How Many Employers Could be Affected by the Cadillac Plan Tax?
Originally posted by Gary Claxton and Larry Levitt on August 25, 2015 on kff.org.
As fall approaches, we can expect to hear more about how employers are adapting their health plans for 2016 open enrollments. One topic likely to garner a good deal of attention is how the Affordable Care Act’s high-cost plan tax (HCPT), sometimes called the “Cadillac plan” tax, is affecting employer decisions about their health benefits. The tax takes effect in 2018.
The potential of facing an HCPT assessment as soon as 2018 is encouraging employers to assess their current health benefits and consider cost reductions to avoid triggering the tax. Some employers announced that they made changes in 2014 in anticipation of the HCPT, and more are likely to do so as the implementation date gets closer. By making modifications now, employers can phase-in changes to avoid a bigger disruption later on. Some of the things that employers can do to reduce costs under the tax include:
- Increasing deductibles and other cost sharing;
- Eliminating covered services;
- Capping or eliminating tax-preferred savings accounts like Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), or Health Reimbursement Arrangements (HRAs);
- Eliminating higher-cost health insurance options;
- Using less expensive (often narrower) provider networks; or
- Offering benefits through a private exchange (which can use all of these tools to cap the value of plan choices to stay under the thresholds).
For the most part these changes will result in employees paying for a greater share of their health care out-of-pocket.
In addition to raising revenue to fund the cost of coverage expansion under the ACA, the HCPT was intended to discourage employers from offering overly-generous benefit plans and help to contain health care spending. Health benefits offered through work are not taxed like other compensation, with the result that employees may receive tax benefits worth thousands of dollars if they get their health insurance at work. Economists have long argued that providing such tax benefits without a limit encourages employers to offer more generous benefit plans than they otherwise would because employees prefer to receive additional benefits (which are not taxed) in lieu of wages (which are). Employees with generous plans use more health care because they face fewer out-of-pocket costs, and that contributes to the growth in health care costs.
The HCPT taxes plans that exceed certain cost thresholds beginning in 2018. The 2018 thresholds are $10,200 for self-only (single) coverage and $27,500 for other than self-only coverage, and after that they generally increase annually with inflation. The amount of the tax is 40 percent of the difference between the total cost of health benefits for an employee in a year and the threshold amount for that year.
While the HCPT is often described as a tax on generous health insurance plans, it actually is calculated with respect to each employee based on the combination of health benefits received by that employee, and can be different for different employees at the same employer and even for different employees enrolled in the same health insurance plan. While final regulations have not yet been issued, the cost for each employee generally will include:
- The average cost for the health insurance plan (whether insured or self-funded);
- Employer contributions to an (HSA), Archer medical spending account or HRA;
- Contributions (including employee-elected payroll deductions and non-elective employer contributions) to an FSA;
- The value of coverage in certain on-site medical clinics; and
- The cost for certain limited-benefit plans if they are provided on a tax-preferred basis.
The inclusion of FSAs here is important. FSAs generally are structured to allow employees the opportunity to divert some of their pay to pretax health benefits, which means that they can avoid payroll and income taxes on money they expect to use for health care. Employees often are permitted to elect any amount of contribution up to a cap (which is $2,550 in 2015), which means that the amount of benefits for an employee subject to the HCPT in a year could vary depending on their FSA election.
The amount and structure of the HCPT provide a strong incentive for employers to avoid hitting the thresholds. The tax rate of 40 percent is high relative to the tax that many employees would pay if the benefits were merely taxed like other compensation, and the ACA does not allow the taxpayers (e.g., the employer) to deduct the tax as a cost of doing business, which can significantly increase the tax incidence for for-profit companies. Further, to avoid the perception that this was a new tax on employees, the HCPT was structured as a tax on the service providers of the health benefit plans providing benefits an employee: insurers in the case of insured health benefit plans; employers in the case of HSAs and Archer MSAs; and the person that administers the benefits, such as third party administrators, in the case of other health benefits. While it is generally expected that insurers and service providers will pass the cost of the tax back to the employer, doing so may not always be straightforward. Because there can be numerous service providers with respect to an employee, the excess amount must be allocated across providers. In some cases, it may not be possible to know whether or not the benefits provided to an employee will exceed the threshold amount until after the end of a year (for example, in the case of an experience-rated health insurance plan), which means that service providers may need to bill the employer retroactively for the cost of the tax they must pay. Amounts that employers provide to reimburse service providers for the HCPT create taxable income for the service provider, which the parties will want to account for in the transaction. The IRS has requested comments on potential methods for determining tax liability among benefit administrators, including a way that could assign the responsibility to the employer in cases other that insured benefit plans. The proposed approach could simplify administration of the tax.
To read the full story go to the Kaiser Family Foundation website at kff.org.
How to Avoid ACA Filing Penalties
Originally posted by Michael Weiskirch on August 21, 2015 on eba.benefitnews.com.
The 6055 and 6056 tax filing has many employers and their advisers up in arms for the upcoming tax filing. The increased penalty amounts announced in July are alarming. A single 1095-C form violation could result in a penalty of $500 per form, with no cap if the employer shows intentional disregard — basically skipping out on the filing for 2015. A 500-person firm in this case would pay $250,000 in penalties. The good news is many employers can get a break of some sort for 2015. These are listed below:
Good faith effort
For 2015, employers who file will have protection even if their filing is incorrect or incomplete, as long as they show they made good faith efforts to comply with the ACA reporting requirements. A “good-faith effort” is defined as employer simply attempting to complete the forms. Keep in mind that the good-faith effort for 2015 tax year will disappear in 2016, thus penalties will apply for incorrect information in subsequent years.
Transition relief
Transition relief is designed to shield employers from shared responsibility penalties for all or part of 2015, reducing the exposure of the (A) $2,000 or (B) $3,000 penalties. This relief is not granted automatically and only applies for the 2015 tax year. To take advantage of this relief, the employer needs to complete line 22 of the 1094-C form or line 16 of the 1095-C for non-calendar year plans. With HCM File, we advise our clients to incorporate transition relief into their filing where appropriate. There are four flavors of transition relief, each essentially providing a bye for the months the relief is designated.
1) Qualifying offer method: Employer who offers MEC which does not exceed 9.5% of the federal poverty level to at least 95% of full-time employees.
2) 4980H for Employers with 50-99 Employees: Employer averaged between 50-99 employees
3) 4980H for 100+ Employers: Employer offered coverage to at least 70% of full-time employees
4) Non-Calendar Year Relief: Employers with plans that renew February-December in 2015.
30-day extension mirroring
The extension process for W2s and 1099s, the IRS will allow a 30-day extension as long as you can demonstrate certain hardship conditions and file Form 8809 by Jan. 31, 2016. Getting the final health plan participation and completing 1095-C forms for each health eligible employees, COBRA and retirees (if self-funded) is a lot to accomplish in a short window. As many employers scramble to complete their end of year payroll and compile the information for 6055/56, a good number of employers are looking to take advantage of the extension especially in the first year. Unlike the good faith effort and transition relief, the 30-day extension can be utilized in any tax year assuming the employer qualifies.
Also see: "Why get involved in ACA reporting?"
While good faith effort, transition relief and 30-day extensions are tools that employers may take advantage of to shield them from potential penalties, they should not be viewed as a method to evade penalties in all situations. Employers should strive for compliant, accurate and penalty-free filing without the support of any safety nets.
How 'casual Fridays' suppress creativity
Originally posted by Melissa Dahl on May 29, 2015 on cnn.com.
(Science of Us) - I used to work with a guy who refused to let his sartorial standards drop just because it was nearly the weekend. Instead of Casual Fridays, he tried to institute its opposite: Fancy Fridays. This did not exactly catch on widely in the office, and yet he might've been onto something. A recent paper in Social Psychological and Personality Science argues in favor of dressing up, finding that when people felt more formally dressed as compared to their surrounding peers, they tended to think more creatively.
The psychological meaning of clothing is something academics have been curious about for more than a century, particularly the influential Harvard psychologist William James, who believed the clothes you wear ranked just under your physical body, but above your immediate family, in contributing to your understanding of who you are.
And modern research has borne this idea out, suggesting that clothes indeed influence self-perception. People who feel dressed-up are more likely to think of themselves as competent and rational; in contrast, those who are dressed casually tend to describe their personality accordingly, as friendly and laid-back. Recently, a team of researchers from Columbia University and California State University, Northridge, took this idea a step further and conducted a series of five experiments that suggest the clothes we wear don't just influence the way we think about ourselves; they also seem to influence the way we think, period.
Specifically, they found that people who felt more formally dressed than the people around them were more likely to think abstractly. "And by that we mean, basically, holistic or big-picture thinking — so not focusing on the details but seeing bigger ideas, seeing how things connect from a more high-level perspective," said Michael Slepian, first author on the new paper, which was recently published in Social Psychological and Personality Science.
In one experiment, for example, Slepian asked college students to come to the lab with two sets of clothing: an outfit they'd wear to a job interview, and an outfit they'd wear to class. (These were college students, so even the formal clothing they brought wasn't too fancy — more like business casual, Slepian said — while the casual outfits tended toward shorts and flip-flops.) Some of the students were told to change into their interview clothes, and others were told to change into their casual ones. Both groups then answered two questionnaires, the first one asking them to rate how formally dressed they felt in comparison to the other students. The second was meant to determine their cognitive-processing style, asking them whether a given item fit within a particular category. For example, abstract thinkers — again, these are people who are more focused on the broader, bigger picture — would be more likely to answer that, sure, a camel could belong under the "vehicle" category; concrete thinkers, on the other hand, would disagree, sticking to a stricter definition of the category.
As Slepian and the rest of the research team suspected, those who'd been asked to wear their formal clothing were more likely to give answers indicating abstract thinking, something that can be explained in a couple of ways. One, being more formally dressed than those slobs around you probably makes you feel a bit surer of yourself, which, in turn, might make you feel more in control, or more like a leader.
And when people feel powerful, they're more likely to engage in abstract thinking, previous researchhas shown. It also just makes intuitive sense, Slepian said. "Someone who is a leader has a big picture of where they want their team to go, what they want their team to be working on," he explained. They have the big picture, and they have to figure out how to implement it. That's why power leads to abstract thinking — when you're in a position of power, you don't have to focus on the details."
It also could be something about the novelty of dressing up, if it's something you're not used to (like if, for instance, you're a college student). In that case, perhaps the effects would wear off over time if you started dressing more formally as a habit. This isn't something the researchers tested explicitly for, but Slepian said he buys it as a valid alternative explanation.
But does it work the other way around, in that dressing like a slob reduces your ability to think big picture? (A question I am personally interested in, as I started writing this post while clad in gym shorts and a T-shirt I got for free at a race last year.) Slepian won't go that far, as that's not what the data showed, but he did admit that since working on this research project, he's stepped up his own wardrobe a bit. "When I work at home, I maybe dress a little nicer now," he said.
Far Too Many People Die After Cardiac Arrest. Here's What You Can Do To Help.
Originally posted by Lauran Neergaard on July 1, 1015 on huffingtonpost.com.
WASHINGTON (AP) — Would you know what to do if you see someone collapse, not breathing — a loved one at home, a co-worker at the office, a stranger on the street? Far too many Americans die of cardiac arrest, and now a major new report urges a national campaign to improve survival in part by making sure more bystanders know how to help.
Every year, about 395,000 people suffer cardiac arrest in their homes or other non-hospital settings — and less than 6 percent of them survive, the Institute of Medicine estimated Tuesday.
That's not the whole toll: An additional 200,000 cardiac arrests occur in hospitals every year, and even there only a quarter of patients survive, the report found.
Cardiac arrest is not a heart attack — it's worse. It means the heart abruptly stops beating, its electrical activity knocked out of rhythm. CPR can buy critical time if it's started immediately, but Tuesday's report concludes the nation must take key steps to give victims a better shot.
"Cardiac arrest survival rates are unacceptably low," said Dr. Robert Graham of George Washington University, who chaired the IOM committee's investigation. "There is a lot an individual can do to assist somebody if they witness one, and to work with their communities to improve the system of response."
What to do may sound straightforward: Call 911, and then start quick, hard compressions of the person's chest until trained responders arrive. If a device called an AED — an automated external defibrillator — is available, use it.
In reality, the IOM committee said fear, not understanding what cardiac arrest is, lack of first-aid training and concern about legal liability can hamper response and cost precious time. Each year, less than 3 percent of the U.S. population receives training in CPR or defibrillator use, while some European countries mandate training, the report found.
Moreover, there are wide disparities in outcomes: One study found that survival ranged from about 8 percent to 40 percent across 10 different communities.
On Tuesday, the IOM called for a major public education effort to teach people how to recognize and react to cardiac arrest — including making CPR training a graduation requirement for high school. According to the American Heart Association, Connecticut just became the 24th state to pass legislation to do that.
State and local health departments should team with health groups to create "a culture of action," the IOM recommended. It also urged employers to stock defibrillators and train workers to use them, and expanded access to CPR training for people over age 65 and their caregivers.
Good Samaritan laws provide varying legal protection by state. At the same time, laymen shouldn't feel they have to provide perfect care, said IOM committee member Dr. Tom Aufderheide of the Medical College of Wisconsin.
"Any CPR and any early defibrillation delivered by the public is better than no care at all," he said.
Other recommendations:
—The Centers for Disease Control and Prevention should create a national registry of cardiac arrest. There are no good statistics on this killer, the IOM said, calling its own numbers the best available estimates. A registry would track outcomes so communities could take steps to improve. The CDC said it will review the recommendation.
—National standards are needed for emergency medical systems, to ensure that 911 callers are talked through how to provide CPR.
—The National Institutes of Health should expand research for better treatments. Defibrillators attempt to shock the heart back into rhythm so it can resume beating, but most out-of-hospital cardiac arrests aren't the kind of abnormal rhythms that a shock can fix, said IOM committee member Dr. Lance Becker of the University of Pennsylvania. Yet the report found the NIH spends far less on cardiac arrest research than on other cardiovascular problems.
—Hospitals should have to meet national accreditation standards on cardiac arrest care. Survival of patients who suffer cardiac arrest while hospitalized for some other reason can vary by 10 percent between hospitals, IOM found.
Improvement is possible, the IOM found, calling some communities examples. In King County, Washington, there's a 62 percent survival rate among patients with a specific shockable form of cardiac arrest if they collapse in front of someone. Policymakers there have spent decades studying what care works best, and getting bystanders and professionals on board with response practices.
The American Heart Association — which along with the American Red Cross, American College of Cardiology and the federal government had requested the IOM's study — welcomed the recommendations.
Cardiac arrest is "the most critically ill state a human being can be in," said Dr. Robert W. Neumar of the University of Michigan, who chairs a heart association emergency care committee. The nation needs to create a culture where "if someone collapses in front of you with cardiac arrest, it's your obligation to help."
The App Will See You Now, But May Not Get The Diagnosis Right
Originally posted by Martha Bebinger on July 9, 2015 on khn.org.
There’s a warning out today for those who go online or to apps to figure out why they have an upset tummy or nagging cough or occasional chest pain. Symptom checkers, those tools that ask for information and suggest a diagnosis, are accurate only about half of the time.
The finding is from a Harvard Medical School study that reviewed 23 sites, such as WebMD, the Mayo Clinic and DocResponse. One third listed the correct diagnosis as the first option for patients. Half the sites had the right diagnosis among their top three results, and 58 percent listed it in their top 20 suggestions.
Dr. Ateev Mehrotra, one of the study’s authors, urges patients to be cautious when using these tools.“These sites are not a replacement for going to the doctor and getting a full evaluation and diagnosis,” he says. “They are simply providing some information on what might be going on with you.” About a third of U.S. adults use the sites, although not necessarily in place of going to the doctor.
Some of the diagnostic questions are also used by nurse triage phone services and, Mehrotra says, these online tools are about as accurate as the call-in lines offered by many insurers and physician groups. “[They are] better than just a random Internet search,” he said.
Researchers entered the symptoms of 45 patients from vignettes used to train medical students. The Mayo Clinic’s first online diagnosis was right only 17 percent of the time, but had the correct diagnosis on a list of 20 in 76 percent of cases. Dr. John Wilkinson, who works on Mayo’s symptom checker, says the tool directs patients to medical research and prepares them to talk to their doctor.
“We’re always trying to improve but if most of the time the correct diagnosis is included in the list of possibilities, that’s all we’re attempting to do,” he says.
The diagnosis accuracy rate for physicians is 85 to 90 percent. But Jason Maude, who runs a high performing tool called Isabel, says he does not want a Web versus doctor showdown.
“The whole point is not to set the patient against the doctor or replace the doctor, but to make the patient much better informed and to ask the doctor much better questions, and then together they should do a much better job,” he says.
Isabel ranked well in the study, showing the correct answer more than 40 percent of the time in the first diagnosis and 84 percent in the top 20 answers. Those high results, Maude says, may be because the site lets patients type in their own description of symptoms. They might describe a “tummy ache” or “stomach cramps” rather than the more clinical choice of “abdominal pain” used by many online symptom checker tools. And Isabel asks just two or three questions before patients describe their problem, as compared to sites that ask patients to click through 20 questions — steps Maude said may discourage use.
Clarifying how and why patients use these tools is critical, say the study’s authors. They could reduce unnecessary office visits or inform patients as they talk with their doctors. But for some, the tools may encourage people to seek unnecessary care.
Mehrotra says patients used symptom checkers more than 100 million times last year, a fact that may stun some physicians.
“While most doctors know patients are going to the Internet to search for medical advice, in terms of these symptom checkers, I’ve been surprised that few of my colleagues even knew they existed,” he says.
IRS Issues Forms and Instructions for ACA Reporting
Originally posted on shrm.org.
In early February 2015, the IRS released draft versions of the forms that employers subject to the Affordable Care Act (ACA) “shared responsibility” mandate—sometimes referred to as “play or pay”—will be required to file in order to show that the health coverage they offer to their employees is compliant with ACA requirements. The forms implement reporting obligations under Internal Revenue Code sections 6055 and 6066, which the ACA added to the tax code.
The forms are not required to be filed by employers for tax year 2014. However, in preparation for the first required filing of these forms (in 2016 for 2015), reporting entities may, if they wish, voluntarily file.
The IRS also released a new brochure Affordable Care Act: Reporting Requirements for Applicable Large Employers, which discusses getting ready for monthly tracking and preparing to fill out new IRS forms in 2016.
The forms include:
• Form 1095-B: Health Coverage. To be filed with the IRS and provided to taxpayers by insurers, as well as by self-insured employers that are not subject to the employer "shared responsibility" mandate, to verify that individuals have minimum essential coverage that complies with the individual coverage requirements.
• Form 1095-C: Employer-Provided Health Insurance Offer and Coverage. To be filed by employers with 50 or more full-time or full-time equivalent employees to verify their compliance with the employer "shared responsibility" mandate. Form 1095-C will also be used to establish employee eligibility for premium tax credits if the employer does not offer affordable and adequate coverage.
• Form 1094-B: Transmittal of Health Coverage Information Returns and Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. These are the transmittal forms that insurers and employers will use to transmit the individual 1095-Bs and 1095-Cs to the IRS.
“Insurers and self-insured health plans will provide a Form 1095-B to each of their enrollees and members, and file these forms, together with a transmittal Form 1094-B with the IRS,” explained Timothy Jost, J.D., a professor at the Washington and Lee University School of Law, in an earlier post regarding the draft forms on the Health Affairs Blog. “Large employers must provide a Form 1095-C to each employee, and transmit these, together with a transmittal [Form 1094-C] to the IRS.”
The IRS also issued instructions relating to the above forms:
• Text of Instructions for IRS Forms 1094-B and 1095-B.
• Text of Instructions for IRS Forms 1094-C and 1095-C.
“The instructions for the 1094-C and 1095-C are by far the most complex of the instructions...filling 13 pages with dense, two column, print,” noted Jost in a blog post regarding the draft versions (the final instructions reach 14 pages and are in a smaller type face, and thus even longer). “Most of the complexity derives from the options for complying with the employer mandate and the transition exceptions to that mandate that the administration has created,” Jost explained.
The forms “are identical to the draft forms released in the late summer of 2014,” Jost noted in a February 2015 blog post. “The instructions for the transmittal forms 1094-B and 1095-B are virtually identical to the draft instructions. … The final instructions for forms 1094-C and 1095-C, however, contain a number of changes from the draft instructions and should be reviewed carefully by insurers, employers, and those who advise them.”
“We hoped that the IRS was finding a way to streamline and simplify the reporting forms and instructions that employers will use in connection with the...employer and individual mandates. Those hopes were dashed...when the IRS released the final reporting forms and instructions,” stated a February 2015 alert from Lockton, an insurance brokerage. “The reporting forms and instructions remain detailed and complex, with many caveats, exceptions and special rules. Complicating this, reporting continues to be based on the calendar year, regardless of the year on which an employer’s plan operates.”
The Lockton alert further notes:
The final forms and instructions are labeled as “2014” forms, meaning they would relate to coverage during 2014. It is apparent, however, that these materials were created for the required reporting in 2016 with respect to coverage during 2015. In addition to explicitly stating that reporting with respect to 2014 is voluntary, the instructions explain how to indicate use of various transition rules that apply during 2015.
“As the forms must be filed by Feb. 28 (March 31 if filed electronically) and were just released in final form, it is very unlikely that many employers, insurers, or government programs will file for 2014,” noted Jost. “The 2015 forms are likely to be very similar, however, so it is probably important for employers and insurers to review these forms to ensure that they are on track for 2015 reporting.”
Advised a February 2015 alert from Fox Rothchild LLP, “Bear in mind that there is a considerable amount of time between now and the final filing obligation so there may be additional revisions to these instructions, or at least some further clarification. But in the meantime, read the instructions and familiarize yourself with the reporting obligations.”
Tracking and Reporting Employee Data
Companies with 100 or more full-time equivalent employees must begin complying with the ACA coverage requirements in 2015, although they will have two years to phase up to the requirement that they cover 95 percent of their workers. Companies with 50 to 99 full-time equivalent employees will have another year—until 2016—to start complying. Smaller businesses are exempt.
Under tax code sections 6055 and 6056, employers must compile monthly and report annually numerous data points to the IRS and their own employees. This data will be used to verify the individual and employer mandates under the law.
“Although required reporting under sections 6055 and 6056 will not occur until January 2016 to employees and March 2016 to the IRS, the data being reported is based on what happened during 2015,” according to an August 2014 article in HR Magazine. “Therefore, employers should have the necessary infrastructure in place to gather that information by January 2015 or very soon after.”
Given the cross-functional compliance and reporting requirements, having a multidisciplinary team in place is important, with a written workplan that specifies the responsibilities of HR, payroll, finance and other departments. The chief HR officer and the chief financial officer should coordinate their efforts and those of their staffs. Top-level executive sponsorship should ensure that all functions are working together and doing their part.
“Ideally, technology will take much of the reporting burden off of employers, automating significant portions of the data collection and reporting processes,” observed the Lockton alert, adding:
Unfortunately, technology will not produce accurate reporting without accurate data. In addition, while an employer’s current HR technology solutions may capture the information required for ACA reporting, it is unlikely that the employer has any one system that incorporates all of this information. It is also very likely that gathering the information from various sources and entering it into the required forms will be difficult and time-consuming. Employers that have not done so already will want to discuss with their third-party payroll and benefits administration vendors the extent to which they can handle the required information gathering and reporting.
| Reporting Requirement Still Applies to Mid-Size EmployersAlthough mid-size employers (between 50 and 99 full-time employees or equivalents) can take advantage of one year of transitional relief from the employer mandate requirements, delaying compliance until the first day of the employer's 2016 plan year, “these employers are still required to comply with the pay or play reporting requirement and the individual mandate reporting requirement, if the mid-size employer sponsors a self-funded group health plan,” advised law firm Miller Johnson. “In order to qualify for the transitional relief, mid-size employers must certify to the IRS that it meets the necessary requirements. Form 1094-C is used to certify that the mid-size employer meets these requirements.”
The firm added, “The good news is that these forms appear relatively simple to complete. The bad news, however, is that compiling the information necessary to complete these forms will likely impose significant administrative burdens.” |
2015 Monthly Information
“This reporting and disclosure requirement is new for employers and may catch some employers off-guard,” warned an alert by benefits consultancy Hill, Chesson & Woody, which added that the reporting requirements include collecting and disclosing:
- Social Security numbers of employees, spouses and dependents.
- Names and employer ID numbers(EINs) of other employers within the reporting employer’s controlled group of corporations for each month of the calendar year.
- Number of full-time employees for each calendar month.
- Total number of employees (full-time equivalents) for each calendar month.
- Section 4980H transition relief indicators for each calendar month.
- Employees’ share of the lowest-cost monthly premium for self-only, minimum value coverage for each calendar month.
- Applicable Section 4980H safe harbor for each calendar month.
“The first transmittal and returns will not be filed until January 2016, but much of the information must be reported for each calendar month of 2015,” the firm pointed out. “Ensuring internal time and attendance systems, record management, and payroll systems are capable of producing the required information is critical. Although there is much information left to be released by the IRS concerning the Code 6056 reporting requirement, employers subject to this requirement should begin preparing now.”
“The significant amount of information that is required to be reported to both employees and the IRS on these forms may factor in to an employer’s overall strategy for compliance with health care reform’s pay or play penalty requirement,” advised Miller Johnson.
| Steps to TakeIn light of the complexity of the new information reporting requirements, employers should take the following actions, advised McGladrey LLP in an alert:
• Learn about the new information reporting requirements and review the IRS reporting forms. • Develop procedures for determining and documenting each employee's full-time or part-time status by month. • Develop procedures to collect information about offers of health coverage and health plan enrollment by month. • Review ownership structures of related companies and engage professionals to perform a controlled/affiliated service group analysis. • Discuss the reporting requirements with the health plan's insurer/third-party administrator and the company's payroll vendor to determine responsibility for data collection and form preparation. • Ensure that systems are in place to collect the needed data for the reports. |
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| Four Steps Required Prior to ACA E-FilingFor calendar year 2015, applicable large employers must file Affordable Care Act Information Returns (Forms 1094-B, 1095-B, 1094-C and 1095-C) via paper returns by Feb. 28, 2016 or via electronic returns by March 31, 2016, reports the International Foundation of Employee Benefit Plans.
Electronic returns will be filed through the new ACA Information Returns (AIR) system. The AIR system is specifically designed for the IRS to process these new ACA forms. Other IRS e-filing systems do not support the ACA Information Returns. Prior to e-filing, applicable large employers must: (1) identify their responsible official(s) and contacts, (2) register with IRS e-services, (3) apply for the ACA Information Return Transmitter Control Code (TCC), and (4) participate in testing. |
The Most Dangerous Identity Theft Threat
Originally posted by Adam Levin on August 6, 2015 on huffingtonpost.com.
Last weekend, TheUpshot published the most dangerous identity theft threat: the non-expert's tendency to underestimate the magnitude of problem. The piece in question argued that the consequences of most identity theft have been exaggerated (by identity theft experts like me), and that, "only a tiny number of people exposed by leaks end up paying any costs."
The main source for TheUpshot's argument seems to be the 2015 Identity Fraud Report (covering data from 2014) published by Javelin Strategy and Research, which found a dramatic increase in account takeovers (i.e., when a fraudster is able to get through the authentication process on an existing credit account and make charges) but an overall decrease in the amount of money lost to identity-related fraud.
To think that the 2015 Javelin report minimizes the threat of mega data breaches to consumers is to misread it. To suggest that the threat is overstated is both simplistic and harmful to consumers. The article focuses too much on account takeover resulting from big-name hacks like Target (a very common form of identity theft). Meanwhile, it gives nowhere near enough attention to the very real and long-lasting effects of more serious forms of identity theft - the kind that's committed using Social Security numbers - and the equally big-name hacks like Anthem, Premera, and the Office of Personnel Management that exposed millions of records containing that data.
The Buck Doesn't Stop With the Bank
TheUpshot dismisses the consumer cost of most data breaches (beyond lost time and annoyance) because "several laws protect consumers from bearing almost any financial losses related to hackers." TheUpshot continues, "...banks and merchants, like Target, must bear the cost. But even their losses have been dropping in recent years, as data security experts have learned new strategies to prevent intrusions from turning into theft."
First of all, banks do not bear all the costs if they can help it. They pass it along to the company that caused the problem in the form of fines and penalties, and in some cases the company is only alleged to be the cause of the problem. It is very hard for small businesses to fight card companies on these charges. So when it happens, it can be a near extinction-level event, or force price changes. And, of course, that cost often manifests itself at the consumer level.
Additionally, according to at least one recent report, the cost of a data breach to businesses has not been going down, as stated by TheUpshot. On May 27, IBM and the Ponemon Institute jointly reported the cost per breached record had increased by 12% over the preceding year, from $145 to $154, and that the average total cost of a data breach to an enterprise rose a not inconsiderable 23% to $3.79 million.
And it bears repeating: While it's all very populist and fair-weather foppery to say that companies like Target and Home Depot can foot the bill of a breach, the same cannot be said of smaller businesses--after all, breaches are not confined to big companies.
5% Is a Huge Number
TheUpshot's big reveal: "The more troubling identity theft, in which new accounts are opened in an unsuspecting person's name, make up only 5 percent of the total figure given by Javelin."
To the uninitiated eye, 5% sounds like a small number. But it's missing context.
"Although we have no data to support what percentage of breaches turn into identity theft cases," according to Brent Montgomery, Fraud Operations Manager at my company IDT911, "5% is a lot."
In 2014 there were 12.7 million identity fraud victims, according to Javelin. Just 5% of that total is 635,000 consumers--hardly a negligible number.
Montgomery then highlighted the essence of the problem here: "There are so many breaches on a daily basis that information can be pieced together from one breach to another giving a criminal all they need to complete the puzzle."
TheUpshot fails to account for the long tail of identity theft--the fact that scams are pieced together using data harvested from countless individual and corporate compromises oftentimes sold and resold on the data black market. A scam that happens today may use data that was compromised three years ago--especially when Social Security numbers are involved since their only expiration date is when the holder of those nine digits expires.
Another problem with using the Javelin report is that the data is extrapolated from a relatively small sample of the population, whereas the Federal Trade Commission's Consumer Sentinel Network Data Book for January-December 2014 is driven by hundreds of thousands of pieces of consumer-reported data. That matters here because on page 13 of the Sentinel report, you will find a higher incidence of new account creation (12.5%) than fraud on existing accounts (4.9%).
There Are Very Serious Identity Theft Threats
While instances of new account fraud and some signs of existing account takeover can show up on your credit reports (you can get them for free once a year on AnnualCreditReport.com), other types of identity theft are less detectable - until they really cause damage. Of greater concern is what does happen to consumers whose information falls into the wrong hands--specifically their most sensitive information. Mentioned nowhere in the article is tax fraud, a crime that is most definitely on the rise and cannot be resolved easily or quickly (think: 6-12 months). Equally absent in this Panglossian take on what really is an identity theft epidemic: medical identity theft, which is extremely difficult to detect, equally difficult to resolve and can have potentially life-threatening consequences.
The bottom line is that while it's easy to dismiss identity theft experts as being the equivalent of "the soap company that advertises how many different types of bacteria are on a subway pole without mentioning how unlikely it is that any of those bacteria would make you sick," it is irresponsible to downplay the various serious risks now facing millions of Americans whose most sensitive personal information has been exposed in the breaches of Anthem, Premera, Sony Pictures and the Office of Personnel Management, to name a few. The threat for them is very real, and long-term--perhaps a lifetime.
Boost & Sustain Your Energy During the Workday
Originally posted by Graham Young on May 29, 2015 on liveinthegrey.com.
It happens to all of us. We hit that wall at some point in the day and our energy levels suddenly drop. It’s not a surprise that we’re likely experiencing brain fatigue. We live in a time of information overload and the onslaught of distractions can often cause our brain to become over activated. Unfortunately coffee, fresh air and typical remedies usually don’t get us over this hump.
Here are 5 unique ways to avoid burnout and reset yourself if you experience it:
1) Start your day off right:
I encourage you to try this technique for a few days and see if it makes an immediate difference in your life. It should automatically make you feel rejuvenated and can sustain your energy throughout the day by helping break down the food you eat more efficiently. Drinking a warm cup of lemon water first thing in the morning provides energy, balances your pH levels, boosts your immune system and aids in digestion. You can check some of the amazing benefits of warm lemon water here.
2) The right food for your particular body:
Just because you are not allergic to some foods, doesn’t mean you are not sensitive to them. Sensitive foods won’t agree with your body, so not only do they require more energy to digest but they also can cause adverse effects such as inflammation, congestion, brain fog etc. The problem is when you consume sensitive foods over your entire life, you often get used to them and don’t notice how they are actually depleting your energy levels.
I experienced this first hand when I got an allergy blood test done. It came back that I was highly sensitive to peanuts, onions and dairy; yet I was having some form of these in every single meal I ate. Once I eliminated them from my diet, my energy levels not only sky rocketed, they remained constant. See an allergist or naturopath and get tested to see which foods could be holding you back.
3) The science behind laughter:
The fact is your brain is bad at learning and functioning when it’s stressed. During stressful times your brain produces hormones such as cortisol which can impair cognitive function, increase blood pressure and suppress your immune system.
A quick fix solution? Find a media outlet, website or YouTube channel that you can rely on for funny content. Laughter reduces the level of stress hormones and also increases the level of health-enhancing hormones like endorphins. Endorphins promote an overall sense of well-being; a good, hearty laugh relieves physical tension and stress, leaving your muscles relaxed afterwards.
4) Breathing:
We often neglect breathing exercises because it’s weird to focus on something we do so naturally. However, there is a reason that yoga and meditation focus so much on it. Just how walking is something you do daily, but you run to exercise; breathing routines can have an immense impact on your entire physiology. Our body uses oxygen to create energy, and most of the time we are actually breathing a lot more shallow then we think. This in turn causes us to take in less oxygen. So to wake yourself up try this breathing technique suggested by Dr. Andrew Weil, called The Stimulating Breath.
Essentially you will keep your mouth closed, then breathe in and out of your nose rapidly for 15 seconds. You should feel invigorated afterwards with more energy and a sense of alertness.
5) Alter your emotional state:
If you are feeling unmotivated, frustrated or just lacking energy; remember that sometimes the slightest change in emotion can fix it. It’s difficult to feel opposite emotions at the same time, so your goal will be to ignite positive feelings so they overtake the negative ones.
A sense of contribution and gratitude are some of the most powerful feelings you will ever have in your life. The easiest way to trigger them is by doing something substantial for someone unexpectedly. I suggest performing a random act of kindness for someone in need. When you actually do this spontaneously without planning; your mind doesn’t much have time to analyze the situation and thus your emotions take over. You can do this by simply buying a few snacks or a bag of groceries for a homeless person, grabbing a cup of coffee for someone you don’t know or going out of your way to help a co-worker.
Of course your focus should be on giving to give, and not giving to get. But if this technique helps both sides, hopefully it can inspire us to do these kinds of things more often.
Can your smartphone tell you if you have depression?
Originally posted by Carina Storrs on CNN.com on July 15, 2015.
Getting a diagnosis of depression usually involves filling out questionnaires about your mood and undergoing lengthy interviews with a psychiatrist. But smartphone apps might be able to handle some of that work, and at least tell you if you are at risk of depression, simply by collecting GPS and other data, according to a new study.
Researchers at Northwestern University in Illinois tested an app they developed called Purple Robot. It uses data from a number of sensors in the smartphone that detect location, movement, phone usage and other activities to assess if a user is likely to have depression.
"The main reason for the development of the app is to see if we can objectively and passively identify if people are depressed," said Sohrob Saeb, a postdoctoral research fellow at the Feinberg School of Medicine at Northwestern University who is one of the developers of Purple Robot.
In the study of Purple Robot, Saeb and his colleagues at Northwestern and Michigan State University looked at GPS or phone usage data among 28 participants for two weeks.
They found that Purple Robot could identify 87% of the participants in the group who were determined to be at risk of depression according to PHQ-9, a nine-question test for depression, based only on GPS data on how much users moved between their regular locations. The more users moved around, the less likely they were to fall into the at-risk category.
In addition, by identifying the participants who used their phone the most, including everything from texting and playing games but not talking on the phone, Purple Robot could detect 74% of those in the at-risk group. Data on both GPS and phone usage were not available for enough participants to let the researchers see how well Purple Robot performed when both data sets were available, Saeb said.
However, PHQ-9 is only a screening tool that tells you if you have an above-average chance of having depression and is not enough to diagnose depression, said Dr. Scott Monteith, clinical assistant professor of psychiatry at Michigan State University, who has not been involved in developing or researching Purple Robot or other smartphone apps.
The way the test was used in the study, with a low cutoff score, it probably incorrectly identified many of the participants as being at risk of depression who were not, he added.
To get a better idea of the effectiveness of Purple Robot, the researchers are going to do a study involving more participants over a longer period to see if the app can detect changes in behavior over time, Saeb said. In addition, the group will see if they can improve Purple Robot's ability to spot depression by including additional data, such as how long people talk on the phone and who they talk to.
Depression is a debilitating illness that affects about 17% of people at some point in their lives. Meanwhile, it is estimated that by 2025 more than 5 billion people in the world will have a smartphone, and their sensing capability will be above and beyond that of today's iPhones, Androids and Blackberries.
There are probably hundreds of apps that promise to improve your mental health, from offering tests to gauge your depression risk to providing information about depression treatments. Others, like Purple Robot, are in the development stage.
Optimism and DBSA Wellness Tracker are two of the apps on the market that track your mood. Ginger.io goes further and analyzes data such as how much users move around on the weekends and how long they talk on the phone, as well as users' reports of their health, to alert them and their health care providers about concerns with their behavior and mental health. Ginger.io, which is in use at about 30 medical centers, is available through health care providers and as part of research studies.
However the problem with all the apps that are designed to warn about depression risk is that their effectiveness has not been demonstrated, Monteith said.
It is not clear how good these apps are at picking out people who have depression, Monteith said. What's more, it is not clear how these apps would be "embedded into a broader continuum of care" to ensure that a person or their doctor went from getting an alert from the app, for example, to that person getting a diagnosis of depression and getting proper care, he added.
Even if researchers can get a better handle on the effectiveness of these apps, there are still numerous questions regarding risks, especially about the data they collect not being secure and private, Monteith said.
"The data from these types of apps could potentially end up in anyone's hands, if the data are moved offshore, which a lot are," said Monteith, who co-wrote a recent article on health care data privacy. Another way data security could be compromised is that when a company is bought, the buyer may not have to adhere to the original terms and conditions about how the data are used, he added.
Experts including Monteith worry that once data get into the wrong hands, that could potentially jeopardize a person's ability to get a job, get life insurance or get a loan.
The best way to keep data secure, at least from hackers and thieves, would be to make sure the users control their data, such as by keeping it stored encrypted on their phone, and have apps analyze the data on phones, and never have it sent back to the app developers or other companies, according to Dr. Deborah C. Peel, leader of Patient Privacy Rights, a nonprofit advocacy organization. Monteith is on the advisory board of Patient Privacy Rights.
As for Purple Robot, some of these concerns may not apply for now. Saeb and his colleagues work with encrypted data. However if they eventually make the app public, if they can demonstrate its effectiveness, they would have all the data on secure servers at Northwestern. This type of data centralization, even on secure servers, is a "honeypot" for hackers, Peel said.
So far, the analyses that Purple Robot is doing are really only for research purposes, Saeb stressed. In addition to the work he is involved in, there is also research on whether the app can pick up signs of bipolar disorder among users.
The app gets its name because the color of Northwestern University is purple, and because the developers hope the app can act like a robot and automatically alert a user of his or her mental health risk and also make recommendations to possibly mitigate the risk, such as using the phone less or getting out of the house, Saeb said.
Despite concerns surrounding these apps, Monteith said he is "totally in favor of research [on them], that's what we need to do." However, he urged that researchers consider both effectiveness and risks in their studies. "We need to look at what the FDA looks at" when deciding whether to approve medical treatments and devices, Monteith said.
Implementing Health Reform: IRS Requests Comments On Cadillac Tax
Originally posted by Timothy Jost on healthaffairs.org.
One of the last remaining features of the Affordable Care Act (ACA) that has yet to be implemented is the so-called “Cadillac tax,” which takes effect in 2018. Section 4980I will impose a 40 percent excise tax on employee benefits the cost of which exceeds certain statutory limits. The Cadillac tax is intended to limit the generosity of employer coverage on the theory that excess coverage encourages excess health care expenditures and thus drives up the total cost of health care. The tax is also, however, one of the major anticipated sources of revenue under the ACA, expected to raise $87 billion over the next 10 years.
On July 30, 2015, the Internal Revenue Service (IRS) released a Revenue Notice, requesting comments (due by October 1, 2015) on various issues that must be resolved to implement the Cadillac tax. The notice supplements an earlier notice requesting comments issued on February 23, 2015.
The earlier notice had addressed issues relating to (1) the definition of applicable coverage subject to the tax, (2) the determination of the cost of applicable coverage, and (3) the application of the dollar limit to the cost of applicable coverage to determine any excess benefit subject to the excise tax. The July 30 notice addresses additional issues, including the identification of the applicable taxpayer liable for the tax, employer aggregation, allocation of responsibility for the tax among applicable taxpayers, payment of the tax, age and gender adjustment, and further issues concerning the cost of applicable coverage.
Section 4980I(a) imposes a 40 percent excise tax on “excess benefits” provided to employees. Excess benefits are defined as the excess of the aggregate cost of applicable coverage for an employee for a month over the applicable dollar limit for that employee for that month. Section 4980I(c)(1) provides that each “coverage provider” must pay the tax on its applicable share of the employee’s excess benefit.
Section 4980I(c)(2) defines the “coverage provider” as (A) the health insurance insurer that provides health insurance coverage under a group health plan, (B) the employer with respect to contributions to health savings accounts (HSAs) or Archer medical savings accounts (MSAs), or (C) “the person that administers plan benefits” with respect to other applicable coverage. Section 4980I(f)(6) provides that the term “person that administers the plan benefits” includes the plan sponsor, as defined by the Employment Retirement Income Security Act, if the plan sponsor administers benefits under the plan. Each coverage provider is responsible for a share of the excise tax proportionate to its share of the total cost of coverage provided to an employee, as determined by the employer.
Defining The “Person That Administers Plan Benefits”
The term “person that administers plan benefits” is not a term that appears elsewhere in the Internal Revenue Code, the Affordable Care Act, or related legislation, so it must be defined for purposes of section 4980I. The IRS proposes two different approaches to identifying this person.
Under the first, the “person that administers plan benefits” would be the person responsible for the day-to-day administration of plan benefits, usually the third party administrator of a self-insured plan. This could cause problems if several third party administrators are responsible for different parts of a benefit plan.
Under the second approach, the “person that administers plan benefits,” would be the person ultimately responsible for administering the plan, including administering issues like eligibility determinations, claims administration, and arrangements with providers. The IRS requests comments on these two alternative approaches.
Related employers are aggregated for purposes of 4980I much as they are for other Internal Revenue Code purposes. The IRS requests comments on how aggregation would affect (1)
identification of the applicable coverage made available by an employer (2) identification of the employees taken into account for the age, gender adjustments, or adjustments for high risk profession employees; (3) identification of the taxpayer that must calculate and report excess benefits, and (4) identification of the employer liable for the tax.
Timing Of Determinations
The notice discusses at some length issues that arise with respect to the timing of determinations of the cost of coverage under self-insured plans and experience-rated insured plans. It is important that tax liability be determined and paid on a timely basis, but self-insured plans may need a time for claims runout at the end of a taxable period to determine the final cost of coverage. Experience-rated plans may receive discounts from the insurer after the end of the taxable period if experience is favorable, and a determination will need to be made whether to attribute this discount retroactively to the taxable period. The IRS requests further comments on these issues.
The notice also discusses at some length tax issues related to the pass through to employers of the excise tax by entities that pay the tax. It is anticipated that this will generally occur. The reimbursement of the cost of the excise tax by the employer to the coverage provider is not itself coverage subject to the excise tax. It is, however, taxable income to the coverage provider.
It is expected that the coverage provider will attempt to recover from the employer the cost of the income tax paid on this reimbursement in addition to the cost of the excise tax. The cost of the income tax is also not considered to be part of the cost of coverage, subject to the excise tax. The IRS requests comments on whether the cost of the income tax reimbursement that can be excluded from the cost of coverage should be determined based on the marginal tax rate of the particular coverage provider or on some average marginal tax rate.
Issues With Account-Based Coverage
Special issues arise with respect to account-based coverage — HSAs, Archer MSAs, flexible spending accounts (FSAs), and health reimbursement arrangements (HRAs). While the excise tax is calculated on a monthly basis, account-based contributions are not necessarily made on a monthly basis. The IRS is considering an approach under which contributions would be allocated pro-rata on a monthly basis.
Under the statute, the cost of applicable coverage under an FSA for any plan year is the greater of an employee’s salary reduction or total reimbursement received under the FSA. If an employer makes non-elective contributions to an employee’s FSA, these are only counted to the extent they are actually spent on medical care. This formula raises the possibility of double counting if amounts contributed through a salary reduction in one year are carried over and spent in a later year.
The IRS is considering, therefore, a safe harbor which would only count funds contributed through a salary reduction agreement in the year it was contributed, not the year it was spent. Comments are requested to this approach, as well as on whether non-elective contributions from an employer to an FSA should be treated the same way, and how contributions to an FSA should be allocated when total employee and employer contributions to a cafeteria plan exceed the statutory limit on contributions to an FSA.
The notice discusses briefly the treatment under the excise tax of the cost of coverage that is taxable to highly compensated employees because the coverage discriminates in their favor. The IRS understands that this excess coverage is subject to the excise tax and intends to revise reporting requirements accordingly.
Increasing Dollar Limits To Account For Age And Gender
Section 4980I(b)(3)(C)(iii) requires that the dollar limit above which the cost of coverage is subject to the excise tax be increased to account for the age and sex of a particular employer’s employees. The increased amount would be equal to the excess of the premium cost of the Blue Cross/Blue Shield standard benefit option under the Federal Employees Health Benefits Plan (FEHBP) if priced for the age and gender characteristics of the employees of an individual’s employer over the premium cost for providing this coverage if priced for the age and gender characteristics of the national workforce. This adjustment recognizes that older employees have higher health care costs than younger employees, and that younger women have higher health care costs than younger men. The fact that the the amounts that individual employers can pay for coverage before the excise tax attaches is adjusted for the age and sex of the employer’s employees has received little attention and is an important safety valve. The threshold can only be adjusted upwards, not downwards.
The notice proposes an approach for determining the age and gender composition of the national workforce and of a particular employer. It then proposes a seven step process that would be used for determining the relative FEHBP premium cost for various age and gender groups and for then determining the age and gender adjustment that should be applied for each employer given the composition of its own workforce.
The IRS is proposing the development of a form for employers to use to notify the IRS and their coverage providers as to the amount of the tax and how much each coverage provider is responsible. The IRS is also considering the method through which the tax would be paid. Finally, the IRS requests comments on the issues raised by this notice and the earlier notice, as well as comments on the relationship between the Cadillac tax and the employer responsibility tax, and stipulates that the notice does not provide guidance on which taxpayers can rely.