari. “Another option is selling the business. Maybe there is a point where the market is right to sell, but that has a lot to do with the personal goals of the owners.”
Smart Business spoke with Vicari about the different growth strategies and how they are implemented to build companies.
How do you leverage assets or market position to grow?
You can figure out how to do things better or more efficiently; that’s leveraging intangible capital. Every business also has tangible assets such as machines and buildings, and you can look at whether you can use those assets in different ways. Those might be line extensions or new products that you make with your existing technologies and hard assets.
Instead of focusing on assets, you can look at market position and ways to take share from competitors, assuming, for example, that it’s a billion-dollar market and you have a 10 percent share of a pie that isn’t getting bigger. You could take market share by expanding the sales force or distribution channels. For instance, if you’re only distributing in the northeast, you could open a distribution site in Indianapolis.
Another way to leverage your position is to look at existing customers and see if there are products they buy that you’re not presently selling but are close enough to your product line that you could. For instance, if you distribute HVAC equipment, you might want to expand your line and start selling water heaters.
What are the different acquisition strategies?
When you grow by acquiring a similar firm, it’s because they have different characteristics, such as geography or products, which complement the position you have. Maybe they give you a footprint in another three states. Or maybe they do commercial HVAC rather than residential.
You can also diversify through acquisition — for example, an HVAC company gets involved in home alarm systems, which is an entirely different business. Some businesses like diversification as a risk management strategy because you’re not concentrated in one industry. But the reality is it’s often very risky because it takes you outside of your core competency and it’s not easy to operate a business without experience in the industry.
Is it ever OK to stop growing your business?
It’s OK to maintain your position as long as you maintain your margins. The problem is that a lot of companies fall into doing nothing, not because they intentionally decided to do so, but because they become complacent.
Ninety percent of the time, companies in the status quo category tend to be there because they’re comfortable and not putting pressure on themselves to grow. That’s a dangerous place to be because when you have no goals or plans to improve your business you could wind up diminishing its value.
Mario O. Vicari is director at Kreischer Miller. Reach him at (215) 441-4600 or firstname.lastname@example.org.
Something NEW has arrived for private companies! Introducing the Center for Private Company Excellence, a community created by Kreischer Miller. Learn more at www.privatecompanyexcellence.com.
A truly great bank will go beyond standard financial services and provide value-added assistance in partnership with client businesses.
“I think the lost art in banking is the bank being a partner. It isn’t just about taking deposits, doing loans and putting people in a box. If you’re really doing your job you should provide far more than just your standard services, which, frankly, every service provider should do,” says Ed Lambert, senior vice president, marketing manager, Technology Banking Group at Bridge Bank.
Smart Business spoke with Lambert about what it means to be partners and what you should look for when choosing a bank.
What criteria should someone use in evaluating a bank?
The first question a bank should be asking is, ‘How are you doing as a company?’ Not, ‘Who are your investors?’ or, ‘Are you profitable?’ The bank you chose to work with should want to learn as much as they can about your company so they can find ways to meet your needs.
The banker should sit down with you and listen to your background and then, and only then, respond. What you don’t want is a banker who walks in and opens the conversation by talking about their bank and what it provides without having a conversation and getting to know something, anything, about you.
The second criterion for evaluating a bank is, ‘Do they have answers for me?’
The third criterion is whether the banker is limiting his or her answers to what benefits him or her and his or her bank. If there is a need they cannot fulfill directly, they should be able to tell you that and point you in the direction of someone who can help. They should be ready to provide a solution to your problem, whether directly or indirectly.
What kind of added value should business owners expect in a banking relationship?
A bank should be in a position to provide solutions to whatever situational issues could divert you from focusing on growth. It could be banking issues such as how to best manage your cash or what kind of debt works for your business, or possibly an overall solution process. It also could be something as mundane as finding a solution to the problem of you not liking your CPA or attorney. There have been horror stories about the CFO of a company making 30 phone calls to find a new CPA, taking a lot of time to find answers that a bank should be able to provide in terms of what their Rolodex holds.
If a bank is really providing a good level of service, those things should inherently be part of what they offer to its customers. The supposition is that the bank has been doing this for a long time and has built up a substantial list of contacts, so why should it not share that with its customers?
The bottom line is this: What a company should be looking for in a bank, as well as in any other service being provided to it, is what they bring to the table beyond the array of services that one would assume are standard.
If credit decisions are based on numbers, why would a good banking relationship matter?
The banker’s job is to tell the client ‘yes;’ ‘not yet, and here’s how to make it a yes;’ or ‘here’s somebody who can help you where you are today.’ Those are really the only three acceptable answers that a banker should be providing to his or her clients.
The role of a bank should be to solve issues for its clients that go well beyond just managing deposits and credits. Banks should really be a resource for a company to have at any stage of its life because each phase has a different set of needs. A truly good bank provides for those needs, even if that means telling a business owner something he or she doesn’t want to hear.
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U.S. Marine Corps Capt. Juan E. Rose III lets his military experience provide perspective when considering the task of balancing work, school and family life.
A student in the Executive MBA program at the UCLA Anderson School of Management, Rose’s leadership qualities earned him a John Wooden Global Leadership Award Fellowship. At the award ceremony, he was asked how he manages his busy schedule.
“When I met Pepsi CEO Indra Nooyi, she said, ‘You’re a Marine on active duty in San Diego, you go to an Executive MBA program in Los Angeles and you have a family in Murrieta, Calif. How do you do this?’ I commute 40,000 miles a year and I’m working hard and learning every single minute. But my Marines and I are not getting shot at, so it’s OK,” Rose says.
Smart Business spoke with Rose about the MBA program and how it’s helped prepare him for entering the business world when he leaves military service.
Why did you enter the MBA program?
After 10 years of active duty, I’m looking to transition to the private sector and I’m using the MBA program to couple the leadership experience I have with more technical knowledge.
I’m a financial management officer in the Marine Corps; however, finance in the private sector is for-profit, levering debt, and managing, maintaining and acquiring assets. As a government-certified defense financial manager (CDFM), I’m more preoccupied with safeguarding and disbursing public funds, while accomplishing the mission with minimal resources. Profit is never a conversation we have.
How does the profit motive change things?
Profit stresses people in completely different ways. I’ve been afforded the opportunity to work as a consultant recently, and I’ve been working with a couple of clients as a student. I am learning every day that people manage risk in order to maximize profit; Marines manage risk in order to save lives. It still seems to me that if you focus on your employees — an invaluable asset — while managing risk, profit maximization will be a result.
To me, profit just changes the perspective. When you’re managing life or death situations, losing money is not as important. As a leader you can then focus on learning from the mistakes to ensure you and your team doesn’t allow that to happen again. The complexity of defense financial management in the military comes from the environment and the mission, not the application of financial assets.
When you start using debt and trying to maximize profit at all costs, there are a lot of strategies and different ways to do that. That’s what I am trying to obtain from the MBA program and so far it’s exceeding all of my initial expectations.
What type of job will you seek after graduation?
I’m leaning toward management consulting. It will give me the opportunity to work in teams and continue to learn about industry as a whole in several different arenas.
It’s important for me to bring value to a company that values its people and affords them the opportunity to be intellectually challenged. My No. 1 priority is to work in a company that gives back somehow.
My long-term goal is to be a professor and to continue to coach, mentor and inspire people. The most important part of what I’ve accomplished over the past 10 years is coaching, mentoring and inspiring Marines to exceed their own expectations.
I look at some of our professors who sacrifice and take time to do that for us. They are able to manage their professional aspirations and personal lives, while also continuing to educate us. That’s what I’m passionate about — paying forward what was done for me.
Juan E. Rose III is a MBA candidate at the UCLA Anderson School of Management. Reach him at (760) 458-7408 or email@example.com.
For information on the MBA Program, Masters in Business Administration, UCLA Anderson School of Management, visit http://www.anderson.ucla.edu/x40700.xml.
Insights Executive Education is brought to you by UCLA Anderson School of Management
The federal government provided $600 billion in grants in 2011 for more than 1,000 programs. It takes considerable time and paperwork to apply for and monitor these grants, which is where a grants management system can help keep everything organized and on track.
“Automation really allows grant-giving organizations to focus more on the actual content and performance of the grant rather than get bogged down in the administrative and manual tasks of the grant process,” says Joseph Rodrigues, director, projects - Electronic Grants Management and Administration System at HTC Global Services.
Smart Business spoke with Rodrigues and James Joseph, vice president, government services, at HTC Global Services, about grant management systems and the advantages of automating the grant process.
What are the benefits of automated grants management?
Among the benefits of automation, the most important is that the grant administration staff can provide quality services to their grantees and focus their efforts on the core aspects of grants performance and monitoring as opposed to spending considerable time on administrative tasks, such as paper management, manual verification and validation. The second most important benefit is timely completion of the various steps in the grant life cycle process. Other benefits include consolidated repository of grants data that enables timely and effective information retrieval, analysis and reports.
Automated review process enables accuracy and consistency of reviews across reviewers. Automation of post award processes and notification ensure compliance and timeliness.
What are the challenges faced by grantors in automation of grants?
The biggest challenge is to find a truly configurable grants management software that can be configured to automate all the grant programs in an agency. Most grant giving agencies give out multiple grant programs that have varied requirements in terms of regulations and business rules. Most grant automation products available may address a specific grant program or a specific kind of business rule set. The most cost effective and efficient solution is configurable software that can automate all the programs that an organization has to offer through configuration rather than expensive and time consuming customization.
How does automation benefit grant applicants?
The biggest challenge that grantees face is submission of a complete and error-free grant application by the submission deadline. This is enabled through an online application that is intuitive, has context-sensitive help and validation features with recommended corrective actions.
An automated system assists grantees in identifying potential grant opportunities, based on eligibility. The application process enables multiple grantee staff to work on the same application, thus facilitating collaboration. In addition, it also provides transparency of status, online progress reporting and improved communication and responsiveness.
Good automation software is user friendly, does not require any third party software or plugins and caters to all levels of computer proficiency.
How does a grant management system cut down on inappropriate payments?
The reduction and eventual elimination of inaccurate and inappropriate payments is one of the major goals of the federal grantors. Automation has been identified as the primary strategy to ensure that payments made are accurate, appropriate and verifiable.
Automation verifies that payments are spent in the approved expense categories. When payments are made, they are normally made against the budget specified in the application. If an award of $100,000 is made, the award may be spread across several expense categories such as salary and wages, fringes, supplies, etc. When expenses are booked, they can be submitted only against the approved expense categories and/or within any deviation limits, if applicable. In the absence of an automated system, the grantor would have to manually match these expense categories and ensure that the expenses do not exceed what has been requested in the budget, which may lead to errors. With an automated system, all the validation and cross-verification is done by the system, thereby saving a lot of time, avoiding errors, overpayments and payments misapplied to the wrong categories.
What is the future of grant management systems?
The federal government has been trying to mandate transparency in grants. With the paper process through which the grants are given out, it’s very difficult to maintain transparency because it’s lost in the paper. If you have a system, it is possible to make the grant process transparent and minimize inappropriate payments. This is possible only through automation. The expectation is that the federal government will start insisting that a higher degree of automation is utilized in the grant management process.
With the proliferation of tools such as tablets and smartphones, grantees will demand that they can apply for a grant using these devices. Enabling mobile devices for grant management will be a trend in the future.
State governments will increasingly use software to automate the grant-giving process, submit their reports and help get all the grant money they can. Some already have. In addition, Software as a Service would be the preferred acquisition model.
JAMES JOSEPH is vice president, government services, at HTC Global Services. Reach him at (248) 530-2528 or firstname.lastname@example.org.
JOSEPH RODRIGUES is director, projects at HTC Global Services. Reach him at (248) 530-2554 or email@example.com.
Insights Technology is brought to you by HTC Global Services.
No matter your income, your taxes are likely going to increase in 2013. Although the amount depends on what Congress does about the “fiscal cliff” of budget measures due to expire at the end of 2012, chances are that at least one of many scheduled changes will directly impact your finances.
In addition to automatic spending cuts, the fiscal cliff includes an end to Bush-era tax cuts that will take brackets from current rates of 10 percent, 25 percent, 28 percent, 33 percent and 35 percent back to 15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent, respectively.
Other changes include raising the capital gains rate from 15 percent to 20 percent, reducing the child tax credit from $1,000 to $500, reducing the exemption for estate taxes from $5 million to $1 million and an end to temporary relief for the so-called “marriage penalty.”
“Absent action, we know what’s going to happen — all of these things are going to expire,” says Jim A. Forbes, CPA, a principal with Skoda Minotti. “I read an article calling this the legislative equivalent of a slow-motion train wreck. I’m sure they’ll get something done. It’s a matter of how many things get done before the end of the year.”
Smart Business spoke with Forbes about scheduled tax changes and the impact on families and businesses.
How will these changes impact business owners?
If your business is a closely held corporation, like an S Corp or a partnership, its tax flows through to your personal tax return. So your tax rates are going up if you own a small business that is an S Corp or a limited liability company.
For all businesses, regardless of the type, your ability to write off capital goods or fixed asset purchases will likely be severely limited in the future. Since 2001, we’ve had some form of bonus depreciation — accelerated writeoffs of purchases like computers, machinery, equipment and office furniture. In 2011, you were allowed a 100 percent write off. In 2012, it was 50 percent.
In 2013, absent any action, you’re not going to get an immediate writeoff; you’ll have to depreciate it over five years or whatever the life of the asset is. So incurring capital expenditures before the end of 2012 will give you a much better tax deduction than in 2013.
We’ve been telling clients for a long time to accelerate purchases if it makes good business sense because they’ll get a bigger deduction right now.
How are estate and gift taxes changing?
This year is an ideal time, if you’re wealthy, to gift something to your children. Right now, you can gift up to $5 million per individual, or, if you die today, no estate tax is paid on the first $5 million. Beginning Jan. 1, that reverts back to $1 million. If someone who is 55 or 60 years old wants to get their kid involved in their business that’s worth several million dollars, they can start gifting shares to them now because they can gift up to $5 million.
How will the Alternative Minimum Tax (AMT) change?
Your individual tax is computed under two methods. One is under the regular Form 1040. There is also a separate AMT calculation you have to do. It doesn’t allow you certain deductions, like state and local taxes, and it uses a different tax rate. What happens is that you pay the higher of the two, regular tax or AMT. The AMT captures upper middle class people generally with incomes from about $100,000 to a few hundred thousand — people who are wealthy but not in the top 1 percent of earners.
The AMT exemption is not set to index for inflation, so what’s happening is more people are going to be subject to AMT. That happens every year, but historically, they always put a patch on it. The exemption amount has been around $75,000 and it’s going to drop to $45,000 without action by Congress. About 4 million people paid AMT in tax year 2011. Without a patch, it’s projected that 31 million will pay AMT on their 2012
How will the average family be affected?
The one change that everyone will see in their paychecks is the end of a 2 percent reduction in the Social Security taxes they pay. Since 2011, the rate has been 4.2 percent. That was put into place as part of the stimulus plan. The likelihood of that one getting extended is not very high. That change affects anyone who gets wages. Absent anything else, you’re going to see a 2 percent reduction in take-home pay in January.
Another one that will affect an average family is the reduction of the child tax credit. If you have a child, you’ve been getting up to a $1,000 tax credit per child; that number is going to decrease to a maximum of $500 per child.
Also, the marriage penalty is going to come back. Many years ago, the rule was that the standard deduction and graduated tax rates for a married couple were not two times that of a single person, they were about 167 percent. Congress fixed the marriage penalty and, over the last few years, a married couple’s standard deduction and tax rate were exactly double a single person’s. What’s happening now is that the marriage penalty is returning.
The exemptions and tax brackets that were double the single person amount revert back to around 167 percent. So married couples are going to pay a little bit more tax, absent anything else. That applies whether you file jointly or separately.
JIM A. FORBES, CPA, is a principal with Skoda Minotti. Reach him at (440) 449-6800 or firstname.lastname@example.org.