First Quarter 2007

VOLUME 29, FIRST QUARTER 2007
BENEFITS NEWS
F RO M YO U R B E N E F I T S S O U R C E
Sunrise Advertising Now Serving Graeter’s Ice Cream
Inside this Issue
Client Spotlight ………1
University of Cincinnati
and Xavier University
Scholarship Fund ……2
2007 Horan Client
Learning Program……2
Your MyWave
Homepage ……………3
Changes to HSAs ……3
Interview with Bruce
Petrie, Jr .………………4
HSA Guidelines ………5
Horan Welcomes Our
New Clients……………6
Horan Associates would like to recognize Sunrise
Advertising in this month’s edition of the Horan Client
Spotlight. Sunrise Advertising, the fastest growing full
service advertising agency in Cincinnati, has recently
been named agency of record for Graeter’s, a Cincinnati brand icon and
nationally-renowned company famous for its “Irresistible” ice cream. Sunrise
has had proven success with many Cincinnati based brands such as Skyline Chili,
Fifth Third Bank, John Morrell, The Beach Water Park, Midwest Eye Center, and
Bob Sumerel Tire Co. just to name a few. The keys to their success are simple;
proven results, a good understanding of their clients, creatively driven solutions
and the ability to measure success.
For seven years, Jim Browning and George Sabert managed the Cincinnati office
of FS&D Advertising. In 2003, they partnered to purchase all of the Cincinnatibased clients and formed Sunrise Advertising. Today, those same clients - as well
as several new ones - continue to radiate with strategically relevant ideas that
work. Sunrise’s mission is to create fresh ideas in all disciplines for their clients
that will build their brand, drive traffic and generate the results that make their
sales “shine”. Their revenue has increased 500% since 2003 and continues to
grow. Sunrise also places more media then any other full service agency in the
area, which offers them more clout in the industry.
What is the secret of Sunrise’s success? George Sabert, co-owner of Sunrise
owes much of their success to their employees and their strategic partners. He
said that one of their greatest achievements is “being able to provide a stable
career path for 39 employees with a rewarding and flexible work environment”.
He also gives credit to his attorney, Bill Keating, their accountants Shriver &
Company, Fifth Third Bank and Horan Associates for helping grow their business.
George stated, “As a partnership, it is important that each partner and our
employees are protected. We feel that with the help of our strategic partners
we have been able to achieve this goal.”
Sunrise believes their strong local presence is a valuable asset and it, paired with
their core competency, will help them to gain in the future. Horan is proud to
partner with such a thriving company as Sunrise and we wish them success in
their endeavors.
University of Cincinnati and Xavier University Scholarship Fund
Horan Associates, Inc. and Horan Securities, Inc. believes in the value of
good education. As a result, we have joined University of Cincinnati and
Xavier University to fund scholarships to current students attending either
Xavier University or the University of Cincinnati. The Jack and Elaine Horan
Scholarship Fund at the University of Cincinnati began in 1997, honoring Jack
Horan, the deceased founder of Horan Associates, Inc. The Xavier scholarship,
called the Musketeer Free Throw Challenge Scholarship Fund, began in 2002 and
Horan makes a donation for every Free Throw made by a Musketeer during the
Jack Horan
Terry Horan
home basketball games.
These scholarships are awarded to current full-time students who are dependents of employees of Horan clients, or
who are employees of a Horan client themselves. Information concerning these scholarships, as well as applications to
apply, can be found on our website at www.horanassoc.com.
2007 HORAN CLIENT LEARNING PROGRAM
Horan Services
HSA (Health Savings
Accounts)
HRconnection
Wellness
Medicare
Benefits University
This is a specialized
This extensive class
A specific session designed Learn tips and pointers
Learn the Medicare
Topics vary. You won’t be
for those interested in
on how to get your
ABCs...and D. This course
session designed to outline promises you will have a
disappointed.
building their company’s company off to a healthy
is offered for the HR
industry trends, legislative thorough understanding
about the complex world employee benefits website start. Discuss what other individual who wants to
news and benchmarks
of HSAs.
- HRconnection.
companies have done and understand Medicare, and
related to benefits.
learn what services are for the senior who needs
available.
help understanding the
options.
All sessions (except for the Benefits University) will be held at Horan Associates Training Room at
4990 E. Galbraith Road, Suite 102, Cincinnati, OH 45236
For questions or to RSVP call Chris Huggard at 513-745-0707
Benefit University’s will be held at the Sharonville Convention Center:
11355 Chester Road, Cincinnati, OH 45246
Phone: 513-771-7744
Page 2
BENEFIT NEWS
Interview with Bruce Petrie, Jr.
Bruce I. Petrie, Jr. is a
Partner, Member of the
Executive Committee and
External Affairs Partner of
Graydon, Head & Ritchey
LLP.
His 27 years of
legal experience covers a broad range of private and
public sector industries and clients, including collective
bargaining negotiations on behalf of employers in
health care and education. He has a B.A. with Honors
from Brown University and a J.D. from Northwestern
University School of Law where he was a member of
the Law Review Editorial Board. He has a distinguished
career of community leadership including presidency of
the Cincinnati Parks Foundation and of the Volunteer
Lawyers for the Poor Foundation. He and his wife of 27
years, Dr. Mary B. Petrie, have 4 children and reside in
Cincinnati.
Q: What trends have you seen in labor negotiations
with regard to benefit plans and medical plans in
particular?
A: A major trend is the need to tackle the rising
cost of health insurance. This is especially so because
labor contracts are typically multi-year in term, and
due to sometimes wild fluctuations in health care costs
year after year, employers are very reluctant to lock
on to a cost sharing structure that is static over the
term of the contract. Both sides of the bargaining table,
employers and employees, have an economic interest
to contain health care costs. Employers are spending
more time at the bargaining table educating employee
leadership about benefits and cost of benefits. Without
such education, employee benefit plans can be devalued as entitlements. Consumers, whether labor or
management, need to understand what they are getting
for their dollars contributed to health care. So, the first
step in every collective bargaining negotiation involves
education about the variety of plans, benefits and options.
I have used Horan Associates in this educational process
during negotiations and this has helped “get to yes”
over benefits. Once this foundation is set, the parties
are better able to negotiate successfully over such cost
factors as contribution rates, co-pay caps and other costsharing and cost-containment strategies. The trend in
both the public and private sector contracts is to move
toward a higher employee contribution rate beyond 10%
of the premium, often with escalators year to year.
Q: What trends do see in heath care benefits plan
design?
A: There is a deep trend toward re-design of health
care plans to cut cost. All parties during negotiations
are looking at new plan designs such as health savings
accounts, high deductible plans, consumer-driven plan
designs and so on. Reviewing all of these options is
beyond the scope here, but there’s a very important
twist when it comes to collective bargaining agreements
(“CBAs”). This is the so-called “right to change
benefits” issue under CBAs. Employers who are not
subject to a CBA have flexibility and latitude in making
adjustments, even unilaterally, to employee benefit plan
design and cost structures. Such flexibility is critical
for cost containment in a rapidly changing health care
industry. Employers who are subject to a CBA must,
as a mandatory subject of bargaining under federal and
state labor law, negotiate with the union language that
reserves the employer’s right to change benefit plans
during the course of the CBA. Without the legally
correct right to change language in the benefits articles
of the CBA, an employer can get locked into a benefit
plan for the full term of the CBA, which may be as long
as 3 years or more. Obviously, lots of new insurance
ideas, products and cost-containment opportunities
can arise over 3 years--opportunities that can be lost
to an employer which is “locked in” by its CBA. I am
not a fan of so-called “contract reopeners” during the
CBA term limited to benefits. The employer’s bargaining
strength can be disadvantaged if the other terms and
conditions of the contract such as wages are fixed, the
no-strike clause goes away with the reopener, and the
focus is only on give and take over cost of health care
and contribution rates without other “trading material”
like wages.
FROM YOUR BENEFIT SOURCE - HORAN ASSOCIATES, INC.
Page 4
Interview with Bruce Petrie, Jr. continued
Q: What trends do you see in retirement plan
benefits in collective bargaining?
A: On the retirement benefits front, particularly
in the private sector, the trend toward enhancement
of defined contribution plans (e.g., 401(k) plans, profit
sharing plans) and curtailment of traditional defined
benefit pension plans continues. Freezing participation
in traditional pension plans, and expanding 401(k)
matches and other savings opportunities for employees
are typical approaches at the bargaining table. The
driver of this trend has been the increase in under
funding of traditional plans due to the perfect storm of
underperforming investment markets, lower interest
rates, and rise in PBGC premiums. However, we often
find that employers work hard to neutralize the impact
of such plan changes on current employees by offering
them the choice of continuing in the traditional plan or
switching to the enhanced defined contribution plan. As
with medical benefits, it is important for employers to
correctly (legally) retain flexibility to change retirement
benefits during the contract term.
Q: What are you seeing in terms of the “musical
chair effect” from employers saying an employee is not
eligible for the group medical plan if their spouse is
employed and has coverage, thus causing other employer
plans to assume the cost of more members?
A: This feature of plan design is ballooning in the
self-insured plan arena, and is becoming more common
with fully-insured plans as they come up for renewal.
Such shifting of coverage responsibility to the plan of
the spouse’s employer is having a “ping pong” effect in
the marketplace because often the plan of both spouses
contains such a shifting provision, with the result that
neither plan, on its face, will cover the employee’s spouse
and dependents. This has created havoc for employers
and families during open enrollment season, trying to
reasonably determine which plan, if any, will cover these
individuals. We believe these disputes and stalemates will
more frequently work their way into the courtroom, and
will likely be the subject of future legislation.
Q: What are some of the other national trends you
are seeing with regard to CBAs?
A: Organized labor is engaging in more aggressive
campaigns to represent more employees in more
workplaces across more industries. The political
environment has shifted in favor of organized labor in
Ohio, with a Democratic Governor and Administration.
Recent legislation, for example, such as the new
minimum wage amendment to Ohio’s Constitution
contains some provisions that may facilitate union
organizing of non-union workforces. The upcoming 2008
Presidential campaign will highlight domestic economic
and “workplace equity” issues. Employee benefits
issues, from health care to post-Enron insecurity over
retirement plans, will be paramount. Revitalized unions
such as SEIU are targeting specific industries such as
health care. Unions are seeking to increase their revenue
by increasing the number of dues paying members.
Higher wage jobs mean higher potential dues for unions.
Accordingly, employers which are not currently unionized
need to be vigilant about those issues that tend to
drive employees toward union representation, including
benefits. Employers who get ahead of the game with
new and more cost-smart benefit plans may disincent
employees from paying dues to unions to get such
benefits.
Horan has partnered
with HealthCare for
1, a one-stop on-line
shopping site, built
to help individuals
make the best and most informed, individual health
insurance buying decisions. We have added a link to
our website (www.horanassoc.com) where individuals
looking for health insurance coverage can immediately
research health policies online, then choose to apply
entirely online, with a HealthCare for One call center
professional, or with Sally Schulte of Horan Associates
at 513-745-0707.
Page 5
Your MyWave Homepage
Horan has partnered with a benefits technology company called Zywave. Through
this partnership we can offer our clients tools for the employer and employee side
of the benefits equation. MyWave, a product of Zywave, is an employer website
that facilitates communication with your employees and offers time-saving tools
and resources that build convenience into managing your everyday work tasks.
Whether you want to collaborate with our agency online, quickly access timely
news, information, and resources, or connect with over 200,000 peers in your
industry, this is the place to be. It’s easily accessible, hardworking, and just one of
the many services available to you when you partner with Horan.
LOGGING ON: Log in to www.mywaveportal.com to access the log in page of your Horan MyWave site.
TIP: If you forget your User Name and Password, click on the Retrieve your login information? link.
•
Click “Retrieve your login information?”
•
Enter your email address to get your username and click on “Get
username”
•
Enter your username to get your password and click on “Get NEW
password”
•
Retrieve information from your email account in a few seconds
•
Return to the link above and enter your username and password
You have successfully logged into your MyWavePortal, otherwise known as your
MyWave homepage.
Below is a summary of the changes to Health Savings Accounts, as a result of the Tax Relief
and Health Care Act of 2006 that went into effect January 1, 2007.
One-Time Health FSA or HRA Rollover Allowed
• Employees are allowed a one-time rollover of funds from their Health Reimbursement Account (HRA) or
Flexible Spending Account (FSA)
• Amount rolled over cannot exceed the amount equal to the lesser of:
• HRA/FSA balance as of 9/21/06 OR HRA/FSA balance as of date of rollover.
• Employees have until 1/1/2012 to rollover funds without penalty
HSA Annual Deductible Limitation Repealed
• Plan deductible is no longer a factor in determining the maximum annual contribution to an HSA.
• The maximum annual contribution for 2007 is $2,850/single and $5,650/family.
Earlier Indexing for Cost of Living Adjustments (COLA)
• Adjustments to the annual maximum contribution limits will be based on the CPI changes as of the 12-month
period ending 3/31
• IRA will publish adjusted rates for a year no later than 6/1 of the preceding year.
Allow Full Contributions For Any Participation During the Year
• Pro-rated limits based on month of eligibility removed
• Individuals may fully fund HSA regardless of month of eligibility, if certain conditions are met.
One-Time Rollover From IRAs to HSAs Allowed
• Rollover must be a trustee to trustee
• Not subject to 10% early distribution tax, if certain conditions are met
Employer Comparable Contributions Rules Modified
• Employers may make larger HSA contributions for NON-Highly compensated employees
If you have questions, please do not hesitate to contact your Horan Account Manager. Or, you can contact Mikal
Jeffries of Horan Associates, Inc. at 513-745-0707.
Page 3
Prsrt Std
US Postage Paid
Cincinnati OH
Permit No 7312
4990 East Galbraith Road
Suite 102
Cincinnati, OH 45236
513-745-0707
800-544-8306
FAX 513-745-9731
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Please join us in welcoming our following new clients
Indian Hill Exempted Village School District
Crossroads Community Church
Beechwood Home for Incurables
Drew & Ward
King & Myfelt, LLC
Teen Challenge
FSCreations
Blue Manatee Children’s Book Store
Cincinnati Equitable Insurance Company
Cornerstone Properties
Matandy Steel Sales
Village of Woodlawn