Aon Puts a Favorable Spin on Health Insurance Increases

Aon Corporation, the world's 2nd largest insurance broker released their latest survey on projected "health care" costs for 2009. An increase of only 10.6%. So what would you expect the headline to be.

HEALTH INSURANCE RATES GOING UP AGAIN.

Well not exactly. How about ....

HEALTH CARE COSTS TREND DOWN

Don't be fooled by the industry "Spin". Small business owners and mid-size companies should be prepared to experience another round of double digit rate increases again this year. Just like your experience last year, and the year before that, and the year before that.

Aon Consulting's U.S. Health & Benefits practice director, John Zern, said of the survey results: "While the medical trend rate is still more than twice the consumer price index, it is encouraging to see that health care cost rate increases are continuing to slow down. This is a step in the right direction for companies nationwide that continue to feel significant health care price pressures."

Bill Sharon, senior VP of Aon Consulting and director of the study attributes the decrease in the medical trend rate to more employers and employees taking advantage of wellness, health promotion and consumer driven programs.

"Unlike some other healthcare trend surveys, Aon Consulting's survey reports the expected future increase in employer-provided health plan claims cost before any plan changes, based on the opinions of health plan actuaries. We provide this trend data to help employers evaluate the competitiveness of health insurance premium renewals. For employers with self-funded health plans, this trend data helps them (and their actuaries) develop future claim estimates for budgeting purposes."

This is "double speak" for let us see where we can cut your benefits this year. Once again, the insurance company will pay less of the claim (if any), employees will pay more, and the employer still gets socked for an increase in premiums, only not as much as last year. Sound familiar?

If your a business owner, employer or manager and you want to escape the annual treadmill or health insurance rate increases .... than you should consider the services of a Professional Employer Organization

PEO-quote.com offers a free guide that helps entrepreneurs and busy executives find out about the many solutions that employee leasing, HR outsourcing, and professional employer organizations can provide the small and midsize company. Take the time to learn what some of the industry leaders can do for you. You owe it to yourself, and to your employees.

Too busy, then call on the services of a consultant that specializes in employee leasing, and the HRO and PEO industry. Business owners can have their questions about employee leasing and professional organizations answered by experienced professionals at Employers Rx LLC.

Bill Makes HSAs More Flexible

The U.S. House and Senate on Saturday passed a bill that may increase the popularity of health saving accounts. The Tax Relief and Health Care Act of 2006 (H.R. 6408) awaits President Bush's signature.

Under the legislation, employees and employers can contribute up to $2,850 for single coverage and $5,650 for families, even if the deductible is lower. Moreover, companies can contribute more money to HSAs for workers making less than $100,000 per year than for higher-income employees.

The legislation allows a one-time transfer of funds into an HSA from an individual retirement account, health reimbursement arrangement or flexible spending account. The provisions also permit workers hired during middle of the year to enroll in an HSA and make a full-year maximum contribution at that time.

Barry Barnett, a principal at PricewaterhouseCoopers, comments, "I think it's good. I think it'll drive more employers to adopt these plans. It allows people to put in more cash. As they have more cash at risk, they'll be better consumers."

John Hickman, a partner at Alston & Bird law firm, predicts, "This is probably the last, given the makeup of the [new] Congress, favorable HSA legislation we're going to see for a while. We fully expect all of the provisions to be signed [by the president]. Most of these are improvements."

Christopher McFadden, deputy business unit leader for Goldman Sachs' U.S. health care group, notes that Sen. Edward Kennedy (D-Mass.) and Rep. Pete Stark (D-Calif.) are not fans of HSAs and will head key committees on health policy. "What I hope is that this doesn't antagonize these two increasingly powerful members of Congress in a way that incites them to [reverse] the progress that has been made," he adds.

An analysis from the Center on Budget and Policy Priorities states, "HSAs provide a tax subsidy for virtually any out-of-pocket health care costs, including elective procedures not normally covered by health insurance. By enabling individuals to overfund their HSAs, the bill could encourage some people to spend a portion of their excess HSA balances on elective services they would not otherwise consume. The change would primarily benefit high-income individuals, since they are the people most likely to make such a transfer" from an IRA.

The bill garnered praise from the U.S. Chamber of Commerce, the American Benefits Council and America's Health Insurance Plans.

The bill makes "several important improvements to help the growing number of Americans enrolling in these plans and to increase the number of people who will find these plans attractive," says James Klein, American Benefits Council president.

"If you want consumers to prepare for long-term care, they need to develop a long-term strategy," says Karen Ignagni, president of America's Health Insurance Plans. "With higher contribution limits that are indexed to inflation, HSAs will offer new opportunities for consumers to plan for their long-term care expenses."

IRS Announces 2007 HSA Limits

CHH Online

The IRS issued guidance on the maximum contribution levels for health savings accounts (HSAs) and out-of-pocket spending limits for high deductible health plans (HDHPs) that must be used in conjunction with HSAs. These amounts have been indexed for cost-of-living adjustments for 2007.

Annual contribution levels

* For 2007, the maximum annual HSA contribution for an eligible individual with self-only coverage is $2850. (Note: for any individual, the maximum contribution is the lesser of the indexed amount or the deductible of the HDHP.)
* For family coverage the maximum annual HSA contribution is $5,650.
* Catch up contributions for individuals who are 55 or older is increased by statute from $700 to $800 for 2007.
* Both the HSA contribution and catch up contribution apply pro rata based on the number of the months of the year a taxpayer is an eligible individual, and, with respect to the catch up contribution, the number of months of the year that the taxpayer is age 55 and over.

Out-of-pocket spending

* The maximum annual out-of-pocket amount for HDHP self-coverage increases to $5,500 and the maximum annual out-of-pocket amount for HDHP family coverage is twice that, $11,000.

Minimum deductible amounts

* For 2007, the minimum deductible for an HDHP increases to $1,100 for self-only coverage and $2,200 for family coverage. (IRS Rev. Proc. 2006-53, IRB 2006-48, Nov. 27, 2006.)

http://hr.cch.com/news/payroll/112106a.asp

PEOs cover ABCs of Human Resources

Akron Beacon Journal

Companies take care of hiring, payroll and benefits

For many small businesses, the administrative burdens of hiring, managing and paying employees can be overwhelming. As a result, many business owners are turning to alternative methods of hiring staff, including something called the "professional employer organization'' or "PEO''.

PEOs are companies that help businesses find and hire people, plus manage such things as health benefits, workers' compensation claims, payroll, unemployment insurance and more. As a business owner, you contract with a PEO to assume these and other responsibilities, allowing you to concentrate on the revenue-producing side of your operations. PEOs establish and maintain an employer relationship with the workers assigned to you and assume many employer responsibilities and risks.

Most small businesses are new to the ``human resources'' or ``HR'' field. One advantage of using a professional employer organization is that they already have experienced HR pros who can handle benefits, payroll, Occupational Safety and Health Administration compliance and just about everything else you will need. By bringing employees into a larger overall group, a PEO can offer your workers benefits, such as health insurance and retirement plans, that you would be hard-pressed to deliver on your own.

Pre-employment testing is another area where PEOs can help. Without a screening process, you risk placing the wrong person in the job, leading to lost productivity and costly turnover. PEOs tailor pre-employment tests to predict loyalty to you as well as success on a specific job. The tests aren't foolproof, but they can have a big impact.

Small-business owners often dread the prospect of reading stacks of resumes and conducting interviews for prospective hires. PEOs can reduce this burden and deliver candidates quickly, then handle the paperwork for the new hire. Some PEOs have entire divisions devoted to recruiting and helping small-business owners gather information to make the right hiring decisions.

Many entrepreneurs who have used PEOs credit the choice with helping grow their businesses quickly. The National Association of Professional Employer Organizations (NAPEO) is a good source of information and help. The organization's Web site at www.napeo.org describes how PEOs work, the benefits of using one and guidelines for selecting one that's right for your business.

Is It Time to Outsource Your HR?

By Layne Davlin

When the time comes to start hiring staff, a lot of entrepreneurs fail to give much thought to all the responsibilities that come with being an employer. The average small-business owner isn’t equipped with either the knowledge or the time to comply with the mountain of regulations required by the government. Fortunately, HR outsourcing--hiring a PEO to oversee your HR tasks--is a solution that not only provides help with compliance issues but can also provide assistance that’s tailored to your company’s specific needs.

A PEO, or Professional Employer Organization, can offer HR solutions tailored to small and midsized businesses in all industries. For an annual fee, usually 2 to 7 percent of the dollar value of your annual payroll, a PEO will take care of everything from recruiting and hiring to managing your health benefits. Since many smaller businesses can’t afford to hire an HR professional, PEOs can be a cost-conscious option. For instance, if a company has a $1 million payroll, a PEO can provide the equivalent of a full HR department for roughly $20,000 to $70,000 a year, considerably less than a fully staffed HR department or even one qualified executive.

Generally, a PEO will legally hire a company's current employees, thereby making the PEO the "employer of record" for taxation and insurance purposes. Having the employees of multiple businesses “on staff” allows PEOs to enjoy lower benefits’ costs because more employees mean better rates. The employees are then leased back to the original employer (now a PEO client) under a shared-employment contractual relationship, which sets out the powers, responsibilities and liabilities of the parties. This practice is also known as “employee leasing” or “staff leasing".

The PEO then assumes responsibility for all payroll obligations, workers’ compensation coverage and tax filings. Additionally, health, welfare and retirement benefits can be contracted as well as all associated administrative work. Because they take over most of the headaches of being an employer, PEOs are ideal for small businesses. In fact, most PEOs target companies that have 150 employees or less.

Many times, a PEO arrangement is the only way a small business can offer benefits like health insurance, dental and vision care, life insurance, retirement saving plans like 401(k)s, Section 125 cafeteria plans (flexible spending accounts for healthcare and childcare), job counseling, adoption assistance and educational benefits. Most small businesses just couldn’t afford or manage these benefits on their own.

Finding the Right PEO for Your Company

Ideally, a PEO will relieve its client companies of the time-consuming and money-draining burdens associated with HR. Because PEOs offer many different types of services, choosing the right PEO is essential. If you’re thinking about hiring a PEO for your business, consider the following factors to find the best possible PEO arrangement to meet your needs:

• Conduct a basic needs analysis. Lay out exactly what type of HR and risk management concerns your company has.
• Review the services of all the PEO firms you’re considering. Find out which firms can meet all your needs and will do so in a manner that meets--if not exceeds--your expectations.
• Perform extensive background research to find out if the PEOs’ sales pitches are really what they deliver.
• Check out the companies' staff. Does it have the depth and expertise to deliver on its promises?
• Find out how the firms deliver their services. In person? By phone? Via the web? A mix of all three?
• Determine what kind of consulting the PEOs provide on strategic HR issues like recruiting, HR procedures and processes.
• Ask for a few references, and then check them. If a particular PEO can’t relieve your HR burden, one of the other ones certainly can.
• Find out if the PEOs charge any upfront fees and how those fees are determined. What about pre-payments? Do you have to put up a deposit?
• Ask for some demonstration that payroll taxes and insurance premiums are being paid properly, and that any past clients’ legal issues have been correctly and efficiently handled.
• Once you’ve selected the PEO you’ll be hiring, lay the foundation for a lasting relationship with your PEO by meeting the people you’ll be working with face to face. An open line of friendly communication ensures you won’t be lost in the in-box.

The bottom line is, PEOs can help small and midsized employers enjoy the same HR benefits as large companies without the considerable overhead. A PEO costs less than hiring an internal HR employee and will maintain critical employment records and payroll reports, as well as provide the forms needed to make sure you’re in compliance with all required employee regulations. Being an entrepreneur is difficult enough without all the accompanying HR hassles, so find a PEO for your company today.

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