BIZGrowth Strategies: Ideas to Help Grow Your Business (Spring 2014)


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This issue offers useful infomation and strategies on: The Impact of Dropping Your Health Care Plan; Nonprofit Retail Activities; Wellness Programs; SlideShare; and Navigating the Road to Retirement.

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BIZGrowth Strategies: Ideas to Help Grow Your Business (Spring 2014)

  1. 1. BIZGROWTH I S S U E 5 9 • S P R I N G 2 01 4 S T R A T E G I E S IDEAS TO HELP GROW YOUR BUSINESS Navigating the Road to Retirement Do Your Nonprofit’s Retail Activities Venture into Commercial Territory? IS YOUR Wellness Program ACA Compliant? business our is growing yours THE IMPACT Dropping Your Health Plan in 2015 of SlideShare… Still a Favorite!
  2. 2. In This Issue… Management & Performance Management & Performance.............................2 The Impact of Dropping Your Health Plan in 2015 Tax & Accounting......................5 Do Your Nonprofit’s Retail Activities Venture into Commercial Territory? Employee Benefits.....................6 THE IMPACT Dropping Your of Health Plan in 2015 Is Your Wellness Program ACA Compliant? Expanding Your Personal Wealth........................7 Navigating the Road to Retirement Marketing.................................7 SlideShare…Still a Favorite! @cbz CBIZ BIZ Tips Videos To view the electronic versions of current and past issues of BIZGrowth Strategies, visit To register for our online version, visit You can also call us at 1-800-ASK-CBIZ (1-800-275-2249). CBIZ in the News The Wall Street Journal Tax tips for small business owners A s employers consider whether or not to drop their health plan in 2015, a broad, comprehensive financial impact analysis is required. In addition to calculating the cost of the “No Coverage” Shared Responsibility penalty, employers must factor in the nondeductibility of the penalty, increases in cash compensation and possible reductions in productivity. This article provides a brief overview of these components and explains how to run the math. $2,000 “No Coverage” Shared Responsibility Penalty Generally, the “no coverage” penalty could be assessed if minimum essential coverage (MEC) is not offered to at least 95% of the employer’s employees working 30 or more hours per week. For the 2015 plan year only, employers employing between 50 and 99 employees are exempt from the risk of penalty as long as certain conditions are met. For employers employing 100 or more employees, 95% is replaced with 70%. If a penalty is assessed and assuming it applies for the entire year, it is calculated by multiplying the number of full-time employees less 80 for 2015 and less 30 thereafter by $2,000. Importantly, the “inadequate or unaffordable” shared responsibility penalty may still be imposed if a full-time employee qualifies for premium assistance when purchasing coverage through the marketplace. Cash Compensation Considerations Your current contribution towards the cost of your group health plan is part of your employees’ total compensation package. As such, the question of whether or not an employer should continue to provide health benefits cannot be considered in isolation. For example, it’s likely that your employees will expect you to increase other forms of compensation to make up for any lost benefit. There is flexibility (and complexity!) in the approach you take; salaries may be increased, variable pay programs could be introduced, new benefits may be offered, greater portions of benefit contributions may be covered or any combination of these.   If your strategy in dropping your health plan includes increasing direct compensation, these questions should be asked: Medical debt will persist despite health law 1. Will you increase salaries across the board or only for a select group of employees? January 23, 2014 USA Today January 15, 2014   CNNMoney 4 money resolutions to make now December 30, 2013 For complete articles: 2 | BIZGROWTH STRATEGIES – SPRING 2014 You may choose to limit increases to critical jobs or high-performing staff members. This approach can be less costly and yield improved results by retaining the most valued employees. However, discretionary increases can lead to questions of fairness, which in turn could lead to compensation discrimination allegations. The best way to safeguard the organization is to ensure clear and thorough documentation is in place to justify salary increases. (Continued on page 3) CBIZ, INC.
  3. 3. Salary increases may also need to be addressed on a case-by-case basis to ensure individuals are optimizing the options available to them. For example, raising an employee’s pay could result in a reduction or elimination of health care premium subsidies, leaving the employee worse off. Given that employers lack the information and time necessary to perform a cost-benefit analysis for every potential salary increase, the onus will be on employees to examine and communicate their particular circumstances. Not only will many employees find this process burdensome, but misinterpretation of regulations or income calculations can quickly lead to mistakes and frustration among workers. 2. you currently provide more benefits If compensation for an employee with family coverage, will you increase those employees’ salaries more than you will for those with single coverage? While employers regularly contribute a greater dollar value to family coverage than single coverage, employees may find it less acceptable to differentiate salary increases based on household structures. As with any deviation from across-the-board increases, it is imperative that a documented policy be established and applied consistently. 3. While your current employer contribution towards premium is provided to your employees tax free, that is not true of W-2 compensation. Thus, what will you pay in additional payroll taxes to make this change? It is important to balance and control the costs of increased employee wages and increased payroll taxes. In addition, employees’ pay increases may be taxed (depending on whether funds are taken as regular wages or applied toward non-taxable benefits), which could result in reduced take-home pay. 4. How will dropping your health plan impact the initial salary offers you make for new employees? In the near term, most employers will not drop their health benefits. Therefore, it may become more difficult to recruit talent without other meaningful compensation elements. If you find new hire salaries are rising at a faster pace than salaries of the general employee population, compression issues are probable in the near future. Productivity Considerations Even if you currently offer several health plan choices, the time employees spend at work evaluating those choices and enrolling in your plan is likely limited. This efficiency results from: • your clear communication of the plan choices; • the employee’s comfort in knowing that you evalu ated and recommended these plans; and • your streamlined enrollment process. Conversely, the exchanges will offer about five plan designs from multiple carriers. Off-exchange, additional plan designs will be available, complicating employees’ choices. While guidance in making plan elections will be available via “navigators” and sometimes through brokers, it is likely your employees will spend more time at work on the evaluation of their health plan options than they have in the past. Additionally, company HR professionals often assist employees with the resolution of health insurance questions and claim issues. If you drop your health plan, this assistance will end and employees will be on their own to navigate questions and issues that arise. Another financial consideration, therefore, is whether dropping your health plan will impact overall employee productivity. Specifically, how much time will an employee spend during work hours researching plan options, enrolling in plans and solving administrative challenges? Calculate the total cost of dropping your health plan. Adjusting for any enhancements needed to eliminate the “no coverage” and “inadequate/unaffordable” ACA penalties, project the total cost of your 2015 health plan. Next, solve for your total cost net employee payroll reductions and for any tax reductions. (Continued on page 4) DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting, or other professional advice. To the extent anything herein could be construed as tax advice, such advice is not intended to be used and cannot be used to avoid penalties under the Internal Revenue Code, or to promote, market, or recommend to another person any tax-related matter. 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 – SPRING 2014 | 3
  4. 4. Management Performance (Continued from page 3)   Projected 2015 Cost of Your Health Plan A: Annual health premiums   B: nnual employee payroll A reductions for the health plan   C: educed payroll taxes via payroll R reductions through your Section 125 plan   D: orporate Tax benefit for your C contribution to the health plan (A-B multiplied by your marginal tax rate)   A-B-C-D = Your Total Net Cost:   Next, calculate the total cost of dropping your health plan.   2015 Cost to Drop Your Plan E: f applicable, the $2,000 “no I coverage” per employee penalty   F: he increase in your cash T compensation   G: he resulting increase in your T payroll tax because of this compensation increase   H: stimate the cost of any reduced E productivity Project these costs out five years. Assume the annual “no coverage” penalty will increase 10% annually. Make appropriate projections to all components. Compare your five-year projected totals and finalize your strategy. If you proceed with dropping your health plan, an effective employee communication strategy should describe the following: • why you are making this change • how this decision will impact employees and their families • what resources employees have from their home state and the federal government in evaluating and purchasing health benefits • how this change impacts your Total Compensation Philosophy As you evaluate whether or not to drop your plan in 2015, answering the questions detailed in this article will help ensure that your resulting decision is in the organization’s best interest and will help prepare you for any transition. CO-AUTHORS:   E+F+G+H = Total Cost to Drop Your Plan: Compare these 2015 totals.   4 | BIZGROWTH STRATEGIES – SPRING 2014 PRIYA J. KAPILA CBIZ Human Capital Services • St. Louis, MO 314.995.5558 • ZACK PACE CBIZ Benefits Insurance Services Columbia, MD 443.259.3240 • Portions reprinted with permissions from iWorkwell: Health Care Reform – What’s the Impact of Dropping Your Plan in 2015? (Part II) CBIZ, INC.
  5. 5. Tax Accounting Do Your Nonprofit’s Retail Activities Venture into Commercial Territory? C haritable 501(c)(3) organizations receive taxexempt status because their missions are to benefit society, and the majority of their revenue goes toward achieving their tax-exempt purpose. Yet, many such organizations also operate retail ventures such as a museum gift shop or a hospital-run thrift shop. Organizations should be aware that doing so has pitfalls from a tax perspective. While nonprofit organizations may receive an unlimited amount of income that is “substantially related to the pursuit of its exempt purpose” (generally not subject to income tax), charities that regularly engage in business activities unrelated to their exempt functions may be subject to tax on the net income from these activities. If this unrelated business activity becomes “substantial,” the charity risks losing its exempt status. Therefore, it is vital that the organization not only demonstrate that its income-generating business activity is an appropriate method of achieving the organization’s exempt purposes but also show that there is no substantial non-exempt commercial purpose. How much Unrelated Business Taxable Income (UBTI) can a nonprofit receive without jeopardizing its tax-exempt status? The IRS may consider proceeds from nonprofits’ retail ventures UBTI if the income is considered a “trade or business,” is regularly carried on and is not substantially related to the nonprofit’s exempt purpose. must be established before sales of the items can be considered substantially related within the meaning of section 513(a) of the Code. For nonprofits, exclusions to UBTI include income substantially generated by unpaid volunteers; retail income donated to the nonprofit; dividend, interest and royalty income and gains from sale of property; and retail income from real property (provided the property is not debt financed). In general, when the IRS determines whether UBTI is substantial it considers the reasonableness of the commercial venture’s pricing, the extent of the commercial venture and the size and extent of the commercial venture relative to the size of the exempt function it is said to serve. Because the IRS does not provide iron-clad guidelines for organizations to follow regarding UBTI, organizations instead must use their own judgment to interpret IRS rulings made in cases similar to their own. Proceed with caution. Expanding into new activities is a great way to grow your nonprofit organization, support its mission and take advantage of new opportunities. Proceed cautiously, however, because although commercial-like activities can help generate after-tax income, straying too far into commercial territory can cause revocation of your exempt status. IRS regulations provide that a trade or business is “related” to an organization’s exempt purposes only where the conduct of the business activities has a causal relationship to the achievement of exempt purposes and the activity from which the gross income is derived contributes importantly to the accomplishment of those purposes. A connection between the items sold in a gift shop and accomplishing the organization’s exempt purpose CBIZ, INC. BRENDA BOOTH CBIZ MHM, LLC • Boston, MA 617.761.0729 • BIZGROWTH STRATEGIES – SPRING 2014 | 5
  6. 6. Employee Benefits Is Your Wellness Program ACA COMPLIANT? I mplementing a workplace wellness program offers employers an excellent opportunity to improve the health, productivity and overall morale of employees and to reduce future health care costs. The question all employers must answer is “How does our organization ensure our wellness program is compliant with the Affordable Care Act (ACA)?” In order to answer that question it is important to know that the ACA divides wellness programs into two types: Participatory and Health-Contingent. An employer’s main focus when introducing either type of program must be avoiding discrimination and providing goals that are obtainable for all employees. Participatory Wellness Program The participatory program is pretty straightforward and centered solely on employee participation, not a specific outcome. An example is offering reimbursement for the employee’s cost of a monthly gym membership. If introducing a participatory program, there should never be a reward or incentive for something outcome based. Also, be sure the health incentives set forth are possible for any employee to complete regardless of health status; for example, completing a health risk assessment or going to one’s annual preventive care appointment. Regardless of the results from the assessment or the biometric numbers obtained at a preventive care appointment, the employee would be rewarded simply because he or she completed the task. Health-Contingent Wellness Program Health-contingent programs can be a bit tricky when looked at from a discrimination viewpoint as they require the employee to meet a specific goal (e.g., stopping tobacco use) in order to obtain a reward. These programs can be broken out further into “Activity Only” or “Outcome Based”. “Activity Only” rewards the employee for accomplishing a certain activity (e.g., walking 30 minutes a day, three days a week), but does not depend on numerical goals like weight loss, BMI or blood pressure. Conversely, “Outcome Based” does not reward an employee for simply participating in an activity but rather requires achieving or maintaining a specific health goal, such as obtaining a BMI of 28 or less. Thus, the model of reward based on outcomes 6 | BIZGROWTH STRATEGIES – SPRING 2014 can lend itself to discrimination issues, especially if an employee cannot reasonably accomplish a goal due to conditions such as health status or safety issues. Therefore, it is always necessary to offer alternative means of accomplishing a specific goal or task and make sure the reward is the same as that being offered to other employees. Lastly, the ACA specifies the 2014 maximum permissible reward for health-contingent wellness programs to be 30% of the cost of the employee-only health coverage. This means annual rewards, whether health care premium subsidies or tangible items, cannot exceed this amount. In summary, wellness programs are an effective way for an organization to improve many facets of employee health and wellbeing, as well as to exert some control over future health care costs. Just be cognizant to design a program that is compliant with ACA requirements. SUSANNE HARRIS CBIZ Benefits Insurance Services • San Jose, CA 408.794.3583 • CBIZ, INC.
  7. 7. Expanding Your Personal Wealth Navigating the Road to Retirement O ne of today’s hot topics in wealth management is retirement. To have a realistic opportunity to maintain your lifestyle during retirement, you must be concerned about saving now. Thankfully, guidance from retirement planning experts is available to help you set goals and navigate toward healthy retirement readiness. A basic question to ask in setting retirement goals is “how much money will I need?” Industry experts suggest that, generally, you should expect to replace 70 to 85% of the income from your last working year. Social Security benefits typically replace only 30 to 40% of your pre-retirement income. In most cases, the difference, known as the “income gap,” will need to be covered by the annual income generated through your retirement savings. Use the Rule of 25 which suggests that multiplying your income gap by 25 will estimate the total amount of assets you will need to seal the gap. For example, if an individual has an income need of $50,000 and estimated Social Security benefits of $15,000 annually, she has an income gap of $35,000. Multiplying this gap by 25, the resulting $875,000 represents the amount she will have to amass by retirement age in order to reach her goal. So, what are some things to do now in order to help generate this future income? Make sure you are taking full advantage of any employer matching program. Also, establishing a Traditional or Roth IRA is a great way to save up to an additional $5,000 per year. This amount is increased to $6,000 per year for those 50 years old and older. Some annuities guarantee a certain return for life, which is a good way to protect yourself against the risk of exhausting your resources during retirement. As a first step, review your budget to see if a total contribution of 10 to 15% of your annual income to your retirement savings is possible. This is the percentage that retirement industry experts recommend. When you invest the money you save, two of your most important considerations should be your asset allocation and time horizon. Historically, a portfolio that is diversified among multiple asset classes (stocks and bonds, international and domestic) has shown to lower risk and increase returns. Also, an investment time horizon of 10 years and longer is considered long term and risk friendly. This is because you can take full advantage of the power of compounding when there are gains in the markets. Even if the markets were to fall, there is still time to try to recoup the losses and continue to grow the assets. CBIZ, INC. When financial experts advise young people to start saving for retirement and to invest aggressively, they are emphasizing that time is on their side. As you approach your desired retirement age, you should taper your exposure to the stock market and decrease overall volatility in your portfolio. Target date funds take care of risk management and diversification automatically. Once you choose the plan that represents the year closest to your desired retirement target, the fund will automatically adjust the risk based on the time horizon left until your retirement. If you would rather invest outside of target date funds, mimicking the allocation of the applicable target date fund will help you taper the risk in your portfolio as you approach retirement. Sufficient awareness and active planning are paramount in successfully achieving your retirement goals. Seeking the guidance of a retirement planning expert will help you determine the best strategy for your lifestyle and time horizon. ANNA RATHBUN CBIZ Retirement Plan Services Cleveland, OH 216.520.6622 • Mareketing SlideShare… Still a Favorite! E very day it seems as if a new social media site is created. These new social tools prompt improvements and changes to the other, more classic and original social sites. One favorite social media tool, which has continued to compete with the industry leaders, is SlideShare ( SlideShare is a public sharing site that allows businesses and individuals to upload presentations, whitepapers, brochures and videos to share with the world. By doing so, you can expand your sphere of influence, increase brand awareness, share ideas and possibly generate leads. At the bottom of each resource there are easy share buttons linked to Facebook, Twitter and LinkedIn. SlideShare content spreads virally through social networks like these, as well as through blogs. (Continued on page 8) BIZGROWTH STRATEGIES – SPRING 2014 | 7
  8. 8. business our is growing yours Marketing (Continued from page 7) © Copyright 2014. CBIZ, Inc. NYSE Listed: CBZ. All rights reserved. • CBIZ-020, Rev. 59 Anyone can view presentations and documents on topics of interest, download them and reuse or remix for their own work. Therefore, it is important to utilize strategic titles and descriptions for uploaded resources in order to capitalize on search engine optimization (SEO) opportunities. A very popular feature is the enhanced analytics section that tracks how many people have viewed and downloaded your documents. These detailed analytics even include the country or geographic region of those viewers. Perhaps one of the more useful tools for businesses is the built-in contact field that allows you to capture contact information from those who have viewed your documents. This is obviously great for prospecting. And, if you think YouTube is the only video sharing site, think again. As previously mentioned, SlideShare allows you to upload and share videos. They also have Slidecast where you can sync mp3 audio with presentation slides to create a webinar. It is also important to mention there is an infographic directory that was added to SlideShare in July of 2013. This section allows businesses and professionals to upload and share another great resource material – infographics. cial media channels that push advertisements, paid updates, etc. While SlideShare does have some paid business features, users can still share and download materials without having to pay one penny. Companies, professionals and students all rave about the usefulness of SlideShare. In a digital world where connectivity is at its peak, SlideShare continues to offer simple tools and features that define “social sharing.” In summary, SlideShare is a great place to share your expertise with the world or learn something new. If you haven’t already visited the site, it very likely will be worth your time to do so. AMANDA MARKOS CBIZ, Inc. • San Diego, CA 858.795.2253 • SlideShare is still free. This is unlike most so8 | BIZGROWTH STRATEGIES – SPRING 2014 CBIZ, INC.