HR Elements February 2012 Newsletter
By aida | February 20, 2012
Final versions of benefits-related rules have been flying out of federal agencies in the early weeks of 2012, with more expected to come over the next few months. One of the hottest compliance topics to emerge from health care reform — the new summary of benefits and coverage (SBC) requirements — received some much-desired guidance and a new deadline. The Equal Employment Opportunity Commission (EEOC) has issued a final rule that defines record-retention requirements under the Genetic Information Nondiscrimination Act (GINA). This rule establishes the same requirements that apply under Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act. The DOL finalized rules regarding fee disclosures for 401(k) plans. The final rules call for service providers to give plan fiduciaries information about any direct or indirect compensation or fees received by the service provider to maintain and manage the plans.
Employers must implement solid cost-control strategies if they want to keep their health care plans viable and valuable. Prevention and early detection of medical problems can stave off high costs in the long run, but many Americans are not doing enough. The practice of induced births to fit around a patient’s (or doctor’s) schedule has become a moneymaker for hospitals but a drain for insurers and employers. In addition to plan design and a push for preventive medical services, employers can control costs by supporting a robust wellness program that gets to the root of many health care problems.
The federal government continues to tweak the rules regarding the Family and Medical Leave Act (FMLA), giving employers another reason to carefully review their leave policies. Most recently, the DOL issued a new proposed rule that would extend leave for family caregivers of US veterans up to five years after the veterans leave the military. Presently, the law only covers family members of service personnel who are currently serving. The proposed rule also would make FMLA more accessible to airline flight crews by altering the eligibility requirements and changing how flight crews’ hours are calculated when determining FMLA leave. This proposal adds yet another wrinkle to FMLA compliance.
Source: Spencer Fane Britt & Browne, LLP
For more info on these topics read the full newsletter here.
For more info on the new SBC guidelines, read our previous blog.
Agencies Finalize Guidance on Summary of Benefits & Coverage
By aida | February 15, 2012
The agencies charged with implementing this requirement has now finalized the regulations they proposed in August 2011 regarding the Health Care Reform mandated “Summary of Benefits and Coverage” (SBC). As enacted, this SBC requirement was to apply as of March 23, 2012. This recent guidance allows compliance to be deferred until the first open enrollment period beginning on or after September 23, 2012. To comply with this requirement, an SBC must be included in any application materials provided as a part of the open enrollment process.
These SBC rules apply to both insured and self-funded plans. This is another health care reform requirement to which even “grandfathered” plans are subject. The same is true for even stand-alone health reimbursement arrangements, as well as “mini-med” plans that have received a waiver from the prohibition on annual benefit limitations. Certain employer plans are exempt from this SBC requirement such as stand-alone dental and vision plans and most flexible spending arrangements. Health savings accounts are also exempt.
Although the final regulations track most of the August 2011 proposals, certain changes should make it somewhat easier to comply with this SBC requirement. These include the following:
- An SBC need not disclose information concerning premiums.
- An SBC may be combined with other plan materials, such as a summary plan description, so long as the SBC is prominently displayed. In the case of an SPD, the agencies suggest that the SBC immediately follow the SPD’s table of contents.
- Although the agencies continue to emphasize the importance of using the published template when preparing an SBC, they now acknowledge that certain modifications are permissible. These might be needed to describe discounts available through provider networks, benefits that vary with the type of facility, multi-tier drug formularies, or incentives for participation in wellness programs.
- The proposed regulations described three examples to be included in the “Coverage Facts” portion of each SBC: maternity care, management of type 2 diabetes, and treatment of breast cancer. Responding to concerns raised by various commenters, the breast cancer example has now been removed. However, the agencies have specifically reserved the right to require up to six different examples, so future guidance may require examples of more acute medical conditions.
- The version of the SBC template issued in August of 2011 was drafted by a task force organized by the National Association of Insurance Commissioners. Perhaps for that reason, it spoke in terms of a “policy” or “insurer.” Recognizing that these terms are not appropriate for self-funded plans, the revised template substitutes “coverage” and “plan” for these two terms.
- The final regulations make it somewhat easier to distribute an SBC via electronic means, rather than on paper. The rules have not changed for participants and beneficiaries who are currently enrolled in the plan (for whom electronic delivery is permissible only in accordance with the DOL’s stringent requirements), but somewhat more liberal rules now apply to individuals who are merely eligible to enroll. Assuming an SBC is in a “readily accessible format,” it may be posted on the Internet. The plan or its insurer would then notify the eligible individual (either on paper or via e-mail) that the document is available online, providing both the Internet address and a statement that the SBC will be provided in paper form upon request.
The penalty for failing to comply with the SBC requirement is $1,000 for each plan participant and beneficiary who fails to receive a timely and accurate SBC. Plan administrators therefore should take immediate steps to prepare appropriate SBCs (one for each benefit option), well in advance of the upcoming open enrollment season. Administrators of insured plans will want to coordinate with their insurers, but self-funded plans should familiarize themselves with both the final regulations and numerous pieces of related guidance.
Source: Kenneth A. Mason
Spencer Fane Britt & Browne LLP
HR Elements January 2012 Newsletter
By aida | January 27, 2012
Under the Patient Protection & Affordable Care Act (PPACA), companies are required to report the value of their employer-sponsored health care coverage on employees’ W-2s. This takes effect for most employers this year, meaning the values must be represented on the forms issued in 2013. Smaller employers – those with fewer than 250 W-2s to distribute, are exempt until at least 2014. To read more about this and the new notices issued by the IRS previous read our previous blog here.
More employers are betting that health plans with higher deductibles will take some of the string out of soaring health care costs. Still, traditional plans continue to dominate the employee benefits scene. Wellness programs, however, were no more attractive to those under CDHPs than those in traditional plans. The apparent lack of enthusiasm for wellness can present a big challenge for employers with high-deductible options.
Most employers say they understand the importance of benefit communications. Unfortunately, many struggle to translate that knowledge into actions. Now more than ever, employers are turning to technology to make those communications easier and more effective. Emerging technologies, especially mobile devices, appear to be spurring interest in the use of technology-based benefit communications. Like mobile devices, social media tools and websites have seen an explosion of use over the past few years.
To read the full newsletter click here.
More IRS Guidance on W-2 Reporting of Health Coverage
By aida | January 24, 2012
Among the provisions contained in the 2010 Patient Protection and Affordable Care Act (PPACA) was a requirement that employers report, on each employee’s W-2, the value of any employer-provided health coverage. As explained in our October 2010 article, this reporting requirement is optional for 2011, but mandatory for 2012 (that is, for W-2s to be provided in January of 2013). The IRS issued an initial round guidance on this reporting requirement in Notice 2011-28 (as summarized in our April 2011 article), but that Notice left many questions unanswered. A number of those questions have now been answered in Notice 2012-9.
Overview of Reporting Requirement
Before addressing the recent guidance, it is worth noting some key points that have not changed. For instance, this reporting requirement remains optional for 2011, but then required for 2012.
Also still in place is the postponement of this requirement for “small” employers. Any employer that is required to issue fewer than 250 W-2s for 2011 qualifies for this postponement. The soonest a small employer might be required to report the value of their employees’ health coverage is January of 2014 (on the 2013 W-2).
Nothing in this new reporting requirement will cause an employee to be taxed on any employer-provided health coverage.
Calculating the Cost of Coverage
The amount to be reported should reflect both the employer and employee portions of that cost, with the annual amount equal to the sum of all monthly amounts (and under all plans sponsored by the same employer). If the plan is insured, the amount to be reported should be the insurance premium charged for whatever level of coverage an employee received. If a plan is self-funded, the general rule is to use the “applicable premium” calculated for COBRA purposes.
Recent Clarifications
- There is no need to report any employee contributions to a flexible spending account. However, if an employee allocates any employer “flex credits” to a health FSA, those employer amounts must be reported.
- Whether the value of dental or vision coverage must be reported on a W-2 depends on whether that coverage constitutes an “expected benefit” under the HIPAA portability and nondiscrimination rules. In general, this would be the case if either the coverage is offered under a separate policy, certificate, or contract of insurance, or participants have the right to elect the dental or vision coverage and must pay an additional premium if they do so.
- An employee assistance program (“EAP”), wellness program, or on-site medical clinic may be subject to this reporting requirement if it constitutes as a “group health plan.” However, the reporting of these benefits will be required only if the employer charges a separate premium for someone to receive COBRA coverage under these benefits.
- Even if an employer is not required to report the value of certain types of health coverage – either the types listed immediately above, or coverage received under a health reimbursement arrangement – the employer may choose to report these amounts.
- Pre-existing rules require an employer to provide a W-2 within 30 days of a request received from an employee who terminates during the calendar year. Under this recent Notice, however, such a W-2 need not report the cost of any health coverage receive by the employee.
- If an employer wait until year-end to supply W-2s to terminated employees (the more usual case), those W-2s must report either the value of the coverage received only while an active employee or the value of the coverage received through the end of the year (thereby including the value of any COBRA coverage). The employer must be consistent, however, in selecting one of these two approaches.
- The Notice provides that an employer need not report the value of health coverage received by any individuals who are not otherwise entitled to receive a W-2. These might include COBRA beneficiaries, retirees, non-employee directors, or independent contractors.
- The IRS Form W-3 need not report the cost of any health coverage.
- In general, this W-2 reporting requirement applies even to the value of any health coverage that must be included in an employee’s taxable income. This might include the value of coverage provided to an employee’s domestic partner, or to a non-dependent child over age 27. However, it is not necessary to report the value of coverage that is taxable only because a self-funded plan discriminates in favor of highly compensated individuals (in violation of Section 105(h) of the Tax Code), or an employee is a 2% or more shareholder in a Subchapter S corporation.
- If a single plan provides both health coverage and non-health coverage (such as disability or life insurance), an employer may use any reasonable method to allocate the total cost of coverage between the two categories – and then report only the cost of the health coverage. Alternatively, if either the health coverage or the non-health coverage is merely “incidental” to the other type of coverage, the employer may treat the plan as though it provided only the primary type of coverage.
- The value of the coverage provided to an employee may be determined on the basis of the facts known to the employer on December 31 of the reporting year. Accordingly, any information learned after that date may be disregarded, even if that information results in the employee’s coverage during the reporting year either increasing or decreasing in value (Example: Increasing – Adding a Child or Decreasing- Removing a Spouse).
- If the final pay period in a calendar year laps over into the following year, an employer may allocate the value of any health coverage received during that pay period between the two calendar years, based on a reasonable allocation of the days falling within each year. Alternatively, so long as it is done consistently, the employer may allocate that entire pay period to either of the two calendar years.
- Although prior guidance suggested that both hospital indemnity insurance and coverage for a specific disease or illness were entirely exempt from this W-2 reporting requirement, the most recent Notice limits this exemption to plans under which an employee pays the full premium for that coverage on an after-tax basis. If an employer pays any portion of the premium – or if an employee pays any portion of the premium on a pre-tax basis – the entire value of the coverage must be reported. As a result, even some “voluntary insurance arrangements” (which are exempt from most requirements of ERISA) must be reported on a W-2 – that is, if employees pay their premiums on a pre-tax basis.
Although the first W-2s on which the value of health coverage must be reported are not due until January 31, 2013, employers will want to ensure that they are able to capture all the data they will need in order to comply with this reporting requirement. The IRS expects to issue still further guidance on this reporting requirement. It will apply only to calendar years beginning at least six months after the additional guidance is issued. For this reason, employers who are subject to this W-2 reporting requirement in 2012 should assume that this is the final guidance they will receive before reaching their compliance deadline.
Source: Kenneth A. Mason, Partner
Spencer Fane Britt & Browne LLP
Union Backed Election Rule Changes
By aida | December 22, 2011
On November 30, during a closely-watched session, National Labor Relations Board Chairman Mark Pearce and Member Craig Becker voted to proceed with preparation of a final rule modifying the Board’s election procedures to speed up the process in certain circumstances. The changes that ultimately were passed represent a substantially more limited version of what initially has been proposed by the Board’s majority and are summarized as follows:
- Elimination of pre-election appeals to the Board from the actions of the Regional Director on an election petition, providing instead only for a single, discretionary appeal of pre-election and post-election issues after the votes are cast. An appeal to the Board prior to the election is limited to issues that otherwise would escape Board review if not raised prior to the election.
- Express direction that a pre-election hearing is to determine only whether a question concerning representation exists, and that the hearing officer has authority to limit evidence taken at the hearing where the evidence does not have relevance to a genuine issue of fact material to that issue. This means that questions of individual voter eligibility (as opposed to appropriate bargaining unit composition) will be litigated after the election, as opposed to before. Also, the hearing officer may decline requests of parties to submit post-hearing briefs, which right previously was guaranteed by the Board’s rules.
- Elimination of the current requirement that the vote may not be held sooner than 25 days after the Board’s Regional Director issues a Direction of Election. As a result, some elections likely will be held sooner after the Direction of Election than was previously the case.
The following proposed changes have been eliminated:
- The requirement that a hearing be held within seven days of the filing of a union’s representation petition.
- Allowing the union’s petition to be filed electronically, rather than the current practice requiring filing by hand or regular mail.
- The requirement that the employer prepare and file a comprehensive “statement of position” on the union’s election petition no later than the date of the hearing, together with the requirement that any issues not raised by the employer in its statement are waived by the employer and may not be raised later.
- The requirement that unions be given employees’ email addresses and telephone numbers prior to the election.
- The requirement that the voter eligibility list (“Excelsior List”) be given to the union within two days of the Direction of Election, instead of the current rule allowing for seven work days.
Even though the new rule will have less impact on employers than the originally proposed rule, the new rule still substantially shortens the period from filing of the petition to the date of election from the current Board election target of 42 days. Elections most certainly will be held more quickly. The actual period will be determined by the circumstances of each case. The fact that elections will be held more quickly underscores the need of employers to remain constantly vigilant regarding potential union organizing efforts in order to address such efforts at the earliest possible opportunity.
Source: Brian Christensen, Partner at Spencer Fane Britt & Browne LLP
HR Elements December 2011
By aida | December 20, 2011
The legal fate of the Patient Protection & Affordable Care Act (PPACA) is poised to take center stage at the nation’s highest court in the next few months. The Supreme Court recently agreed to consider a number of lawsuits pertaining to PPACA and likely will start hearing arguments in March with a final ruling expected in June. The full impact of a ruling against PPACA will depend on whether the court strikes down the entire law or only sections of it. As long as the law’s future remains unclear, employers are stuck in limbo regarding the main provisions of the legislation that are set to start in 2014.
Soaring health costs from hospital stays, emergency room charges and doctor’s appointments – costs that often are out of employers’ control – all give sponsors of benefit plans to plenty to worry about these days. Fortunately, many employers are making a real impact in one area that is increasingly important when figuring total health care costs: prescription drugs. A new report notes that employers are actively taking measures to shore up and control their prescription drug benefits with some success.
The idea of a wellness program seems clear-cut on the surface: Improve your employees’ health and lifestyles, and they’ll spend less on health care. That can translate into savings for employers on benefits. Simple, right? Unfortunately for employers, setting up a wellness program is anything but a simple endeavor. A number of federal laws dictate how a program must be managed, and agencies review and revise the laws frequently.
To read more on these subjects click here.
Source: Spencer Fane Britt & Browne LLP
Wishing you and your family Happy Holidays & a Prosperous New Year from all of us at AxisPointe!
2011 Fourth Quarter Newsletter
By aida | December 13, 2011
Our last quarterly newsletter of 2011 talks about seven different topics ranging from health care reform to retirement plan amendments to Cobra among others. To read about the different subjects covered see below and for the link to the newsletter scroll to the bottom of this entry.
Health Care Reform: What’s gone away? And what’s coming in 2012? The tide of regulations interpreting the 2010 Patient Protection and Affordable Care Act (“PPACA”) began to ebb in 2011, and portions of the law have even been repealed or put on hold.
Deadlines approaching for Retirement Plan Amendments Once again, amendment season is upon us. Sponsors of tax-favored retirement plans should keep in mind the many required amendments for which a year-end deadline is fast approaching.
Health Plan assessed double damages for MSP Violation A federal appeals court has held that the Medicare Secondary Payer (“MSP”) Act authorizes a medical provider to sue an employer health plan for double damages when the plan fails to comply with the MSP Act.
Extension of Trade Adjustment Assistance affects certain Cobra Coverage The Trade Act of 2002 created a health care tax credit (“HCTC”) for certain individuals who become eligible for trade adjustment assistance (“TAA eligible individuals”), as well as for certain retired employees who are receiving pension payments from the Pension Benefit Guaranty Corporation (PBGC recipients).
Failing to notify Participants of Plan Change can be Costly Among ERISA’s many notice and disclosure obligations, the requirement to timely inform participants of important plan changes is one that is too often overlooked.
Investment Providers and Advisors may now provide “Conflicted” Advice to Plan Participants Both the Employee Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “Code”) generally prohibit fiduciary investment advisers from receiving compensation from the investment vehicles that they recommend to plan participants and IRA holders.
Loss of Privilege: Another Reason not to give the “Company” a Fiduciary Role In our efforts to help plan sponsors minimize their fiduciary risk, we consistently advise against giving the sponsoring employer a fiduciary role. Designating the “company” or “employer” as an ERISA fiduciary can unintentionally subject the employer’s executive officers and board of directors to ERISA’s fiduciary standards, and potentially to personal liability.
To read more on these subjects, view the newsletter here.
Source: Spencer Fane Britt & Browne LLP
HR Elements November 2011 Newsletter
By aida | November 22, 2011
While conventional wisdom holds that many employers will drop their health benefits in 2014 when the major provisions of the Patient Protection and Affordable Care Act (PPACA) take effect, that decision wouldn’t make economic sense for most. The law states that employers with more than 50 workers who don’t offer benefits in 2014 would have to pay a penalty ($2,000-$3,000 per worker). If a company drops coverage, it would need to pay the penalty in addition to boosting wages to offer a competitive overall compensation package. For many employers, that might cost more than sticking with a robust benefit package that will recruit and retain quality employees.
More companies are using financial penalties to strong-arm employees into a better lifestyle, according to a new survey sponsored in part by the National Business Group of Health. According to a report on the survey, the number of companies using penalties more than doubled from 2009 to 2011 and is expected to double again in 2012. While the study notes that positive incentives are still playing a large part in employers’ strategies, it also shows that penalties are becoming more pronounced as employers look for new ways to keep spiraling costs under control. Examples of such penalties include higher premiums for smokers or for workers who can’t keep their weight or cholesterol levels under control.
After years of enduring a sour economy, many employers with 401(k) plans now are looking ahead and trying to sweeten their plans to increase their recruitment and retention power. For many, the first ingredient involves restoring the matching contribution – a benefit that many employers dumped when the downturn hit. Three-quarters of employers that suspended a 401(k) match have restored it, according to a poll by Towers Watson. In addition to bringing back the match, employers can mix up plan types and help provide information and support to get employees’ retirement savings back on track. Luckily for employers, many plans and benefit advisors now offer personalized, full-service advising in addition to educational materials about general investing.
For more information, please read the full newsletter here.
Should you have any questions or if we can be of any assistance do not hesitate to call us at 973.299.0022!
HR Elements October 2011 Newsletter
By aida | October 17, 2011
Enrollment can be more than just presentation and forms – it can serve as a great opportunity to reconnect and communicate to employees the value of their compensation and benefits. Data from the 2010 enrollment season show that nearly a third of workers said the benefit education materials from their employer was inadequate. Only about half of employees said they received printed materials about their benefits, the survey found. Slightly more than a third of poll respondents said their company sponsored some kind of question-and-answer session about their benefits. Employers should try to announce benefit meetings about three or four weeks in advance and should consider individual meetings, if possible.
Rising health care costs and a tough economy can make health care benefits primary focus for employees during benefit enrollment time. But experts advise that income protecting benefits, such as life and disability insurance, deserve some attentions as well. According to a new report by Prudential, workers are expressing interest in life (83%), disability (66%), and long-term care insurance (21%) this enrollment season. Disability can be particularly hard sell for employers because many workers think they’ll never need it. While many people assume accidents are the main cause of disability claims, 90% of all claims actually stem from illnesses, including musculoskeletal conditions and cancer.
The temperature is cooler, the leaves are changing color – and the sounds of sneezes and coughs echoing through the office hallways may not be far behind. The fall months traditionally serve as a time to promote flu prevention, and employers can play a key role in keeping their workforce – and their entire community – healthy as winter approaches. If employees get ill, the company should provide them time off to encourage them to stay home and recover fully. This is especially vital for companies with employees who interact in person with the public. Another key asset in combatting a flu outbreak is to prevent it from happening by promoting vaccinations and making them convenient.
To read more about these subjects ready the full newsletter here.
NLRB Postpones Deadline for Posting of New Notice
By aida | October 17, 2011
As we explained in our September 19, 2011 Blog, the National Labor Relations Board (NLRB) has ordered the vast majority of private-sector employers to post a notice informing employees of their rights under the National Labor Relations Act. Originally, the deadline for posting this notice was November 14, 2011. In more recent guidance, however, the NLRB has postponed this deadline to January 13, 2012. No other changes in the posting rule, or in the form or content of the required notice, have been made.
The purpose of the notice is to inform employees of their rights to organize, form, join, or assist a union; to bargain collectively with their employer; and to discuss their wages, benefits, and other terms and conditions of employment with their co-workers or a union. The new rule covers not only union workplaces, but non-union workplaces, as well.
If you have any questions about what you are reading do not hesitate to call us at 973.299.0022.
Source: Denise Portnoy of Spencer Fane Britt & Browne, LLP