As more and more benefits require tax reporting, such as 1099s, W2s and the like, employers are struggling to comply and looking to their adviser for help. Jeff Cronin, VP of product at Sovos, a third-party filer of 1099 and 1042s forms, spoke with EBA about how the company is now working with employers and advisers.
EBA: What is your history with HR professionals?
Cronin: Our history has been working with HR departments directly on a smaller-scale basis in the 1099 and in some cases for companies who were managing their own payroll, W2 processing on the tax side. There are always challenges with other benefit programs that had tax-reporting obligations, such as sick leave, where they need help.
We started this whole transition before the Affordable Care Act came out. We held a joint session between HR professionals at the companies that we serve and the health insurance companies, where we sat down and said, ‘This ACA is coming up. We don’t have any regulations; we don’t know who is going to be responsible, but it is very likely it is going to be some combination of ACO providers, the health insurance companies, vendors, or the HR departments who will have this obligation.’ We started a process going back then to make sure whichever way that ended up going we had a set of solutions in place to help drive the correct compliance requirements.
Also see: "
EBA: How do you work with brokers?
Cronin: It came to be that once the regulations settled, that naturally led to relationships with the benefit broker side. As the obligation became clear that the majority of the compliance requirement was sitting in the HR department and the HR department was looking for help. They turned to their benefit broker for recommendations about how to comply with the regulations. It was a natural move for us there as well.
Repeal the ACA. Build upon health reform. Increase consumer choice. Eliminate monopolies. The two candidates are divided on some policy, but there is also common ground in their proposals.
In the majority of the situations it has been that the broker partners with us, we provide them with materials, educational programming and we do events for their customers — strictly educational, not sales — around compliance.
Then, the broker in the field will refer us to their clients when the clients need solutions. In the majority of cases the brokers are acting as a third-party consultant when referring their customer to an ACA reporting provider. And in many cases, the brokers have more than one provider. So for us it about providing a best relationship with them.
EBA: What is the commission structure like with a broker?
Cronin: We have several structures in place. In some cases, the brokers are receiving discount from us, in terms of being able to offer their end customer a better rate. Brokers themselves also will be running consulting programs. In very few cases, we have seen the broker willing to look at or consider more financial benefits for themselves in the process of referring, because they want to keep their independence.
We would be happy to discuss that with them, but it is there decision to stay independent and talk about the benefits of selecting a provider. I really respect the fact that the broker community is more interested in serving their customer and managing their product than necessarily lining their pocket.
