This guest post was written by Shannon Swift of Swift HR Solutions.  Thank you for your contribution Shannon!

You are the CEO, COO,CFO  or VP of Finance, or VP of Operations. You have a full plate, but you are also responsible for Human Resources.  Am I right?

As a VP of Operations you have projects to implement and an office to run.  As the CFO or VP of Finance you have a top line to watch and a bottom line to manage.  As the COO you have everything already mentioned and more than likely a sales organization to oversee.  And as the CEO you have it all and much, much more, as the buck stops with you.  So who has time for Human Resources?  Who has time for all that touchy, feely stuff?  Heck, who even has time to think about any of it today as we are all trying to do more with less?
 
You do, and you have to.  Why? Because, as the VP of Operations, you need strong, competent people to implement and manage those projects.  As the CFO or VP of Finance, you need a critical eye to examine ways to cut costs related to things like benefits and insurance without damaging morale, and someone to keep you compliant to avoid costly litigation and fines.  If you are the COO, you need everything already mentioned along with a solid strategic partner to help you with organizational design to put  the right people in the right places to ensure all are successful and, in turn, the Company.   And if you are the CEO, you need an experienced confidant and candid partner to help you through everything from layoffs to acquisitions and board meetings to executive coaching.  You need to know that every issue related to the success of your company that involves your people (which is nearly every one) is covered.

So, has your view of the value and need for Human Resources changed?  Been updated?  Been confirmed?  What do you need to know to put the right Human Resource program in place for your company?  Well, let's start with the stage of your company and go from there.

Top 5 things you need to know about Human Resources if your company is between 2 and 20 employees:

1.       Implementing best practices and philosophies early is the key to growing your company the right way.  What we mean here are things like foundational areas such as hiring practices, compensation and benefits philosophies, culture and values, etc.

2.       Ensure your benefits are in place and fit your company culture and budget.  A good Human Resource professional can help you do everything from implementing your first benefit package to evaluating an existing one to ensure you are getting the best value for the benefits you are providing and offering.

3.       Compensation is key to attracting and retaining the right people. Having a strategically thought out plan that fits your company's stage of growth, funding, and product stage, and is also competitive with the market, is key to keeping the team happy, as well as your investors.

4.       You never get a second chance to make a first impression.  Be sure that you have an orientation program that helps people quickly come up to speed on all the things they need to know to get started successfully.

5.       Have solid tools in place and an experienced resource to reach out to when you are in need of Human Resource support.  Attorneys are expensive, and don't necessarily fit your culture.  Accountants are not normally well versed in Human Resource requirements, so you need someone on your team who is focused on Human Resources and has the best tools to support you.  Utilizing a product like SwiftHR®-in-a-box affords the appropriate level of HR tools and resources needed in a cost-effective way for even the earliest stage employer

The Top 5 things you will want to consider if your company has more than 20 employees:

1.       If you currently have someone internally managing Human Resource ask yourself if they are tactical, strategic, or both.  If you have an Office Manager, for example, focused simply on tactical execution of the HR function, you likely are missing out on a number of important issues around such areas as compensation (including equity), benefits design, organizational design, leadership and executive coaching.  You may find that adding senior level Human Resource expertise leads to HR practices that more fully support business objectives and facilitate effective organizational growth.  This is a position ripe for outsourcing if you're not ready to absorb the cost of a full time professional.

2.       Make sure all of your executives and management are on the same page.  A good way to test this is to ask each what the mission of the Company is, along with the foundational values that drive the Company's behavior.  Will the answers be the same?  Ask them what the key business initiatives today are and what their role is in ensuring they are met.  Will they know?  Strategic Human Resources can help to ensure that these are clearly articulated and that all parts of the organization are aligning in the same direction.  Having everyone on the same page will allow the company to move toward success much faster and easier, and with fewer hiccups.

3.       Evaluate your compensation and benefits practices to make sure you have a defensible structure with strong evidence of internal equity.  Ensure that your capitalization table is up-to-date and that your underlying compensation philosophies are resulting in consistent hiring and merit procedures and outcomes.  Compensation is an emotionally charged area and one ripe for compliance and litigation problems.

4.       Review your Organizational Chart.  Look for areas that no longer make sense, or may indicate potential problems are looming.  Common problems include too many direct reports (i.e. > 5-7), a strong individual contributor who has somehow managed to build a large base of direct reports but has no leadership or management skills, functional sub-groups under the wrong group, "holes" in a department, or "equal partners" with no clearly defined authority points.  Keeping an eye on the organizational chart of a rapidly growing business and making corrections before they're needed is essential to effective execution.

5.       Know what your people care about. When you started out, the team was all young, single, and didn't care about things like health benefits or EAPs or even having a 401(k) plan.  Does the group still look the same now, 2 or 3 or 4 years down the road?  As demographics of the team change, the package offered should reflect the members you're trying to keep on board, and also those you're trying to recruit.

So where do you start in regards to getting your Human Resource initiatives on track or in place?  The best place to start, if you are an established company, is with a complete Human Resource Assessment.  This process and resulting document will help you determine and address areas of non-compliance, both state and federal, and will also identify areas of deficiency in best practices and gaps in your HR program.  Another consideration in your evaluation of how you're doing as an employer is to invest in a culture assessment.  What aspects of the Company and their job are important to your employees?  What do they say outside the company walls about the company? What would they do differently if they were in charge?  The answers to these questions are all things that help you as an executive anticipate and proactively avoid issues that could slow your company's progress down, or in the worst case scenario, bring it to a halt.
 
Tell us what you are doing to ensure Human Resources is a priority in your company.  What are you doing creatively that you can share with other executives?  What questions do you have that we might be able to answer?

Shannon Swift is the Founder and CEO of Swift HR Solutions, an HR Consulting firm that supports early and mid-stage companies in the Northwest through its talented Human Resource consultants and its SwiftHR® in-a-box product and surrounding services.  For more information contact Shannon at Shannon@swifthrsolutions.com or via phone at 888-768-5920  X701.

On December 19th President Obama signed into law H.R.3326 - Department of Defense Appropriations Act, 2010 which contains the anticipated extension of the federal COBRA subsidy. The changes to the federal COBRA subsidy are effective immediately. Below is a summary of the new subsidy extension provisions.

Extending the period during which individuals may qualify for the subsidy:

Original Law – Both involuntary termination and COBRA continuation start date must occur by December 31, 2009.

New Law - Involuntary termination must occur no later than February 28, 2010.
The original law required the Assistance Eligible Individual's Qualifying Event to occur, and COBRA continuation coverage to begin no later than December 31, effectively denying the subsidy to many otherwise eligible Assistance Eligible Individuals whose active coverage extended through December 31. The new provision only requires the involuntary termination to occur on or before February 28, 2010 regardless of when the individual's COBRA eligibility period begins.

Extending the length of the subsidy:

Original Law – maximum 9-months of subsidy
New Law – maximum 15-months of subsidy

Assistance Eligible Individuals who exhausted the subsidy (generally beginning in November) and subsequently dropped or modified their COBRA coverage, are entitled to an extension of their December payment due date. (NOTE: Because COBRA is a federal law, this extension of the payment period is not binding on state plans not subject to the federal law. The individual states will have to address this issue relating to insurance plans in their specific state.)

Assistance Eligible Individuals who continued COBRA by paying the full premium will be entitled to a credit and must be notified of the Plan's application of the credit under rules similar to the original law.

Plans are required to provide notices to individuals affected by these changes explaining the revised provisions, as well as the Assistance Eligible Individuals' rights and responsibilities under the new law, including any reinstatement rights.

The timing for distribution of the notices is generally tied to either the date of passage or, if applicable, the date the COBRA subsidy was exhausted by an Assistance Eligible Individual.

If you have questions concerning technical details as to how this extension affects your COBRA eligible former or furloughed staff, you should consult with your benefits broker and/or COBRA administrator.

Note: Thank you to the folks at the LWHRA e-networks group for this information!

The StrategicPay Blog would like to thank guest blogger Caprice Pine of Swift HR Solutions, a strategic partner of the StrategicPay^® Series.  Thanks for the very useful information Caprice! For more information, or to reach Swift HR Solutions, see the contact information below.

There have been and continue to be legislative changes that may directly impact your company's administrative and cash flow procedures. We hope that this article helps clarify issues around COBRA and related legislation passed as a part of the Economic Stimulus Package. Congress is currently considering continuing some of these programs, to continue to help the lagging job market recover as it struggles behind the economic recovery.

What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act of 1986, as Amended (COBRA) is an act that requires most employers with at least 20 employees to allow covered employees and/or their dependents ("qualified beneficiaries") to continue their employer-sponsored group medical, dental and/or vision coverage for up to 18 months after losing coverage due to a COBRA "qualifying event" (e.g., termination of employment for other than gross misconduct, divorce, no longer being a legal dependent, etc.).  Coverage may be continued for up to 36 months if a covered individual experiences a "secondary event" while on COBRA health care continuation (e.g., if he or she becomes disabled).

An employer offering a group health plan to its employees becomes COBRA-liable on the first day of a calendar year when it has employed at least 20 W-2 employees for at least 6 months of the previous calendar year. Under COBRA, the covered individuals must normally pay 100-102% of the monthly premium themselves.

What is ARRA and how does it impact your company?
With the American Recovery and Reinvestment Act of 2009 (ARRA), the U.S. government extended a 65% COBRA subsidy to covered employees of COBRA-liable companies (employed at least 20 W-2 employees for at least 6 months of the previous calendar year) who are involuntarily terminated between September 1, 2008 and December 31, 2009. Employers play a large role in providing this subsidy, since they must pay the subsidy up front and then recover the funds via a tax credit when they file their quarterly Federal Income Taxes on Form 941. The COBRA subsidy provisions under the ARRA apply to all group health plans, including both fully- and self-insured health plans, maintained by essentially all types of employers that are required to offer COBRA in the first place. This is a great boon for folks who lose their coverage because of the down job market, and it is also something employers need to be prepared to continue dealing with. It is quite possible that Congress may extend this program.

So what do you need to know about COBRA/ARRA? Here are your Subsidy Essentials:

• OBRA-liable plan sponsors must notify former employees of their rights under          COBRA and ARRA using the new language provided by the DOL for this purpose.
• To qualify for the subsidy, a worker must have been involuntarily separated between Sept. 1, 2008, and Dec. 31, 2009, and not for gross misconduct.
• Workers who lost their jobs between Sept. 1, 2008, and enactment of the ARRA in 2009, but failed to initially elect COBRA because it was unaffordable, got an additional 60 days to elect COBRA and receive the subsidy.
• Eligible workers must self-declare as "Assistance-Eligible Individuals" (AEIs).
• AEIs have to pay 35 % of the premium to their former employers.
• The employer must pay the other 65% of the premium to the carrier, and can recapture that money from the Federal government via a tax credit on quarterly tax filings, using form 941.
• The subsidy phases out for individuals whose modified adjusted gross income exceeds $125,000, or $250,000 for those filing joint returns. Taxpayers with modified adjusted gross income exceeding $145,000, or $290,000 for those filing joint returns, do not qualify for the subsidy.
• The 65% subsidy is payable for up to nine months from the date it begins.
• If an AEI becomes eligible for other group coverage at any time during the 9 month COBRA/ARRA subsidy period, he or she is still eligible for COBRA, but no longer eligible for the subsidy.
• Once a COBRA covered individual becomes covered under another group plan, he or she is no longer eligible for the subsidy or for COBRA health care continuation.

 
Is your plan subject to the COBRA/ARRA subsidy?
All group health plans, except for health flexible spending account arrangements offered through a IRS Code § 125 cafeteria plan, are subject to the COBRA premium subsidy under the ARRA. This includes not only major medical plans (indemnity, PPO, etc.) and HMOs, it also includes dental-only plans, vision-only plans, health reimbursement arrangements ("HRAs"), employee assistance programs ("EAPs"), and on-site medical clinics that provide medical care. Note, however, health savings accounts ("HSAs") are NOT considered to be group health plans for COBRA purposes, even though a related high deductible health plan ("HDHP") may be subject to COBRA.

What is an Assistance Eligible Individuals (AEIs)?
For purposes of the new COBRA subsidy provisions, an AEI means any individual who (a) is a qualified beneficiary as the result of his or her involuntary termination of employment during the period from September 1, 2008, through December 31, 2009; (b) is eligible for COBRA at any time during that period; and (c) elects COBRA continuation coverage. In Notice 2009-27 the IRS clarified that the involuntary termination of employment and the loss of coverage must occur between September 1, 2008, and December 1, 2009, for an individual to be considered an AEI. It is important to note that the individual must not be eligible for coverage under Medicare or any other group health plan (including a successor employer plan or the spouse's group health plan) in order to receive the COBRA premium subsidy.

Does this subsidy apply to Dependents too?
The new subsidy provisions apply not only to the covered employee who is involuntarily terminated, but also to a spouse and other dependents of the employee who were covered by the employee's group health plan immediately prior to the involuntary termination of employment and loss of coverage. Since each qualified beneficiary can independently elect COBRA, they will also be independently eligible to receive the subsidy. Important (as many plans cover domestic partners): for purposes of the COBRA premium subsidy the terms "spouse" and "dependent" follow the definition of spouse and dependent under federal, not state law. Thus, a same-sex spouse, domestic partner (registered or unregistered), or the child or children of a same-sex spouse or domestic partner may qualify for COBRA, but they are not eligible for the premium subsidy if they are not qualified dependents of the employee under federal law.

What if you have High-Income individuals?

• All qualified beneficiaries—even high-income individuals—who are also AEIs can receive the COBRA premium subsidy
• However, when the qualified beneficiary files Form 1040 at year-end, all or part of the COBRA premium subsidy received by the taxpayer, spouse, or dependent must be paid back (as additional income taxes) if the taxpayer is a high-income individual
• Partial recapture begins when modified adjusted gross income (AGI) is $125,000 ($250,000 for joint returns)
• Full recapture if modified AGI is $145,000 ($290,000 for joint returns)
• The taxpayer can avoid recapture by making a permanent election to waive the right to COBRA premium assistance

What is the difference between a Voluntary and Involuntary Termination?
Under IRS Notice 2009-27, an involuntary termination means "a severance from employment due to the independent exercise of the unilateral authority of the employer to terminate the employment, other than due to the employee's implicit or explicit request, where the employee was willing and able to continue performing services." The determination of whether a termination is involuntary is based on all the facts and circumstances. This can get tricky. For example, a resignation in lieu of termination would still be considered an involuntary termination for purposes of the new COBRA subsidy rules if the facts and circumstances indicate that the employer would have otherwise terminated the employee and the employee had knowledge that the employee would be terminated. The IRS has clarified this somewhat and noted that the following specific situations resulting in loss of group insurance coverage constitute an involuntary termination of employment for purposes of the COBRA subsidy law (high-level summary only—details can be found in IRS Notice 2009-27):

• An employer's failure to renew an employment contract.
• An involuntary reduction in hours of employment down to zero, such as a lay-off, furlough, etc.
• An employer's action to end an individuals employment while the individual is absent from work due to illness or disability.
• An employee's retirement, if the facts and circumstances indicate that, absent retirement, the employer would have terminated the employee and the employee had knowledge that he or she would be terminated.
• An involuntary termination for cause; however, if the termination of employment is due to gross misconduct, the employee and covered dependents are not eligible for federal COBRA.
• A termination elected by the employee in exchange for a severance package (i.e., a "buy-out").
• A work stoppage due to a lockout initiated by the employer.

Note that if an individual disagrees with the employer's decision as to whether a termination was involuntary, the AEI will have the right to file an appeal with the DOL, which will render a decision within 15 business days of its receipt. The DOL's decision will be final in any disputed situations.

When does the COBRA/ARRA subsidy end?
COBRA premium assistance from the federal government ends on the earliest to occur of the following events: 1) The end of the nine-month period of COBRA premium assistance; 2) The first date the AEI becomes eligible for coverage under Medicare or any other group medical plan (with certain minor exceptions); 3) The date on which the AEI's COBRA coverage ends under federal and state law; or 4) The end of the month in which the AEI informs the employer that he or she is waiving the right to receive COBRA premium assistance. AEIs are required to notify the employer (or pay a tax penalty) if they become eligible for or covered under Medicare or any other group medical plan.

What happens if a company ceases to exist?
If an employer (including all members of the controlled group of corporations that includes that employer) ceases to sponsor any group health plan, all obligations to provide COBRA coverage cease. The COBRA premium subsidy ceases as well. If a related or successor employer is responsible for providing continuation coverage to former employees of the bankrupt employer, the former employees can enroll in the related or successor employer's group health plan. The related or successor employer must notify and make the COBRA premium subsidy available to the former employees of the bankrupt employer.

So what are some action items you should consider if you are a COBRA-liable employer?

• Provide (or have your COBRA administrator provide) the new COBRA notices created by the DOL for this subsidy program, including language regarding AEIs' right to the premium assistance.
• Include a description of the obligation of the AEI to notify the plan of eligibility of subsequent coverage under Medicare or another group health plan, and the penalty for failure to notify the plan (Failure to notify the plan may result in a penalty of 110% of the premium reduction provided).
• Identify AEIs – employees and their dependents losing group health coverage due to involuntarily terminations during the period of September 1, 2008 and December 31, 2009.
• Pay 65% of the COBRA premium for AEIs. AEIs will pay 35% of premium rate. Make sure the carrier receives the total premium each month on time (employer/COBRA administrator coordinate).
• Take payroll tax credit for subsidy using line 12 of Form 941.
• Employers may only claim the credit after the AEI has paid their portion of the reduced premiums.
• Reimbursement is made out of payroll taxes. If payroll taxes are insufficient, then IRS will issue a refund directly to the employer or carrier IRS Form 941 for 2009 (Employer's Quarterly Federal Tax Return)

What if your plan denies coverage to a COBRA premium assistance request?
If the group health plan denies an individual's request for COBRA premium assistance, the individual may appeal the decision to the federal government

• The federal government is required to make its determination on review within 15 business days after receiving the individual's appeal
• The federal government's determination will be made "de novo" (i.e. without regard to the decision made by the plan)

Fun COBRA Facts—Did You Know?

• COBRA-liable companies are required to notify newly covered individuals of their COBRA rights when they first become covered (this is called the Initial COBRA Notice). Many companies don't realize this and only notify folks of their COBRA rights when they lose their coverage.
• If an employee has covered dependents residing at more than one address (e.g., dependent children living with an ex-spouse), COBRA notices must be sent to each address.
• Many group insurance brokers now offer COBRA administrative assistance for a small or no fee—check with your broker to see if they may be able to help. Caveat: they don't usually handle the initial COBRA notice, just the notices and premium collection when people lose coverage. A full-service COBRA administrator will handle it all for you, and will charge you fees and usually collect a 2% administrative fee from the covered individuals (this 2% should be included in the total premium when calculating the COBRA/ARRA subsidy).
• Each eligible dependent can make a separate election to continue or not continue coverage under COBRA, and can continue one coverage without the other coverages, unless coverage is "bundled". For example: a former employee whose covered spouse has a pre-existing condition might elect to cover the spouse under COBRA for medical, but cover the former employee and any other eligible dependents under individual insurance with a higher deductible and lower monthly premium.
• If an individual continues COBRA medical coverage for the full 18 months, an insurance company must accept them onto coverage without requiring completion of a health risk questionnaire (i.e., the insurance company can't exclude or charge them more for any pre-existing conditions).

This article is by no means a comprehensive analysis of COBRA and/or of the COBRA/ARRA subsidy—it is intended as an overview only. For more information, check out the Department of Labor's Website pages below:

An Employer's Guide to Health Continuation Coverage Under COBRA
FAQs About COBRA
COBRA Continuation Coverage Assistance Under ARRA
FAQs for Employers Re: COBRA Continuation Coverage Assistance Under ARRA
COBRA Model Notices from the DOL

Or contact Swift HR Solutions and they will be happy to help.

Author:
Caprice Pine, Senior Consultant
Swift HR Solutions
caprice@swifthrsolutions.com
425-503-5770
www.swifthrsolutions.com

Swift HR Solutions: Winner "Best Service Provider to Startups" Seattle 2.0 May, 2009

If yesterday's graphic didn't scare you, this one might help you get the gist of why REAL healthare reform is critical to the costs your organization incurs for healthcare, as well as for the entire country, and especially for the taxpayers (and your children/grandchildren) that will foot the burden of out-of-control healthcare cost growth.

Some may ask why I'm on a soapbox about healthcare reform recently, and the answer is really quite simple.  Healthcare reform, without real reform, is just another way to pump even more money into the machine that is slowly but surely bankrupting our country. 

The current plans on the table, while offering some "mini" reforms, basically just pump another trillion or so dollars into the same high margin, fee-for-service machine that has led to a never-ending spiral of cost increases several times the overall rate of inflation for the past few decades (even in the 2008-2009 economic slump, the worst in decades, healthcare costs are expected to rise in low double digits annually, even while consumers are cutting back on medical care!).

Of course, most Americans are concerned about what come out of their pocket for care, and that's understandable.  But what I believe many fail to realize is someone is paying for all the care that you're not paying for, and those "someones" are your employer, your government, your children and grandchildren, and you (indirectly, through taxes and deficits).

So, even if you think you're not paying for it, you really are, because it is built into the cost of the goods you buy, the massive deficits we're racking up, higher cost your employers are paying (which otherwise might go towards pay increases or hiring, but those costs are diverted to healthcare instead).

The healthcare crisis in America is not going away, with or without the current plans on the table.  It's time for all Americans to demand real reform (at least if you're concerned about the world you, your children and grandchildren will live in, in the the coming decades).  Reform that will restrict and/or eliminate the current fee-for-service model, and move towards evidence-based treatments, outcome-based payments, best-practice models, and yes, even some reasoned rationing, because everybody can't have everything they want (at little or no out-of-pocket cost, of course) and not expect the costs to soar.

I feel better, now that I've blown off some steam!  Please do you part.  This really is a crisis, even if you don't feel it yet.

Scariest Graphic Ever - Healthcare Costs!

If looking at this graphic doesn't scare you, then either you've been living in a cave, or must not care to much about the future of our country.

Healthcare costs are swallowing up an ever-growing percentage of our country's total spending, currently between 16% and 18% of GDP (depending on the study).  If current trends continue, healthcare spending will hit 20% of GDP in a few short years (yes, that's one of every five dollars spent in the U.S. is being spent on healthcare alone).

Healthcare is bankrupting this country, and it's time for everyone to become more informed and involved.  For a couple of good summaries of the issues and proposals, see this article in the Wall Street Journal (subscription may be required) "Ten Questions on the Health-Care Overhaul."  Another great overview most recent healthcare proposals coming out of Washington DC comes from the Terri Albee of the Compensation Cafe'. See her post here.

Don't let the special interests (and there are lots of them) rule your future.  Read up and speak up now!

If you see any real healthcare cost containment going on, please let me (and the rest of the country) know.

Each year some major consulting firms and others conduct their annual healthcare cost studies, and while the trends seemed to be moving toward slightly lower annual increases (down to the upper single digits, from the low double digit percentage annual increases), the last two studies I've seen are predicting roughly 10% annual increases in healthcare cost for 2009 and 2010, in the middle of major a major recession with virtually no (non-healthcare) inflation!

For instance the Buck Consultants 20th National Health Care Trend Survey is predicting between 10% and 11% annual increases (depending on plan type) for 2009 and 2010.  In other words, while wages are are flat to down in real (post-inflation) terms and companies suffering from falling sales and profits, somehow, healthcare can increase 10% in cost.

I've been reading about how many consumers are delaying going to the doctor, and not electing to have elective procedures done, but costs still go up 10%?  Somewhere I recall hearing about this concept called "the law of supply and demand," but apparently I was mistaken about that!

Healthcare costs for employers have more than doubled since the turn of the century and employee's out-of-pocket cost have tripled. Healthcare is slowly bankrupting our country.

I'm not a fan of government intervention in the free market, or of government-provided healthcare, but something has to be done.  In 1980, healthcare was about 9% of GDP, and in 2009 it will be approximately 18%.  We're heading toward 20% of GDP being spent on healthcare in this country within a few years.  Yes, you read correctly, one out of every five dollars spent in this country, will be spent on healthcare alone.