Posts

Practice Health Insurance Options: Professional Employer Organizations

Your first question is likely, what is a PEO? Simply, it’s a Professional Employer Organization. That probably doesn’t help your understanding, does it? To define PEOs, we’ve brought in an expert in the industry, Jeff Wanner, to describe the components and advantages further.

What is a PEO?

PEOs (Professional Employer Organizations) have become a widely popular strategy for small and medium sized businesses across the country. PEO partnerships provide a great deal of value across an organization to greatly simplify administrative functions, contain employee benefit costs, and a streamlined strategy for compliance.

How does it work?

The role of the PEO is to co-employ their client’s employees, which is the primary mechanism for delivering everything previously mentioned. The responsibility to follow state to state employment regulations, payroll tax filings, worker’s compensation claims, and employee benefits administration falls squarely on the shoulders of the PEO.

These organizations work with clients across the country and accumulate massive buying power for things like medical benefits. Being a part of these groups allows for a much more consistent and predictable medical increase structure as years progress. Many PEOs have averaged less than 3% annual increases over the past 10 years, whereas the national average is well above 10%. With medical benefits being the largest employee-related expense (outside of salaries), it’s not difficult to see why this strategy is very appealing economically as the years go on.

I can use this for my Dental Practice?

Dental practices have found this strategy to be very appealing over the past 5+ years. As you know, dentists are extremely busy business owners that don’t benefit from adding complexity to their practices. Dentists aren’t students of state to state employee regulations and compliance. With one evaluation, they are able to turn the key on essentially every aspect on the employee side of their practice. The only challenge is picking the right partner for your practice!

Companies like PairPEO are great resources for these evaluations and will even help through the implementation process for your practice. This is a good resource to start with to ensure the correct partner is brought to your practice.

If you have questions or would like to connect with a health insurance partner in your area, contact us today!

Practice Health Insurance Options: QSEHRA

Historically, small businesses, including dental Practices, have met the need for employee insurance with a traditional group plan or providing an increase in salary to allow employees to purchase their own insurance. With the work of Congress, there is a new option in the marketplace. This option is the qualified small employer health reimbursement arrangement (QSEHRA).

Through QSEHRA, businesses with 50 employees or less are able to offer employees a monthly allowance of tax-free money. Sounds easy, right? Maybe. Employees then must choose and pay for their own health care, potentially including personal insurance policies, and the business reimburses them up to their allowance amount.

This allows businesses to keep control over their budget while offering a meaningful benefit to their employees. At first glance, Practice owners always love this option but the devil is in the details so, let’s review those.

How it works:

Step 1: Practices set the allowance. Practices choose a monthly, per-employee allowance of tax-free money to make available. Currently, there are no minimum contribution requirements and Practices are able to offer different allowance amounts based on an employee’s family status. In 2018, QSEHRA contribution limits allowed businesses to offer up to $420.83 a month for single employees and $854.16 a month for employees with a family.

Step 2: Employees make purchases. Employees with a QSEHA are permitted to buy what fits their personal health needs. There are a variety of expenses eligible for reimbursement, including personal health insurance premiums, copays, deductibles, prescription drugs, and many more.

Step 3: Employees submit proof of expenses. After incurring an eligible expense, employees are required to submit proof to the Practice through documents that include: a description of the product or service, the cost of the expense, and the date the employee incurred the expense.

Step 4: Practices review and reimburse employees’ expenses. After an employee submits an expense, the Practice or an approved third party should review the documentation and reimburse the employee from their monthly allowance.

With the QSEHRA, reimbursements are free of payroll tax for both the Practice and its employee. Reimbursements can be free of income tax for employees if the employee is covered by a policy providing minimum essential coverage (MEC).

Often, the QSEHRA is a good option for Practices to consider since it allows for complete personalization. Understanding your staff, their incentives, and their needs will be a priority when exploring this option.

If you have questions or would like to connect with a health insurance partner in your area, contact us today!

Practice Health Insurance Options: Association Health Plans

A new rule issued by the Department of Labor in 2018 expanded the availability of association health plans (AHPs) for small businesses. AHPs allow small businesses to band together within industries, professions, or geographic regions to either purchase large-group coverage or self-insure.

In North Carolina, this is a popular option and it exists in many state for Dental Associations. The NC Dental Society offers an Association plan that allows a Practice owner to open up “group” insurance to his or her staff. More information about the plan specifics can be found here

Once the benefit is in place, it works much like a regular group policy or self-funded health insurance benefit would. However, AHPs aren’t subject to the ACA’s rating rule, which prevents insurers from varying costs in a specific region based on things like sex, age, or health status. They also don’t need to cover the essential health benefits that ACA-compliant policies do.

Administration is typically done by the association, rather than by the small business members.

AHPs can help cut costs, often by between $1,900 and $4,100 per employee per year. However, AHPs achieve these cost savings not only by widening the risk pool, but also by cutting out standard coverage items. The AHP may not cover essential health benefits, such as prescription drugs, maternity care, or mental health services.

The NC Dental Society plans are competitive to group policies and offer a valid option for Practice owners. If you make the decision to offer the plan, you still need to understand your option on how you pay for the plan for employees and yourself – both of which have tax implications.

If you have questions or would like to connect with a health insurance partner in your area, contact us today!

Practice Health Insurance Options: Traditional Group

The traditional choice for most businesses is a group health insurance policy. This business chosen plan provides coverage to employees, and potentially, employees’ dependents. Depending on your Practice size, this traditional option may still be a good fit for you. However, for the majority of single doctor locations, this proves to be prohibitively expensive and is not the right solution. Practices that offer group health insurance pay a fixed premium for the policy, and then, pass on a portion of the premium cost to employees. For example, the employer may pay 50% of the premium and the employee is then responsible for paying 50%.

Where should you look for and acquire this type of insurance? There are 3 basic options:

Many Practices find that their staff likes the traditional option because it’s familiar to them. It is how many of us have had insurance for the majority of our lives. However, Practices also find the cost to be higher than one can afford. Your employee census and the benefits chosen will drive the cost. We suggest Practices at least consider this option and shop the pricing as a baseline to compare to other options discussed later.

If you have questions or would like to connect with a health insurance partner in your area, contact us today!

3 Ways Startups Benefit from Outsourced Accounting

The accounting function should be a main priority for startup businesses. According to the Small Business Administration (SBA) Office of Advocacy, about 80% of small businesses survive the first year. This seems like a high percentage considering the common belief is that most businesses fail within the first year. About half of those small businesses reach the five-year mark and only one in three makes it to 10 years. When starting a business, it is important to take advantage of every opportunity to help you become successful. By outsourcing your accounting, the financial portion of your business will be headed in the right direction from day one.

Correct Set-Up

If you start outsourcing your accounting from the beginning, you can feel confident knowing your business financials will be set up correctly. When you start by doing your own accounting, it becomes difficult and expensive to migrate your data to a firm later.

Save Time & Energy

As a new business owner, your time is valuable. You should focus your time and energy on ideas, employees, products, and services instead of finances. Having an expert on your side will help you make important decisions on what accounting software should be used and ensure you are complying with tax and accounting standards. In addition, your outsourced accounting team will guarantee that your books are maintained properly and provide you with support in case of an audit.

Team of Professionals

Hiring an in-house finance team is both expensive and time consuming. There are many factors that go into choosing how many employees to hire and what qualifications they should have. As a business owner, you would also be responsible for training and managing these employees. When you outsource your accounting, you avoid these costs and time spent on the hiring and training process. Outsourcing allows you to work with professionals who have years of industry experience and are able to provide valuable insight to help you make the best business decisions.

Want to learn more about the benefits of outsourced startup accounting? Click here to start the conversation about the future of your business with LBA Haynes Strand.

Practice Health Insurance Options

You don’t have to look far to know that health insurance costs are on the rise. It’s becoming a hot topic for Practice owners and their employees. If you haven’t already been asked by your staff to add health insurance, or why the cost keeps going up, you likely will soon! As a Practice owner, you are faced with trying to juggle employee satisfaction and retention in addition to managing profit margins and cash flow. If you are considering adding health insurance, changing plans, or looking for ways to manage the cost, you can count yourself in a growing group of concerned Practice owners. Health insurance is a valued benefit for your staff and you need to make sure you can offer it at a sustainable cost to your overall margins.

You may ask yourself… why even offer it? It’s a hassle. It’s costly. Does my staff even really appreciate it? These questions have caused many Practice owners to procrastinate on offering it and others to drop it altogether. In 2019 and into the future, your Practice will face an increasingly competitive marketplace for talented staff. Health benefits can be a vital part of attracting and maintaining high quality talent.

Don’t worry, it’s not all doom and gloom. There are more options today for your Practice than ever before. Below, we’ve listed and will subsequently review some of the most popular health insurance options for Practices in 2019.

  • Traditional Group Health Insurance
  • Association Health Plans
  • Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs)
  • The “Bonus” Plan
  • PEO’s
Honorable Mentions:
  • Group-integrated HRAs
  • Self-funded Health Insurance

In full disclosure, the above are options for health coverage, just not common for the dental industry. Know they exist, but these should be viewed as an outlier solution for your Practice.

As each of the options above are considered for your Practice, our dental team can help you find the right partners in your market to help determine the best option for you, analyze the cost to your bottom line and industry standards, and project the cash flow impact to you as the owner (considering tax implications, including review of potential tax credits). Analyzing each of these options is a lot to tackle on your own so bringing in a qualified professional will be key.

In our following posts, we’ll review the basics of how these options work, the corresponding pros and cons, roadblocks to certain options, and highlight the right Practice profiles.

If you have questions or would like to be connected with a health insurance partner in your area, contact us today!

Why Should You Hire a Dental Specific CPA?

Whether you are a new dentist entering the market, an established dentist, or considering transitioning out of your Practice, having a dental specific CPA in your corner is the key to success. We live in a world of specialization. While a general accountant may be easy to find and work with, having a CPA with deep industry expertise on your side is vital to the success of your Practice. Our dental team is uniquely qualified and ready to support your Practice regardless of what stage you are in.

A few key solutions we provide are:

Specialized Tax Planning

As you become successful and grow your Practice, your tax situation becomes more complex. Dental specific CPAs are able to share techniques to lower your tax rate while increasing your tax savings.

Trends & Benchmarking

Our expertise extends beyond traditional tax planning and compliance. Our team is fully immersed in the dental industry which provides us with tangible insight on current trends and common issues to help you make educated business decisions.

Complete Lifecycle Support

From start-up to exiting your Practice, our team serves as strategic business advisors who are there with you every step of the way. For future Practice owners, we develop a business plan to help obtain business financing needed to take the next steps and launching your Practice confidently. When purchasing an established Practice, our team works with you to find and review purchase options through our Practice Scorecard Analysis and due diligence process. When it comes time to sell your Practice and retire, our team is able to provide sell side representation and focus on finding the right buyer who is able to provide you with the right offer.

Owning and managing a dental Practice can be quite challenging. Allow us take the dental accounting and tax preparation tasks off your hands so you can focus on providing high quality service to your patients. To learn more about how a dental specific CPA can support your Practice, contact us!

If you are interested in starting or acquiring a dental practice, check out our dental lifecycle blog series!

When to Hire a CFO

As your company grows, both in size and revenue, it becomes necessary to have a leader who can manage and think strategically about financial decisions. While CPAs are critical to the success of the organization, they may not have the time to dive in and focus on the financial future of the company. When you hire a CFO you have the opportunity to add value through a variety of resources and collaboration.

Here are a few indicators that it is time for you to hire a CFO:
  • CEO is working more “in” instead of “on” the business
  • Complexity of the business begins to erodes profits
  • Business decisions are hindered by lack of timely financial data
  • An early warning system would have prepared the business for significant up or downturn
  • Lack of planning unexpectedly interrupted cash flow
  • Lead bank is concerned over quality and timeliness of financial reporting
  • The business growth plans include an acquisition strategy
  • Company experiences higher than expected tax liabilities due to lack of tax strategy

The resources the CFO provides can add value to and enhance the strategic direction of the company.

If you are interested in learning more or would like to hire a CFO, contact us today!

The Role of the CFO

Over time, the role of the CFO has evolved from transaction oversight to one of strategic importance. The CFO has become a true business advisor which both business owners and senior leaders rely on.

Typically, the CFO will model the owner and leader’s vision into a financial pro-forma to evaluate whether they can and will make the necessary investments (primarily financial and cultural) to achieve their goals.

Business owners need an in-house counselor, who is invested in the financial future of the company, to aid in decision making. The CFO provides resources needed to help make these decisions and “monetize” the company’s vision.

Resources the CFO provides:

Business Planning

  • Provide your business plan with financial rigor

Financial Projections

  • Create a bottom-up forecast and detailed budget with spending plans by department

Rolling Cash Forecasts

  • Enable you to respond, in real time, to emerging business conditions

Annual Operating Budgets

  • Help you keep track of maintenance operations, salaries, and interest payments

3 and 5 Year Plans

  • Forecast expenditures and revenue for three and five year periods
  • Create corresponding strategic goals

Monthly Management Reports

  • Create reports with previous and current financial data

Pricing

  • Build a financial model to set price

Managing Debt

  • Establish company budget and payment schedule to repay and keep debt low

Mergers and Acquisitions

  • Advise on M&A initiatives
  • Complete business valuation

Equity and Debt Negotiations

  • Restructure your debt to improve liquidity

Liquidations

  • Ensure proper redistribution of your company’s assets and property

With the resources they provide, the CFO is vital to driving business improvement initiatives. Not only do they want to sustain your accounting function, they want to improve it. To learn more about how our CFO Services can help you and your accounting department reach the next level, contact us today!