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Federal Law Alert – Health Care Reform FAQ

Friday, May 10th, 2013

Please take note of the following Federal Law Alert, courtesy of HR Support Center:

Question: We have over 50 employees. Is it true that we may face health care reform penalties even if we do offer health insurance coverage in 2014?

Answer: Yes, an organization with 50 or more employees may still face Health Care Reform penalties from the Federal Government if it does not offer “minimum essential coverage” at an “affordable rate”.

So what is “minimum essential coverage”? And what is an “affordable rate”? “Minimum essential coverage” refers exclusively to the health insurance plan design, not how much the employer contributes to the plan. In order to offer minimum essential coverage under the federal law, the health insurance carrier must pay for at least 60% of treatment costs, commonly referred to as a health plan with a 60% actuarial minimum value. In the coming months, you will probably hear this level of plan referred to as a “bronze level” plan. On the other hand, “affordable” coverage has everything to do with how much the employer contributes to the plan. It is a common misconception that a large company is required to contribute a specific percentage to each employee’s health insurance plan (such as 50%, 60% or 75%). Rather, the federal law requires that the organization contributes enough so that the employee’s portion of the premium for employee-only health insurance coverage for the “bronze level or richer” plan is no more 9.5% of the employee’s total household income. Since employers generally do not know an employee’s total household income, there is a safe harbor in place for 2014 stating that employees have access to “affordable coverage” as long as the employee’s portion of the premium for single coverage for the “bronze level or richer” plan is equal to or less than 9.5% of the employee’s reported W-2 wages.

If you have questions regarding penalty amounts and calculations, please reach out to your Human Resources Professional, Accounting Professional or Health Insurance Broker.

This information is provided courtesy of your HR Pros. If you have questions about how to access your HR Support Center account, please contact your Client Account Manager.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

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Tags: Affordable Coverage, Affordable Health Care, Affordable Health Insurance, CBIZ, CBIZ Payroll, CBIZ Payroll MN, Employer Contributions, Employer Provided Health Coverage, Employer Provided Health Insurance, Federal Law Alert, Health Care Reform, Health Care Reform Penalties, Health Insurance Coverage, HR, HR Pros, HR Support Center, Human Resources, Payroll Control Systems, PCS
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Federal Law Alert – Form I-9 Change

Friday, May 10th, 2013

Please take note of the following Federal Law Alert, courtesy of HR Support Center:

The U.S. Citizenship and Immigration Services (USCIS) published a revised Employment Eligibility Verification Form I-9 for use. All employers are required to complete a Form I-9 for each employee hired in the United States. Employers should not complete a new Form I-9 for current employees if a properly completed Form I-9 is already on file.

Effective 03/07/13: Employers should begin using the newly revised Form I-9 (Rev. 03/08/13) for all new hires and re-verifications. Employers may continue to use previously accepted revisions (Rev.02/02/09) and (Rev. 08/07/09) until May 7, 2013. As of May 7, 2013, employers must only use Form I-9 (Rev. 03/08/13). The Form I-9 Instructions and Form I-9 document are available in the HR Support Center, under the Essentials tab, or in the forms section on our website.

This information is provided courtesy of your HR Pros. If you have questions about how to access your HR Support Center account, please contact your Client Account Manager.

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Women’s Preventive Services Update Impacting Religious Organizations

Wednesday, February 27th, 2013

February 6, 2013

The ACA governing agencies are proposing a way to provide the full panoply of women’s health services without unduly burdening religiously affiliated organizations who object to providing contraceptive coverage, as imposed by the preventive services mandate. On February 6, 2013, the Agencies released proposed regulations and a Fact Sheet addressing these issues.

As background, the ACA requires non-grandfathered plans to cover women’s preventive health services without any cost-sharing (see Preventive Care Coverage Expanded to include Women’s Health Services, 8/3/2011). For plan years beginning on or after August 1, 2012 (January 1, 2013 for calendar year plans), plans are required to include coverage for these women’s health services, including contraceptive services.

Group health plans sponsored by certain religious employers are exempt from the requirement to cover contraceptive services. This exemption applies very narrowly to churches, temples and similar houses of worship. The regulations propose a clarification to the definition, as described below. The clarification is intended to provide protection to houses of worship that engage in such activities such as food pantries or other outreach programs.

The definition of a religious employer also left organizations with religious affiliations, such as hospitals, colleges and universities, private primary and secondary schools, and social service organizations who cannot meet the exception exposed to providing the women’s preventive services mandate. Temporary relief from this requirement was issued last year (see Preventive Health Services for Women: Regulations Final – Limited Exception for Certain Church Plans, 2/13/12). The Agencies are now issuing a proposal to offer a more long term solution.

Religious Employer Re-defined.
The proposed regulations re-define religious employer to primarily include churches, other houses of worship, and their affiliated organizations, as defined in IRC Section 6033(a)(3)(A)(i) and (iii).

Accommodation for Religious Organizations
The proposed regulations provide a waiver from the requirement to provide contraceptive services for religious organizations that don’t qualify for the full exemption. To obtain the waiver, the religious organization must:

Oppose providing coverage for some or all of any contraceptive services required by the women’s services mandate on account of religious objections;
Be organized and operate as a nonprofit entity;
Hold itself out as a religious organization; and
Maintain a self-certification form (see below), for each plan year to which the accommodation is to apply.

Organizations that meet this criteria would not be required to endorse, pay for, or otherwise facilitate coverage of the objectionable benefit; but such benefits would continue to be made available to women through a separate individual policy.

Self-Certification Form
HHS provides the form and instructions for obtaining the self-certification (CMS-10459 – Coverage of Certain Preventive Services Under the Affordable Care Act). The self-certification must be executed by an authorized individual of the organization, and specify the types of contraceptive services that the organization does not wish to administer or fund.

Insurer Obligations
An insurer receiving a copy of the self-certification form would be required to provide coverage for any contraceptive services identified in the form through a separate policy for each plan participant and beneficiary. The insurer is then obligated to include a separate written notice to participants of the availability of the contraceptive coverage in its application and enrollment materials. Below is the model language that can be used in the notice:

“The organization that establishes and maintains, or arranges, your health coverage has certified that your group health plan qualifies for an accommodation with respect to the federal requirement to cover all Food and Drug Administration-approved contraceptive services for women, as prescribed by a health care provider, without cost sharing. This means that your health coverage will not cover the following contraceptive services: [contraceptive services specified in self-certification]. Instead, these contraceptive services will be covered through a separate individual health insurance policy, which is not administered or funded by, or connected in any way to, your health coverage. You and any covered dependents will be enrolled in this separate individual health insurance policy at no additional cost to you. If you have any questions about this notice, contact [contact information for health insurance issuer].”

If plan is self-funded, the regulations propose that the third party administrator (TPA) would facilitate this process. The insurer providing the coverage would receive an additional adjustment in the user fees charged by the federal exchange in an amount that would offset the TPA’s charge for performing the service. The insurer would then pass the amount on to the TPA as a condition for receiving a user fee adjustment.

Student health insurance coverage sponsored by higher education institutions
Student health insurance coverage arranged by a group health plan sponsored by an exempt religious organization’s higher education institution would be handled in the same manner as above; except the model notice would change the reference “plan participants and beneficiaries” to “student enrollees and their covered dependents”.

Comment period.
The Agencies are seeking comments on these proposals through April 8, 2013.

Until these rules are finalized, organizations with a religious affiliation can continue to follow the relief described in this Health Reform Bulletin, Preventive Health Services for Women: Regulations Final – Limited Exception for Certain Church Plans.

Conclusion
While this proposal may provide relief to religiously affiliated organizations, it does not provide any relief to private sector entities with moral or religious objections to providing contraceptive services. Numerous lawsuits have been filed on this topic and are winding their way through the court system. It is certainly possible that this issue will reach the Supreme Court at some point.

About the Author: Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc. She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law. Ms. McLeese is based in the CBIZ Leawood, Kansas office.

The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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Tags: ACA, ACA Regulations Regarding Religious Employers, Affordable Care Act, CBIZ, Preventive Care Coverage Under ACA, Religious Employers, Women's Health Services
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Individual Minimum Essential Coverage and Affordability Standard

Wednesday, February 27th, 2013

February 6, 2013

The centerpiece of the ACA is health coverage expansion. One of the ways that this is to be achieved is through a mandate that virtually all people residing in this country maintain a minimum level of coverage or pay a tax. The Agencies have recently issued two sets of proposed regulations and one final regulation targeted at explaining how this coverage mandate will be accomplished.

INDIVIDUAL SHARED RESPONSIBILITY REQUIREMENT – MINIMUM ESSENTIAL COVERAGE
On January 30, 2013, the IRS issued proposed regulations and questions and answers relating to the Individual Shared Responsibility provision. Below is an overview of this guidance.

Who are the individuals required to maintain Minimum Essential Coverage?
As mentioned above, beginning in 2014, all individuals residing in the U.S. must maintain a minimum level of coverage, or risk a shared responsibility payment. A taxpayer would also be responsible for maintaining coverage for a child or other individual claimed as a dependent on the taxpayer’s federal tax return. Spouses who file their taxes jointly are likewise generally responsible for maintaining this minimum level of coverage.

Following are the potential penalties for failure to maintain a minimum essential coverage:

Who is exempt from maintaining minimum essential coverage?
The regulations provide for 9 categories of individuals exempt from the requirement to maintain minimum essential coverage; they are:

A member of a religious sect that is recognized as conscientiously opposed to accepting any insurance benefits.
A member of a recognized health care sharing ministry.
A member of a federally recognized Indian tribe.
An individual whose household income falls below the minimum threshold for filing a tax return.
An individual who experiences a short gap in coverage of less than three consecutive months during the year.
An individual who incurs a hardship, as certified by an Exchange, which makes him/her unable to obtain coverage.
An individual who cannot afford coverage because the premium cost exceeds 8% of the his/her household income.
An individual who is incarcerated (jail, prison, or similar penal institution or correctional facility)
An individual who is not a U.S. Citizen, a U. S. national, nor an alien lawfully present in the U.S.

For other individuals seeking an exemption, the HHS issued proposed regulations relating to the process to be used by Exchanges in conducting eligibility determinations and granting exemptions from the shared responsibility payment.
In an effort to facilitate the maintenance of minimum essential coverage, certain individuals whose income falls between 100 and 400% of the federal poverty level will be entitled to government assistance unless the individual is exempt.

What is Minimum Essential Coverage?
Minimum essential coverage generally includes coverage under:

Employer-sponsored group health plans, whether insured or self-funded, and grandfathered plans, as well as COBRA coverage (if actually elected) and retiree coverage. It also includes group health coverage sponsored by non-profit and for-profit entities, and governmental entities, including local governments.

It should be noted that HIPAA-excepted coverage alone will not qualify as minimum essential coverage; HIPAA-excepted coverage includes:

Limited-scope dental benefits, vision benefits, or long term care benefits provided under a separate policy or contract, and are otherwise not an integral part of a group health plan.
Other types of limited benefit plans, such as accident-only plans, disability income coverage, liability insurance, workers’ compensation, credit-only insurance, and coverage for on-site medical clinics.
Non-coordinated benefits providing specified disease or illness coverage, hospital indemnity insurance, or fixed dollar indemnity insurance that meets certain criteria.
Supplemental benefits, such as Medicare supplemental coverage (Medigap or MedSupp).

Government-sponsored plans such as Medicare, Medicaid, Children’s Health Insurance Program (CHIP), TRICARE, and various Veteran’s health programs.

Individual health policies, including a qualified health plan offered by an Exchange.

Other similar types of comprehensive health coverage recognized by HHS as minimum essential coverage.

When does the individual mandate become effective?
The individual shared responsibility provision becomes applicable on January 1, 2014.

EMPLOYER SHARED RESPONSIBILITY REQUIREMENT – DETERMINING AFFORDABLE COVERAGE
Beginning January 1, 2014, a large employer employing 50 or more employees must offer adequate coverage at an affordable rate to its employees, or risk being subject to an excise tax (see CBIZ Health Reform Bulletin, Shared Responsibility Guidance, 1/9/13).

On January 30, 2013, the IRS issued final regulations specifically relating to defining the “affordability” standard. These regulations affirm that affordability is based on the cost of single coverage in the employer’s least expensive plan. While large employers must offer coverage to their full-time employees (those working 30 or more hours per week) and their dependents (children under age 26), the affordability, according to these regulations, is based only on single coverage. This should come as welcome news to employers.

CONCLUSION
While much of this guidance relating to the obligation to maintain a minimum level of coverage would not unduly impact employers, employers will be interested to know the types of plans that qualify as minimum essential coverage. Employers will also likely be pleased to know, at least for now, affordability is based on the cost of single coverage.

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Sub-Regulatory Guidance and FAQs Issued

Tuesday, February 26th, 2013

January 25, 2013

As has been true since the enactment of the Affordable Care Act (ACA), the governing agencies are using their authority to issue sub-regulatory guidance, often in the form of questions and answers, to provide guidance on how the government believes regulations will be issued. To this end, FAQs About Affordable Act Implementation Part XI have just been issued. Of particular note are:

Notice of Exchange
The law requires employers to issue a Notice to employees explaining:

The existence of the Exchange
If the employer’s health plan provides less than minimum value, the individual may be entitled to government assistance for purchasing coverage through the Exchange
If the employee chooses to purchase coverage through the Exchange, he/she may lose any employer contribution toward employee coverage.

This Notice was to be provided to employees by March 1, 2013. The Department of Labor has stated that the requirement to issue the Notice is delayed until future regulations are issued. It is expected that these regulations will be issued in late summer or early fall – closer to the time that Exchanges will be open for business.

Stand-Alone Health Reimbursement Arrangements
One of the provisions of the Affordable Care Act is that a health plan can impose no lifetime, and eventually, no annual limits on essential health benefits. A question has risen as to the applicability of the no limit requirement on Health Reimbursement Arrangements (HRAs) (see HRB 39 – Relief for Stand-Alone Health Reimbursement Arrangements). The Department of Labor has indicated that it expects to issue guidance clarifying the types of HRAs that will be considered integrated, and therefore not subject to the no-limit provision. Specifically, the Department expects to issue guidance stating that an HRA used to fund individual policies, including employer sponsored individual policies purchased with HRA dollars will not qualify as an integrated plan. What this means is that these types of HRAs would be subject to the no lifetime or annual limit requirement. Further, the Department states that it expects to issue guidance stating that, to be integrated, the HRA participant must be enrolled in the related comprehensive health plan in order for the HRA to be exempt from the no lifetime and annual limit requirement.

Finally the guidance clarifies that amounts credited in a standalone HRA prior to January 1, 2014, can continue to be used to reimburse medical expenses. In a nutshell, what this guidance suggests is that only integrated HRAs, i.e., an HRA that is used in conjunction with a comprehensive health plan and only covers participants enrolled in the comprehensive health plan will be viable in 2014 and beyond. Other types of HRAs would have to comply with the no annual or lifetime limit requirements applicable to other comprehensive health plans.

Patient-Centered Outcomes Research Fee
As a reminder, the Affordable Care Act imposes a per-covered-life Patient-Centered Outcomes Research fee (PCOR) to fund the Patient-Centered Outcomes Research Trust Fund. This fee commences for plan years ending after September 30, 2012 and continues through plan years ending before October 1, 2019 (see CBIZ Health Reform Bulletin 60, Patient-Centered Outcomes Research Fee) and CBIZ Health Reform Bulletin 49, Fees on Health Insurance Policies & Self-Insured Plans: Patient-Centered Outcome Research Trust Fund). Generally, the government has indicated that this fee cannot be paid from plan assets. The newly issued guidance addresses the specific issue of multi-employer and limited other circumstances in which the plan trustees have no existence other than for the specific purpose of providing benefits In these very limited circumstances, the Department of Labor has indicated that the PCOR fee can be paid from plan assets. But again, in all other instances, the PCOR cannot be paid from plan assets.

Fixed Indemnity Plans
The Department of Labor has issued several FAQs relating to fixed indemnity plans. Generally, a fixed indemnity plan in its purest sense is one that reimburses a fixed amount upon the occurrence of an event, such as a hospitalization, without regard and in no way tied to actual receipt of care. These types of plans generally are not subject to ACA nor are they subject to HIPAA. The Department of Labor indicates in these FAQS that the marketplace is attempting to circumvent this rule by calling plans fixed indemnity plans when in fact reimbursement is made or is otherwise tied to actual receipt of care. In effect, the Department has indicated that it will double down its efforts with state insurance departments to make certain that the intent of the Affordable Care Act is not thwarted through these types of arrangements. This is just another example of how the government is trying to stay ahead of creative methods of trying to circumvent the law.

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Final FMLA Regulations

Tuesday, February 26th, 2013

February 19, 2013

In recent years, the Family and Medical Leave Act (FMLA), enacted in 1993, has undergone several fairly narrow modifications, most recently relating to military leave and rules specific to airline personnel. Final regulations interpreting these rules were issued on February 6, 2013 by the Department of Labor’s Wage and Hour Division. While these regulations primarily address the narrow focus as described above, there are a couple notes important to all employers subject to FMLA.

As a reminder, FMLA applies to employers employing 50 or more employees on each working day in at least 20 or more calendar weeks in the current or preceding calendar year. Public agencies, as well as private and public primary and secondary schools, are considered to be covered employers without regard to the number of employees.

To be eligible for FMLA benefits, an employee must have at least 12 months of service with the covered employer at a worksite subject to the law, and must have accrued at least 1,250 hours of service during the 12 months immediately preceding the leave. Under FMLA, eligible employees are entitled to take job-protected, unpaid (or substituted paid leave) for up to 12 weeks in a 12-month period for the:

Birth or adoption of a child, including the placement of a child for foster care.
Care for a parent, child, or spouse with a serious health condition.
Employee’s own serious health condition.

NEW FMLA GENERAL POSTER
One of the requirements of the FMLA is that the employer must post a general notice explaining the FMLA. A new General Poster has been prepared by the DOL that employers must begin using no later than March 8, 2013.

As a reminder, the General Poster must be posted in a conspicuous place in all of an employer’s locations where it can be readily seen by employees and applicants. The employer must also provide this General Poster to any eligible employee by including it in an employee handbook, or other written document that sets forth employee benefits or leave rights, as well as provide it to each new employee upon hiring. The General Poster can be posted and provided electronically, as long as the employee has access to employer’s electronic system.

Employers can duplicate the text of the General Poster, or use a different format than the DOL’s model notice, as long as all of the information contained in the alternate form is replicated, and the text is large enough to be easily read. If English is not the primary language of an employer’s workforce, the DOL makes the General Poster available in several languages to be provided to the appropriate employee population.

COORDINATION OF FMLA AND GINA
Another clarification of the final FMLA regulations relates to coordinating the FMLA with the Genetic Information Nondiscrimination Act of 2008 (“GINA”). For purposes of GINA, genetic information and family medical history cannot be used for enrollment, or in connection with enrollment, nor can it be used for underwriting purposes. Genetic information means:

The genetic tests of an individual or his/her family member;
The manifestation of a disease or disorder of the individual’s family member; or
Any genetic services relating to participation in clinical research by the individual or his/her family member.

In addition, GINA requires that genetic information be kept confidential. The final FMLA regulations coordinate with GINA to protect the confidentiality of genetic information. This means that any genetic information or family medical history must be maintained in accordance with the requisite confidentiality rules and kept in a separate file.

DESIGNATING INCREMENTS OF LEAVE
These regulations attempt to clarify the issue of “increments of leave” used in the event of an intermittent or reduced scheduled leave. Generally, the regulations require that an individual can only be charged with FMLA for time that the individual is, in fact, not working; and, the increments must be the shortest increment used for other types of leave, not to exceed one hour.

CHANGES TO FMLA MILITARY LEAVE PROVISIONS
The National Defense Authorization Act for FY 2008 broadened the benefits available under FMLA specifically for employees who have family members called to active military service. The law allows up to 12 weeks of FMLA leave per 12-month measuring period for a qualifying exigency; and, up to 26 weeks of FMLA leave to caregivers of service members in a single 12-month period.

EXIGENCY LEAVE
Eligible employees may take up to 12 weeks of FMLA leave while the employee’s spouse, child or parent, is on active duty for one or more qualifying exigencies, defined as a short notice deployment, military events and related activities, childcare and school activities, financial and legal arrangements, counseling, rest and recuperation (R&R) or post-deployment activities.

The final regulations clarify that:

Active duty requires deployment to a foreign country.
Members of the National Guard and Reserves and the Regular Armed Forces are now eligible for exigency leave.
The amount of time for R&R qualifying exigency leave is expanded to a maximum of 15 calendar days.

In addition, the final regulations add a new category of qualifying exigencies for parental care leave when a military member’s parent is incapable of self-care, for such events as providing immediate care, arranging for alternative care, or transferring the parent to a care facility.

CAREGIVER LEAVE FOR SERVICE MEMBERS EXPANDED FOR VETERANS
Up to 26 weeks of caregiver leave is available to otherwise FMLA-qualified individuals who have a family member (service member) experiencing a serious health condition or injury while on active duty, or one existing prior to active duty that is subsequently aggregated by service duty. The final FMLA regulations expand the definition of service member to include veterans who are undergoing medical treatment, recuperation, or therapy for a serious injury or illness. This provision only applies to veterans who have been discharged or released under honorable circumstances at any time during the five-year period prior to the first date the eligible employee takes FMLA leave to care for the covered veteran.

In addition, the serious health condition or injury of the veteran must meet one of the following criteria:

A continuation of a serious injury or illness that was incurred or aggravated when the veteran was a member of the Armed Forces and rendered him/her unable to perform the duties of his/her office, grade, rank, or rating;
A physical or mental condition for which the veteran has received a VA Service Related Disability Rating (VASRD) of 50% or greater, and such VASRD rating is based on the condition precipitating the need for caregiver leave;
A physical or mental condition that substantially impairs the veteran’s ability for substantially gainful occupation by reason of a disability related to military service; or
A physical or psychological injury, as determined by the Department of Veterans Affairs Program of Comprehensive Assistance for Family Caregivers.

Certification of Military Caregiver Leave for Veterans
An employer may require an employee to obtain certification from an authorized health care provider to support the need for FMLA leave to care for the service member veteran. An employee can use the model Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave (Form WH-385-V) for this purpose. In the alternative, an employee may submit documentation of enrollment in the Department of Veterans Affairs Program of Comprehensive Assistance for Family Caregivers as sufficient certification of the veteran’s serious injury or illness, even if the employee is not the named caregiver on the document. In this event, an employer may require the employee to provide additional information, such as confirmation of the familial relationship to the enrolled service member or documentation of the veteran’s discharge date and status.

COORDINATING FMLA LEAVE FOR AIRLINE PERSONNEL
Because the provisions of the FMLA are complicated when applying the law to the airline industry, the law was amended several years ago. The final FMLA regulations provide that an airline flight crew employee will meet the FMLA hours of service eligibility requirement (1,250 hours of service in prior 12 months) if he/she has worked or been paid at least 60% of the applicable total monthly guarantee for minimum of 504 hours (not including personal commute time, vacation, medical or sick leave) during the prior 12 months.

Airline flight crew employees are entitled to 72 days of leave during any 12-month period for FMLA-qualifying reasons other than military caregiver leave, and 156 days of leave during any single 12-month period for military caregiver leave. If an airline flight crew employee takes leave on an intermittent or reduced schedule, the employer would account for the leave using an increment no greater than one day.

EFFECTIVE DATE
The FMLA regulations relating to military caregiver leave for a veteran, qualifying exigency leave for parental care, and the special leave calculation method for flight crew employees become effective March 8, 2013.

Certain other provisions relating to the expansion of qualifying exigency leave to families of members of the Regular Armed Forces, and the special eligibility hours of service requirement for flight crew employees, were effective when those laws were enacted on February 15, 2012.

CONCLUSION
While these regulations, by and large, have implications for very unique situations, it is especially important that all employers post the new General Poster no later than March 8, 2013.

Employers should also be aware that three existing FMLA model forms have been revised to reflect the changes made by the final regulations, and a new form added for veteran’s leave:

Revised Notice of Eligibility and Rights & Responsibilities (Form WH-381)
Revised Certification of Qualifying Exigency For Military Family Leave (Form WH-384)
Revised Certification for Serious Injury or Illness of Current Servicemember — for Military Family Leave (Form WH-385)
New: Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave (WH-385V)

Additional FMLA information, forms, publications, fact sheets, employee guides for both military and non-military leave, FAQs, etc., can be found on the DOL’s designated FMLA website:

http://www.dol.gov/whd/fmla

About the Author: Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc. She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law. Ms. McLeese is based in the CBIZ Leawood, Kansas office.

The information contained in this At Issue is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained in this At Issue is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this At Issue is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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Essential Health Benefit Regulations And Tools

Tuesday, February 26th, 2013

February 25, 2013

In keeping with the on-going march toward Affordable Care Act compliance in 2014, the Department of Health and Human Services has issued several important pieces of guidance recently, including final Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation.

Essential Health Benefits
Non-grandfathered plans in the individual and small group markets, issued both in – and outside of exchanges (“marketplace”) must cover essential health benefit packages (EHBs), beginning in 2014. Self-insured group health plans, health insurance coverage offered in the large group market, and grandfathered health plans are not required to cover the essential health benefits. However, to the extent that self-funded plans and large insured plans offered outside the marketplace offer EHBs, these essential benefits cannot be subject to annual and lifetime limits.

Coverage for the essential health benefits package must cover 10 specific categories of benefits. The 10 categories are:

Ambulatory patient services.
Emergency services.
Hospitalization.
Maternity and newborn care.
Mental health and substance use disorder services, including behavioral health treatment.
Prescription drugs.
Rehabilitative and habilitative services and devices.
Laboratory services.
Preventive and wellness services and chronic disease management.
Pediatric services, including oral and vision care.

Coverage for Mental Health and Substance Abuse Services
Though health plans offered by employers employing fewer than 50 employees are generally not subject to the federal mental health parity laws (Mental Health Parity Act of 1996 (MHPA) and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), these plans will be required to provide mental health benefits, in accordance with the EHB standards.

Benchmark Plan Designs
States can utilize one of several plan design categories for defining essential benefits (click here for CBIZ Health Reform Bulletin). As of February 25, 2013, twenty-six states have chosen their base-benchmark plans. In states that do not select their own benchmark plan, the default base-benchmark plan will be based on the largest plan and product by enrollment in the State’s small group market.

Additional information on the specific benefits, limits, and prescription drug categories and classes covered by the EHB-benchmark plans, and state-required benefits, is available on the Center for Consumer Information and Insurance Oversight (CCIIO) website.

Cost-Sharing Requirements

DEDUCTIBLES. For plan years beginning on or after January 1, 2014, the final regulations clarify that the annual deductible imposed by plans cannot exceed $2,000 for self-only coverage, or $4,000 for coverage other than self-only. These deductible restrictions only apply to individual and small group health plans, and plans offered through the marketplace. These deductible limits do not apply to large group plans offered outside the marketplace or to self-funded plans.

These regulations, while they reserve the right to make modifications, provide that contributions to flexible medical spending arrangements (FSAs) cannot be used to buy down the deductible levels by the amount available under the FSA.

OUT-OF-POCKET LIMITS. The annual out of pocket limits must match those limits applicable to health savings accounts (HSA). While we do not know the HSA limits for 2014 yet (typically, these figures are available in May or early June), the high-deductible health plan annual out-of-pocket limit for self-only coverage in 2013 is $6,250; $12,500 for family coverage. The out of pocket limits apply to all sized plans; though, with the exception of emergency services, these restrictions only apply to in-network services.

For subsequent years, the deductible and out-of-pocket limits may be adjusted annually to reflect cost increases.

Actuarial Valuation Calculation for determining level of coverage
Non-grandfathered health plans offered to individuals and small employer group markets both in and outside an marketplace must meet the bronze, silver, gold, or platinum actuarial levels of benefits and coverage. A bronze plan is required to have an actuarial value (AV) of 60%; a silver plan, 70%; a gold plan, 80%; and a platinum plan, 90%. Actuarial value refers to a percentage measurement of expected health care costs covered by the plan and used to determine an overall measurement of the plan’s generosity.

The CCIIO has released an updated Actuarial Value Calculator, together with an Actuarial Value Calculator Methodology, for purposes of determining whether a plan’s actuarial value is based on a national standard population.

Determining Minimum Value
Under ACA, a plan fails to provide minimum value if the plan’s share of the total allowed costs of benefits provided under the plan is less than 60% of such costs. Determining minimum value is important to employers, particularly those employing 50 or more full-time equivalent employees, in that if the employer plan fails the minimum value test, or is unaffordable, a shared responsibility tax may be triggered (see CBIZ Health Reform Bulletin, Shared Responsibility Guidance, 1/9/13).
For the purposes of determining whether an employer’s group health plan provides a minimum value of benefits, the plan can utilize a minimum value calculator, a designed-based safe harbor checklist to be established by HHS/IRS, or the plan can seek an appropriate actuarial certification. The CCIIO has released Minimum Value Calculator, together with a Minimum Value Calculator Methodology for purposes of determining a plan’s minimum value.

The final regulations provide that employer contributions to health savings accounts (HSA) and first year contributions to health reimbursement arrangements (HRAs) can count toward meeting a plan’s minimum value.

The final regulations also provide for a plus or minus 2% margin, applicable to AV calculations and MV calculations, as well as to deductibles in the small group market, to allow plans a bit of wiggle room for compliance.

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FUTA Credit Reduction Impacts 19 States

Monday, November 26th, 2012

Due to high unemployment rates that have occurred throughout the United States over the past several years, many states are now subject to a FUTA Credit reduction. This article will briefly discuss Credit reduction and how it may affect your business.

The standard Federal Unemployment Tax (FUTA) is 6.0% on the first $7000 in employee wages subject to FUTA. However, the federal government provides a 5.4% tax credit which results in an effective federal unemployment tax rate of 0.6% on the first $7000 in subject wages, (equivalent to $42 per employee, per year).

Why the Credit is Reduced
According to federal law, states with a high rate of unemployment and difficulty meeting their benefit obligations can borrow money from the FUTA account. If a state has an outstanding loan on January 1 for two consecutive years, and does not repay the full amount by November 10 of the second year, the FUTA credit rate for employers in that state will be reduced until the loan is repaid.

A state with an outstanding loan can avoid a credit reduction by repaying the loan by November 10^th of the year the reduction is scheduled to take effect. If the loan is not repaid by that date, a credit reduction of 0.3% goes into effect, with employers in that state having their maximum credit reduced to 5.1% (5.4% – 0.3%) and their effective FUTA tax rate increased to 0.9% (0.6% + 0.3%) or $63 per employee in the first year of reduction. Each year a loan remains unpaid, the credit reduction increases by 0.3%, although there are limits for states that have made efforts to keep their balances in check.

How will this affect your company?
If you were required to pay state unemployment in any of the impacted states during 2012, you should expect to pay additional Federal Unemployment Tax on the wages paid in these states when the 940 return is filed for 2012 (due January 31, 2013). Each credit reduction increase of 0.3% will result in an additional $21 per employee that earns at least $7,000 in subject wages:

0.3% reduction = additional $21 per employee
0.6% reduction = additional $42 per employee
0.9% reduction = additional $63 per employee
1.2% reduction = additional $84 per employee
1.5% reduction = additional $105 per employee

The additional FUTA liability will appear on the Schedule A form, which is filed with the 940 return in the 4^th quarter packet.

States	Reduction Rate
Arizona	.003
Arkansas	.006
California	.006
Connecticut	.006
Delaware	.003
Florida	.006
Georgia	.006
Indiana	.009
Kentucky	.006
Missouri	.006
Nevada	.006
New Jersey	.006
New York	.006
North Carolina	.006
Ohio	.006
Rhode Island	.006
Vermont	.003
Virgin Islands	.015
Wisconsin	.006

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Tags: 2012 Employer FUTA Liability, Employer FUTA Tax, Employer Taxes, FUTA Credit Reduction, FUTA Credit Reduction Impacts 19 States, FUTA Tax, FUTA Tax Credit Reduction, FUTA Taxes, Payroll Control Systems, PCS, Taxes
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Expanded Work Opportunity Tax Credit Available for Hiring Qualified Veterans

Tuesday, November 13th, 2012

Source: IRS.gov

The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC). The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer’s share of social security tax. The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013.

The credit can be as high as $9,600 per qualified veteran for for-profit employers or up to $6,240 for qualified tax-exempt organizations, but the amount of the credit will also depend on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. The amount of the credit for qualified tax-exempt organizations may not exceed the organization’s employer social security tax for the period for which the credit is claimed.

Pre-screening and Certification

All employers must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. The process for certifying the veterans for this credit is the same for all employers.

Normally, an eligible employer must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their respective state workforce agency within 28 days after the eligible worker begins work. But under a special rule included in IRS Notice 2012-13, employers have until June 19, 2012, to complete and file this newly-revised form for veterans hired on or after Nov. 22, 2011, and before May 22, 2012. The 28-day rule will again apply to eligible veterans hired on or after May 22, 2012.

Notice 2012-13 also provides additional guidance on submission of Form 8850.

For more information, see Form 8850 , Pre-Screening Notice and Certification Request and the instructions.

Claiming the Credit

For-profit Employers

For for-profit employers, the law now allows a tax credit for hiring qualified veterans who begin work before January 1, 2013.

After the required certification is secured, for-profit employers claim the tax credit as a general business credit against their income tax. The process for for-profit employers claiming the Work Opportunity Tax Credit under the VOW to Hire Heroes Act for qualified veterans remains the same.
For additional information, see:

Form 5884 (with instructions) (PDF),
Form 3800 (PDF),
Instructions for Form 3800 (PDF), and
Your business’s related income tax return and instructions (i.e., Forms 1040, 1041, 1120, etc.)

Tax-exempt Employers

Qualified tax-exempt organizations, organizations described in IRC Section 501(c) and exempt from taxation under IRC Section 501(a), may claim the credit for qualified veterans who begin work on or after Nov. 22, 2011, and before January 1, 2013.

After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C , Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans.

File Form 5884-C after filing the related employment tax return for the employment tax period for which the credit is claimed. It is recommended that qualified tax-exempt employers do not reduce their required deposits in anticipation of any credit as the forms are processed separately.

In addition to Form 5884-C and its instructions, tax-exempt employers should see IRS Notice 2012-13 and the Frequently Asked Questions & Answers for more details for claiming the credit.

References/Related Topics:

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W-2 Reporting of Employer Paid Insurance

Sunday, October 28th, 2012

The Affordable Care Act requires many employers to report the cost of coverage under an employer-sponsored group health plan on employees’ 2012 W-2s. If you need an earning code for this, please contact your Client Account Manager before processing your final payroll dated in 2012.

All employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement, except as provided in the transition relief described below. This includes federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families), churches and other religious organizations, and employers that are not subject to the COBRA continuation coverage requirements, but does not include federally recognized Indian tribal governments or, until further guidance, any tribally chartered corporation wholly owned by a federally recognized Indian tribal government. Those not required in 2012 may choose to voluntarily comply this year and could be required in future years but the IRS will give at least six months of advance notice of any changes to the transition relief.

In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee whether or not it was pre-tax. In the case of a health FSA, the amount reported should not include the amount of any salary reduction contributions.

The cost of these health care benefits will be reported in Box 12 of the Form W-2, with Code DD. It is listed for informational purposes only, and is not taxable.

The transition relief applies to the following:

Employers who filed fewer than 250 Forms W-2 for the previous calendar year (employers who filed fewer than 250 W-2s for 2011 tax year) will not be required to report the cost of coverage on the 2012 W-2s.
Multi-employer plans.
Health Reimbursement Arrangements.
Dental and vision plans that are not integrated into another group health plan or that give participants the choice of declining the coverage or electing it and paying an additional premium.
Self-insured plans of employers not subject to COBRA continuation coverage or similar requirements.
Employee assistance programs, on-site medical clinics, or wellness programs for which the employer does not charge a premium under COBRA continuation coverage or similar requirements; and
Employers furnishing W-2s to employees who terminate before the end of a calendar year and request their W-2 before the end of that year.

Employers are not required to create a W-2 for the sole purpose of reporting health coverage.

Click Here for more detailed information on this topic.

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Archive for the ‘Government News’ Category

Expanded Work Opportunity Tax Credit Available for Hiring Qualified Veterans

Pre-screening and Certification

Claiming the Credit

For-profit Employers

Tax-exempt Employers

References/Related Topics:

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