Why Should I Care About the Department of Labor’s Employee Benefits Security Administration?

 

“Why should I care about the Department of Labor-Employee Benefits Security Administration?” It’s a good question. As a business owner, if you sponsor a retirement, health or cafeteria plan you’re about to learn why you should.

The responsibility of the Employee Benefits Security Administration (EBSA) is to safeguard over $9.9 trillion in assets maintained in approximately 703,000 pension and retirement plans and 2.3 million health and welfare plans. This is accomplished by a relatively small cadre of investigators and auditors who probe for a wide range of violations. If an investigation reveals a violation of ERISA (Employee Retirement Income Security Act of 1974), EBSA takes action to obtain correction of the violation. When voluntary compliance is not achieved, EBSA may refer a case to Department of Labor (DOL) attorneys for litigation. Plan assets recovered by EBSA go directly back to the plans and participants involved; penalties go to the government. DOL may also provide information to any persons affected by a breach of ERISA (i.e., IRS, HHS, state insurance departments, parties involved in litigation against your plan).

·       RELATED: The Top 10 HR Mistakes Employers Make.

(By the way, that $9.9 trillion in ERISA plans represents the single largest block of tax favored money on Earth. Consequently, it gets a tremendous amount of attention from the DOL, the IRS, SEC, HHS and all 50 state insurance commissioners. That includes your little piece of that pie, and by extension, YOU as the plan sponsor.)

The DOL has the power to impose civil and criminal penalties and fines and to coordinate with the Justice Department to prosecute criminal violations or litigate large civil matters. For you, as the subject of this attention, it can quickly become a costly matter in terms of money, time, effort and aggravation.

The best way to keep your risk profile as small as possible regarding your ERISA qualified benefit plans is to proactively manage them in compliance with all applicable statutes and regulations. This includes respecting and protecting participant and beneficiary rights, proper management of assets, oversight of service providers and the myriad reporting and disclosure rules. In the end, even if it is a service provider to your plans who violates ERISA, as the plan sponsor the responsibility and liability will always fall into your lap.

Therefore, a suggestion on what amounts to “cheap insurance” – consider engaging a consultant to conduct a thorough analysis of your entire benefits program to identify potential areas of concern and to assist you in designing a “best practices” regimen of policies and procedures to get, and keep, your benefits programs in compliance. As a plan sponsor, you should be proactive in protecting yourself, your business, your plans and your employees.

Disclaimer: This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The Gertsburg Law Firm Co., LPA and Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.

Frank J. Bitzer, Director of Legal Compliance & Employee Health & Benefits at Marsh & McLennan Agency LLC. He can be reached at frank.bitzer@marshmma.com.

Charlie Filisko is Vice President of Property, Casualty & Surety at Marsh & McLennan Agency LLC. He can be reached at charlie.filisko@marshmma.com.

Alex Gertsburg is the CEO and Founder of the Gertsburg Law Firm Co., LPA. He can be reached by email at ag@gertsburglaw.com or by phone at 440-571-7775.

Stop worrying if your company is vulnerable to lawsuits or liability and schedule a confidential, no-cost CM6 Vulnerability Check with Gertsburg Law Firm. CEO Alex Gertsburg will walk you through the minefields in your documents and key processes and tell you how to fix them yourself. Call 440-571-7774 or e-mail cz@gertsburglaw.com to schedule your CM6 Vulnerability Check today. Explore the full CoverMySix legal audit suite at covermysix.com.

Securities offered through MMA Securities LLC (MMA Securities), member FINRA / SIPC, and a federally registered investment advisor. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Variable insurance products distributed by MMA Securities LLC.  MMA and MMA Securities are affiliates owned by Marsh & McLennan Companies.

 

Share
  • Email
  • Next up: Why Succession Planning Matters to Your Bank – And You
  • More in HR
  • Why Succession Planning Matters to Your Bank – And You

     

    Putting plans in place to keep your business operating in the event you don’t want to or are unable to continue to run the show makes good sense. The path you choose to exit the business will depend on your circumstances, your desire to continue a family-run company or your choice to sell or merge with another entity. While you’re the right person to decide your business’s long-term fate, involving your bank and keeping your banker informed of your plans benefits you, your business and your relationship with your financial services partner.

    “When we understand a business owner’s vision for the company’s future, our relationship with the business gets stronger,” said Kurt Kappa, chief lending officer at First Federal Lakewood. “We can be confident in the longer-term view and help the business owner avoid pitfalls along the way.” 

    Unplanned Events

    While a business owner cannot foresee the exact timing of unexpected changes or unplanned life events, making a plan to protect the business when change inevitably occurs makes the aftermath easier and less risky.  Sharing the plan with the banker allows the business financial partner to understand who will be in charge, what skill and knowledge gaps need to be filled and what other organizational changes need to be made so the business continues to operate. Banks want to protect their interests in businesses to ensure loans and obligations are met and disruption to the business is minimized. 

    Every experienced banker has seen businesses fail because the owner was unprepared. For example, if the owner dies suddenly, is there a life insurance in place to protect the company? In the same scenario if the spouse inherits the business, will they be able to run it? If not, is there a sell plan in place? Is there a life insurance policy in place that will be able to cover the company’s debt? There are a lot of questions to consider and if there are no answers, a lot could go wrong and negatively affect the lending relationship. Planning before a life-changing event occurs is one of the best steps a business owner can take.

    Planning for an Exit

    Some types of business changes can be timed carefully using an exit or succession plan. If a business is transitioning to a next generation of family, the banker will want to get to know the new leaders before they take seats at the leadership table. These relationships are often personal and having the banker know the succession plan and the people involved can smooth the transition. The next generation will need to be able to demonstrate industry knowledge, experience, operational acumen and the desire to continue the business’s success. 

    Business sales and mergers are complex transactions. Bankers understand the nuances. A business banker knows the business’s financial condition, has awareness of market and industry conditions and is up to date on economic trends. They may even be able to connect potential buyers with sellers and others who can offer sound advice.  Most importantly, a business banker can help ensure that if an owner prepares for a sale by building up the balance sheet income statement or taking money out of the business, loan covenants which can delay or derail a sale aren’t triggered. These presale activities are, in themselves, fine and understandable as long as the short- and long-term financial implications are understood. 

    In the case of a planned business closure or liquidation, keeping the bank informed protects the relationship and sets a clear path for asset distribution and how and when outstanding debt will be satisfied. The bank’s involvement can help avoid disruption during what can be a difficult and emotional transition for the business owner.

    “Most business owners recognize the need for a succession or exit plan,” Kappa said. “We have seen how a good plan that is updated regularly can protect companies, owners, families and banking relationships.” 

    Start Now
    A business owner has likely built and run the entity and may be reluctant to think about letting go or passing on what they’ve accomplished. But change is inevitable and planning for both the unexpected and expected ensures continuity and a seamless exit. Planning sooner than later is better. 

    Get started by seriously thinking about the future of the company when the owner is no longer able or has the desire to lead and manage the business. When made aware of the succession plan, the business banker can impartially assess the impact to financials, loans and banking relationships.  Most business owners don’t want the exit to destroy the business or add undue burden to new owners and a business banker can help make sure the transition is successfully executed.  

    Gather your trusted advisors, including your banker, attorney, accountant and others. Explain your vision for the future of your business. If you’re not comfortable having the conversation just yet, make sure you have the protections in place if you are unexpectedly unable to continue involvement in your business.

    Review your succession plan just as you would your financial results or any other documents that pertain to your business. Set a date annually to make sure what you want is reflected in what you plan. Don’t put your banking relationship, lending viability or financial security at risk by not having the right plan in place at the right time and staying attuned to changing market and business conditions. The business banker can best help when kept informed of succession plan updates as they occur. 
     
    The decisions a business owner makes and the continuation path they choose are the culmination of a lifetime of hard work and determination. A good banking relationship puts a planning partner in the best position to help protect the business’s interests now and in the future.  

     
    Share
  • Email
  • Next up: Why the Recruiting Industry is a Racket
  • More in HR
  • Why the Recruiting Industry is a Racket

    Share
  • Email
  • Next up: Why You Should Consider a COSE MEWA Health Plan for Your Small Business
  • More in HR
  • Why You Should Consider a COSE MEWA Health Plan for Your Small Business

    The overall health of your business is a priority, so you require a health insurance plan that keeps your employees safe and healthy. It’s important to choose a carrier that offers the products, access and benefits you’re looking for, who also looks out for you. That’s why COSE has partnered with Medical Mutual to offer the multiple employer welfare arrangement (MEWA) to help small businesses receive the big-business benefits they deserve.

    See why you should join the 7,500 small businesses who save on their health insurance through the COSE MEWA:

    1. You have the support of the Council of Smaller Enterprises (COSE) and Medical Mutual
    If you are reading this, you are likely already a member of COSE and realize the value of your membership. COSE and Medical Mutual offer the COSE MEWA to small business owners and their employees to help with the increasing cost of healthcare benefits. 

    2. Favorable rating of like-minded companies 
    The way a MEWA works is by getting together a group of similar small business employers to pool their contributions in a self-contributing benefits plan for their employees. By pooling your contributions with other employers, you are better positioned to offer the best benefit package to your employees due to economies of scale.  

    3. Strength of network
    As a chamber member, the COSE MEWA gives you and your employees access to Medical Mutual’s high-quality network of doctors and major hospitals across the state. Whether you’re looking for a narrow or broad network plan, your employees will be able to access the providers they want and need.

    4. Specialty Products
    In addition to our health plans, we offer dental, vision and life & disability insurance coverage, plus options like hospital, accident and critical illness insurance. Through Medical Mutual, your employees have access to our SuperDental network, one of Ohio’s largest dental networks, as well as national vision carriers like VSP and EyeMed. Offering a complete benefits package to your staff can improve overall employee satisfaction and retain talent. 

    5. Cost savings
    Since the COSE MEWA is not subject to certain state health insurance regulations and benefit mandates, this type of plan may be less expensive for your group than similar plans on the exchange. In addition, your rate will be determined by expanded criteria including medical history and gender to allow us to better tailor the costs to the unique characteristics of your group.  

    6. Wellness benefits 
    Through Medical Mutual, the COSE MEWA offers a comprehensive suite of wellness and disease management programs designed to promote healthy lifestyle behaviors. These wellness programs start with a health assessment to provide a baseline to help your employees better understand their health and identify risk factors for disease. Additional programs are available including the Health Resource Center on My Health Plan, fitness discounts, access to the QuitLine program for tobacco users and a WW® (formerly Weight Watchers) reimbursement. 

    For more information on the various COSE MEWA product offerings, please contact your broker or Medical Mutual Sales representative. 

     
    Share
  • Email
  • Next up: Why You Should Hire High School Interns
  • More in HR
  • Why You Should Hire High School Interns

    Why should you as an employer consider welcoming high school students as interns in your company? As part of the 2018 Cleveland Internship Summit, representatives from local companies, schools and youth-workforce intermediary organizations served as panelists to discuss their experiences with high school internship programs and share advice on the process.

    Participants in the 2018 Cleveland Internship Summit panel, Why Employers Should Consider High School Students for Their Internship Programs, included moderator Joe Spiccia, superintendent of Wickliffe City School District; Craig Dorn, senior vice president at Youth Opportunities Unlimited; Zerrine Bailey, emerging talent network leader at JumpStart; Karyn McAdams, human resource team leader at Parker Hannifin; and Marzell Brown, talent management lead at Rockwell Automation. The focus of the discussion was intended to help the audience understand the elements that make a high school internship experience successful for all parties involved.

    Why a high school internship program could benefit your company

    While some companies might not even realize it’s possible to hire teens as interns, others might be hesitant to do so due to some common misconceptions related to these types of programs, including that high school students are too young, they aren’t ready for this type of experience, they aren’t capable of the work involved or that they don’t have enough to contribute to the internship experience.                

    The panelists identified several reasons why those thoughts on hiring younger interns are not accurate, including the following benefits that they bring to an organization:

    Benefit No. 1: Valuable work. Students at this age are learning things at an earlier and faster rate than many adults. They have a keen interest in and experience with different areas of technology, and can pick up new things quickly.

    Benefit No. 2: New ways of thinking. Having input from varying ages and levels of experience can help improve the energy in your company and add to the diversity of thought and actions your company takes. These younger workers can help improve your brand awareness and appeal to a younger audience.

    Benefit No. 3: Management opportunities. Having high school interns on staff can be a great experience for your college interns. It can give them the opportunity to take on a management and mentorship role when it comes to working with the younger students.

    Benefit No. 4: Workforce development. Your high school intern could very well become a part-time employee while they work their way through a local college program, and then potentially become a future full-time employee with solid work experience.

    Benefit No. 5: Community partnerships. When you begin an internship program for high school students within your company, you have the potential to create long-term sustainable partnerships with valuable organizations and schools within your community.

    How to go about creating a high school internship program

    As companies begin to consider creating a high school internship program, it’s helpful to understand how schools are preparing their students for internships. Many schools offer opportunities to focus on specific industries such as culinary arts, healthcare and more so that students can acquire hands-on skills they will need in the real world. Schools are also bringing in companies to do things like mock interviews, resume writing and job shadowing. These partnerships can be invaluable for, not only the students, but also for the schools and the companies themselves.

    The panelists offered some thoughts on how employers might onboard or supervise high school interns differently than college interns and regular staff members, including:

    • Holding orientation in a more relaxed setting that appeals to and better engages younger workers;
    • conducting separate trainings for each high school intern to establish a connection and ensure they have a thorough understanding of expectations and have their specific questions answered;
    • realizing that, for paperwork purposes, younger students may not have a photo ID, a driver’s license, and other things that are more commonly expected from older hires;
    • understanding that transportation can be a challenge and helping ease this issue by providing bus passes, allowing remote working opportunities or creating ride share options;
    • connecting the interns with specific employees who are excited about working with high school students and who are not biased against their younger age;
    • helping interns build their “soft skills,” such as the importance of being on time, how to communicate in a professional setting, how to take constructive criticism, how to dress, and other things that usually come with experience;
    • ensuring you have clearly defined projects for the interns to work on and clearly identified timeframes in which they will conduct their work; and
    • checking in with your high school interns one-on-one on a regular basis, and providing “light-weight” performance reviews periodically so that they have an understanding of that part of the job process, as well as regular feedback on their performance.

    All panelists advised working with a third-party intermediary group, such as Youth Opportunities Unlimited. Using a broker can help your company go through the process of creating a program and filling your intern staffing needs, as well as assisting you in overcoming any potential challenges that might exist when hiring interns from this particular age group. For a deeper dive into how to create and manage your company's internship program, check out the Greater Cleveland Partnership's Internship Central page.

    Share
  • Email
  • Next up: Why You Should Offer Health Care Coverage to Your Employees
  • More in HR
  • Why You Should Offer Health Care Coverage to Your Employees

                                                                   

    As a small business owner, you may be deciding if you want to offer health care benefits to your employees. From recruiting and retaining talent to saving your company tax dollars, offering health care benefits can be a win-win situation for both you and your employees. 

    Attract talent

    Many companies offer health care for recruiting and retention purposes to make sure they are attracting the best talent for the job. According to Glassdoor, the top three benefits that make employees the most satisfied include health insurance, paid time off and retirement plans (Glassdoor Economic Research, 2016). Covering these types of benefits will help boost employee morale and productivity on the job.

    Save money

    Offering health care benefits will actually help you save money. Employers and employees pay less for health insurance when it is purchased at a group level because it can be paid for with pre-tax dollars. When you and your employees contribute to premiums, health savings accounts (HSAs) and/or health reimbursement accounts (HRAs), there are even more tax benefits available.

    Network access

    Group health plans often have access to larger networks of doctors and hospitals compared to an individual plan on the public exchange. This can be really important for employees who have already established care with certain providers and don’t want to lose these relationships through a smaller network.

    There’s already a great option for you

    As a COSE member, you have access to the COSE multiple employer welfare arrangement (MEWA) through Medical Mutual. The COSE MEWA is designed as a self-funded benefit option for businesses with 50 or fewer employees. The COSE MEWA was developed to help small business members and their employees manage the increasing cost of healthcare benefits. Talk to your broker or read this article to see if this benefit option makes sense for your business. In addition to the COSE MEWA, you also have access to Affordable Care Act benefit plans with a state premium tax savings through COSE.

    A broker can help

    It may seem complicated to coordinate health insurance benefits for your employees, but it’s actually easier than you think. A broker can guide you through the process and help find the best health plan for you and your employees. If you don’t have a broker, Medical Mutual can help you find a reputable one through our broker network.  Please click here to get started.

    Glassdoor Economic Research. (2016, June 2). New Glassdoor Research Reveals Health Insurance Has Greatest Impact on Employee Satisfaction With Overall Benefits Packages in U.S. [Press release]. Retrieved from https://www.glassdoor.com/press/glassdoor-research-reveals-health-insurance-greatest-impact-employee-satisfaction-benefits-packages/

    Share
  • Email
  • More in HR