I don’t claim to be an economist, but I will use this space to relate and comment on what I hear and read regarding the economy.  At a recent United Way of Dane County Board Meeting I was fortunate to participate in a discussion with Dennis Winters, Chief Labor Economist for the State of Wisconsin regarding the current and near future status of our economy.

My takeaways from this discussion were:

• Many of the Government’s economic measurements indicate that this is the worst recession since the 1930’s and the longest in duration in the post-war era.
• Many economic experts says we are at or near the bottom of this recession.  While there is always a risk of another dip, there seems to be light at the end of the tunnel.  And no the light isn’t another train coming at us.
• Consumer confidence is climbing; however, industry is taking longer to turn around.
• Consensus among economists forecasts an upturn in the economy in the late summer or early fall of 2009.  However, unemployment rates will most likely not improve significantly until six to twelve months after the upturn occurs.
• A wild card in the recovery effort will be the banking situation.  If businesses can’t get access to cash from banks to ramp up production the slope of the expected upward trend will flatten.
• Now is the time to invest in human capital.  Increasing the level of competency in your organization pays off in any economy, but the current state of the economy allows this to occur at a lesser cost.
• Employees should be investing in themselves as well.  Employees making more than $30,000 annually are expected to have secondary education along with specialized skills.

Thanks to continued strong growth in our revenue, TASC is weathering the economic storm just fine.  Operational effectiveness and efficiency will be a focus area for us.  Increasing “cash available to invest” is important for a company like TASC, who relies on its own resources and traditional banking (not a public company with no venture capital or private equity, etc.) to fund our growth.  With small operational adjustments that won’t reduce TASC’s level of overall customer satisfaction, TASC will be positioned well for the short-term moves necessary to ensure long-term stability and enhance TASC’s customer relationships.

The headlines are appearing at a frenetic pace.  “Array of Taxes Considered for Overhaul,” Senate Finance Members Look for Ways to Shrink Price Tag,” and “Democrats Work to Pare Cost of Health Care Bill” are just a few that caught my eye this week.  These headlines, of course are talking about the initiative to reform the U.S. health care system.  According to these articles, Legislators are considering everything from lowering the amount of subsidies offered to help uninsured Americans buy coverage, to raising the payroll tax that funds Medicare in an attempt to afford this overhaul of our health care system.

TASC applauds the effort to reform our nation’s health care system and believes that making health care coverage more affordable and accessible is long overdue.  Helping make health care affordable is really at the core of what TASC does.  However, several of the financing options under consideration seemingly run counter to that objective.

The employer-based system and the range of coverage options available have succeeded in extending coverage to millions of working Americans and their families.  I agree with the President when he says that anyone satisfied with the health coverage they currently receive through their employer should be able to keep that coverage.  If I had the opportunity to sit with the President or my Representatives to discuss this issue, the points I would share are as follows:

• Any attempt to materially alter the current exclusion for health coverage will be a burdensome tax on working Americans at a time when our economy can least afford it.
• Many policy makers have pledged to ensure that Americans who like their current coverage will be able to keep it in a reformed health care system.  Any initiative to abolish account-based plans is counter to that pledge.
• Account-based plans lead to better consumer engagement in their health care decisions, which has been shown to help reduce unnecessary health care spending.
• Account-based plans are particularly important for individuals with chronic illnesses. Even if cost-sharing is nominal, out-of-pocket spending for a person with a chronic illness can quickly add up.
• Account-based plans are beneficial in helping working Americans afford health care in areas like dental, orthodontia and vision.  These are areas where traditional coverage falls short or should not be extended.

Now, I am not encouraging or discouraging you from talking to your Legislators.  However, if you are so inclined, these bullets would be a good starting point for that discussion.  Whether or not you have occasion to speak with your Representatives, these remain interesting points.  At the very least, keep these in mind as this process to reform our health care system continues to play out.  More headlines to follow…stay tuned.

It is important to keep in mind that even as the President and others push for a health care reform bill to be sent to the House prior to Congress’ recess this August, that two common occurrences could affect the timing of any proposed legislation.  First, the creation, mark-ups, and the resulting floor action often delays bills.  Second, in a lot of cases, not just one single bill or piece of legislation on an issue is put forth.  For example, in the case of health care reform, at the same time you have action in the House, you may have two actions in the Senate.  Or even more.  At this point, Senator Max Baucus (D-Montana), Chair of the Senate Finance Committee and Senator Edward Kennedy (D-Massachusetts), the Chair of the Health, Education, Labor and Pensions Committee are potential sources of proposed legislation.

It will be important for TASC to evaluate and respond to the multiple proposals and various components of the proposals.  It will be equally important that we do so in a prudent manner.  You will find TASC’s response to be methodical in nature.

Too many times I have seen wasted energy spent on items that are incorrect, premature, or not likely to come to fruition.  A lot will be thrown against the wall, but only a small amount will stick.  Expect TASC to respond in a manner that supports our brand promise:

• Help protect the customer’s bottom line…by not wasting your time in unwarranted areas and instead spending time helping our customers capitalize on valued opportunities.
• Give the customer peace of mind…by keeping you informed of the potential impact these proposals could have on you, on them and on TASC.
• Provide innovative solutions…by placing energy into making health care more affordable, including but not limited to, by retaining the tax exclusion of their health care expenses.

At this time, June 2009, there isn’t any legislation on the floor. On Tuesday, June 4, 2009, President Obama stated that mandates on employers should not include small businesses and that any mandates on individuals requiring them to have insurance coverage should include hardship waivers for those who cannot afford the coverage.  At this same time and not in total alignment with the President or Senator Baucus, Senator Kennedy is expected to unveil a sweeping health care reform plan that requires every American to have insurance and mandating that employers contribute to workers’ coverage.

I suggest that our customers and representatives give this issue two to four weeks to gain a more clear picture.  In support of our previously stated objectives, TASC and TASC’s CEO Blog will remain focused on fact-based communication during this time and keep the opinion-based communication to a minimum.

We knew the push for health care reform and the corresponding debate over health care reform, would eventually heat up.  The idea of health care reform, with the impending debate and its potential impact on our customers’ lives is nothing new for TASC.  We have watched, participated, and reacted to this debate for more than three decades.  I personally have lived through this for the last 26 years.

So what is so special about this time?  Certainly not the fact that health care costs are going up.  We are not going to stop that.  Look at two simple facts: (a) the largest segment of our population are becoming senior citizens, followed by the next largest group moving into their fifties, and (b) our life expectancy is longer.  I am not a scholar, but I can read the writing on the wall.

So what do we do?  We make some changes, shifts, and adjustments to our behavior to contain costs.  And, we attempt to do it in a manner that does not leave even more people behind.  What makes this time so special is the alignment of control in the House, Senate and the administration.  With the legislative and executive branches working together, the potential of making something happen exists now more than at any time in recent history.  This, of course, does not mean something will happen, there’s a lot more to it than that.

The latest debate is about more than just how to finance health care reform.  It includes improving our health care delivery system and the health related behavior of our society.  However, for the purpose of future TASC CEO Blogs we will focus solely on the financing portion of the debate.  Some in the media will sensationalize this debate and will promote the whole idea of “winners and losers” in an attempt to sell more magazines and newspapers.  I will not do that. I am here to help you understand the issues and to continue to serve you as a premier third-party administrator of tax advantaged health accounts and related services.

Each one of the following posts to the TASC CEO Blog will have a link back to this post to remind you and us of why we are here and why we need to be heard.

As we watch our nation’s economy taking baby steps towards turning around, there is still a lot of talk regarding stimulus packages.  While the politicians argue the merits of one package over another, I know of a stimulus package that’s been in place for years.  The one I’m thinking of continues to reap benefits, benefits that bear talking about again and again…  It’s the TASC AgriPlan and BizPlan stimulus package of course!  This tried and true approach is based on saving tax dollars for self-employed individuals and small business owners.

It’s long been known that every dollars that comes into a local economy produces more than just a dollar’s worth of benefit to the community before it leaks back out.  Simply stated, every dollar created by a locally-owned business will turn over many times within that same local economy.  This “Multiplier Effect” purports that a dollar spent at a local business will stay in the local economy for quite awhile.  For example, spend $1 at the corner grocery store, and that dollar will have a good chance of being spent at another local shop; from there it may be used at the farmers’ market before making its way to the local movie house.  Besides turning over as many as six times in the local economy — thereby helping three to four businesses — that dollar is paying local employees, consumers who will in turn put money back into the local economy.

Now, let’s look at the impact AgriPlan and BizPlan can have locally.  The average AgriPlan and BizPlan Client saves $3,000 in taxes just by participating in the Plan.  That means $3,000 extra dollars are available to that small business owner to spend.  The business owner may use some of that savings to pay vendors (most likely other small local businesses) for products and services they use in their business.  They may use some of the savings to pay wages to an employee, who in turn spend some of the wages locally.  And finally, some of that tax savings is spent by the business owners for their own personal needs.

Some economists figure that original $3,000 in tax savings will turn over as many as six times, with the potential multiplier effect climbing to $18,000.  That’s $18,000 fueling the local economy.  And that’s from just one AgriPlan or BizPlan Client saving the average amount.  Now, add several more Clients in one geographical area, and take into consideration the reality that some will save substantially more than the average Client.  I’ve done the math … it’s easy to see what an impact this could have on a local economy.  Now if that doesn’t help Main Street, I don’t know what will!

As Bob Dylan said so many years ago, “the times, they are a-changing.”  This certainly holds true in our industry as we continue to feel the impact of the American Recovery & Reinvestment Act (ARRA) and specifically its impact on COBRA coverage.  So far in 2009, sales of our COBRAToday compliance service are running 109 percent above last year’s sales.  To put this into a little perspective, in all of 2008 we entered and processed a total of 833 COBRAToday applications.  As of April 21, 2009 we have already entered and processed 545 COBRAToday applications.  Between January 1, 2008 and April 21, 2008 we entered and processed only 183 COBRAToday applications.  In 2009, we added 277 new COBRAToday Clients between March 1 and April 30, which represents a 14 percent increase overall in our COBRA Client base.  And this increase in new business — combined with an increase in activity from our existing COBRA Clients and Qualifying Beneficiaries — has impacted our Customer Service team as well.  Just in phone calls alone, we have experienced a 36 percent increase in COBRA related calls since February.

The continued good news: TASC was ready.  We are ready.  Ready, willing, and able to handle this increase in volume.  Our line-up of products and services is diverse.  Meanwhile, we continue to acquire and absorb smaller third-party administrators throughout the country, thereby gaining quality resources to assist with this increase in traffic.  Rest assured that while TASC continues to do the work (in some cases five times more work than usual), we avoid exploiting the situation: we don’t hit our Clients with additional charges.  Sure, you may experience some slight delays when accessing our website, or when calling a Customer Service Representative.  But by in large, these waits haven’t been excessive, and call volume is showing signs of returning to more normal levels.

On the flip side, this increase in the number of Clients needing COBRA assistance has accelerated some of the COBRAToday web improvements that have been underway.  Watch for more information on this development soon.  Also, the increased attention on COBRA has increased interest in two of our new services, ERISAEdge and FMLAMatters.

As always, thank you for working with us and for trusting us with the important job of manging and ensuring the compliance of your benefit plans.  Thank you, especially, as we continue to work through these changing times.

Leadership, as defined by most dictionaries, means “to go before, or with; to show the way; to induce.”  Every organization needs a leader (and preferably several leaders) to “show the way” as the organization strives to define and achieve its goals.  Without leaders at every level of an organization, strategic opportunities may be missed, innovation may be stifled, and employees may be underutilized.  Without proper leadership, many companies may fall short of their goals in customer service, quality, productivity, profitability, and longevity.

On Friday, March 20, 2009 the following leadership changes took place at TASC.  I believe the timing of this transition — the spring equinox — is fitting.  Spring is a time of growth, renewal, and new life.  In that spirit, I am pleased to welcome our new Chief Financial Officer, Steve Cable.  A graduate of the University of Iowa, Steve is the former Chief Financial Officer for Fiskars Consumer Products and Springs Window Fashions.  Steve adds a wealth of complimentary skills to the experience and skills of TASC’s Executive Vice President of Finance Maurie Ash and Corporate Controller Angie Justman.

Going on 10 years with TASC, Pam Reynolds is TASC’s new Chief Development Officer.  In addition to her tenure with TASC, Pam has a degree in Human Resources and six years of experience with Boeing, formerly known as McDonald Douglas, where she served as a financial analyst and worked on strategy and quality systems in the assembly division.  Her new responsibilities will include a greater emphasis on Planning and Strategy, Product Development, and Effective Change.

Ken Odom is moving into the role of Executive Vice President of Acquisitions and Alliances.  Ken has clearly demonstrated his abilities in this area and we are poised to further capitalize on his talents.  As our new Vice Presidents of Group Division Sales and Microbusiness Division Sales respectively, Andy Bartel and Jack Hippen will lead the charge for new revenue.  In addition to growing TASC’s market share, their teams will represent TASC in the market with integrity.

In our final leadership change, I am equally pleased to announce Steve Cretney as TASC’s President and Chief Operating Officer.  With this move the organization is better positioned to be innovative and to effectively make the most  of our employees so we may achieve our goals for customer service and sales.  Since joining TASC Steve has shown what he is capable of and has demonstrated his ability to lead.  Positioned as Steve’s right hand man is TASC’s new Executive Vice President of Operations, Tim Kempf.  Tim’s 16 years at Marquip, combined with his nine years at TASC has equipped him with the human resources, customer service, and quality skills and experience needed to lead this challenging area for TASC.

Some of you may be asking what this means for my future with TASC.  If you assumed I’d be checking out, let me assure you that nothing could be further from the truth.  I am more energized than ever about the future here at TASC.  While it’s true I gave up the President title at TASC, I am still Chief Executive Officer.  Going forward, these changes will allow me more flexibility to pursue my continued commitment to active philanthropy.  In addition to sitting on the United Way of Dane County Board of Directors, I have also recently joined the Boards of the Meriter Foundation and the American Family Children’s Hospital.

My focus at TASC remains on building synergy between strategy, operations, and financial, with a continued emphasis on our growth.  I will work diligently to accomplish our vision and mission, to maintain our culture and values, and to instill a sense of purpose and passion in our team of employees.  The work that TASC undertakes is important to us all.

Recent COBRA developments caused by the American Recovery and Reinvestment Act have provided a good opportunity to compare how different third-party administrators handle change.  While some use the change to scare consumers, TASC holds strong that now is no time to use fear as a tactic.  Not ever…and surely not during a down economy.  Surely not when many Human Resource Departments are already over-taxed.  So you won’t hear TASC talking about the “sky falling” or using terms like “code blue” to scare you.

We also believe it is not wise to be the first to act just for the sake of being first.  Instead, we believe it is far more important to have an approach that is valuable and stable, one that focuses on solution and execution.  That’s TASC’s approach.

TASC is doing everything in its power to help Clients — existing Clients and those who are yet to join us – by accomplishing the large task in front of us right now.  Specifically, that task is a challenging one: notifying those terminated employees who are now eligible for a subsidy to help pay for their COBRA coverage.  And we are doing this without regard to generating any additional fee revenue.

This is the point: Unlike some of our competitors, TASC isn’t capitalizing on this development to make some quick cash.  TASC is capitalizing on this change through effective execution, which can only lead to solid Client relationships and solid growth through word-of-mouth. 

That’s the difference between TASC and the competition; TASC has a genuine concern for our customers.  We’re in this for the long-run.  We think long-term, we act long-term, and we will be around to serve you long-term.

Pick up any business related publications these days, and you are sure to run into one or more articles about surviving the recent downturn in our nation’s economy.  At TASC, we have our own strategy for doing far more than just surviving a recession.  In fact, we have strategies in place for thriving in these challenging times!  My guide for growing a business follows; I think it’s pertinent no matter the economic climate.

Most of the articles I’ve read stress maintaining tight control over your financials, touting this strategy as a key to surviving in rough times.  At TASC, we’re also concerned with achieving a tight control over our financial situation.  This means we will continue to stress the timely collection of our account receivables, be these administration fees or account contributions.  Further, our emphasis on receivables means we must actively manage our customer credit.  I know some may think that TASC doesn’t extend credit to Clients… But look at it this way: we are in fact extending credit each and every time we pay a Participant’s reimbursement before we’ve received the contributions to cover the reimbursement.  TASC is going to remain diligent to ensure the timely collection of account funding.

Let me provide more perspective on this issue.  TASC annually collects roughly 35 million dollars in administration fees.  By contrast, we collect about 10 times that amount in account funding.  Why wouldn’t this be an area of high concern for TASC?  We will continue to use traditional methods and accepted business guidelines when developing procedures for collecting our fees and account funding.  We will continue to tightly manage customer credit by segmenting customers based on their credit risk.  After all, it is always prudent to be careful about the extending credit.

What can you do?  Make sure the vendors you depend on are stable, whether they’re providing goods or services.  This includes your banker, your printer, your office supply store…even TASC.  We in turn are following our own advice; we’re taking steps to ensure that all of our vendors are stable.

At TASC we are in a fortunate position indeed.  We offer services that make health care affordable and reduce taxes, and these services are in demand no matter the state of the economy.  Our corporate structure is stable and our leadership is strong.  Meanwhile, we are very good at managing risk, and we have enough mass to ride out economic downturns.

Saying that, I want to stress that we are looking hard at our business, as always, to ensure that we continue to thrive.  We continue to look for ways to cut costs without reducing the value of our services.  Watch for us to continue to cut unproductive services and to eliminate wasteful procedures.  We’ve already found many ways to cut costs and add value at the same time.  For example, by eliminating or reducing paper checks we save money, simply because it’s less expensive to use the web or other electronic methods to move money.  And they’re not just less expensive; electronic Participant reimbursements are more secure and faster than paper reimbursements.

Looking for ways to eliminate waste is good for business, no matter the economic climate.  And being strict about limiting credit is good for TASC, no matter the economic climate.  Simply put, these are sensible building blocks for any good business, be the weather foul or fair.

Our nation is going through some tough economic times.  A part of the new stimulus package being debated in Washington includes an expansion of COBRA coverage.  With the recent announcement of massive layoffs, it’s easy to see the dramatic effects this legislation could have on workers and employers alike.

Under current law, COBRA provides for continued health coverage through a previous employer’s  health plan; said coverage may extend for up to 18 months for most people, but they must pay 102 percent of the cost of that coverage.

Specifically, the House version of the bill contains three COBRA components:

1. A temporary subsidy for COBRA premiums to enable people who have been involuntarily terminated from their jobs to maintain coverage they had through work,
2. New options for states to extend healthcare to unemployed workers through Medicaid, and
3. An extension of COBRA eligibility (without subsidies) for long-term employees and older workers.

Besides affecting workers, if these new provisions become law our country’s businesses will face additional and unavoidable challenges, simply because COBRA administration is laborious and exacting in the first place, without the added components mentioned above.

TASC is ready to help.  We are well prepared to address the first component, as we have the infrastructure and the experience already in place to help employers collect the government subsidies (which will in turn help pay the COBRA premiums). After all, this added step is not far from our current COBRA administration services in which we collect these funds from employees who have elected COBRA coverage.

The second component offers TASC an opportunity to move into the institutional services area.

The last component is interesting as well.  Under this provision, COBRA-eligible workers who are age 55 or older, or who have worked for an employer for 10 or more years, would be able to retain COBRA coverage, at their own expense, until they become Medicare eligible at age 65 or secure coverage through a subsequent employer.  This sounds very much like a new product that TASC is already developing (hopefully for release later this year).  Through a recent acquisition in Rhode Island, TASC has obtained a Retiree Billing product that would serve us well in helping employers deal with long-term COBRA coverage.

TASC will continue to monitor the progress of this bill, and others like it.  We’re always looking for opportunities to bring more value to our customers.