June 2014

Get a clear understanding of the health insurance. How is it rated? Ask about tier placement and get a guarantee you can only be moved down a few tiers in any one year. Ask for claims/utilization records supporting the decision. Key points for Health Insurance Renewals

• What rate increases have your clients experienced in the past 3 years?
• When? Annually? Quarterly?
• How far in advance are clients notified of the renewal?

HR & Benefit Compliance is more and more important with required SBC distribution, increase in ACA & DOL audits resulting from Obamacare. I have asked several PEOs to show the support provided for these audits. Repeatedly I’m told “Our Benefits Department has advised that this information is provided to the employee in the package that is mailed to them from the carrier after enrollment and advises they may visit the carrier website or contact the carrier’s customer support to obtain a copy of the SPD.”

SPDs and Wrap documents are not provided by the carrier, SBCs ares. However, SBC distribution is the obligation of the PEO. – Whoever answered the question either did not understand or does not know what an SBC or SPD is. It is the responsibility of the group to provide the SPD and Wrap. I this case, if a PEO is undertaking the compliance for their clients, it would be the PEO’s responsibility.

We recommend working with a PEO broker like Employee Benefit Advisors. The experience brought to the table can save headaches that you otherwise might not have seen.

Many variables exist when choosing a PEO. – The first step is deciding IF a PEO is the right decision. It’s never always yes or no. You may have the goal of being in a PEO for the short term or long term. If short term you may be trying to correct WC, health insurance or administrative problems. If long term, be sure to choose a strategic partner. Regardless, always consider the opt-out clause; i.e. lengthy contract obligation, one year, 30 day opt-out, terminate anytime or only at renewal…

Questions for a PEO and the right fit for each PEO will be different depending on the potential client. Is price the primary concern? What’s their culture? Do they value customer service? Do they provide training; HR, WC, etc…? Performance reviews? Are they strategic? Tactical?

Employee Benefit Advisors places transparency right at the top of the list. – Ask to see a sample bill and ask to see all rates you are being charged, not a bundled rate. What are they trying to hide that they cannot tell you? Many PEOs hide their cost within the margins of the billing points and charge an artificially low administration rate. What are the transparent points in evaluating a PEO?

• WC
• Payroll Tax; FICA, Medicare, FUTA, SUTA
• FSAs
• Tax cutoff points – Does PEO continue to charge?
• Does the PEO make the ER/EE whole if contracted mid-year?
• Is the PEO passing on Work Opportunity Tax Credits (WOTC) you may be eligible for?
• Is the PEO SSAE 16 Type 2 certified? (formerly known as SAS70. This is an independent audit vendors should obtain to verify their systems, processes and data security.)
• Restaurants: Is the PEO passing on FICA Tax Tip Credits you may be eligible for?

PEOs receiving federal and state tax credits should be offering this tax savings opportunity to their clients.

You want your PEO to be financially stable. The best PEOs are accredited by the Employer Services Assurance Corporation and have a current Statement on Standards for Attestation Engagements No. 16 audit (formerly known as SAS 70). Do your homework, make sure your PEO has a strong presence in your industry. Talk to references.