Penalties Increase for Employers Violating Certain Federal Labor Laws

Employers that do not comply with certain requirements under a number of federal labor laws will face increased fines beginning with civil penalties assessed after August 1, 2016 (whose associated violations occurred after November 2, 2015).

Key Penalty Increases
Penalty increases announced by the U.S. Department of Labor that may be of particular interest include:

• Repeated or willful violations of the Fair Labor Standards Act (FLSA) minimum wage or overtime pay requirements will be subject to a penalty of up to $1,894 per violation (formerly $1,100);
• Willful violations of the Family and Medical Leave Act (FMLA) posting requirement will be subject to a penalty not to exceed $163 for each separate offense (formerly $110) (note: covered employers must post this general notice even if no employees are eligible for FMLA leave);
• Failure to provide employees with a Children’s Health Insurance Program (CHIP) notice will be subject to a penalty of up to $110 per day per violation (formerly $100);
• Failure to provide a Summary of Benefits and Coverage (SBC) will be subject to a penalty of up to $1,087 per failure (formerly $1,000);
• Failure or refusal to file a Form 5500 will be subject to a penalty of up to $2,063 per day (formerly $1,100); and
• Violations of the Occupational Safety and Health Administration’s posting requirement will be subject to a maximum penalty of $12,471 for each violation (formerly $7,000).

Our Compliance by Company Size chart features a summary of key federal labor laws that may apply to a company based on its number of employees.

Proposed Changes to Form 5500 Include Elimination of Filing Exemption for Small Group Health Plans

The U.S. Department of Labor and other federal agencies have released two proposed rules revising the Form 5500 and Form 5500-SF Annual Returns/Reports that are required to be filed by certain employee benefit plans.

Among other changes, the proposed rules would:

• Introduce basic reporting requirements for all group health plans that have fewer than 100 participants and are covered by Title I of the Employee Retirement Income Security Act (ERISA)–most of which are currently exempt from reporting requirements;
• Create a new schedule (Schedule J), by which applicable group health plans would satisfy certain ERISA reporting requirements added by the Affordable Care Act (ACA); and
• Revise the Schedule C reporting requirements to more closely track the information that plan service providers are required to disclose to plan fiduciaries.

The target for implementing the proposed revisions is the Plan Year 2019 Form 5500 Series Annual Returns/Reports, though some form changes may be made earlier or later.

You may review our Benefits Notices Calendar for additional notice and disclosure requirements that apply to group health plans under federal law.

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ACA PCORI FEES:

What is PCORI? When, Why and How Much?

PCORI = Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377):

What:  The PCORI Trust Fund fee is a fee on plan sponsors and issuers of health insurance individual and group policies.  The fee is designed to create a funding for the Patient-Centered Outcomes Research Institute, which is tasked with researching health plans and making informed health decisions by advancing the quality and relevance of evidence-based medicine.

Who: Any fully insured employer with an HRA (Health Reimbursement Account) plan or non-excepted FSA (Flexible Spending Account) plan will need to pay the fee directly to the IRS for any employees participating in the offered HRA or FSA. For fully insured employers who do not offer HRA (Health Reimbursement Account) plans, their issuer, or carrier, are responsible for filing and paying the PCORI fee to the IRS on your behalf.  The fee is included in your monthly premium.  Self-funded employers must complete IRS Form 720 (see attached) and pay the PCORI fee directly to the IRS.  Additionally, if you offer accident / health coverage or major medical insurance, even if under multiple plans, you are subject to the fee.  Retiree-only health or major medical coverage is also subject to the PCORI fee.  The fee also applies to COBRA coverage.  Dental benefits, vision benefits, or HSA (Health Savings Account) plans are not affected by this requirement.

When:  The PCORI fee applies to specified health insurance policies with policy years ending after Sept. 30, 2012, and before Oct.1, 2019, and applicable self-insured health plans with plan years ending after Sept. 30, 2012, and before Oct. 1, 2019.  The PCORI fee is due to the IRS by July 31^st, annually.

How much: The fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for that specific year. The amount of the PCORI fee is adjusted annually to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services. For plan years ending on or after 10/01/2015 and before 10/01/ 2016, the fee of $2.17 per employee is due July 31, 2016 to the IRS.

Calculating the Average Number of Lives: The PCORI Fee is based on the average number of covered lives (employees, spouses and dependents) during the plan year. Only those residing in the U.S. must be counted. If the address on file for the primary covered subscriber is outside the U.S., you may presume that the spouse and dependents also reside outside the U.S. Self-insured plan sponsors may use any of the following methods to calculate their covered lives subject to the PCORI Fee:

1. Actual Count Method: Calculate the sum of the covered lives for each day of the plan year and divide the sum by the number of days in the plan year.
2. Snapshot Method (Factor or Count Methods): Add the total number of covered lives on one selected date in each quarter of the plan year, or an equal number of dates for each quarter, and divide the total covered lives by the number of dates on which a count was made. To count covered lives on a designated date, use either the snapshot factor method or the snapshot count method.
   1. Snapshot Factor Method: The number of covered lives is equal to the sum of the number of primary plan participants with self-only coverage on that date, plus the number of primary participants with other than self-only coverage (e.g., participant plus spouse or family coverage) multiplied by 2.35. (This is the method for those not wishing to count dependents separately.)
   2. Snapshot Count Method: The number of covered lives is the actual number of covered lives (primary participants and all covered dependents) on the designated date.
3. Form 5500 Method: Use the formula that includes the number of participants actually reported on the Form 5500 for the plan year.

Plan sponsors must use only one method in each year, but are not required to use the same method from year to year.

Generally, all individuals who are covered during the policy or plan year must be included in computing the average number of lives covered for that year. Thus, for example, an applicable self-insured health plan must count an employee and his one dependent child as two separate covered lives. The exception to this is for both health reimbursement arrangement (HRA) and flexible spending arrangement (FSA).

When a plan sponsor has multiple plans, FSAs and HRAs will fall under one of the below three categories for paying these fees:

1. Stand-alone HRA or FSA.
2. If the plan sponsor has no other medical healthcare plan with the HRA, then the fee will be paid by the plan sponsor on the average number of covered lives under the HRA. HRA or FSA with an insured medical plan.
3. If the plan sponsor has other medical healthcare plans and that coverage is fully insured, covered lives that were already counted with the medical healthcare plan will need to be counted and paid again for the FSA or HRA plan. The insured carrier will pay the fees for the medical healthcare plan and the plan sponsor will pay the fees for the FSA or HRA plan.

HRA or FSA with a self-funded medical plan. If the plan sponsor has other medical healthcare plans that are self-funded and on the same plan year as the FSA or HRA, then any covered life that was already counted for the medical healthcare plan will not need to be counted and paid again for the FSA or HRA plan.  If the plan sponsor has other medical healthcare plans that are self-funded and NOT on the same plan year as the FSA or HRA, then any covered life that was already counted for the medical healthcare plan will need to be counted and paid again for the FSA or HRA plan.

The IRS allows several different methods for determining the average number of covered lives. You may want to consult your tax professional to discuss which method is best for your organization. For more information on the PCORI fee, please go to http://www.irs.gov/uac/Newsroom/Patient-Centered-Outcomes-Research-Institute-Fee

The information and materials herein are provided for topical general reference purposes only and are not intended to constitute legal, tax or other advice. Opinions on any specific matters and are not intended to replace the advice of a qualified attorney, tax consultant or plan provider. Federal and state laws change frequently and, as such, there is no guarantee as to the accuracy or completeness of the information featured herein. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

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We have received many questions from clients regarding Health Savings Accounts and we thought it would be helpful to provide an overview. Health Savings Accounts are part of the movement toward “consumer-driven healthcare”, which is an approach aimed at encouraging patients to make better informed choices about the costs associated with their health care.

An HSA is a personal tax advantaged medical savings account set up to pay qualified medical expenses on a tax-free basis. To be eligible and qualify for an HSA, an individual must be enrolled in a qualified high deductible health plan (HDHP). An HDHP is defined as a plan with a deductible of $1300 or more for an individual and $2600 or more for two or more coverage.

Generally, an adult who is covered by a high-deductible health plan (and has no other first-dollar coverage) may establish an HSA. During 2016, HSA’s allow for tax deductible contribution of up to $3,350 for a self-only plan and $6,750 for coverage of two or more. Additionally, any 55 year old or older subscriber is eligible for a $1,000 catch-up deduction.

The advantages of HSA accounts include:

• Exempt from payroll taxes

• Deductible contributions include both earned and unearned income

• Choice of investment types and risks

• Funds can be used at any time/any age for qualified medical expenses

• Can continue to make deductible contributions after employment
• The account owner is able to spend it on eligible health care expenses, invest it, or spend it on consumer goods (although penalties, such as taxes, apply)

• Rollovers

• Portability

If you have any further questions on this, feel free to give us a call.

The information and materials herein are provided for topical general reference purposes only and are not intended to constitute legal, tax or other advice. Opinions on any specific matters and are not intended to replace the advice of a qualified attorney, tax consultant or plan provider. Federal and state laws change frequently and, as such, there is no guarantee as to the accuracy or completeness of the information featured herein. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

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Changes to Federal Overtime Rules for ‘White Collar’ Workers

A final rule, effective December 1, 2016, updates the regulations governing which executive, administrative, and professional employees (white collar workers) are entitled to the minimum wage and overtime pay protections of the federal Fair Labor Standards Act (FLSA).

Current Rules
The current federal rules provide an exemption from both the FLSA minimum wage and overtime pay requirements for bona fide executive, administrative, and professional employees who meet certain tests regarding their job duties and who are paid on a salary basis at not less than $455 per week ($23,660 per year). “Highly-compensated employees” (HCEs) who are paid total annual compensation of $100,000 or more and meet certain other conditions are also deemed exempt.

Key Changes  
The final rule focuses primarily on updating the salary and compensation levels needed for executive, administrative, and professional workers to be exempt. No changes are being made to the current job duties tests. In particular, the final rule:

• Raises the salary threshold from $455 a week to $913 per week (or $47,476 annually) for a full-year worker;
• Increases the HCE total annual compensation level to $134,004 annually;
• Establishes a mechanism for automatically updating the salary and compensation levels every 3 years, beginning on January 1, 2020; and
• Amends the regulations to allow employers to use nondiscretionary bonuses, incentives, and commissions to satisfy up to 10% of the new standard salary level, so long as employers pay those amounts on a quarterly or more frequent basis.

Note: When both the FLSA and a state law apply, the employee is entitled to the most favorable provisions of each law.

Our section on the Fair Labor Standards Act features additional information on exemptions from the law’s minimum wage and overtime requirements.

Employers Should Continue to Use Current Version of Form I-9 Until Further Notice

As a reminder, U.S. Citizenship and Immigration Services has advised that employers should continue using the current version of Form I-9, even though the March 31, 2016 expiration date on the form has passed. The agency recently proposed several revisions to Form I-9 and stated that it will provide updated information about the new version of the form as it becomes available.

Federal law requires employers to hire only individuals who may legally work in the United States–either U.S. citizens or foreign citizens who have the necessary authorization. To comply with the law, employers must verify the identity and employment authorization of each person they hire by completing and retaining Form I-9.

For more information on complying with the employment eligibility verification requirements, please visit our section on Form I-9.

Certain Employers May Receive Marketplace Notices

The Affordable Care Act (ACA) and its accompanying rules require Health Insurance Marketplaces to notify any employer whose employee has enrolled in a Marketplace plan and has been determined eligible for advance premium tax credits and cost-sharing reductions. A sample employer notice that will be used by the federally-facilitated and certain state-based Marketplaces is now available for review. Because these events may trigger employer penalties under the ACA’s “pay or play” provisions, an employer appeal request form has also been provided by the federal government.

Receipt of Notices
Marketplaces must notify employers within a reasonable timeframe following any month of the employee’s eligibility determination and enrollment. Previously released FAQs indicated that the Marketplaces would begin sending out employer notices in spring 2016, with additional notices to follow throughout the year.

Employer Appeals Process
Appeal of an employer notice generally must be made within 90 days. In the appeal, the employer may assert that it provides its employee access to affordable, minimum value employer-sponsored coverage or that its employee is enrolled in employer coverage, and therefore that the employee is ineligible for advance payments of the premium tax credit.

Our Pay or Play section includes step-by-step guidance, worksheets, and calculators that can help employers understand if they will be subject to a penalty and how to calculate it.

6 Factors for Deciding Whether to Pay Interns

Are you planning to hire interns this summer? While it can be tempting to allow such individuals to volunteer at your place of business or pay less than the minimum wage, the fact is that internships are most often considered “employment” subject to the federal minimum wage and overtime rules.

The Fair Labor Standards Act
Under the federal Fair Labor Standards Act (FLSA), interns in the for-profit private sector who qualify as employees typically must be paid at least $7.25 per hour, and not less than one and one-half times the regular rate of pay after 40 hours of work in a workweek.

Note: When both the FLSA and a state law apply, the employee is entitled to the most favorable provisions of each law. Be sure to check your state wage and hour laws for applicable requirements.

The Test for Unpaid Interns
There are some circumstances under which individuals who participate in for-profit private sector internships or training programs may do so without compensation. The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances. The U.S. Department of Labor uses the following six criteria which must be applied when making this determination:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship likely does not exist under federal law, and the FLSA’s minimum wage and overtime provisions do not apply to the intern. (This exclusion is narrow, because the FLSA’s definition of “employ” is very broad.)

Visit our Employee Pay section for information on other common federal wage issues.

New Rules Apply to Wellness Programs Beginning in 2017

New rules issued by the U.S. Equal Employment Opportunity Commission describe how the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) apply to wellness programs offered by employers that request health information from employees and their spouses. The new rules, which apply beginning in 2017, affect all workplace wellness programs (including those in which employees or their family members may participate without also enrolling in a particular health plan).

Background
The ADA and GINA, which apply to employers with 15 or more employees, generally prohibit employers from obtaining and using information about employees’ own health conditions or about the health conditions of their family members. Both laws, however, generally allow employers to ask health-related questions and conduct medical examinations if the employer is providing health or genetic services as part of a voluntary wellness program.

New Rules
Subject to certain conditions, the new rules generally allow employers to:

• Provide limited incentives as part of wellness programs that make disability-related inquiries or require medical examinations; and
• Offer limited inducements to an employee whose spouse receives health or genetic services offered by the employer–including as part of a wellness program–and provides information about his or her manifestation of disease or disorder as part of a health risk assessment.

In general, the maximum incentive or inducement may not exceed 30% of the total cost of self-only coverage under the applicable health plan. Among other things, the new rules also detail several requirements that must be met in order for participation in a wellness program to be considered voluntary, and require employers to provide employees with a notice clearly explaining what medical information will be obtained, who will receive it, how it will be used, and how it will be kept confidential.

Additional Information
In addition to complying with the ADA and GINA, certain wellness programs must meet specific requirements to satisfy nondiscrimination rules under the federal Health Insurance Portability and Accountability Act (HIPAA). Due to the changing law and the complexity of the requirements that apply to employment-based wellness programs, employers are advised to check with a knowledgeable employment law attorney to ensure that any program complies with all applicable federal and state laws.

Our section on Wellness Programs provides additional details.

Newsletter provided by:

Summit Insurance Advisors
11350 McCormick Road, Executive Plaza III,, Hunt Valley, MD 21031
(410) 584-9600

Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

The information provided herein is intended solely for the use of our clients and members. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher. Kindly read our Terms of Use and respect our Copyright.

© 2016 HR 360, Inc. – All rights reserved

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2017 HSA Contribution Limits and Minimum Deductibles

The IRS has released the 2017 inflation adjusted amounts for health savings accounts (HSAs). To be eligible to make HSA contributions, an individual must be covered under a high deductible health plan (HDHP) and meet certain other eligibility requirements.    High Deductible Health Plan Coverage An HDHP has a higher annual deductible than typical health plans and a maximum limit on the sum of the annual deductible and other out-of-pocket expenses. For 2017, the minimum annual deductible is $1,300 for self-only coverage or $2,600 for family coverage. Annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) may not exceed $6,550 for self-only coverage or $13,100 for family coverage.    Annual HSA Contribution Limitation An eligible employee, his or her employer, or both may contribute to the employee’s HSA. For calendar year 2017, the annual limitation on HSA deductions for an individual with self-only HDHP coverage is $3,400. For an individual with family coverage under an HDHP, the annual limitation on HSA deductions is $6,750. The limit is increased by $1,000 for eligible individuals age 55 or older at the end of the tax year.   You can learn more about HSAs in our section on Health Savings Accounts.

Upcoming Deadlines for Employers to File ACA Information Returns With the IRS

Employers subject to the new Affordable Care Act (ACA) information reporting requirements are reminded that the deadlines for filing the first ACA information returns with the IRS for the 2015 calendar year are quickly approaching. The due dates are as follows:

• Applicable large employers (ALEs)–generally those with 50 or more full-time employees, including full-time equivalents–must file Forms 1094-C and 1095-C with the IRS no later than May 31, 2016 (or June 30, 2016, if filing electronically).
• Self-insuring employers that are not considered ALEs, and other parties that provide minimum essential health coverage, must file Forms 1094-B and 1095-B with the IRS no later than May 31, 2016 (or June 30, 2016, if filing electronically).

The ACA information returns are used to report certain information to the IRS about the health care coverage offered to employees and other covered individuals (as applicable). Affected employers were also required to furnish employee/individual statements, on or before March 31, 2016, that included the same information provided to the IRS.   Be sure to review our Information Reporting section for more information, guidance, and Q&As.

Updated FMLA Poster Now Available

The U.S. Department of Labor (DOL) has released an updated version of the “Employee Rights Under the Family and Medical Leave Act” poster (often referred to as the “General FMLA Notice”), along with a new guide to help employers comply with the law. Employers may use either the new April 2016 version of the poster or the prior February 2013 version of the poster to fulfill their FMLA posting requirements.   Background The federal FMLA provides eligible employees of covered employers (including private sector employers who employ 50 or more employees for at least 20 workweeks in the current or preceding calendar year) with unpaid, job-protected leave for specified family and medical reasons. The law also includes certain family military leave entitlements. Employers are required to maintain group health insurance coverage for an employee on FMLA leave on the same terms as if the employee continued to work.   Updated FMLA Poster Every employer covered by the FMLA is required to display a poster prepared by the DOL which summarizes the major provisions of the law. The poster must be displayed in a conspicuous place where employees and applicants can see it, even if there are no employees eligible for FMLA leave. An April 2016 version of the required FMLA poster is now available for employers; however, the February 2013 version of the FMLA poster is still valid and can be used to fulfill the posting requirement.   If a covered employer has any eligible employees, it must also provide the general notice to each employee by including it in employee handbooks or other written guidance concerning employee benefits or leave rights, if such written materials exist (otherwise, the employer may distribute a copy of the general notice to each new employee upon hire).   New Employer’s Guide A new employer’s guide was also released, which is designed to provide information about employers’ obligations under the law and their options in administering FMLA leave. The guide contains resources such as charts, examples, and citations for further information. Our section on the Family and Medical Leave Act includes additional FMLA forms and notices for use by employers.

3 Things for Employers to Know About Vacation Leave

With summer just around the corner, now is a great time to review existing vacation leave policies. Here are three things employers need to know about vacation leave:

1.     Vacation leave is not required under federal law. While vacation days are a common employer-provided benefit, federal law generally does not require either time off or pay for vacation. However, if an employer decides to offer vacation leave to its employees, the policy should be applied fairly and uniformly.

2.     State laws may apply to pay in lieu of earned vacation. In addition to allowing employees annual time off for vacation, employers also commonly provide pay in lieu of vacation time that employees have earned. A number of states require employers to pay employees for unused accrued vacation upon termination. Contact your state labor department for guidance on your state’s laws regarding vacation pay.

3.     Vacation policies should be in writing and communicated to employees. It is very important for employers to develop a clear, written policy regarding paid vacation leave and follow it exactly. Non-written leave policies can lead to inconsistency and complaints from confused employees, as well as claims of discrimination. At a minimum, the policy should include:

·         The categories of employees who are eligible to accrue and use paid vacation leave;

·         The amount of paid vacation leave provided each year and how leave is earned;

·         Whether paid vacation leave can be carried over from year to year; and

·         Whether employees will be paid for unused vacation leave upon termination of employment (in compliance with any state law requirements).

Check out our section on Leave and Time Off to learn more about federal and state-mandated leave requirements, as well as common types of employer-provided voluntary time off.

New Versions of SBC Template and Related Documents Finalized

Federal agencies have finalized new versions of the summary of benefits and coverage (SBC) template, instructions, uniform glossary, and related documents, which are authorized for use on or after April 1, 2017. Under the Affordable Care Act, group health plans and health insurance issuers are generally required to provide a written SBC to plan participants and beneficiaries at specified times during the enrollment process and upon request.   Changes to SBC Template The new SBC template includes an additional coverage example as well as language and terms to improve individuals’ understanding of their health coverage. Specifically, the new template includes more information about cost-sharing, such as enhanced language to explain deductibles, and requires plans to address individual and overall out-of-pocket limits. Changes have also been made to the SBC to improve readability.     Date for Using Updated Template and Related Documents The implementation date for using the new SBC template and associated materials will be as follows:

• Health plans and issuers that maintain an annual open enrollment period will be required to use the new editions beginning on the first day of the first open enrollment period that begins on or after April 1, 2017 with respect to coverage for plan years beginning on or after that date.
• Health plans and issuers that do not use an annual open enrollment period will be required to use the new editions beginning on the first day of the first plan year that begins on or after April 1, 2017.

Additional information can be found in our Summary of Benefits and Coverage (SBC) section.

Newsletter provided by:

Summit Insurance Advisors 11350 McCormick Road, Executive Plaza III,, Hunt Valley, MD 21031 (410) 584-9600

Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

The information provided herein is intended solely for the use of our clients and members. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher. Kindly read our Terms of Use and respect our Copyright.

© 2016 HR 360, Inc. – All rights reserved

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HR News Alert Brought to you by Summit Insurance Advisors April 2016 Issue 5 Q&As About ACA Information Forms for Employees As a result of the new information reporting requirements under the Affordable Care Act (ACA), employers may be fielding questions from employees about the different forms they are receiving with information about their health coverage. The following questions and answers for employees may be helpful: 1. What are the health care tax forms that employees might receive? Employees may receive one or more forms providing information about the health care coverage they had or were offered during the previous year, including: Form 1095-B, which is furnished by health insurance companies, small self-insuring employers, and other providers of minimum essential health coverage. Form 1095-C, which is provided by applicable large employers (ALEs)–generally those with 50 or more full-time employees, including full-time equivalent employees. Individuals that enrolled in coverage through the Health Insurance Marketplace will receive Form 1095-A. 2. How do employees use the information on these forms? An employee uses the information on these forms to verify that the employee, his or her spouse, and any dependents had minimum essential health coverage for each month during the prior year and to report that coverage on his or her federal income tax return. Employees that did not have minimum essential health coverage may be liable for an individual shared responsibility payment. 3. Can employees file their tax returns if they have not received these forms? Yes. Employees should not wait for either Form 1095-B or 1095-C to file their individual income tax returns. Other forms of documentation that may assist in reporting health coverage include insurance cards, explanations of benefits, and Forms W-2 reflecting health insurance deductions. (Employees enrolled in Health Insurance Marketplace coverage will need the information on Form 1095-A to file a complete and accurate tax return.) 4. Should these forms be attached to individual income tax returns? No. Although employees may use the information on the forms to help complete their tax returns, these forms should not be attached or sent to the IRS. The issuers of the forms (e.g., employers or health insurance companies) are required to send the information to the IRS separately. Employees should keep the forms for their records along with other important tax documents. 5. Who should employees contact with questions about these forms? Employees should contact the provider of the form (e.g., the employer or health insurance company), not the IRS, with questions about Form 1095-B or 1095-C. For questions about Form 1095-A, employees should contact the Health Insurance Marketplace. Our section on Information Reporting provides more information on the requirements for employers. New ACA Guidance on SBC Templates, Cost-Sharing Limits, and Extended Transition Relief for Existing Coverage Employers should take note of important new agency guidance affecting a number of Affordable Care Act (ACA) requirements over the next year. Implementation Date for Using New Proposed SBC Template A new FAQ regarding the applicable date for using the new proposed summary of benefits and coverage (SBC) template and associated documents provides the following expected implementation dates: Health plans and issuers that maintain an annual open enrollment period will be required to use the new SBC template and associated documents beginning on the first day of the first open enrollment period that begins on or after April 1, 2017 with respect to coverage for plan years beginning on or after that date. For health plans and issuers that do not use an annual open enrollment period, use of the new proposed SBC template and associated documents would be required beginning on the first day of the first plan year that begins on or after April 1, 2017. 2017 Cost-Sharing Limits Released New guidance from the U.S. Department of Health and Human Services updates the limit on annual out-of-pocket cost-sharing for coverage of essential health benefits by non-grandfathered group health plans. For 2017, annual out-of-pocket expenses may not exceed $7,150 for self-only coverage or $14,300 for family coverage. Small Businesses May Be Able to Keep Existing Health Coverage Through Policy Years Beginning On or Before October 1, 2017 A previously extended transitional policy which allows health insurance issuers, at their option, to continue small business group coverage that would otherwise be terminated or cancelled has been extended further—to policy years beginning on or before October 1, 2017, provided that all policies end by December 31, 2017. Health insurance issuers that renew coverage under the extended policy are required to provide standard notices to affected small businesses for each policy year. Policies subject to the transitional relief will not be considered to be out of compliance with some of the ACA’s key provisions, including: The requirement to cover essential health benefits; The requirement that any variations in premiums be limited with regard to a particular plan or coverage to age and tobacco use, family size, and geography; and The requirements regarding guaranteed availability and renewability of coverage for employers. Be sure to visit our Health Care Reform section to stay on top of the latest ACA updates. 3 Tax Recordkeeping Tips for Employers Keeping good records not only makes tax filing easier and faster, but it can also help you monitor the progress of your business, prepare your financial statements, and support items reported on your tax returns. Here are three simple tips from the IRS to help you get organized: 1. Save Certain Business Records The following are some of the types of records you should keep: Gross receipts are the income you receive from your business. You should keep supporting documents that show the amounts and sources of your gross receipts. Purchases are the items you buy and resell to customers. Your supporting documents should show the amount paid and that the amount was for purchases. Expenses are the costs you incur (other than purchases) to carry on your business. Your supporting documents should show the amount paid and that the amount was for a business expense. Assets are the property, such as machinery and furniture, that you own and use in your business. You need records to compute the annual depreciation and the gain or loss when you sell the assets. 2. Keep Employment Tax Records The following information should be available for IRS review: Your employer identification number (EIN); Amounts and dates of all wage, annuity, and pension payments; Amounts of tips reported; The fair market value of in-kind wages paid; Names, addresses, social security numbers, and occupations of employees and recipients; Any employee copies of Forms W-2 that were returned to you as undeliverable; Dates of employment; Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payers made to them; Copies of employees’ and recipients’ income tax withholding allowance certificates; Dates and amounts of tax deposits you made; Copies of returns filed; Records of allocated tips; and Records of fringe benefits provided, including substantiation. 3. Store and Organize Your Records Business owners should generally keep all employment-related tax records for at least 4 years after the tax is due, or after the tax is paid, whichever is later. The length of time you should keep other documents depends on the action, expense, or event the document records. You can review our section on Employee Records and Files for information on other federal recordkeeping responsibilities for employers. Common Workplace Poster Mistakes and How to Correct Them A number of federal, state, and local laws require employers to display labor posters in their workplaces that include information about relevant employment laws. Employers should be mindful of the following mistakes concerning workplace posters. Mistake #1: Posting the Wrong Posters A good place to start your poster inspection is with the U.S. Department of Labor’s (DOL) online Poster Advisor, an interactive tool that can be used to determine the poster requirements of several federal laws administered by the DOL. Be sure to check with your state labor office for state-specific poster requirements, as well as any industry-specific requirements that may apply to your business. You should also check with your local municipal government, as certain localities may require additional workplace postings. Mistake #2: Posting Outdated Posters Workplace posters are updated from time to time–for example, to reflect changes in the law–so make it a regular practice to check whether the posters displayed in your workplace are the most recent versions available. Mistake #3: Posting the Wrong-Sized Poster Many of the agency links to required workplace posters contain specific information regarding a poster’s size. If you have any questions regarding the required size of a poster, contact the DOL or the applicable state or local agency. Mistake #4: Hanging Posters in the Wrong Place Workplace posters must generally be displayed in a prominent location where all employees can see them, but some posters may have special location requirements. Check for specific requirements for the posters you must display, and choose each poster’s placement carefully. Information regarding the federal requirements and links to downloadable posters are featured in our Federal Poster Requirements section. For state-specific posters, visit our State Laws section, select your state, and click on ‘Posters’ in the left-hand navigation menu.

Newsletter provided by:

Summit Insurance Advisors
11350 McCormick Road, Executive Plaza III,, Hunt Valley, MD 21031
(410) 584-9600

Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

The information provided herein is intended solely for the use of our clients and members. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher. Kindly read our Terms of Use and respect our Copyright.

© 2016 HR 360, Inc. – All rights reserved

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HR News Alert Brought to you by Summit Insurance Advisors

Newsletter provided by:

Summit Insurance Advisors 11350 McCormick Road, Executive Plaza III,, Hunt Valley, MD 21031 (410) 584-9600

Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

The information provided herein is intended solely for the use of our clients and members. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher. Kindly read our Terms of Use and respect our Copyright.

© 2016 HR 360, Inc. – All rights reserved

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HR News Alert Brought to you by Summit Insurance Advisors February 2016 Issue OSHA Summary of Work-Related Injuries and Illnesses Must Be Posted From February 1 – April 30 Employers subject to the recordkeeping requirements of the federal Occupational Safety and Health Act (generally those with more than 10 employees, except for employers in certain low-hazard industries) are reminded to post OSHA Form 300A, Summary of Work-Related Injuries and Illnesses, from February 1 to April 30, 2016. The Form 300A lists the total number of job-related injuries and illnesses that occurred during the previous year and must be posted even if no work-related injuries or illnesses occurred during the year. The summary must be certified by a company executive, and should be displayed in a common area where notices to employees are usually posted so that employees are aware of the injuries and illnesses occurring in the workplace. Revised List of Exempt Industries and Effect on State Plans As of January 2015, a final rule created a new list of industries that are partially exempt from keeping OSHA records. The rule maintains the exemption for any employer with 10 or fewer employees–regardless of its industry classification–from the requirement to routinely keep records of worker injuries and illnesses. However, please note that certain “state plan” states may not have formally adopted the new classifications. As such, establishments located in states that operate their own safety and health programs should check with their state plan for the implementation date of the requirements. More information about employer responsibilities related to worker safety and health is available in our section on Safety & Wellness. In this Issue OSHA Summary of Work-Related Injuries and Illnesses Must Be Posted 5 Quick Facts About COBRA Additional Guidance on Retroactive Increase for 2015 Monthly Transit Benefits How to Handle Employee Attendance During Bad Weather New Guidance on Joint Employment Under the Fair Labor Standards Act 5 Quick Facts About COBRA Understanding your responsibilities when it comes to COBRA compliance is the best way to prevent expensive mistakes. The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that requires certain-sized employers with group health plans to offer employees, their spouses, and their dependents a temporary continuation of health coverage if they lose coverage due to certain specified events. If you need a refresher, the following are five key points: COBRA generally applies to group health plans maintained by employers with at least 20 employees on more than 50% of typical business days in the prior year. Each part-time employee counts as a fraction of a full-time employee, equal to the number of hours the part-time employee worked divided by the hours an employee must work to be considered full-time. Only qualified beneficiaries are entitled to COBRA continuation coverage. Generally, qualified beneficiaries include employees, their spouses, and their dependent children who are covered under a group health plan on the day before a qualifying event. In addition, any child born to or placed for adoption with a covered employee during a period of COBRA coverage is automatically considered a qualified beneficiary. Qualifying events are events that cause an individual to lose group health coverage. Voluntary or involuntary termination of a covered employee (other than for gross misconduct) or a reduction in hours of work are qualifying events for the employee and his or her spouse and dependent child. Additional qualifying events for a spouse and dependent child include the covered employee’s death, divorce, or entitlement to Medicare. The type of qualifying event determines the amount of time the plan must offer qualified beneficiaries COBRA continuation coverage. When the qualifying event is the covered employee’s termination of employment (other than for gross misconduct) or reduction in hours of work, qualified beneficiaries must be provided 18 months of continuation coverage. (In certain circumstances, this period may be extended due to disability or the occurrence of a second qualifying event.) For other qualifying events, qualified beneficiaries must be provided 36 months of continuation coverage. Group health plans must provide qualified beneficiaries with specific notices explaining their COBRA rights. One way to avoid mistakes is to use the Model General Notice and the Model Election Notice provided by the U.S. Department of Labor, filling in the blanks with your plan information. Other notices, such as the Notice of Unavailability of Continuation Coverage and the Notice of Early Termination of COBRA Coverage, should be sent to qualified beneficiaries as necessary. COBRA rights must also be described in the plan’s summary plan description (SPD). Keep in mind that many states have enacted what are commonly referred to as “mini-COBRA” laws, which typically require continuation of group health plan coverage provided by employers with fewer than 20 employees. Employers of all sizes should check to see if a state mini-COBRA law applies to their plans and if so, how the law differs from federal COBRA. Be sure to consult with a trusted employment law attorney or benefits advisor if you have any questions as to how COBRA and/or mini-COBRA apply to a particular plan or your obligations under the law. Visit our section on COBRA for additional information regarding compliance, including step-by-step guidance, FAQs, and model notices and forms Additional Guidance on Retroactive Increase for 2015 Monthly Transit Benefits IRS guidance on how to apply the retroactive increase for monthly transit benefits in 2015 is now available for employers. As announced in December, the monthly exclusion for combined commuter highway vehicle transportation and transit passes was increased from $130 to $250 (equal to the exclusion for qualified parking), retroactive to January 1, 2015. The guidance provides a special administrative procedure for certain employers that treated “excess transit benefits”–i.e., in excess of $130 and up to $250–as wages and did not yet file their fourth quarter Form 941 for 2015. Employers that already filed the fourth quarter Form 941, or that have not repaid or reimbursed employees prior to filing the fourth quarter Form 941, must use Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, and normal procedures (described in the guidance) to make an adjustment or claim a refund for any quarter in 2015. The guidance explains both the special administrative and normal procedures in more detail, and provides employer instructions for Form W-2. For more on employer-provided transportation benefits, please visit our section on Fringe Benefits How to Handle Employee Attendance During Bad Weather Snow and slippery conditions during the winter months may make it difficult for your employees to travel to work. Consider the following guidelines that can help your company be prepared when bad weather strikes. 1. When an employee misses work due to bad weather conditions, whether the employee is entitled to be paid for the absence may depend on the employee’s exempt or non-exempt status. Under the federal Fair Labor Standards Act (FLSA), employers are not required to pay non-exempt employees for hours they did not work, including when the office is closed due to bad weather. Exempt employees generally must be paid their full salary amount if they perform any work during a workweek. However, an employer that remains open for business during a period of bad weather may generally make deductions, for full-day absences only, from the salary of an exempt employee who chooses not to report to work because of the weather. Deductions from salary for less than a full-day’s absence are not permitted.If the business is closed for the day as a result of inclement weather, the employer may not deduct the day’s pay from the salary of an exempt employee. The general rule is that an employer who closes operations due to a weather-related emergency or other disaster for less than a full workweek must pay an exempt employee the full salary for that week, if the employee performs any work during the week. This is because deductions may not be made for time when work is not available.2. Some states require employers to pay employees for showing up even if no work is available or there is an interruption of work and the employee is sent home. Although payment for time not worked may not be required for non-exempt employees under federal law, some states do require that employees be paid for a minimum number of hours for reporting to work, even if there is no work that can be performed (such as when the office is closed) or the employee is sent home early, for instance, due to an impending storm.Often called “reporting time pay,” these laws may apply to specific industries (e.g., manufacturing) or certain employees only, so it is important to check with your state labor department for requirements that may apply to your company before implementing any policy. 3. Plan ahead to let your employees know what is expected of them and to help minimize disruption to your business. Make it a priority to notify all of your employees, both exempt and non-exempt, of your company’s policy regarding employee attendance and pay during periods of inclement weather. Your policy should include information on how your employees can find out whether the office is open or closed, such as by email, radio broadcast, calling in to hear a recorded message, or other methods that all employees can access. Be sure to apply your policy consistently and fairly to all employees. It’s also prudent to remind employees to use their best judgment and not to put their safety at risk when it comes to traveling to work during or after a storm. If possible, see if you can arrange for employees to work remotely from home on days when the weather makes travel dangerous. For more issues related to employee compensation, including guidelines for determining the exempt or non-exempt status of your employees, visit our section on Employee Pay. New Guidance on Joint Employment Under the Fair Labor Standards Act The U.S. Department of Labor has issued new guidance concerning joint employment under the federal Fair Labor Standards Act (FLSA). Under the FLSA, it is possible for a worker to be employed by two (or more) joint employers who are both responsible for compliance. This is because joint employment is included in the law’s definition of “employment,” which was written to have as broad an application as possible. Determining When Joint Employment Exists The most likely scenarios for joint employment are: Where the employee has two (or more) technically separate but related or associated employers. Joint employment exists where two or more employers benefit from the employee’s work and they are sufficiently related to or associated with each other. The focus of this type of joint employment–sometimes called horizontal joint employment–is the degree of association between the two (or more) employers. Where one employer provides labor to another employer and the workers are economically dependent on both employers. Joint employment also exists where a worker is, as a matter of economic reality, economically dependent on two employers: an intermediary employer (e.g., a staffing agency) and another employer who engages the intermediary to provide workers. The focus of this type of joint employment–sometimes called vertical joint employment–is the employee’s relationship with the other employer (as opposed to the intermediary employer). Responsibilities of Joint Employers Joint employers (whether vertical or horizontal) are responsible, both individually and jointly, for compliance with the FLSA. Each of the joint employers must ensure that the employee receives all employment-related rights under the FLSA (including payment of at least the federal minimum wage for all hours worked and overtime pay at not less than one and one-half the regular rate of pay for hours worked over 40 in a workweek, unless an exception or exemption applies). Joint employers must combine all of the hours worked by the employee in a workweek to determine if the employee worked more than 40 hours and is due overtime pay. Additional resources, including Fact Sheets and Q&As, are available on the DOL’s website. More information on employers’ responsibilities under the FLSA is featured in our section on the Fair Labor Standards Act.

Newsletter provided by:

Summit Insurance Advisors
11350 McCormick Road, Executive Plaza III,, Hunt Valley, MD 21031
(410) 584-9600

Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

The information provided herein is intended solely for the use of our clients and members. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher. Kindly read our Terms of Use and respect our Copyright.

© 2016 HR 360, Inc. – All rights reserved

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Important reminder; Employee Retirement Income Security Act of 1974 (ERISA) (Pub.L. 93–406, 88 Stat. 829, enacted September 2, 1974, codified in part at 29 U.S.C. ch. 18) is a federal law that establishes minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans. ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by:

• Requiring the disclosure of financial and other information concerning the plan to beneficiaries;
• Establishing standards of conduct for plan fiduciaries;
• Providing for appropriate remedies and access to the federal courts.

ERISA is sometimes used to refer to the full body of laws regulating employee benefit plans, which are found mainly in the Internal Revenue Code and ERISA itself.
Responsibility for the interpretation and enforcement of ERISA is divided among the Department of Labor, the Department of the Treasury (particularly the Internal Revenue Service), and the Pension Benefit Guaranty Corporation.

ERISA requires that plan participants get copies of summary plan descriptions, plan documents and annual reports when requested. ERISA Section 104(b)(4) provides that “the administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract or other instruments under which the plan is established or operated.” There is even an enforcement provision that subjects the administrator to penalties if they fail to provide requested documentation. ERISA Section 502(c)(1) establishes that an administrator who fails to respond to a participant’s request for certain plan materials within 30 days could be subject to penalties of up to $110 per day for each day past the 30-day response time if the documents are not provided. [Read more…]

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