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I S SUE 6 5 • FA L L 2015
BIZGROWTHS T R A T E G I E S
I D E A S T O H E L P G R O W Y O U R B U S I N E S S
NAVIGATINGYour EmployeeTravel Costs
Our business is growing yours
5 WAYS to Retain Talent in a HotEmployment Market
Is Your LIFEINSURANCE
POLICY Keeping Pace
with Your Life?
Identity Theft IncidentsHighlight Importance of Cybersecurity
The Medical Insurance
Industry Is Changing
Returning toOld Tactics
,
In This Issue…
To view the electronic versions of current and past issues of BIZGrowth Strategies, visit cbiz.com/news/newsletters.
To register for our online version, visit cbiz.com/invitation.asp.
You can also call us at 1-800-ASK-CBIZ (1-800-275-2249).
@cbz CBIZ BIZ Tips Videos
Human Resources ..................25 Ways to Retain Talent in a Hot Employment Market
Tax & Accounting ...................3 StrategiesNavigating Your Employee Travel Costs
Employee Benefits ..................4The Medical Insurance Industry Is Changing, Returning to Old Tactics
Insurance Strategies ..............6Is Your Life Insurance Policy Keeping Pace with Your Life?
Management & ......................7 PerformanceIdentity Theft Incidents Highlight Importance of Cybersecurity
CBIZ in the News
For complete articles, visit cbiz.com/news/in-the-news.
Accounting TodayBeyond tax season: Practice before the IRSAugust 3, 2015
MainStreetShould you admit your current salary when you’re on a job interview?July 16, 2015
Upstart Business Journal10 ways to evaluate your firm’s IT and cybersecurity management June 29, 2015
2 | BIZGROWTH STRATEGIES – FALL 2015 CBIZ, INC.
BY KAREN FREY
“The British are coming! The British are coming!” warned Paul Revere during the American Revolution. In this current employment market, all senior executives should be warned: The
competition is coming! The competition is coming… for your top talent!
Senior executives need to consciously devote an extensive amount of time to employee retention in the immediate future. The employment market, especially at the senior level, has shifted to a true seller’s market. Accordingly, your employees are ripe targets for competitors or other employers in general.
For the first time in perhaps seven years, employees are exhibiting signs of restlessness and are susceptible to overtures of new and exciting career challenges and, of course, money. Executive search firms are seeing an unparalleled demand at all levels across the organization chart, while salaries are being bid up at rates not seen since the early 2000s.
Here are five ways you can retain your top talent in this hot employment market:
1. Pinpoint top workers: Identify high-potential employees and compensate them at or above the market rate. Do not take them for granted.
2. Invest in research: Ensure you are paying competitive rates by confirming your salary data is accurate. Invest in a compensation study from a reputable firm to put some science into the equation. Do not leave it up to guesswork and Googling.
3. Provide education: Share the love with your high-potential employees and go beyond straightforward salary enhancements. Send them to training courses and provide other development opportunities at your company.
4. Safeguard against outside parties: Consider putting up technology firewalls to block outside parties from talking to your best and brightest. In the past, Coca-Cola shut down its voicemail system, giving people one less way to communicate with workers.
5. Update agreements: Make sure your non-compete, non-solicitation and confidentiality agreements are up to date. These measures will make someone think twice about leaving your company.
In all, whatever you do, do not put your head in the sand and think no one is looking at your top talent. It’s a seller’s market, and the competition is coming for your best employees.
Human Resources
5 Ways to Retain Talent in a Hot Employment Market
KAREN FREYEFL Associates, a CBIZ, Inc. company • Denver, [email protected] • 720.200.7055 • @karenfrey
DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.
CBIZ, INC. BIZGROWTH STRATEGIES – FALL 2015 | 3
Navigating Your Employee Travel Costs
Tax & Accounting Strategies
BY CORD D. ARMSTRONG
A s an employer, you can choose either to reimburse your employees for actual travel and entertainment expenses or pay the employee an
expense allowance. The taxable treatment for both the employer and the employee depends on what type of plan your organization has in place.
Generally, any expenses reimbursed to the employee are deductible by the employer. The difference is in how the reimbursement affects the employee.
Accountable Plan RulesIf the employer has a written “accountable”
plan, then the reimbursement is non-taxable to the employee and none of the reimbursement is included
in the employee’s income. The employee also does not deduct any of their expenses on their own personal return.
A plan is accountable if it meets certain requirements for business connection and substantiation and requires that any allowances in excess of the actual expenses be returned. Any unused allowances not paid back to the employer within a reasonable period of time are considered paid under the non-accountable plan rules and treated as additional employee wages.
Non-Accountable Plan RulesThe other option is to treat all employee travel
reimbursements as employee wages under a non-
(Continued on page 5)
4 | BIZGROWTH STRATEGIES – FALL 2015 CBIZ, INC.
BY JOSEPH E. ELLIS
Since the HMO Act passed in 1973, insurance companies have been competing for contracts with health providers of all kinds, including
general practitioners, specialists, diagnostic testing centers and hospitals. In the ensuing years, preferred provider organizations (PPOs), which deliver favored pricing to an insurance company, have dominated the health care and health insurance landscape.
However, there is an alarming trend among employers lately: employers’ in-network participation is nearing 100 percent, meaning almost all of their employees’ and dependents’ claims are in-network. So, while employers are receiving the benefit of the contract rate, if almost all providers are “in network,” then the value of being “preferred” is diminished. It’s like going to a store and finding a 25 percent off sale on everything, permanently; it completely eliminates the benefit that comes along with receiving a discount.
Employee Benefits
This begs the question, what does this mean for employers who pay for the insurance? And, what does it mean for the employees paying their share of the premiums? Three trends will move the needle in this space.
The New Preferred Network First, well aware of the dilution of “preferred” status,
insurers and large employers are back at the negotiating table with providers, having a new conversation. But, this time they are armed with data… lots of data.
One of the most critical issues is quality of outcomes from episodes of care. That is, how quickly does the patient get better, with what complications and at what total cost? It stands to reason that quicker recovery yields overall lower costs, even if individual provider unit costs are more. It is this data that carriers and employers are using to create what I call the “New Preferred.”
Employers can expect to see offers of smaller networks from carriers, where inclusion is based on
(Continued on page 5)
The Medical Insurance Industry Is Changing, Returning to Old Tactics
JOSEPH E. ELLISCBIZ Benefits & Insurance ServicesPlymouth Meeting, PA610.862.2242 • [email protected] • @JEllisSr
CBIZ, INC. BIZGROWTH STRATEGIES – FALL 2015 | 5
accountable plan. The most common example of a non-accountable plan is a simple allowance arrangement where the employer pays the employee a flat amount periodically for expenses and the employee is not required to provide any accounting of these expenses to the employer.
At first glance, the adoption of a simple allowance arrangement might seem appealing to an employer but will likely lead to increased payroll costs.
With a non-accountable plan, the employee can try to offset the additional income in their W-2 by deducting their expenses incurred on their individual return. However, these deductions will rarely offset 100 percent of the income since they are treated as itemized deductions and must exceed two percent of the employee’s adjusted gross income to be deductible. In addition, the deductions for “Meals & Entertainment” expenses are subject to the 50 percent limitation.
Per Diem MethodIn lieu of accounting for and deducting the
actual amount of out-of-town travel costs incurred by employees, employers can elect to pay a fixed daily reimbursement, known as a per diem. If the per diem paid does not exceed IRS approved maximums,
the reimbursement is treated as made under an accountable plan, and the employee does not need to substantiate the actual amounts paid. Although, the time, place and purpose must still be substantiated through adequate documentation.
If the allowance exceeds the per diem rate, the excess is treated as paid under a non-accountable plan and is therefore taxable to the employee, subject to payroll withholding and included in the employee’s W-2.
As an employer, you should educate employees about their particular travel expenses reimbursement policies. For example, if they have an accountable plan in place, your employees should understand the benefits of not including the reimbursement in their W-2. Likewise, if any of the employee’s reimbursement is treated as taxable wages, they should also be educated on what they can deduct on their personal returns.
If you are unsure as to which method is best for your organization, contact a tax professional well versed in this area.
CORD D. ARMSTRONGCBIZ MHM, LLC • Phoenix, AZ602.264.6835 • [email protected]
@CBIZMHMPhoenix
Tax & Accounting Strategies (Continued from page 3)
Employee Benefits (Continued from page 4)
the quality of outcomes. Ultimately, this will be better for patients because it will increase their quality of care and life. It will take some work to change the frame of mind of employers who believe that a larger network is more beneficial, but in the end, better quality of care lends itself to less illness, minimizing the necessity of frequent care and reducing costs.
Reference-Based Pricing Employers have been turning to reference-based
health pricing to help improve quality of care and reduce costs. Reference-based pricing allows a carrier to place a cap on the amount they will cover for certain medical procedures and services that have wide cost variations, encouraging consumers to shop around for health care and value. If the charges are far above the reference- based cost, the excess will be paid by the patient. Employees will need access, training and encouragement to avail themselves of the best tools for determining price and value. However, it’s difficult to determine the true quality of health care as many consumers’ criteria comes down to the provider’s attitude and manner, which is not a gauge of professionalism and expertise.
Accountable Care Organizations (ACO) Accountable Care Organizations (ACOs) are
organizations of health care providers that agree to be accountable for the quality, cost and overall care of a group or population. The ACO is provided a set dollar amount to “treat the patient.” If the myriad providers involved in a course of treatment agree about how to share the revenue, and it results in lower costs, the ACO shares in the savings. If more care is delivered than there are funds to cover the cost of the care, the ACO is financially responsible for any shortfall of funding from the carriers. This approach places a very high value on quality, with significant oversight.
Conclusion Employers of all sizes will be hearing about new
– and not so new – approaches to providing benefits to their employees. The Preferred Provider concept born some 40 years ago is experiencing iteration, pricing of medical care is now compared among service providers, and the idea of paying for outcomes is becoming mainstream. Employers should help employees understand and especially appreciate what is happening and why it is best for them, too!
6 | BIZGROWTH STRATEGIES – FALL 2015 CBIZ, INC.
BY MARY MAHONEY
When was the last time you took a look at your life insurance policy? Many people buy a life insurance policy and then throw it in a drawer
or safe deposit box without giving it another thought. However, the coverage you bought years ago may be outdated. Like other insurance, such as property and casualty and health, life insurance policies need to be managed and adjusted to keep pace with market conditions and your evolving needs and goals. It is recommended that your life insurance policy be reviewed every few years to make sure it is performing properly, as well.
As you go through life, your life insurance needs will change as your circumstances change. The follow-ing is a list of triggering events that require a review of your policy.
Young and SingleWhen you are in your 20s or early 30s you may
not think you need life insurance. In reality, buying life insurance when you are young is a smart financial deci-sion. You can purchase a substantial amount of term insurance coverage for a very low premium and lock in rates for decades. If you are healthy and purchase convertible term, you guarantee that you will always be able to purchase coverage when your term period expires – even if your health status changes.
Family LifeIf you are a newlywed, you may be purchasing a
new home and starting a family. Should something hap-pen and you were left alone, life insurance would be there to cover the mortgage payments and replace lost income. Once you have children, the need becomes even more important. A life insurance policy (term or permanent) that pays a lump sum or a regular income
after your death can ensure your spouse and children are financially protected.
Business and WorkIf you own a business, you may want to buy life
insurance to protect the company you’ve built. If you were to pass away, what would happen to your compa-ny? With life insurance, you can fund a buy-sell agree-ment that would ensure the remaining partners are in a position to buy your ownership stake. A good option in this case may be term life insurance for perhaps 20 years, where the cost of the insurance would be lower than permanent life insurance and still provide protec-tion for your heirs and business partners.
Planning for Your Later YearsAs the years progress, a long-term care need could
arise that could deplete retirement savings. Adding a long-term care rider to a life insurance policy provides peace of mind and independence, knowing that your future is secure and your legacy is intact.
A policy review is simple and takes very little time. Make sure your life insurance is keeping pace with your life.
Is Your Life Insurance Policy Keeping Pace with Your Life?
MARY MAHONEY CBIZ Life Insurance Solutions, Inc.San Diego, CA • [email protected] • @cbizlife
Insurance Strategies
“It is recommended that you have 10 to 15 times your salary
in life insurance.” – MoneyPros, New York Daily News
CBIZ, INC. BIZGROWTH STRATEGIES – FALL 2015 | 7
(Continued on page 8)
BY CAP WILLEY
Two federal agencies are scrambling to recover from data breaches that compromised Social Security numbers and other identifying
information. The breaches indicate just how vulnerable entities can be to hackers.
Identity theft, classified as unauthorized access to your Social Security Number (SSN) and other personally identifiable information, affected both the IRS and the U.S. Office of Personnel Management (OPM) earlier this year.
In the IRS incident, hackers used information taken from other sources to access previous tax return information stored in the IRS Get Transcript website. The hackers made fraudulent tax returns based on the historic tax filing information of 104,000 individuals. The IRS discovered the identity theft in May while investigating a denial-of-service attack on the website.
The OPM’s internal control system uncovered a cyberattack on its information technology systems in April. Hackers accessed personnel files of an estimated
Management & Performance
four million present and former federal employees. Details are still emerging from this case, and the breach may have been even larger than initially thought.
Fallout from the discoveries comes with lessons individuals and businesses should consider. Cybercriminals exploited weaknesses in the protection of sensitive information in both systems.
Individual ResponsibilitiesIndividuals can reduce identity theft exposure risk
by being careful how and with whom they share their personal information. Scammers often impersonate legitimate organizations, so do your research before sharing your SSN, address or other types of personally identifiable information:
n Verify that the company and individual asking for information are who they are represented to be.
n Be careful about submitting personal information over the Internet; ensure that the website you are using is secure.
n Monitor your credit report for unusual activity and keep careful record of your financial information.
Identity Theft IncidentsHighlight Importance of Cybersecurity
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8 | BIZGROWTH STRATEGIES – FALL 2015 CBIZ, INC.
Management & Performance (Continued from page 7)
Tax-related identity theft may be a little trickier to pinpoint, and individuals need to know the signs that someone has used their SSN to file a fraudulent tax re-turn. Typically, scammers submit fraudulent returns earlier in the filing season. Individuals may discover something is amiss if they try to file and receive an alert from the IRS. Letters that indicate you may have been the victim of the scam can contain several types of notifications, including:
n more than one tax return has been associated with their SSN;
n additional taxes are owed; and/orn IRS records indicate wages from an unfamiliar
employer.
Act quickly if you receive spam calls or notifications. The responsibility falls to the individual to submit a report about the incident to law enforcement, notify the applicable credit agencies and register a complaint using the Federal Trade Commission’s identity theft website or hotline.
What Businesses Can LearnIdentity thieves look for where and how
businesses store personal information about clients and employees. Information technology systems and databases of employee files are particularly vulnerable
to hackers looking for SSNs, home addresses and other personally identifiable information.
To keep track of how your systems are holding up to threats, use an internal control system that specifically addresses the risks in the information technology and digital environments.
Internal control frameworks can help break up your monitoring activities into manageable segments. They can also help your system evolve to address the new risks it faces. Hackers continually find new ways to access private information. Your organization also should consider encrypting your private information as an extra line of defense, as well as reviewing your policies on remote access and deploying anti-malware software.
Data breaches and identity theft are real and present risks of the modern operating environment. You need a strategy, both individually and for your business, in order to keep your information secure from threats.
CAP WILLEYCBIZ Tofias • Providence, RI401.626.3213 • [email protected]
@CBIZTofias
Our business is growing yours
