Why a 401k Is Good for Business | R.J. Hedges Podcast
Becky Templeton
/
Fri, May 5, 2023
Independent pharmacy owners embody the spirit of entrepreneurship. They not only serve their communities with exceptional professionalism but also navigate the complex landscape of federal regulations with unwavering compliance.
Additionally, pharmacy owners must create a positive work environment to retain employees. A significant aspect of employee retention is the benefits package.
In a recent SharkPreneur Podcast episode, our very own Jeff Hedges sat down to discuss his company and its employees, the importance of protecting your employees and your business, and why it’s good business to provide your employees with a robust 401k matching program.
Jeff began his discussion with Diane, the host of the SharkPreneur Podcast, by discussing his journey from the Air Force to the world of healthcare compliance. He jokes that, even though this is R.J. Hedges’ specialty, no sane person wants to handle healthcare compliance for independent pharmacies.
Back in 2006, R.J. Hedges worked solely with HIPAA compliance. But, as rules changed for durable medical equipment and pharmacy regulations started getting more strict, Jeff and his team soon expanded their services. At this point, R.J. Hedges provides compliance services for everything an independent pharmacy handles.
To satisfy over 500 clients, Jeff needs a great team around him. That’s why, on top of being flexible and offering good wages, R.J. Hedges offers a full healthcare package to employees. Additionally, R.J. Hedges offers a very robust 401k, matching 3% and another 4% for profit sharing and safe harbor. Due to the difficulty of establishing a 401k, R.J. Hedges has a multiple employer plan, which allows their clients to join in.
At this point, the conversation naturally returned to noncompliance issues. As a business owner offering a 401k, Jeff says he must be aware of what he’s legally responsible for. For example, the person that signs Form 5500 is legally responsible for the 401k plan’s compliance. If the plan is found to be non-compliant, the signee is the one getting the fine.
That’s why, if you’re a business owner offering a 401k plan, it should be your job to fill out Form 5500. You need to protect your staff, and you have to be on top of your own plan. You should know what’s going on and ask questions about anything you don’t know.
Speaker 1:
Welcome to the Shark Preneur Podcast, with Kevin Harrington and Seth Green.
Kevin Harrington is the inventor of the infomercial, one of the original sharks from the hit TV show, Shark Tank, and has generated over $5 billion in TV and digital direct response sales.
Seth Green is the world's first trusted authority on cutting edge, direct response marketing, a best-selling author and the only three time marketer of the year nominee on the podcast.
Kevin and Seth interview Shark Preneurs who share straight talk on what it takes to explode your business.
Kevin Harrington:
Why do so many businesses struggle while others seem to explode overnight? Do you wish you had the secret to this type of exponential growth? Now, I've scaled more than 20 businesses to over $100 million, and it's not just luck. In my new book with Mark Timm, Mentor to Millions, you'll learn the repeatable framework I use in all my business ventures for massive success. Order at kevinmentor.com and get over $1,000 in bonuses. Head to kevinmentor.com.
Dianne:
I'm with R. Jeffrey Hedges from RJ Hedges Associates, and he's very kindly agreed to be interviewed by me today, so thank you.
Jeffery Hedges:
Well, thank you, Diane. And I go by Jeff.
Dianne:
And I go by Diane.
Jeffery Hedges:
Okay. Good.
Dianne:
So I'm like you. My first name is Jacqueline.
Jeffery Hedges:
Yes.
So.
My first name's Raymond.
Dianne:
Raymond? Okay. So we're two alike, right?
Jeffery Hedges:
Yes.
Dianne:
Okay. So I'd first like to start with some basic background questions. So how did RJ Hedges get started?
Jeffery Hedges:
Well, I came out of the Air Force, retired, and then looked... Went to work for a company and then worked there for a couple years and then I started this business, which pretty much found me because no sane person would do healthcare compliance for independent pharmacies, but that's our specialty.
Dianne:
Great. So what's your ideal customer, I guess is my next question for you?
Jeffery Hedges:
Our ideal customer is an independent pharmacy with anywhere from five to 30 employees. We do have larger clients who go up to over 200 employees, but that's our best range right in there.
Dianne:
So most of your clients in Pennsylvania or are they all over the country?
Jeffery Hedges:
No, it's all over the country. We have clients in all states, from coast to coast and Alaska as well as Hawaii.
Dianne:
So what do you do for your customers?
Jeffery Hedges:
We provide all the compliance requirements that they need to meet all the alphabets, DEA, FDA, House and Human Services, the State Pharmacy Boards requirements, the Pharmacy Benefit Managers requirements who enforce Medicare part C and D. And there's a whole hodgepodge of regulations which require the pharmacy to have policies and procedures, specific forms. They're required to do specific training, and we provide everything on our own proprietary platform.
Dianne:
So describe your ideal customer.
Jeffery Hedges:
Ideal customer is a pharmacy owner, has one or two pharmacists working for them, anywhere from two to four technicians and two clerks. So it's basically the ideal client.
Dianne:
So how does a prospect or a customer find you and your company?
Jeffery Hedges:
Well, there's a lot of ways, but trade shows have sort of waned. A lot of people don't go to them anymore. The virtual podcasts are not, no one's getting any good results off that. Magazine ads, no one has time to read them. We do advertise in a couple, but mainly it's through Google searches and that's how they find us. And referrals.
Dianne:
Okay, great. So how has your business evolved over the years?
Jeffery Hedges:
Well, we started back in 2006, we were only doing HIPAA compliance. Then the rules changed for durable medical equipment. We added that and OSHA, human resources. And then when the pharmacy regulations started coming in more tight, we do all types of pharmacies, non-scale compounding, immunizations, diabetic shoes, and there's a whole host of things that we do. Basically, anything that the pharmacy does in their pharmacy, with the exception of actually dispensing the medications, we provide those compliant services for them.
Dianne:
Wow, so you're very busy then?
Jeffery Hedges:
We are quite busy.
Dianne:
Good. So tell me a little bit about the team that you've built.
Jeffery Hedges:
The team I have is phenomenal. It's probably one of the best teams I've ever had, including all of the teams I had in the Air Force. The ladies are pretty much all stay home moms or stay home grandmas. They have full benefits, good wage, and they have the flexibility to take care of their family and work full-time job. It's not nine to five. They can start early. They can start in the evening. The biggest thing is that they are available to their clients wherever they may be.
Dianne:
That's great. And my next question was why do they like to work here? But I think you've already answered that.
Jeffery Hedges:
I don't get any complaints. I get a lot of people that are asking to come to work for us, so apparently we got it down.
Dianne:
Okay. So other than the flexibility and time, and what other type of benefits do you offer them?
Jeffery Hedges:
Well, we do a full healthcare, we offer healthcare to our employees, so they have a choice whether to do it. We're matching 35% this year. So we had to increase that because of all the fees are coming from all the healthcare insurances. The benefit packages, as far as time off they get four personal days. They get, we give a lot of holidays, holidays that most people don't do because we give the day after Thanksgiving off. We also give Good Friday and Easter Monday off, because the kids are home. And if the kids are home, mom can't work. So that's what we deal with, that's why we're family friendly.
And then our 401k. We have a very robust 401k. And so my employees put in a minimum of 3%. I put in a matching up to 3%, but then I add another 4% for profit sharing and safe harbor. So, and we do it every paycheck, rather. Most companies do it at the end of the year, but you don't have that much money at the end of the year. But if you do it every pay life is really easy. It makes it your payroll easy. It's not that much up upfront, but it accumulates very fast. And basically my employees get 10% of their wage, including their bonuses put into the 401k.
Dianne:
Well, that sounds wonderful. So how do you decide any other benefits that you want to offer or that you have offered?
Jeffery Hedges:
I'm sorry?
Dianne:
What other... How do you decide which benefits or what benefits you offer in the future? I mean, how did you decide on the 401k, and then what do you think the future's going to offer?
Jeffery Hedges:
Yeah, we move with the times. We used to offer... We did used to not have health insurance and then it became more and more important. So we offered it to our employees. We started off with matching 25%, or put that in, and then we increased the 35% this year because of the healthcare systems.
Dianne:
So what has been your biggest challenge in attracting and retaining talents? And I think you probably answered that. If they're calling you to work for you, then I think you've got that down. But are there other challenges you have?
Jeffery Hedges:
Right now, I got a great team. Over half my staff has been with me for over 10 years. We don't have a lot of turnover, so it's good. It is hard to find candidates. Our clients are desperate to find employees. But one of the things we find is when we do advertise, we get these applications and resumes and the people don't check. They don't check their spelling. They don't check their grammar. So when you get that, you only got a minute or two to review it. And as soon as you see misspelled words or improper grammar, they get thrown into not-for-review pail, and really fast. And my staff reviews a lot of them before they even make it to me.
Dianne:
That's good. So with all the changes in the benefit world, how do you stay on top of it all?
Jeffery Hedges:
Well, my average reading is not reading mysteries or anything like that. I read federal law and I read all the different regulations and it's ever-changing. We have a new standard that came out for non-steroidal compounding. So I'm working on our policy and procedures and programs for that. We know HIPAA is going to be changing in the spring, and that's a whole different ballgame, because the current version was written in 2013. 2013, we had the iPhone 4. So technology has kind of changed since then.
Dianne:
Yeah, just a little bit, huh? Yeah. So since you have a 401k, are you aware that you could legally be liable for any noncompliance issues?
Jeffery Hedges:
Absolutely. Yeah, you have to, as a business owner having a 401k, you have to have a team with you working with your third party administrator. Whoever's benefit managers are, we have an oversight board that looks at it, makes sure it is. And we also have a multiple employer plan, which is new because a lot of our clients can't get into a 401. So we offer that to our clients as well.
But you have to know what is in your plan. You have the correct options for your employees. You want a lot of them so they can choose because every person's different and what their needs are going to be. And then I'll... What I found is a lot of our clients, they don't even know what a 5500 is or someone else signs it for them. And with our multiple employer plan, we found out that they have no clue that when they sign it or someone signs it for them, that they are legally responsible for everything on that plan, the good, the bad, and the ugly.
Dianne:
So you're the person who signs yours, correct?
Jeffery Hedges:
Absolutely.
Dianne:
So how would you feel if, say one of your other employees signed it and then you found out that the plan was non-compliant and that person gets fined for it? Because are you aware that the person who signs the 5500 is the one who's legally responsible?
Jeffery Hedges:
Yes. And that's why if you're a business owner, that's your job. You got to protect your staff. You got to protect everything around you. And it's your 401K plan, so you have to check your own plan, ask questions, and know what's going on.
Dianne:
So just hypothetically, how would you feel if one of your employees signed the 5500 and they got fined? Because you can't step in as a business and pay that fine. It's legally theirs.
Jeffery Hedges:
How would I feel on something that would never happen? I would be shocked. That'd be the biggest thing. I would be shocked if I had a problem with my plan because I have a good team around me.
Dianne:
Okay. So when was the last time your 401K person came in to see you and to talk to your employees?
Jeffery Hedges:
Well, we actually have it scheduled on March 1st. They're coming in for doing a review.
Dianne:
Great. And what about the health insurance person? Does he or she come in on a regular basis to talk?
Jeffery Hedges:
She's available when she comes in. Most of the time she just talks to our employees individually and works through our in-house accountant.
Dianne:
Great. And are you aware of the Supreme Court's 401k ruling that affects all 401K plans?
Jeffery Hedges:
Yeah, it's oversight and there's a lot of crazy things going on with them. The more reg-, and we find in our industry, the more regulations you put on, the more chances for fraud to occur.
Dianne:
Yes, but that does happen in a lot of cases. So are you aware... So what do you like best about what you do as far as offering the 401k plan to your client, to your employees?
Jeffery Hedges:
Well, so our employees and/or our clients, with the multiple employer plan. You have to understand what the plan is. It has to have multiple functions, multiple plans. On some of the reading preparing for today's podcast, I was amazed at the lawsuits that companies or plan administrators would only offer two or three items, are plans for the employees to choose from. That doesn't sound right. And that's where the class action lawsuits seem to be coming from. I think we have 45 options, plans that our employees can select parts or whole right out of them on their choices.
Dianne:
Well, it sounds like you have things under control, but let me ask you, since you've signed the 5500, have you ever asked your TPA to sign?
Jeffery Hedges:
No, that's my job.
Dianne:
So if you did, what do you think they would say?
Jeffery Hedges:
I don't know. It's my job. I'm a business owner. It's my plan. It's my responsibility. And if someone's having someone else do it, they're not doing their job as a business owner taking care of their employees.
Dianne:
So would you find it a better solution to make sure that your plan is compliant, rather than rely on someone else and have to sue them when it's not?
Jeffery Hedges:
That's a hypothetical that would never enter my mind. But if there's a fine, I mean, whoever pays it, it's again, it's my responsibility as a business owner. To sue someone else for your lack of paying attention seems kind of bad.
Dianne:
So has your TPA or someone else told you that your plan is in compliance?
Jeffery Hedges:
Yes.
Dianne:
They have. Okay.
Jeffery Hedges:
Yeah, we just went through a review, so we're in good shape.
Dianne:
Okay. Well, I want to really thank you for taking your time and meeting with me and answering my questions. And I hope everyone gets to see this and learns about your company, because you have a great little company here.
Jeffery Hedges:
Okay. Well thank you. And we try to do our best for our clients and independent pharmacies. We do have other small healthcare practices we help. And then if you have a 401k and you're a business owner, if you don't know the things we've talked about here, you need to get smart quick.
Dianne:
Well, thank you.
Jeffery Hedges:
Okay, well thank you and have a great day.
Dianne:
You too.
Speaker 5:
Do you need money to fund your idea, product or service? Are you ready to take your business to the next level but need capital to get it done? Kevin Harrington has heard more than 50,000 pitches and knows how to help you make the perfect pitch to get the funding for your entrepreneurial dream. He's distilled the process down in his perfect pitch cheat sheet, and it's yours for free. Just text pitch to him right now at (727) 888-2100. Text pitch to (727) 888-2100 right now, and claim your free perfect pitch cheat sheet. Text pitch to (727) 888-2100 to start funding your dream today.
Speaker 1:
This show has been produced by Market Domination, LLC. To discover how you can have your own show completely done for you and turn it into a real published book and become the authority in your marketplace, go to www.marketdominationllc.com/podcastoffer.
