Small and midsize companies are increasingly looking to outsource HR functions in order to focus on core operations and growing the business. 

“Companies have been moving that 
way as HR has become more complex — it’s no longer an HR person sitting in an office planning parties. There are complicated employee and compliance issues to address,” says Liz Howe, Director of Business Development at Benefitdecisions, Inc. 

“There are so many different laws being 
passed at the state and federal level that it can be a challenge for any HR team to keep up,” Howe says.
Smart Business spoke with Howe about this trend and the benefits HR outsourcing provides.
What are the risks of not investing in HR?
It depends on the business, but risks include auditors finding issues with things like not filing I-9 employee eligibility verification forms correctly or not reporting Equal Employment Opportunity (EEO) information, which can lead to more audits and fines. If you have more than 100 employees, you have to file an EEO report every September. If you have union employees, there are many related rules and regulations to follow.

Also, classification of employees 
has become a growing concern in recent months. Not many small and midsize businesses have the expertise to handle all of these requirements, especially considering that compliance laws change so rapidly. That definitely leads to compliance issues — the federal government estimates that 92 percent of companies are out of compliance with COBRA. That’s particularly a problem among companies that handle it themselves. 

Is outsourcing HR cost-effective?
Medium-size companies may need an HR director, HR manager, a generalist and a recruiter. If you outsource HR, you can get all or some of that expertise for an equivalent cost of hiring one person. Small and midsize businesses don’t need four full-time people to handle HR functions. They might need someone with expertise in employee relations once a month. 

Outsourcing is an affordable way 
to get the specialized expertise that you don’t need on a daily basis. Maybe they can have someone on-site one or two days a week and, for more complex issues, have the ability to get answers from someone who is a certified Senior Professional in Human Resources. 

Why does outsourcing HR make sense for companies moving away from a professional employer organization (PEO)? 

It’s a nice next step for companies that had been in a co-employer relationship with a third-party administrator. The PEO environment is popular with small businesses and startup companies that don’t have any claims history, so they would have expensive insurance and benefits. A third party shares the employees, pays them and manages benefit administration. Usually at around the five-year mark or 100 employees it’s good to move away from the PEO environment.

HR can be a good transition in that you don’t have to go out and hire a full HR team. You can take back control of your employees, but you’re still outsourcing the day-to-day, transactional HR functions. 

What else can outsourcing provide that companies might not be able to handle in-house?

While you can always hire someone with expertise in any certain area, outsourcing can take care of day-to-day functions like building processes and procedures, writing policies and handbooks, benefits administration, compliance and reporting. 

Additionally, you can get assistance with strategy — succession planning, compensation analysis, performance reviews and HR technology evaluations. All of these strategic areas are very specialized and you would potentially need one person to focus on each of them. Many smaller companies don’t want to invest that much into HR. It’s a cost that doesn’t provide quantitative value to the organization. They would rather focus on growing their business and selling their products or services.  
Liz Howe is the director of Business Development at Benefitdecisions, Inc. Reach her at (312) 376-0452 or
Insights Employee Benefits is brought to you by Benefitdecisions, Inc.
Published in Chicago

Restaurants, hotels and other hospitality companies that have not traditionally offered health insurance benefits to employees are struggling to meet the mandate to provide a plan or face penalties starting in 2015 under the Affordable Care Act (ACA).

That need has prompted the insurance industry to respond with cost-effective strategies to help companies with low-wage employees avoid some of the penalties for not providing health insurance coverage.

“There are gaps in the regulations that have allowed the insurance industry to create products to address this issue,” said Daniel L. Meracle, a partner at Benefitdecisions, Inc.

Smart Business spoke with Meracle about which health benefits solutions make sense for businesses in the hospitality industry.

What plans are available to address the need for companies to avoid penalties while controlling costs?

The ACA does not mandate that doctor or hospital visits, prescription drugs or laboratory services be included in the definition of minimum essential coverage (MEC). MEC is what employers are required to provide or pay a penalty of $2,000 per employee, minus the first 30 employees.

Also, self-funded plans do not have to offer coverage for any of the 10 essential health benefits. However, all group health plans must provide ‘recommended preventative services’ at 100 percent with no deductible, copayments or coinsurance. That leaves an opportunity for self-funded MEC plans that provide unlimited coverage for preventive services as the only benefit.

MEC plans are funded at the maximum liability level of about $50 per person, per month. An employer can have the employee pay the entire $50 premium or the employer can pay part or all of the premium. Just by offering MEC to employees, the employer avoids the $2,000 penalty while meeting the employee’s requirement for having coverage, so the employee isn’t liable for the individual mandate of $95 or 1 percent of income, whichever is greater.

In addition to the MEC, employers can add another layer of benefits by providing a limited medical plan that pays first dollar, meaningful benefits for emergency room, doctor’s office visits and prescriptions — the expenses that really impact the budgets of lower wage employees. Those plans start at $50 to $80 a month, and employers can have employees pay all or nothing.

Even if employees pay the entire cost, they can benefit by using pretax dollars if the plan is offered by the employer, rather than purchasing the coverage individually.

But wouldn’t the limited medical plan option still leave companies liable for penalties related to minimum value and affordability?

Yes, an employer would need to offer the next level of coverage, which is a minimum value plan, or be subject to a $3,000 penalty if an employee purchases a plan on the exchange and receives a subsidy. To meet the affordability test, the employee must pay no more than 9.5 percent of his or her income for the employee-only coverage.

However, you’re dealing with a smaller pool of employees at this point because, even at 9.5 percent of income, it’s going to cost the employee about $2,000 a year for a plan that has a deductible that ranges from $2,000 to $6,000. Employees will not see the value in that, since their contribution and the deductible will represent more than 45 percent of take home pay and they will decide to pay the individual penalty or take the MEC.

Therefore, many employers will stop after the first two options — MEC and limited medical benefits — and risk the liability of the $3,000 penalty because they will not be affected by that many employees. If you start with 10,000 employees and wind up with several hundred that actually go to the exchange, get coverage and receive a subsidy, you’ve reduced your liability tremendously from having to pay $2,000 per employee for all employees.

Even if the employee goes to the exchanges and receives a subsidy, their remaining cost for the plan and the same deductible levels of $2,000 to $6,000 will be a large portion of their take home pay, so many of them will not purchase the coverage in the exchanges either.

A number of insurance carriers have developed MEC and limited medical benefits plans because they see tremendous market potential in them.

Daniel L. Meracle is a Partner at Benefitdecisions, Inc. Reach him at (312) 376-0433 or

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.

Published in Chicago

Problems with the launch of the federal health insurance exchange website are removing it as an option for many employers and employees this year.

“How can I advise someone whether to enroll in an employer plan or buy from the exchange when I can’t get on the exchange to make a comparison before the employer’s open enrollment period is up? For the 33 states with a federal hand in operating the exchange, it’s nearly impossible to get any data,” says Paul J. Baranowski, CLU, ChFC, team leader in Account Management at Benefitdecisions, Inc.

Smart Business spoke with Baranowski about strategies to consider in the wake of the problematic launch of the exchange.

How are health plans changing as a result of the exchange?

On the employer side, there’s a stronger move toward defined contributions, providing a set dollar amount and letting employees chose their plan. In the past, there was concern this approach might be too hard on employees with families. It’s easier now for companies to make this transition because the Affordable Care Act (ACA) can be cited as a reason for change.

For larger-sized employee groups, cost increases are still primarily driven by the group’s own claims experience. However, many small to midsize, fully insured employer groups are facing sizable premium increases due to insurers’ expectations of an influx of less healthy people coming on the books, pass-through ACA fees and less flexibility in underwriting methodology. These employers may have little choice financially but to move to something like defined contribution plans.

From a regulation standpoint, a defined contribution plan potentially sets up a method for allowing family members to get subsidies to purchase coverage through an exchange, once ACA is revised to accommodate this. Clients in the hospitality, restaurant and retail businesses are moving toward plans that are purposefully unaffordable — the plan meets minimum coverage requirements but is too expensive, so employees go to the exchange and get a subsidy. Because these industries have a high degree of turnover, the business risk of paying $167 for every month an employee is on the exchange is a fairly low liability.

Exchanges are also giving an extended life to employers putting in a health reimbursement account (HRA) underneath a high-deductible health plan. While employers need to be careful about some new restrictions, and the HRA has to be integrated with the medical plan, this can mitigate employees’ costs while reducing total employer fixed premium costs.

In addition, there’s a strategy that involves offering a plan with minimum essential coverage, which can mean providing unlimited preventive-care-only coverage. This would push employees to get coverage through exchanges and qualifies them for the subsidy.

When do you expect the problems with the exchange will be worked out?

It will take several years to bring stability and less complexity to the market. With all of the uncertainty, plus ACA medical loss ratio rules, carriers won’t take the risk of selling underpriced plans since they’re no longer allowed to recoup losses.

Unfortunately, this means no real price advantages just yet to employers purchasing health coverage, whether in or out of exchanges. There still isn’t any serious movement on affecting the cost of health services and changing behavior at the individual level, but at least there will be more plan choices to give to employees.

On the flip side, reform has several positive advantages. It’s a huge plus for people with preexisting conditions who had been denied coverage, particularly the many small business owners or sole proprietors who previously had to make tough life decisions, such as putting off retirement, because they couldn’t get a decent health plan. This also has closed the door on what once was a possible problem when switching employers.

Although some positives exist, nothing in health care is free — that’s being clearly demonstrated. As a result, even small employers need to explore all possible strategies, keep up on the continuous regulatory changes and be ready to consider doing something unconventional.

Paul J. Baranowski, CLU, ChFC, is team leader in Account Management at Benefitdecisions, Inc. Reach him at (312) 376-0436 or

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.

Published in Chicago

In ruling that the Defense of Marriage Act (DOMA) was unconstitutional, the U.S. Supreme Court also created challenges for HR personnel in managing benefits related to employees in same-sex marriages.

“It’s great that the decision ensures equality and there will no longer be a disparate impact on employees’ spouses,” says Stephanie Martinez, PHR, Director of HR Services at Benefitdecisions, Inc. “But it does present additional challenges for HR.”

Smart Business spoke with Martinez about the ruling and its implications in administering employee benefits.

What was the Supreme Court ruling?

It struck down the DOMA definition of marriage as being between a man and a woman. Couples in same-sex marriages now have equal protection under federal law. The case also dealt with estate taxes.

Which states recognize same-sex marriages, and does the ruling affect other states?

Same-sex marriages are recognized in 13 states: California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington, as well as the District of Columbia.

While the ruling has little direct impact in states that do not recognize same-sex marriages, it does affect federal taxes, regardless of residence. The Treasury Department and IRS issued guidance that a ‘state of celebration’ approach will be used regarding treatment of same-sex couples for federal tax purposes, meaning the marriage will have federal tax recognition regardless of where a couple resides.

How are benefit plans changing?

The ruling is impacting benefits that are extended to spouses, ensuring same-sex couples are treated equally as compared to opposite-sex couples. If you don’t offer spousal benefits, there’s no requirement to do so as a result of the ruling.

You also don’t need to extend benefits to same-sex spouses if you have a self-insured wellness plan or are in a state that doesn’t recognize same-sex marriages. However, if you’re not extending that benefit to same-sex couples you could face legal challenges because it could be viewed as discriminatory.

If you offer a qualified retirement plan, it must treat the same-sex spouse as a spouse for purposes of satisfying federal tax laws. The plan must recognize valid same-sex marriages, even if the state they live in doesn’t recognize same-sex marriages.

Another change is that employees’ health plan contributions for same-sex spouses and children can now be done on a pre-tax basis. Also, they are eligible for COBRA continuation coverage.

In states that recognize same-sex marriage, the Family and Medical Leave Act (FMLA) extends to same-sex couples, giving them the right to take leave to care for their spouse.

Some questions that remain unanswered for HR representatives include whether same-sex spouses will be able to claim their benefits retroactively to the ruling’s effective date. There’s also a question as to whether past federal tax returns can be amended to claim refunds, and if same-sex couples will get their FICA taxes refunded.

What should employers be doing now in response to the DOMA ruling?

Private sector organizations in those 13 specific states should look at how benefit plans are communicated to employees. Make sure payroll taxes are handled correctly, that you’re collaborating with your health care insurance provider regarding COBRA coverage and that communications are modified to reflect necessary changes.

Pertinent policies for things like FMLA and COBRA will need to be updated in your employee handbook.

As an HR representative, it can be difficult from a legal standpoint to stay on top of all of the changes, and how those changes may impact your organization. One complication is that state definitions of terms like domestic partnerships are not clearly defined across the board. Civil unions and domestic partnerships are not normally affected by the DOMA ruling, but California law expanded the scope of domestic partnerships to include all the rights and responsibilities of a legal marriage.

Any effort to move forward with providing equal opportunity for all individuals is a step in the right direction. However, there are many things you need to pay attention to in order ensure everything is done lawfully.

Stephanie Martinez, PHR, is Director of HR Services at Benefitdecisions, Inc. Reach her at (312) 376-0465 or

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.

Published in Chicago

When employees are hired or leave a company, the process typically involves HR staff inputting or changing information in a variety of places.

“HR is adding them or removing them from payroll, typing in information and sending it to the insurance provider, and using seven to 10 different systems to handle the various tasks,” says Liz Howe, director of Business Development at Benefitdecisions, Inc.

Companies are alleviating that burden by automating processes through benefit administration systems.

“They recognize the burden that HR people face. And employees are becoming more technologically savvy and want information at their fingertips,” says Howe.

Smart Business spoke with Howe about benefit administration systems from both employer and employee perspectives.

What are the advantages of benefit administration systems?

From an employer standpoint, HR personnel can easily see who is enrolled in benefit plans. These systems help eliminate errors because the plans are entered into the system once, along with employee and employer contributions. So when an employee enrolls, there’s no question as to whether he or she has a dependent or not, for example. Because everything is computerized, that also eliminates paperwork.

Once employees are enrolled, HR can reach out to carriers with information about who has enrolled and at what level — employee and spouse, employee and family. With a benefit administration system, all those characteristics are readily available.

For employees, they can point and click to find out exactly what will be deducted from their paychecks and the coverage available in their plans.

How detailed is the information provided?

It varies. You can have one focused solely on benefits, with employee information, plan description, plan summary, deductions, and employee and employer contributions. Other systems can have a total compensation statement built in, showing employees how much their benefits cost the employer.

Benefit administration systems also can house HR information such as designation, education, paid time off — anything typically tracked by HR. These systems are scalable to the company’s size and needs.

Have there been any recent developments?

The big push at the moment is toward having mobile apps to allow employees to enroll and make changes online through their smartphones. They can enter the system from home, or if they’re at the doctor’s office and need a group number, they can retrieve that on their phone.

Health care reform, and the state insurance exchanges, will probably lead to some other advancements.

What would keep a company from implementing a system?

Security is a concern that makes some companies hesitant. But companies use the Internet already, so they just need to ensure their connections are safe.

There also may be employees who don’t have access to a computer on a regular basis, although many of them do have a smartphone. Employers can place a computer kiosk or iPad station in a centrally located area for employees to enroll and check information.

Of course, there are always people who don’t want to use an electronic system. Those cases can be managed the old-fashioned way, although it’s not recommended. If you move to an electronic system, it’s best to make a complete switch.

What training is involved?

Every company does it differently. Usually, HR has specific training on the administrative aspects. Supervisors are trained so they can educate their staffs on how to use the system. Employees who need extra help can get one-on-one sessions with instructors, although sometimes that isn’t necessary. Benefit administration systems tend to be very user-friendly and easy to understand from an employee perspective.

Implementation can be a bit tricky. However, over time you’ll see how many errors are eliminated and how much time is saved. No one ever says they were disappointed in the results, they say they can’t believe they didn’t do it sooner.

Liz Howe is Director of Business Development at Benefitdecisions, Inc. Reach her at (312) 376-0452 or

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.

Published in Chicago

Many employees are surprised when they learn how much employers are spending on them in addition to their salaries. Studies show that benefits can add 30 to 35 percent on top of the salary being paid.

“A total compensation statement is a good way to illustrate this and make employees aware. Most employees will end up appreciating employers more if the information is communicated properly and in an effective manner,” says Dan Wilke, director of underwriting at Benefitdecisions, Inc.

Smart Business spoke with Wilke about the value of providing employees with total compensation statements.

What’s in a total compensation statement?

You want to capture every cost associated with employees from the moment they are hired. The statement takes into account items such as vacation time, sick leave, personal days, holidays, wages, overtime, employer matching 401(k) contributions, and bonuses and commissions.

Then you break out the costs of what the employer pays for insurance — medical, dental, vision, life, disability, and travel and accident. It also includes tax-related costs the employer pays — Social Security, Medicare, federal and state unemployment, and workers’ compensation.

Some companies also reimburse employees for tuition for continuing education, or provide reimbursement for health club memberships as a way to incentivize employees to keep active and in good health.

The statement includes all of these hidden costs that employees forget about. They look at their paychecks and lose sight of the other benefits their company provides. Benefit-related costs are the second largest income statement expense, after payroll, and total compensation statements shed light on how much is spent.

It’s not about telling employees what you do for them, but showing how much they are valued. Studies show that when employees are aware of the total costs, they feel more appreciated and they are more productive.

Are total compensation statements also used as a recruitment tool?

It’s a logical next step. It might become commonplace that prospective employees hand over resumes and are given total compensation statements in return. Prospective employees often focus on the salary number. For example, a friend of mine accepted a new position and was surprised to learn he had to pay $1,200 a month for family health insurance because his company only pays 50 percent of those costs. Had he accepted another offer, he would have paid only $400 a month. He lost almost $10,000 in total annual compensation.

If you have a rich benefits package, illustrating that in a total compensation statement could certainly be valuable in terms of recruitment.

Can statements have a negative affect if you don’t have a rich benefits package?

A statement might not be applicable to all companies. It’s not promoting a sense of increased value to employees if your benefits package is light. A consultant would be able to determine if it makes sense to produce a total compensation statement.

What are the implementation costs?

On a one-time basis, you can outsource the project to a company that produces total compensation statements and the fee will run from $5 to $15 per statement.

However, it is more cost-effective to load information in a benefits administration system, if you have one, because it’s rolled into the cost of the system. There is an indirect cost because it takes legwork by HR to gather the information and enter it into a spreadsheet or database, but it’s worth the effort.

Typically, statements are provided to employees annually. While they can be delivered any time of the year, the best time is after you’ve given raises and had a benefits renewal. You’ll know the new costs and it’s a sensible time to update employees.

It’s important that you don’t just send it out or hand it to employees; there has to be follow-up. Offer to meet with employees on a one-on-one basis to provide explanations and answer questions to show you care about them. Total compensation statements are valuable and they have to be communicated in a manner that conveys that message.

Dan Wilke is director of underwriting at Benefitdecisions, Inc. Reach him at (312) 376-0437 or

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Published in Chicago

Today’s workforce is unique in that there are now four generations of people working together — traditionalists born from the 1920s to the 1940s, baby boomers, Generation X and millennials.

That presents challenges to employers in bridging generational gaps and getting workers on the same page.

“There are now four generations of people in the workforce, and they all bring something very different to the table. They have unique characteristics in terms of values and what is important to them personally,” says Liz Howe, Director of Business Development at Benefitdecisions, Inc.

“There is a lot of buzz about the lack of communication among the generations. They come from different places and have different ways of doing things. It’s about getting them to play in the same sandbox, if you will.”

Smart Business spoke with Howe about the differences between generations and the affect it has on the workplace.

There have always been multiple generations in the workforce, how is it different now?

It’s that there are still people born in the ‘20s to ‘40s in the workforce in high, C-level roles, along with baby boomers, Generation X and young kids out of college.

Combine that with the progress made over the last 20 or 30 years in technology and the Internet. The world is a completely different place and that can pose challenges in getting things done. One segment of workers says, ‘This is how it’s been done,” while another says, ‘Why do we do it this way?’

How can you bring them all together?

Companies need to consider what’s important to each group. The traditional generation was raised in a really hard time and tends to revert to how things used to be done; Generation Xers don’t identify with that. If you have a Gen Xer managing a traditionalist, he or she needs to think about what is important to that person — a flexible work arrangement, succession planning and teaching them technology.

That same manager would handle a millennial differently. Priorities to a millennial are having a work/life balance and having a relationship with his or her supervisor that doesn’t involve micromanagement, but more of a team-oriented approach. So it might be more of a mentorship than just being a work manager.

With baby boomers, no news is good news. If a manager isn’t calling and asking questions, they’re in good standing.

What is the danger of managing everyone the same?

You lose the employee engagement factor, which is a hot topic these days. Millennials aren’t as loyal to companies as baby boomers, and if they’re not happy they will leave for a company that better fits their culture. That has become more socially acceptable and other generations are seeing that. Ten to 15 years ago it wasn’t acceptable to have four or five companies on your resume, now tenure is three years before people want a promotion or a different role.

You need to be thoughtful about managing employees and what types of benefits you’re providing by catering to what they find important. There’s been a real push toward wellness programs. Some businesses provide different types of insurance — pet insurance is huge. Other companies will match charitable contributions to an organization of the employee’s choice rather than just giving a cash bonus. People today are much less monetarily driven than they’ve ever been.

What are the benefits of having all of these generations together?

It brings some depth and breath of knowledge to an organization, along with a wide variety of skill sets. It’s an advantage to have people raised at a time when there was little or no technology all the way down to people who don’t know anything but technology and the Internet.

The challenge is to get them to communicate with each other so you can take full advantage of their knowledge.

Liz Howe is director of Business Development at Benefitdecisions, Inc. Reach her at (312) 376-0452 or

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.

Published in Chicago

A company’s mission can be a very powerful tool for building employee engagement and fostering a winning culture. But that can’t be accomplished simply with a mission statement posted on a wall.

“It’s not so much about creating a statement. A company mission lives and breathes, whether it’s documented or not,” says Greg Stobbe, SPHR, J.D., Chief HR Officer at Benefitdecisions, Inc. “The mission is what drives the culture, which is what drives the organization.”

Smart Business spoke with Stobbe about the importance of having a mission and the impact it can have throughout your organization.

What is a company mission?

There’s a unique answer for every organization, but the mission is the what, why, who and how of the company; it’s the reason it exists. The mission isn’t developed — it’s already there, you just need to uncover it.

The mission is the organization’s ultimate goal, if you don’t have one you can’t truly define success or failure. It’s like a ship without a navigational system, you’re not going to know your course or if you’ve reached your destination because you don’t have one.

What are the benefits of having a mission?

The benefits are directly proportionate to the effort and thought that went into designing, implementing and maintaining focus on tracking the mission. There will not be any benefits if it’s just a statement, whether oral or written, and nobody pays attention to it.

Time spent on devising, developing and articulating a mission is a savvy investment in human capital that will pay dividends in the financial success of the organization. Employees who feel invested, who understand their roles, become engaged and emotionally attached. It would be very difficult for someone to be emotionally attached to an organization unless the person knew the mission and it resonated with him or her.

With the economy improving, employees might be apt to look at a position elsewhere for more pay. But when you have employees who are emotionally invested, their first motivation is not compensation. You can do more with a smaller group of employees who are passionate about the cause than with a larger group who show up for the paycheck. A passionate, engaged workforce can accomplish great things and that all goes back to the power of a company mission and how that affects employee engagement.

How is the mission articulated?

You need to work with employees on establishing the mission. It’s not like the secret recipe of Coca-Cola that’s kept in a vault in Atlanta and only three people know it. The mission drives the culture, and you should know what it is when you walk into a company’s headquarters. Once you know the company mission, everyone should know it and live it. If you approach any employee, he or she should be able to articulate what the organization's overall mission is and how his or her contributions are aligned with it.

What are the challenges faced in the process of developing the mission?

First and foremost, the mission has to come from the top — the CEO and/or the board of directors. They need to be stewards of the process. Companies can hire a consultant to put together a mission statement, but if that’s just because the CEO wants to check a box, it’s not going to produce any benefits. Companies with winning cultures are the ones where senior managers embody the mission. Through their example, it cascades down to all levels so that everyone, from the person at the front desk to the clerk in accounting, up through the C-suite knows the mission, and it’s something people live every day.

How is the mission accomplished?

Theoretically, if a company achieved its mission, the reason for the company ‘to be’ would no longer exist. Therefore, it is important to carefully consider your mission and thoughtfully craft it. The difference between the missions of ‘to feed hungry people’ versus ‘to eliminate hunger’ is evident. The former being an event, and the latter a true mission. An engaged workforce will ‘reboot’ each and every day and strive to achieve the mission.

Greg Stobbe, SPHR, J.D., is Chief HR Officer at Benefitdecisions, Inc. Reach him at (312) 376-0456 or

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.


Published in Chicago

Annual physicals can lead to early detection of serious health problems and set a course for better outcomes. Companies need to take the same mindset concerning HR and benefits compliance audits, says Meghann Guentensberger, Director of HR Services at Benefitdecisions, Inc.

“Don’t wait until something ‘hurts’ to try to figure out how to respond,” she says. “It’s better to know ahead of time so you’re protected if there is a disgruntled employee who files a complaint.”

Smart Business spoke with Guentensberger about HR and the benefits of compliance audits.

What areas are covered by HR and benefits compliance?

Compliance is two-pronged: There is the benefit piece, which encompasses the Employee Retirement Income Security Act (ERISA), Health Insurance Portability and Accountability Act (HIPAA), COBRA, etc. There is also the HR side, which deals with regulatory compliance such as federally mandated forms and notice postings, and making sure an organization has proper procedures in place to address and resolve discrimination issues and complaints.

Many companies fall short on compliance with the Fair Labor Standards Act regarding employee classification — whether employees are exempt or nonexempt, or are a contractor or employee. There are best practices and risk management considerations such as having all I-9 employment eligibility verification forms filled out correctly and filed separately. The penalty can range from $1,000 to $10,000 for a form that is incorrectly completed. Employers also must ensure that any protected health information documentation is not co-mingled with other employee-related documentation in the employee personnel files.

What is involved in a benefits and compliance audit?

There are three steps — discovery, evaluation, and assessment and recommendation. In discovery, you determine which areas may present the most risk. A third party conducting an audit will interview HR employees, evaluating practices and processes to determine if they are in compliance with the law.

In the evaluation stage, select policies or a random sampling of employee files are reviewed and compared to standards. This often provides insight into hiring, interviewing and employee relations procedures. Common problem areas include employment applications that contain impermissible questions. This can lead to a claim of discrimination by a candidate who was not hired for a position. Employee handbooks often contain sections that provide unnecessary risks to the employer. An audit can ensure that it provides the same information to all employees.

For the final step, a scorecard is developed that shows risks and potential associated costs of noncompliance, or savings as a result of compliance. The scorecard also identifies areas to improve.

How do you determine an audit’s value?

Some savings derived from audit findings are soft costs, because fines would only be paid if an institution such as the U.S. Department of Labor (DOL) conducts an audit and finds violations.

One of the more significant values of an audit is in showing employees they matter most. Staying compliant shows you’re providing best-in-class service and indicates the moral values of the company. It also can be very powerful when dealing with a complaint from a disgruntled employee.

How often should audits be conducted?

Conduct an audit at least annually, although non-discrimination testing for Section 125 cafeteria benefit plans should be reviewed twice each year.

Many companies establish policies but don’t review them. That’s fine until you have a scenario where a disgruntled employee files a complaint with the DOL.

Regulations change all the time, so you have to stay on top of compliance issues, which can be difficult. Small and midsize businesses would benefit most from hiring an independent third party to perform an audit because you need someone who knows what you don’t know.

Meghann Guentensberger is director of HR Services at Benefitdecisions, Inc. Reach her at (312) 376-0449 or

For additional Insights topics and events, visit Benefitdecisions' website.

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.


Published in Chicago
Sunday, 31 March 2013 22:45

How to expand your business into Asia

Emerging markets in Asia present significant growth opportunities for businesses, but they also pose many challenges in terms of culture differences and government regulations.

“One reason Hong Kong and Singapore have become popular as a first destination for companies expanding into Asia is because they have very good legal systems with good intellectual property protection,” says Mark Matuscak, President and CEO of Benefitdecisions, Inc. “Other key factors are a strong talent pool of local skilled labor, favorable tax rates and a central location that makes travel within the region easy. Companies may be targeting business in China but set up in Hong Kong first as a gateway. Then geographically and culturally you’re much closer to the Asian markets, and it’s easier to build on that.”

Smart Business spoke with Matuscak about what companies need to know from an HR and benefits perspective before expanding into Asia.

How do HR requirements differ when setting up a business in Asia?

The concepts are the same — payroll and benefits — but statutory requirements are much different than in the U.S. and they vary by country. For example, all employees in Hong Kong have a mandatory provident fund that requires a 5 percent contribution by the employer and a 5 percent contribution by the employee. In Singapore, there is a mandatory central provident fund and the average employer contribution is 15.5 percent; that’s a substantial difference.

There are also differences regarding minimum wages, employee compensation insurance, notice periods, holidays, sick leave and even the manner in which people are paid commissions or bonuses. In some countries, laws regarding maternity leave protect a woman’s job as soon as she declares she’s pregnant. Companies expanding to Asia shouldn’t underestimate the complexities involved with HR.

What are the tax differences?

It’s difficult to generalize, as it varies among countries. Since that affects the design for employee benefit packages, it’s best to get an all-encompassing target for wages and benefits. If you set $60,000 aside for a position, dollars can be shifted between items such as housing allowance, mandatory requirements, core benefits and salary.

Getting the right mix for the market is key to securing the right talent. Start with the existing benefits policy and conduct a benchmarking exercise to see what competitors in the area offer.

Can that be accomplished within a company’s existing HR department?

It’s always a good idea to work with someone with the expertise to understand the unique requirements, taxes, culture and laws of each country. For example, you need someone who can help design a staff handbook that’s congruent not only with the culture and policies of the organization, but is also compliant with local legislation. An HR outsourcing company can create a compliance scorecard that identifies all of the requirements of the various countries.

What issues need to be addressed concerning current employees who will be working in Asia?

There are a number of issues that need to be addressed. For example, the application process can take up to 10 weeks, so make sure an employment visa is obtained in a timely manner. Workplaces are often quite remote, so it’s useful to provide a support structure where employees can go for information about schools, etc. Identifying the issues upfront with an expert and strategizing how to handle them is the best plan to minimize unexpected delays or complications.

Are many companies considering expansion to Asia?

About 10 to 20 percent of middle market businesses primarily domiciled in the U.S. say they are looking to do business in Asia. All the indicators are that China will become the largest economy in the world by 2020, and India the third-largest by 2030. Businesses need to look ahead and develop their plans for growth. Many are entering into Hong Kong and Singapore now as part of their future strategy.

Mark Matuscak is the president and CEO of Benefitdecisions, Inc. Reach him at (312) 376-0431 or

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.


Published in Chicago
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