COVID-19 changed the landscape in just about every aspect of our daily lives, including the way we work, the way we live, and, as employers, the way we provide access to healthcare to our teams.
This year, we expect to see the continued growth of many themes and trends at a pace that before seemed impossible. COVID-19 shook the healthcare industry, disrupting the normal course of innovation in unimaginable ways. However, this set a new precedent – one in which no aspect of our healthcare structure is seen as unchangeable.
Rapid Growth in Telehealth
Last year, mandatory shutdowns due to COVID-19 created considerable demand for telehealth services. However, although the majority of mandatory shutdowns have since been lifted, the utilization of telehealth services remains higher than ever before. Before the pandemic, telehealth visits made up only 1% of total visits. While this number jumped to nearly 50% amidst shutdowns in April of 2020, telehealth visits now make up roughly 11% of total visits.
In the past, telehealth was hampered by skepticism and its impersonal regulatory environment. While it was gaining popularity due to its convenience, the progress was slow. One main issue prohibiting the wide adoption of telehealth services was the fees associated with it. However, the Centers for Medicare & Medicaid Services (CMS) most recent fee schedule made temporary changes to reimbursement permanent, making it more accessible.
Improved accessibility and reduced variability of care allow telehealth to offer better population health outcomes – creating buy-in from both providers and consumers. It’s not a matter of if telehealth is a viable method of healthcare, but how it fits into the current system. What is the appropriate mix of remote and in-person care?
While the new reimbursement structure solidified the concept for many, the popularization of telehealth was gaining momentum with both providers and patients before its implementation. In a recent study conducted by The Harris Poll, research showed that roughly 80% of patients who tried telehealth during the pandemic plan to continue utilizing it.
Aside from primary care – which is poised to be both a long-term and high-volume use for telehealth – other procedures are also vamping up their utilization. For example, mental health services have increased their accessibility through telehealth. This couldn’t come at a better time, given the rising issue of mental health in the U.S. amidst the pandemic. And, telepsychiatric services have become more popular for hospitals and clinics that have limited or no psychiatric staff when treating more severe mental health conditions.
In 2021, if an employee has a phone or computer, they can have access to on-demand healthcare. While more in-depth services might require you to be in-person, the realization that certain parts of the healthcare process can be managed remotely is growing expeditiously.
Technology Driven Healthcare
One place that is often overlooked as a viable clinical setting is an employee’s own home. However, in-home care can be incredibly valuable to many. Those who are able to receive care in-home will benefit from lower costs, and they might even prefer it over the traditional healthcare setting. In turn, many providers are showing an increased interest in an in-home approach to healthcare. This would provide a more holistic list of services including preventative care, ancillary care, and support solutions.
COVID-19 and the impact of the pandemic have permanently shifted the standards of primary healthcare. It has fast-tracked innovation and the embrace of telehealth. With the lack of resistance to this market and the digitization of the entire world, there are several technology-driven trends that you can expect to grow in 2021.
1. Remote Patient Monitoring
In 2019, roughly 88% of hospitals invested in remote patient monitoring technology. In 2021, remote patient monitoring is expected to continue to grow. As technologies that can monitor vitals become more popular (i.e. smartwatches), monitoring and treating patients suffering from chronic conditions such as diabetes and heart disease.
2. Telehealth
In March of 2020, the CMS began allowing expanded telehealth services through Medicare. As a result, many major insurance providers such as Blue Cross Blue Shield, Humana, and UnitedHealthcare expanded their coverages. At the end of 2020, the CMS completed the permanent expansion of telehealth. In 2021, the utilization of telehealth will continue to grow.
3. Telemedicine
In a recent study by the JAMA Network, research showed that the use of telemedicine in the U.S. increased by nearly 2000% between January and June of 2020. As care delivery to the home continues to grow, providers will also continue to virtually prescribe medications, while relying on remote patient monitoring to help make better care delivery decisions.
Rising Government Populations
In 2020 we saw rapid growth in the popularity of Medicare Advantage plans. This trend will continue to grow in 2021 as the popularity of managed care and value-based contracting increases. Total enrollment for Medicare Advantage plans in 2020 was nearly 25 million or 40% of all beneficiaries – a 6% increase from the number of enrollments in 2019.
Now that we have a new president and administration in the White House, we can expect to see new priorities with government-sponsored healthcare programs. Possibly the greatest of these shifts in government programs is Medicaid. Between 2017 and 2019, Medicaid enrollment declined consecutively. However, since COVID-19 and its impact on the economy, enrollment is on the rise. In fact, 2020 saw an additional 5 million Americans added to Medicaid.
There is an apparent need for revisions to how we manage and pay the Medicaid population. Low reimbursement rates result in hesitant providers when treating Medicaid patients. This often means extended wait times for Medicaid patients seeking care. It’s no secret, Medicaid patients have long struggled to receive good health outcomes compared to those under commercial healthcare (Medicare), and in some instances, those who are uninsured.
More than 90 million Americans are now covered by Medicaid. That’s up from roughly 75 million before the outbreak of COVID-19. Additionally, the pandemic caused state budgets to tighten, forcing them to look to risk-based contracting arrangements to pay for it. As a result, budgets have become more predictable and the financial risk is moved to the managed care organizations that manage the Medicaid population.
These risk-bearing arrangements bring significant advantages in terms of financial savings due to the co-morbidities and the impact of Medicaid enrollees that have multiple conditions. Better management of these high-cost Medicaid patients could remove considerable amounts from the system. In addition, it increases the possible productivity for the working-age population who need less care.
Self-Funded Employers Will be Empowered to Control Healthcare Costs
While many attempts to curb healthcare costs have been made by providers, employers, and insurers alike, one thing is still apparent – The way that healthcare is both priced and paid for in the U.S. is unsustainable and costs continue to increase across the country. In 2020, both single and family premiums increased by 4% while wages increased by only 3.4% and inflation saw an increase of 2%.
That said, one group has the power to improve the affordability of healthcare for both companies and their employees; self-funded employers. In 2020, 67% of workers with health coverage were enrolled in self-funded healthcare plans. That’s a 6% increase from 2019. Additionally, there were roughly 25 key mergers and acquisition transactions in 2020 in the healthcare space – a 92% increase over 2019. They included reference-based pricing companies, population health applications, care navigation, pharmacy benefits management, and more healthcare plan services. In 2021, we expect to see more growth in these and similar trends.
1. Physician Quality
Avoiding network friction creates limitations to health plans and their ability to guide individuals to physicians based on quality. In response, employers are now searching for ways to navigate members through the use of independent vendors. In 2021, the expectation is that these vendors will continue to utilize quality metrics such as second opinion solutions, physician quality scoring, and centers of excellence to improve their solutions.
2. Pharmacy Cost Containment
The rapid growth of pharmaceutical drug costs continues to be a significant component of healthcare spending, particularly in employer-sponsored health plans. In addition, mid-size and smaller employment groups are receiving poor member and utilization management services from large pharmacy benefits managers. In response, employers are doing more to define pharmacy benefits and participating in aggregation models to create both purchasing power and more focused clinical services.
3. Specialty Condition Management
There has been an increase in popularity for niche solutions, solutions that are built around small yet high-cost employee populations that account for a portion of total healthcare spending. With advanced tech foundations and data analytics, specialty condition management platforms create individualized solutions for employees while offering ROI tracking to employers so they can differentiate from more traditional solutions.
4. Benefit Utilization and Navigation
Better healthcare benefits aside, there is substantial demand for better access, education, and comprehension of the resources that employees have at their disposal. From the physician quality navigation listed above to ecommerce for products and services under the health plans, employers are finding ways to create engagement of the benefits while also managing costs effectively.
Behavioral Healthcare Demand Will Continue to Rise
In 2020, as the stigmas around mental health decreased, the behavioral healthcare market gained momentum. During the pandemic, the demand for behavioral healthcare services saw unprecedented highs as substance abuse, alcoholism, and suicide rates increased across the board. In 2021, we expect the demand for these services will remain strong.
According to a study by Acumen in 2019, research showed that the annual behavioral health market is projected to surpass $240 billion by 2026. Considering that roughly 80% of Americans reported having experienced significant stress due to COVID-19, we expect to see continued growth in individuals seeking behavioral care. In addition, there is a shortage of behavioral health providers in the U.S., and the shortage is expected to grow significantly over the next decade. With this in mind, we expect to see certain trends continue in 2021.
1. Improved Access to Healthcare
With the growing focus on behavioral health, we expect sustained efforts from both the government and private sectors to improve awareness and access to care. With the increased utilization of telehealth and telemedicine services, access to behavioral healthcare is increasing, allowing us to meet the growing mental health crisis in America.
2. Demand for New Solutions
There has been a considerable amount of capital invested into digital health platforms for providers, employers payers, and direct-to-consumer. Expansion of specific segments of behavioral health services is creating a heightened demand for IT solutions with behavioral health technologies. In 2021, we are expecting even more interest in this space from strategic and financial buyers alike.
3. Private Equity Investment
Since 2018, roughly 60 new behavioral health private equity platforms have formed. In 2021, the expectation is that private equity investors will continue to play an increasingly large role in behavioral healthcare.
As we begin to settle into the new year, it’s important to take some time to both reflect on the past year and continue planning for the year to come. While 2020 was an unpredictable year, through the chaos we find insights that will shape the future of the workforce and employee benefits.
While many experts have made predictions for what 2021 might entail, there are a handful of themes that have come to the forefront for most. Likely the most notable of these is the prioritization among employers to promote diversity, equity, and inclusion. Following a year of civil unrest and mass protests for social justice, it makes sense that there is more interest in DEI. And we are seeing more people of color filling roles in high-profile positions – inspiring others, and influencing change. Additionally, we’ve seen a growing interest in environmental, social, and corporate governance policies among corporations where ESG had traditionally been less of a priority.
While priorities have been shifting regarding social equality, we have also been enduring the impacts of a global pandemic. This has shed light on many areas that have been overlooked in the past, such as improved benefits for working parents, women, and low-income individuals. These emerging themes have played a major role in what experts believe will influence the benefits strategies of employers in 2021.
Meeting a Diverse Range of Needs
It has become apparent that a broad benefits plan for all isn’t an effective strategy for companies that are working to create a more inclusive and diverse workplace. Instead, the standard has changed to a need for personalized benefits. While a change to benefits that serve a wider variety of employee needs (mental health, childcare, etc.) has been in the works for a few years, the events of 2020 have and continue to accelerate the need for more inclusive, well-rounded benefit programs.
More Equitable Benefits
2020 brought with it a variety of new challenges for employers and employees alike. While working parents struggled with the stress of ever-changing childcare solutions, many single non-parents struggled with the mental health concerns caused by isolation. The differences in the varying needs of employees brought forth the need for empathy and a shift in the benefits and services offered by employers. The effects of these differences will influence employers to have a more equitable approach to the benefits offered moving forward.
The Rise of Social Benefits
Social benefits refer to things such as student loan repayment programs, commuter benefits, child care, elder care, and more. They are a response to what many employees consider their employer’s social responsibility. While student loan repayment plans were expected to be the big trend of 2020, the COVID-19 pandemic certainly had a big impact on the emergence of such plans. However, that idea and similar non-traditional benefits are continuing to become more important as we see a growing interest in social benefits.
An Emphasis on Connecting Remotely
Our daily working environments have changed dramatically this year and with it came many opportunities and challenges. For example, remote work has allowed employers to tap into a wider pool of talent. However, employers need to continue to prioritize the use of technology that helps their teams succeed and educate them on time management and skills that will improve productivity while working from home.
Surge in DEI-Based Recruitment Efforts
Among all of the realization of the past year, we have seen a significant focus on the need for effective DEI initiatives from employers. The new virtual environment is not only helpful to the continuity of businesses, it encourages DEI initiatives in the future. Employers are no longer limited by geographical location when acquiring talent, rather, the virtual environment enables them to leverage recruitment platforms to access a more diverse pool of talent.
A Focus on Inclusivity, Despite Social Distancing
It uncertain when we will return to working in the office again. Many employers are feeling the struggles of the disconnect between employees. While Zoom meetings are helping us stay connected, it doesn’t quite replace the feeling of seeing and collaborating in-person. In the future, it will be important for leaders to structure remote work in a way that puts inclusivity as the top priority. Regardless of what the future holds, it is important that employers create a uniform and inclusive experience that encourages employees to do their best work.
With President Biden now officially sworn in, many business owners are wondering what the Biden Administration will mean for the COVID-19 response and health care in general.
In this post, we’ll discuss some specific anticipated impacts of Biden’s presidency on the country’s health care system:
COVID-19 Response and Impact on Health Care
ACA, Medicare, and Medicaid
Drug Pricing
Billing and Pricing Transparency
COVID-19 Response and Impact on Health Care
Biden has indicated that he plans to increase the federal government’s role in the pandemic. He plans to lead a response focused on increased access to treatment, testing, and personal protective equipment (PPE). If necessary, he may implement mandates and mitigation strategies.
Most of the solutions that Biden has proposed to control the pandemic fall under one of the following categories:
Increase testing
Address PPE shortages
Distribute vaccines and treatments
Establish additional protections for high-risk and older Americans
Work with local authorities on public health measures
Offer federal relief
As the Biden administration takes over the domestic COVID-19 response, it hopes to improve the relationship with the World Health Organization (WHO). Biden believes this relationship was damaged by the Trump administration.
Biden has already built a COVID-19 response team and his team has begun movement on vaccine and mask initiatives. Potential federal mandates may face opposition. Conversely, increased federal aid and initiatives from the federal government to increase testing, treatment, and PPE access will be met with broader support.
ACA, Medicare, and Medicaid
President Biden hopes to address and expand health care access. Most of his agenda either fits into or supplements an expansion of the ACA, which is understandable since the ACA was one of Obama’s signature accomplishments while Biden was Vice President.
Due to potential congressional gridlock as a result of a divided congress, employers should expect to see roadblocks on Biden’s mission to expand the ACA, Medicare and Medicaid. However, it’s still worth taking a closer look at some of Biden’s health care priorities:
ACA
If the ACA is struck down by the challenges it is facing in the U.S. Supreme Court, the Biden administration would be expected to work toward a replacement. If the ACA is upheld by the courts, the Biden administration is expected to move forward with expanding the ACA. An expansion would include offering a public option and enhancing Medicaid and Medicare.
Public Option
Another Biden proposal is to offer a public option to compete with private markets. The public option would sit on Marketplace exchanges alongside private plans and be available to the public—even if employers offer coverage. President Biden’s ultimate goal with such a public option would be to create lower prices through price negotiation.
With the addition of a public option, small businesses might not need to offer coverage. However, private insurers would certainly be challenged by having to compete against a federally subsidized alternative.
Medicare
Biden has made it clear that he intends to lower the Medicare eligibility age from 65 to 60. If successful, it could increase participation in the Medicare program by 20 million people.
Medicaid
President Biden will seek an expansion of Medicaid, aiming to provide access to almost 5 million additional individuals. States that have already expanded Medicaid (which several have done in recent years) would have the choice of moving the expansion population to the public health care option as described in the previous ACA section, provided they continue to pay the cost of covering those individuals.
Ultimately, Biden hopes to ensure that people making below a certain percentage of the federal poverty level are covered. Biden would also try to create a program to facilitate automatic Medicaid enrollment for eligible participants.
Tax Credits
Biden hopes to expand tax credit eligibility for families who enroll in health coverage through the Marketplace. The current requirements to receive tax subsidies include a household income no higher than 400% of the federal poverty level. Biden would hope to achieve his plan by eliminating the current 400% income cap on eligibility, which would offer more families access to these tax credits.
Biden also hopes to lower the income cap that a family puts toward health care premiums from 9.86% to 8.5%. If a family has employer coverage but can get a better deal with the 8.5% cap on their premiums, they would be eligible under Biden’s plan to switch to a health care plan on the Marketplace.
Drug Pricing
Drug costs have been increasing for consumers in recent years, and President Biden hopes to reverse that trend. Some specific strategies that Biden has proposed are as follows:
Medicare drug pricing negotiation—Biden supports a requirement for drug corporations to negotiate with Medicare over drug prices. Biden wants this negotiated rate to be accessible for private plans. Federal programs would likely be the driving power behind these negotiations.
Drug price increase limits and new drug monitoring—Although this will clearly face opposition, Biden hopes to limit the ability of drug companies to increase prices. If successful in this effort, Biden would establish a board to oversee prices and recommend reasonable prices for new drugs.
Drug Importation —By using the U.S. Department of Health and Human Services to put controls in place to ensure safety, Biden would like to import drugs from foreign markets to increase supply and therefore reduce costs.
Both sides of the political aisle seem to understand the need to reduce drug costs, so it is possible that Biden will have support from Republicans with these efforts. However, we can expect that Biden’s prescription drug proposals will face strong opposition in Congress and from the private sector.
Billing and Pricing Transparency
The final health care related issue that we’ll briefly discuss in this post is billing and pricing transparency. Surprise billing occurs when a consumer receives care that is unknowingly not covered under their health care plan. A common example is when a patient goes to an in-network hospital but doesn’t realize that a specialist at that hospital is not part of their health plan. Biden’s strategy to combat surprise billing is to prohibit health care providers from charging patients out-of-network rates when the patient has zero control over which provider they see.
Such an initiative may have bipartisan support, as efforts to limit surprise billing were also part of the Trump campaign. Both sides of the political aisle want to see increased transparency in health care pricing and billing.
Key Takeaways
Business leaders will want to pay special attention to what unfolds in the health care world as President Biden now holds office. Fortunately, Biden has left some clues as to what we might expect from his new efforts:
Biden has a vision to increase health care access through programs such as Medicare, Medicaid, ACA, and a public health care option.
Biden seeks to reduce prescription drug costs.
Biden supports efforts to make billing and pricing more transparent.
Multiple COVID-19 vaccines are now being distributed across the world. Initial reports indicate that distribution has been slow, but the pace will surely pick up in coming weeks as more vaccines are produced. The vaccine is the light at the end of a dark tunnel that lasted for the majority of 2020. Many employers are optimistically looking forward to their employees receiving the vaccine, as it will allow operations to return to some form of normalcy.
In this post, we’ll cover the most important things that employers need to be aware of when it comes to COVID vaccine distribution and timelines. Specifically, we’ll cover:
Phases and Priorities for COVID Vaccine Release
Legality of Mandatory Vaccines
Strategies to Encourage Employees to Receive the Vaccine
COVID Vaccine Coverage
Phases and Priorities for COVID Vaccine Release
It’s helpful to think of COVID vaccine distribution in three phases:
Phase 1: Potentially limited supply of COVID-19 vaccine doses available – During this phase with a limited supply of vaccines, efforts will be concentrated on vaccinating priority populations (we are currently in the midst of Phase 1).
Phase 2: Large number of vaccine doses available – During the second phase, enough vaccinations will be available to vaccinate the general population.
Phase 3: Sufficient supply of vaccine doses for entire population (surplus of doses) – During the final phase of vaccine distribution, the focus will be on ensuring equitable vaccination access and continual monitoring of COVID-19 infections.
Even more important than understanding the general phases of vaccine distribution is an understanding of which populations are being prioritized for the vaccine. The following groups of people are considered the top priority for vaccinations:
Healthcare personnel (paid and unpaid persons serving in healthcare settings who have the potential for direct or indirect exposure to patients or infectious materials)
Non-healthcare essential workers
Adults with high-risk medical conditions who possess risk factors for severe COVID-19 illness
People 65 years of age and older (including those living in LTCFs)
Legality of Mandatory Vaccines
Many employers are likely wondering if they can require that their employees get the vaccine. According to the U.S. Equal Employment Opportunity Commission (EEOC), a federal agency that administers and enforces civil rights laws against workplace discrimination, here are some things that employers CAN do:
Require employees to receive COVID-19 vaccinations
However, employers may need to accommodate certain refusals. We’ll explain more about this later in this section.
Ask employees if they have COVID-19 or relevant symptoms.
Screen applicants for COVID-19 symptoms after making conditional job offers.
Require employees to stay home if they have COVID-19 or its symptoms. Requiring medical notes before returning to work is permissible.
Employers should know how vaccines relate to the American’s With Disabilities Act (ADA). Under the ADA, vaccines are considered a medical exam. For an employer to mandate vaccines, they must be job-related and consistent with business necessity. The ADA also allows employers to require that their employees undergo certain health screenings and inquiries depending on the state of employment.
We’ll conclude this section by listing some reasons that individuals may be exempt from a vaccine mandate:
Certain disabilities
Pregnancy
Religious beliefs
Medical documentation can be requested for disabilities and pregnancy.
Before you implement a vaccine mandate at your company, you should consult with your HR leadership and ideally your legal council to make sure you have an agreed upon strategy for managing vaccine exemptions.
Strategies to Encourage Employees to Receive the Vaccine
As explained in the previous section, employers do have the right to require that employees receive the vaccine. However, this doesn’t necessarily mean that they should. A better strategy might be to encourage vaccination rather than requiring it. Requiring the vaccine has the potential to cause serious issues, especially if a large number of employees refuse to comply with the mandate.
Consider the following simple strategies for encouraging vaccination:
Subsidize the cost of vaccines.
Allow paid time off to go get vaccines.
Offer vaccines at the workplace to reduce any inconvenience.
Your local health department has most likely already created vaccine-related educational content that can be shared with your employees to inform them about the facts related to the COVID vaccines.
COVID Vaccine Coverage
An interim rule was passed by several federal government entities on November 6, 2020 that will require Medicare, Medicaid, and private insurers to cover a COVID-19 vaccine without any cost sharing.
For private health plans, this rule implements a requirement in the Coronavirus Aid, Relief and Economic Security (CARES) Act that plans provide coverage (without cost sharing) for qualifying COVID-19 preventive services. COVID-19 immunizations are considered preventive services.
Additionally, plans and issuers must cover qualifying COVID-19 preventive services during the entirety of the COVID-19 public health emergency without cost sharing. This is true regardless of whether an in-network or out-of-network provider delivers the preventive services.
The bottom line is that your business’ healthcare plan will be required to cover COVID-19 preventive services, including the vaccine, with no cost sharing.
Key Takeaways
Employers should know that vaccine distribution will take place in three phases. Unless you are a healthcare, education, or frontline-worker based organization, your employees will probably receive the vaccine during the second phase.
Priority populations for vaccination during the first phase are:
Vaccine mandates for employees are permissible under the EEOC and ADA. However, you should be aware of certain exemptions based on disabilities, certain health conditions like pregnancy, or religious beliefs. Before a mandate in implemented, employers should have a plan in place for dealing with these exemptions.
As a general best practice, it may be wiser to encourage vaccination rather than require it.
Rules approve by several federal agencies require that Medicare, Medicaid, and private insurers cover COVID-19 preventive procedures with no cost sharing. This includes vaccination.
This blog post has been a summary of the most important things employers should know about vaccine distribution. If you are in need of a more detailed breakdown of this topic, download our complete eBook: COVID-19 Vaccine Playbook for Employers.
Having smooth payroll processes in the foundation of smooth people operations. As much as your team likely enjoys their roles, it’s the regular paychecks that keep them coming back to work every day.
Conversely, if your payroll processes have errors or inefficiencies, it can wreak havoc on employee morale. Your employees will never know if the next paycheck will be on time and accurate. At startups where lean teams are tasked with throwing payroll on their to-do list, it’s all-too common for critical errors to be made.
In this post, we’ll cover:
What are Some Common Payroll Mistakes?
How to Avoid Common Payroll Mistakes
Outsourcing Payroll to Mitigate Payroll Risk
What are Some Common Payroll Mistakes?
There are several mistakes that are commonly made with inexperienced or overworked teams tackle payroll.
Misclassifying Employees: Tax laws and benefits contributions are generally different for independent contractors than they are for traditional, in-house employees. If an employee is classified incorrectly, it could cause inaccurate contributions towards benefits and taxes. These types of errors can cause significant headaches for both the employee and the employer as they attempt payroll corrections post-processing.
Failing to Send Tax Forms: Sending out your W-2 and 1099 forms as early as possible after the start of the calendar year can go a long way towards making tax season easier on your employees. On the other hand, if it’s late January and your employees have not receive all the forms they need to complete their taxes, they may be left feeling frustrated and anxious. Remember, many of your employees may be expecting significant returns. If you fail to send out tax forms in a timely matter, you’ll be delaying that refund.
Failing to Keep Complete Records: The Fair Labor Standards Act (FLSA) requires that employers keep three year’s worth of payroll records. The law requires that these records include number of hours worked, pay rates, payroll processing dates, and other key information. In order to protect your company from potential fines and lawsuits, be sure that your payroll recordkeeping practices are functioning properly. Also, be sure to check the local payroll recordkeeping laws where your business is headquartered. Some states require that records be kept for over three years.
Missing Key Payroll Deadlines: Processing payroll is a highly time-sensitive matter and issues with updating entries, working with banks, and more, can cause unexpected delays. Processing payroll just one day late could cause extreme financial issues for your employees, especially for those who are living paycheck to paycheck. Many startups believe they have a concrete plan for ensuring payroll is processed on time each cycle, but they often aren’t prepared for unexpected or irregular issues that come up.
Failing to Accurately Calculate Pay: The final common payroll mistake that we’ll address in this post is perhaps the most significant. Accurately calculating payroll is more complicated than simply multiplying an employee’s hourly rate by the number of hours they worked. When you factor in overtime, commissions, deductions, and PTO, calculating the gross pay for an employee suddenly becomes very complicated. Nothing will make your employees lose confidence in your company faster than receiving an inaccurate paycheck. Work with your whomever on your team is tasked with payroll to make sure all payroll systems and data entered are up to date. As we’ll discuss later in this post, you may even consider outsourcing your payroll to ensure accurate calculations and timely deposits.
How to Avoid Common Payroll Mistakes
There are a few steps that you can take to avoid making the common payroll mistakes we covered in the previous section:
Keep a simple checklist of payroll processes. Even though your payroll process should be largely automated with technology, you should still have a detailed checklist that you can use to make sure payroll is processed accurately each cycle.
Consider running certain reports prior to payroll processing. Running reports like a deductions summary, payroll register, and cash requirement is a great strategy to catch any preexisting errors before they pollute the payroll cycle.
Don’t hold back when it comes to investing in payroll tools. Consult with your HR staff to determine if your payroll systems and technology are modern or out of date. Implementing the right Human Resources Information System (HRIS) for your business can easily make the difference between successful and unsuccessful payroll processing.
Make sure you fully understand what payroll is, especially if you don’t outsource your payroll. As a business leader, you should fully understand the payroll process from start to finish. If you can’t walk through the entire process in detail, don’t be surprised if you experience a payroll error sooner rather than later.
Outsourcing Payroll to Mitigate Payroll Risk
In order to avoid making costly payroll mistakes, consider outsourcing your payroll to an expert third party provider. Outsourced payroll providers are experts in all things payroll-related.
As a business owner, you constantly must worry about all aspects of your business. Marketing, finance, accounting, growth, investments, recruiting, onboarding, acquisitions, mergers, etc…the list could go on and on. Why add payroll—which is such a complex and crucially important task—to that list? Outsource your payroll so that you can focus on what matters most – growing your business! Hand off your payroll to a professional with years of experience avoiding and mitigating payroll risk.
