Category: Benefits

Did You Provide the Model ACA Notice to Your Employees?

Under the ACA employers were required to provide existing employees with a copy of a Model Notice, depending on whether you offer insurance or not. The notices can be found here. Click here to read the technical release that explains the use of these notices. A FAQ is provided at http://www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html. You must provide these notices to new employees within 14 days of employment. There is currently no penalty for not providing these notices so don’t sweat it if you do not, but it remains good practice to do so. Lastly, if you intend to provide them electronically, make sure you meet the technical requirements identified in this memo.

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Warning Issued Regarding Using Payroll Debit Card to Pay Workers

In the age of technology, some businesses are opting away from issuing paychecks to employees. Instead, some are choosing to pay employees using payroll debit cards. This practice recently attracted scrutiny, however, after a former worker at a large fast-food chain filed a class-action lawsuit alleging employees were not offered the chance to be paid by check.

In response to the garnered attention, the Consumer Financial Protection Bureau issued a bulletin warning employers against using only payroll debit cards to pay workers. The Bureau said that employers cannot mandate that employees receive wages on a payroll debit card chosen by the employer and that workers must be able to choose their own form of payment for wages. As a result, employers must offer alternatives, such as direct deposit into a bank account or a paper check. Furthermore, if employees choose to be paid with payroll debit cards, they are entitled to protections such as disclosure of fees associated with the cards.

The Bureau found that payroll debit cards can carry fees that are not clearly disclosed. For example, fees may include a $1.50 minimum charge for an ATM withdrawal, $5.00 for an over-the-counter cash withdrawal, $1.00 to check the card’s balance, up to $1.00 for each online bill payment, and $15.00 to replace a lost or stolen card. These mandatory fees can cut into the employee’s earnings such that it may drop those earnings below the applicable minimum wage.

While the majority of states do not have actual laws governing payroll debit cards, the departments of labor for most states have weighed in with guidance for paying employees in this manner. If you currently utilize payroll debit cards, or are considering using them, please contact your Elarbee Thompson attorney to review state laws in concert with the Bureau’s recent warning bulletin.

Article provided courtesy of Worklaw® Network firm Elarbee Thompson (www.elarbeethompson.com)

 

EBSA Clarifies New Posting Requirement Due on Oct. 1

While the DOL wants you to issue insurance coverage notices, they say there will be no penalty assessed if you don’t. As if that makes sense. To read more, click here.

Retirement Plans and Your Fiduciary Responsibilities

The Department of Labor’s Employee Benefits Security Administration updated its website with the following:

Getting It Right – Know Your Fiduciary Responsibilities webcasts will increase awareness and understanding about basic fiduciary responsibilities when operating a retirement plan. Getting it right can be challenging. This is especially true for small and medium sized employers who have limited time, resources, and access to professional help with benefit programs.

Specifically, getting it right means:retirement

The EBSA also posted this Field Assistance Bulletin re Required Annual Fee Disclosure 2013-02.

A Conversation with Dr. Wendy Lynch on Reducing Health Care Expenses

Dr. Wendy Lynch wrote the book Who Survives? How Benefits Costs Are Killing Your Company. Long story short, Dr. Lynch was a wellness consultant who ran into Dr. Hank Gardner, who had been maintaining data on employee health costs in his role as president of the Human Capital Management Services Group. Dr. Garner encouraged Wendy to reconsider her position, claiming that wellness initiatives are not what drive down health care expenses.

After getting pounded with enough data by Dr. Gardner, Wendy capitulated and now goes around the country helping employers understand the most important drivers of health care expenses.

health care costsDr. Lynch, Dr. Gardner, and I are in agreement that people are about as healthy as they choose to be. Perhaps the greatest incentive they have to keep themselves healthy is that they only get paid when they come to work. For example, all three of us are dead against the whole notion of sick pay because it rewards illness absence and punishes those who take care of themselves and show up, which makes it doubly insane that cities like San Francisco and Portland have now mandated sick pay for their employees! As age-old wisdom has it “You get what you focus on.”

The bottom line is that Washington wants employers to take care of employees so the government doesn’t have to. According to the data shared by Wendy:

  • Trying to change the health of a workforce with wellness interventions fail more often than has succeed
  • Even employers who have dozens of health-improvement programs have increased health care costs and absenteeism.
  • No single program always improved health and no single improvement always decreased cost.

According to Dr. Lynch the three most important factors in reducing healthcare costs are:

  1. Employees have an opportunity to earn more than 10% higher income by improving their work performance
  2. Absence policies combine sick and vacation into paid time off and employees receive less than 100% pay for an extended absence such as a short-term disability
  3. The company provides a large portion of employees with relevant and meaningful skills training and opportunities each year.

According to Dr. Lynch these variables can affect productivity by as much as 40% and benefit costs by as much as 25%.

We all agree that wellness is a noncontroversial mission with an altruistic message. It feels good to deliver it. And wellness is in fact important and does in fact affect productivity, absenteeism, presenteeism, etc. The challenge is believing that a company can actually control the level of employee wellness. While you might be able to encourage it, thinking that you can control it through punishing incentives is nonsense. Employees who don’t take care of their health punish themselves far greater than any employer ever could!

It’s all about incentives. When you align incentives into an effective work relationship you will lower medical costs, disabilities costs, workers compensation costs, turnover rates, and increase revenue and productivity.

One of the greatest challenges with medical plans is employees don’t feel like they’re spending their own money. People will spend your dollar much more frivolously than they would ever spend their own. There is literally no shared responsibility in the equation, especially where you have things such as $10 co-pays for an office visit. I’m particularly excited about Dr. Lynch’s work because of my own personal insurance buying approach. I have never bought healthcare insurance for my employees. I don’t believe it’s my job to take care their health. I do however encourage my employees towards good health. I do give them additional pay so that they can buy their own health insurance. And I encourage them to treat their health insurance the way I’ve treated mine – get a high deductible plan, build up an HSA or HRA, take care of your health, and when necessary, shop carefully for your medical services because you’re paying for most of it. I use healthcare insurance only for catastrophic losses that exceed $6,500 per family member per year. As a result I’ve been able to save over $40,000 in my HSA account and I pay much less for health care insurance than my neighbor.

Dr. Lynch is also a big fan of total compensation statements as am I. There’s a sample Total Compensation Statement form in the Miscellaneous section of the personnel forms of HR That Works.

Without going further, I greatly encourage you to pick up a copy of Wendy’s book Who Survives? and to also join us for her webinar on August 1st. Wendy also encourages you to consider the book Why Nobody Believes the Numbers by Al Lewis.

IRS Releases Transitional Guidance Notice

The IRS has released a Transitional Guidance Notice. Bottom line: once the information reporting rules have been issued, employers and other reporting entities are encouraged to voluntarily comply with the information reporting provisions for 2014. This transition relief through 2014 for the information reporting and Employer Shared Responsibility Provisions has no effect on the effective date or application of other Affordable Care Act provisions.

Affordable Care Act Info from the EBSA

The Department of Labor’s Employee Benefits Security Administration updated the Affordable Care Act information on its website with the following:

Employer-Mandate of the Health Care Reform Law Delayed Until 2015

In an unanticipated announcement by U.S. Department of the Treasury in an blog posting yesterday afternoon, the Obama administration has delayed for a year the employer-mandate, commonly referred to as “play or pay” provision, of the Affordable Care Act (“ACA”). So as to implement the ACA in a “careful and thoughtful” manner this was posted. According to the Treasury “we expect to publish proposed rules implementing these provisions this summer”. We’ll let you know when they do!

Now everyone can take a deep breath. It would be nice for the Administration to get its act together so implementation of these laws don’t cause unnecessary stress and confusion!

Patient Centered Outcomes Research Fee

The IRS has released information on the employer’s Patient Centered Research Fee tax. As a result of the Affordable Care Act, IRS form 720 has new line on it as follows:

IRS 133 Form 720

As stated in the instructions

What's New - IRS 133 Form 720

The patient-centered outcomes research fee is imposed on issuers of specified health insurance policies (section 4375) and plan sponsors of applicable self-insured health plans (section 4376) for policy and plan years ending on or after October 1, 2012. Generally, references to taxes on Form 720 include this fee.

Specified health insurance policies.

For issuers of specified health insurance policies, the fee for a policy year ending before October 1, 2013, is $1.00, multiplied by the average number of lives covered under the policy for that policy year. Generally, issuers of specified health insurance policies must use one of the following four alternative methods to determine the average number of lives covered under a policy for the policy year.

1. The actual count method.

For policy years that end on or after October 1, 2012, issuers using the actual count method may begin counting lives covered under a policy as of May 14, 2012, rather than the first day of the policy year, and divide by the appropriate number of days remaining in the policy year.

2. The snapshot method.

For policy years that end on or after October 1, 2012, but that began before May 14,

2012, issuers using the snapshot method may use counts from quarters beginning on or after May 14, 2012, to determine the average number of lives covered under the policy.

3. The member months method and, 4. The state form method.

The member months data and the data reported on state forms are based on the calendar year. To adjust for 2012, issuers will use a pro rata approach for calculating the average number of lives covered using the member months method or the state form method for 2012. For example, issuers using the member months number for 2012 will divide the member months number by 12 and multiply the resulting number by one quarter to arrive at the average number of lives covered for October through December 2012.

Applicable self-insured health plans.

For plan sponsors of applicable self-insured health plans, the fee for a plan year ending before October 1, 2013, is $1.00, multiplied by the average number of lives covered under the plan for that plan year. Generally, plan sponsors of applicable self-insured health plans must use one of the following three alternative methods to determine the average number of lives covered under a plan for the plan year.

1. Actual count method.

2. Snapshot method.

3. Form 5500 method.

However, for plan years beginning before July 11, 2012, and ending on or after October 1, 2012, plan sponsors may determine the average number of lives covered under the plan for the plan year using any reasonable method.

Reporting and paying the fee.

File Form 720 annually to report and pay the fee no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies. If you file Form 720 only to report the fee, do not file Form 720 for the 1st, 3rd, or 4th quarters of the year. If you file Form 720 to report quarterly excise tax liability for the 1st, 3rd, or 4th quarter of the year (for example, filers reporting the foreign insurance tax (IRS No. 30)), do not make an entry on the line for IRS No. 133 on those filings. Deposits are not required for this fee, so issuers and plan sponsors are not required to pay the fee using EFTPS.

Report the average number of lives covered in column (a) and multiply by the rate in column (b). Combine the fees for specified health insurance policies and applicable self-insured health plans and enter the total in the tax column on the line for IRS No. 133.

For more information, including methods for calculating the average number of lives covered, see sections 4375, 4376, and 4377; also see T.D. 9602, which is on page 746 of IRB 2012-52 at www.irs.gov/pub/irs-irbs/irb12-52.pdf. Also see http://www.irs.gov/instructions/i720/ch01.html#d0e128

Seasonal Workers and the Affordable Care Act

The DOL has issued the regulations on the Affordable Care Act which in part address seasonal workers. As indicated in the regulations these are not limited to agricultural workers or retail workers. Think of workers at golf clubs or summer camps for example.

Seasonal Workers

Section 4980H(c)(2)(B)(ii) provides that if an employer’s workforce exceeds 50 full time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, the employer is not an applicable large employer. Notice 2011 36 provided that, for this purpose only, four calendar months would be treated as the equivalent of 120 days. In response to comments, and consistent with Notice 2011 36, these proposed regulations provide that, solely for purposes of the seasonal worker  exception in determining whether an employer is an applicable large employer, an employer may apply either a period of four calendar months (whether or not consecutive) or a period of 120 days (whether or not consecutive).

Because the 120 day period referred to in section 4980H(c)(2)(B)(ii) is not part of the definition of the term  seasonal worker, an employee would not necessarily be precluded from being treated  as a seasonal worker merely because the employee works, for example, on a seasonal  basis for five consecutive months. In addition, the 120 day period referred to in section 4980H(c)(2)(B)(ii) is relevant only for applying the seasonal worker exception for determining status as an applicable large employer, and is not relevant for determining whether an employee is a seasonal employee for purposes of the look back  measurement method (meaning that an employee who provides services for more than 120 days per year may nonetheless qualify as a seasonal employee). See section II.C.2. of this preamble for a discussion of the application of the look back measurement method to seasonal employees.

For purposes of the definition of an applicable large employer, section  4980H(c)(2)(B)(ii) defines a seasonal worker as a worker who performs labor or services on a seasonal basis, as defined by the Secretary of Labor, including (but not limited to) workers covered by 29 CFR 500.20(s)(1) and retail workers employed exclusively during holiday seasons. This definition of seasonal worker is incorporated in these proposed regulations. The Department of Labor (DOL) regulations at 29 CFR 500.20(s)(1) to which section 4980H(c)(2)(B)(ii) refers, and that interpret the Migrant and Seasonal Agricultural Workers Protection Act, provide that “[l]abor is performed on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year. A worker who moves from one seasonal activity to another, while employed in agriculture or performing agricultural labor, is employed on a seasonal basis even though he may continue to be employed during a major portion of the year.”

After consultation with the DOL, the Treasury Department and the IRS have determined that the term seasonal worker, as incorporated in section 4980H,is not limited to agricultural or retail workers. Until further guidance is issued, employers may apply a reasonable, good faith interpretation of the statutory definition of seasonal worker, including a reasonable good faith interpretation of the standard set forth under the DOL regulations at 29 CFR 500.20(s)(1) and quoted in this paragraph, applied by analogy to workers and employment positions not otherwise covered under those DOL regulations.

Several commenters suggested that seasonal workers not be counted in determining whether an employer is an applicable large employer. However, because section 4980H(c)(2) requires the inclusion of seasonal workers in the applicable large employer determination (and then excludes them only if certain conditions are satisfied), this suggestion is not adopted.