Do employees know where to go in a health crisis?
Does your organization have a plan for employee health crises? Employees are often confused and unsure about who they should turn to for assistance when they have a health crisis at work. Read on to learn more.
When talking to employers about their disability programs, I often ask, “Who do your employees go to first for assistance when they have a health condition?”
If I ask that question of a direct supervisor, it’s met with a quick response of “Me!”, which is quickly followed by the statement, “My employees know that my door is always open and I’m here to help them!”
Sadly, this is not true. Another insurance company recently surveyed employees who experienced a health condition in the workplace and asked that same question: Who did you go to for assistance? The responses varied.
For example, we found that at midsize companies with 100 to 499 employees, it varied:
· 44% went to their HR manager
· 33% went to their direct supervisor
· 18% went to their HR manager and direct supervisor
· 5% went elsewhere
What this shows is that many employers don’t have a consistent process in place for addressing employees with health conditions. This confusion or misunderstanding about whom to approach for assistance can create an inconsistent process for your clients and their workforce — potentially resulting in a negative experience for employees and lost productivity for employers.
Based on the survey findings, employees who worked with their HR manager tended to have a more positive experience and felt more valued and productive after speaking with them about their health condition.
For instance, 54% of employees felt uncomfortable discussing their health condition with their direct supervisor, versus only 37% of employees who went to their HR manager. In addition, 73% of employees who worked with their HR manager felt they knew how to provide the right support for their condition versus 61% of employees who worked with their direct supervisor.
There are several reasons why working with an HR manager can be more beneficial for employees, and ultimately, your clients. Typically, working with an HR manager can lead to more communication while an employee is on leave. Our research shows employees who worked with an HR manager were more likely to receive communication on leave and returned to work 44% faster than when they worked with their direct supervisor.
HR managers also are usually more aware of available resources and how to connect employees to necessary programs to help treat their condition. HR managers who engaged their disability carriers saw a 22% boost in employees’ use of workplace resources, such as an EAP, or disease management or wellness program, when involved in a return-to-work or stay-at-work plan.
This connection to additional resources is essential, as it can help employees receive holistic support to manage their health condition — whether it’s financial wellness support, connection to mental health resources through an EAP or one-on-one sessions with a health coach. HR managers also are usually able to better engage their disability carrier to provide tailored accommodations, which can help aid in stay-at-work or return-to-work plans.
Providing your client with these findings can help them understand the importance of creating a disability process that puts HR as the main point of contact. Not only does this create a consistent experience that helps provide employees with the support they need, it can improve employee morale and reduce turnover.
SOURCE: Smith, Jeffery (16 August 2018) "Do employees know where to go in a health crisis?" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/do-employees-know-where-to-go-in-a-health-crisis
Cash Balance Plans for Business Owners
The new tax law is a lucrative opportunity for many pass-through businesses. As long as the owner’s income does not exceed a certain threshold, businesses can earn significant tax savings. In this installment of CenterStage, Todd Yawit – the director of retirement services at Saxon – has provided the following insightful information on Cash Balance Plans and how they can be used to help businesses earn significant tax savings.
The New Tax Law
With the new tax law, some business owners can now deduct up to 20 percent of their qualified business income (QBI) as long as their income falls below a certain threshold. Todd explained, “The new tax law that went into effect treats certain business types differently than it used to. In order to take advantage of the full deductions, certain business owners might need to lower their income to accommodate getting the deductions.”
deductions.” The full 20 percent deduction is available to companies that have an income that falls below the set threshold amount. Because of this, many businesses will have lower effective tax rates. Business owners whose income does not fall below the set threshold amount can still reap significant benefits by placing the difference of their income in a Cash Balance Plan. This will cause their taxable income to fall below the set threshold.
What Are Cash Balance Plans
Cash Balance Plans are a type of retirement plan that combines the maximum benefit amount associated with Defined Benefit Plans with the flexibility and portability of a 401(k) plan.
Cash Balance Plans are trustee directed and assets are invested into a single pool. Participants receive individual statements with hypothetical account balances on them.
Cash Balance Plans are often preferred over traditional Defined Benefit Pension Plans. Individual statements received by participants reflect what participants could potentially collect in the form of a lump sum, if eligible.
Here are the top 6 features of a Cash Balance Plan:
- Niche Retirement Plan – Cash Balance Plans are a great fit for physician groups, dental groups, and other professional practices, as well as small business owners or self-employed individuals.
- Tax Deferred Contributions – All contributions are tax-deductible, and the investment earnings are tax-deferred. Assets are not subject to income tax until they are withdrawn from the Cash Balance Plan or a rollover IRA.
- Higher Contribution Limits – Cash Balance Plans allow for high tax-deductible contributions than a 401(k). The maximum contribution amount is dependent on the individual’s age and normally increases as participants get older.
- Creditor Protection – Plan assets in a Cash Balance Plan are ERISA creditor protected.
- Flexible Plan Design – Cash Balance Plans can easily provide for many different levels of benefits and contributions.
- Supplement to a 401(k) Plan – Cash Balance Plans can be used as a companion to a 401(k) plan, providing a more favorable contribution cost design.
How Can Cash Balance Plans Help Business Owners Take Advantage of the New Tax Law?
“One of the best ways for a business to lower their income is to make contributions into a retirement plan. The advantage of a Cash Balance Plan retirement plan is it benefits the owner and key other people, as opposed to a 401(k) where it’s benefiting everybody,” explained Todd.
The 20 percent pass-through deduction is “phased out” for business owners with taxable income between the threshold limit and phase-out limit. By taking advantage of Cash Balance Plans, businesses can fall within these limitations.
Please contact Todd Yawit with any questions regarding Cash Balance Plans. You can reach him at (513) 573-0129 or send him an email at tyawit@gosaxon.com.
The big difference between long-term care and long-term disability insurance
Do you know the difference between long-term care and long-term disability insurance? These two types of insurance may have similar names, but they are very different. Continue reading to learn more.
The longer people live, the more likely they are to face illnesses that necessitate custodial care either at home, in an assisted-living facility, or in a nursing home. So it stands to reason that there’s a resurgence of interest in long-term care and long-term disability insurance.
While the two types of coverage have similar names, they’re very different. As an employer, it’s important to understand the difference and educate employees on why they’d need each type of coverage. Here is a rundown.
Long-term care insurance
Long-term care insurance covers the cost of custodial care if a person is no longer able to perform at least two activities of daily living. These activities include eating, bathing, dressing, moving from a bed to a chair (called transferring), using a toilet or caring for incontinence.
Most people think LTC insurance is for older people who need to turn to a nursing home for care near the end of their lives — which is also part of the reason more employees are asking for LTC insurance. But LTC insurance can cover anyone who requires extended care.
LTC goes beyond medical care to include living assistance for a severe illness or disability for an extended period of time. Although older people use the most LTC services, a millennial or middle-aged employee who has been in an accident or suffered a debilitating illness might also need long-term care. In fact, 40% of people receiving long-term care services are 18-64 years old, according to America’s Health Insurance Plans. Actor Christopher Reeve was 42 when he was thrown from his horse and was paralyzed. He received long-term care services for nine years before his death.
Most people believe something like that will never happen to them, but it’s important to plan for the possibility. While Reeve had financial resources to cover his healthcare, that’s not typically the case for the average person. LTC can be very expensive, depending on the level of services needed and the length of time the individual needs it. One year in a nursing home can average more than $50,000. In some regions, it can cost twice that amount.
When offering LTC insurance, employees choose the amount of the benefit — typically an amount granted each month — and the length of time the benefit covers — such as two years, three years or 10 years. Obviously, as the benefit amount or length of time increases, so does the premium.
LTC insurance premiums are based on a person’s age, which means the earlier employees buy, the lower the premiums. If a person first buys the insurance at age 32, they lock in a better rate than if they purchase the insurance at age 54. Rates may increase only by a class action that is approved by state insurance regulators. Finally, LTC insurance is portable, which means employees take the policy with them if they move onto another job, or retire.
Long-term disability insurance
Long-term disability insurance may sound somewhat similar to LTC insurance, but the two are very different and important in their own right. Most workers don’t believe they’ll ever become disabled and need LTD insurance. Unfortunately, more than one in four 20-year-olds will become disabled before they reach retirement, according to the Social Security Administration.
LTD insurance is an income-replacement benefit that kicks in when the employee loses income for an extended period of time due to a disability. LTD insurance can be used for living expenses, not just covering care.
LTD insurance starts after short-term disability ends, typically after three to six months. In most cases, it pays 50-60% of an employee’s salary until they can return to work or, in some cases, until they retire. The more working years an employee has in front of them, the more they need LTD. Unlike long-term care insurance, LTD is typically not portable unless the policy contains conversion privileges. It ends when the employee changes employers.
If you offer both types of insurance, make sure your employees understand the difference. These types of insurance will help them in different ways — both important and more beneficial to have at a young age, but for varying reasons.
As an employer, you’re likely employing multiple generations of workers right now. Offering a range of benefits, including long-term disability and long-term care insurance, can help employees prepare for the unexpected now and in the future.
SOURCE: Granfors-Hunt, L (24 August 2018) "The big difference between long-term care and long-term disability insurance" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/how-long-term-care-long-term-disability-insurance-differ?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
Fresh Brew with Garry Rutledge
Welcome to our brand new segment, Fresh Brew, where we will be exploring the delicious coffees, teas, and snacks of some of our employees! You can look forward to our Fresh Brew blog post on the first Friday of every month.
“Always be willing to listen to others, as great idea’s come from the least likely of places.”
Garry joined Saxon in August of 2006 and his focus at Saxon is the strategic management of client assets with tax minimization and capital preservation as the foundation of his planning strategy.
Garry has worked for two respected firms in his first 20 years of being in the industry. He has been in the financial planning business since 1988 when he graduated from Wright State University with a degree in Finance and holds a 7, 63 and Life and Health license.
Favorite Brew
Pikes Place
Garry’s favorite place to grab his favorite brew is Pete’s Coffee Shop.
Give It A Try & Share It!
Seeing beyond size in vision care networks
How do you measure the quality of your vision care network? When it comes to the world of vision care, size isn't the only factor to consider when deciding which network best fits the needs of your employees. Read on to learn more.
Most people believe that “size matters” in regards to provider networks, but in the world of vision care, there are other important factors to consider when deciding which network matches the needs of employees. Network members usually see their vision provider for routine services just once per year. When an employer changes vision administrators, employee in-network utilization is more than 90% regardless of the new network size. Why? Employees are not concerned about changing providers to access in-network benefits. Plus, the new vision provider network will always provide access to multiple providers wherever the employee lives and works.
But what about the quality of the vision care network? To properly assess this measurement of competing networks, employers and benefits advisors need to ask several different questions.
Determine the network’s quality
The quality of the network is vital. Start asking these questions: How are vision care providers credentialed? Do they follow the National Committee for Quality Assurance (NCQA) guidelines developed to improve healthcare quality? Are there provider audit programs provided on an ongoing basis? Is the vision care provider re-credentialed and how often? How frequently are reviews conducted of the Office of Inspector General and Medicare and Medicaid disbarment lists?
Establish the network’s effectiveness
Once you know you have a quality network, now you must ask how effective the network is. How diverse is the network? Are there ample ophthalmologists, optometrists and optical retailers we can access? Are some private practitioners? You want to make sure that a solid provider mix is available to give employees options when choosing a vision care provider.
It’s critical to know what languages are spoken within the employee population as well as the providers who care for them. If you have a large population who speak a certain language you want to make sure your network gives them access to people who can truly understand them and with whom they feel comfortable.
Finally, look at the hours of operations. With schedules being busier now than ever before, people need flexibility when it comes to visiting hours. Do they offer evening hours? Weekend hours? This is particularly important for single parents who work during the week and need the flexibility to visit an eye care professional with his or her child after work.
Having a diverse, quality vision care provider network with convenient access helps keep employees happy, healthy and in-network.
Other factors to consider
One of the other factors to be cognizant of is network ownership. Today, many managed vision care companies are involved in not only providing coverage for vision care but also in delivering it. This means the vision benefits company you’re considering may own optical laboratories, frame companies or retail locations, which can pose conflicts of interest between you, your employees and the managed vision care company. Their need to produce profits can lead to undo pressure on your employees to purchase expensive and potentially unnecessary lens types, materials and options. Coupled with direct to consumer advertising and the expansion of brands, eyeglasses have become even more expensive.
This leads to another factor for consideration. Does the potential vision benefit administrator provide meaningful information to help your employees make informed decisions about what they really need, when it comes to the myriad of options available for frames, lenses and lens options?
Network matching
Start by remembering two things when matching networks. First, if you’ve changed vision carriers in the past, you selected a network that was not identical to your previous one. Vision networks never match each other. Some have higher proportions of independent providers and lower percentages of large retailer chains. Second, the infrequency with which the vision benefit is available to be used mitigates the impact of changing providers. People don’t have the same attachment to their eye care professional as they do with their physician.
Beyond quality and effectiveness is the important factor of access. The vision industry has grown to a point where there are often many more providers than would ever be necessary to provide convenient access for your membership. The reality is that two networks may be equally sized in an area and yet there may be little overlap, making the selection of the best network with the lowest overall cost a better strategic direction than simply selecting the one with the highest provider match.
The vision industry has long demonstrated that employees are willing to select new providers, especially when costs are more competitive, and services are more convenient.
SOURCE: Moroff, C (22 August 2018) "Seeing beyond size in vision care networks" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/seeing-beyond-size-in-vision-care-networks?feed=00000152-a2fb-d118-ab57-b3ff6e310000
10 creative ways to help working parents
The parenting workforce is changing. Most working parents are concerned they won’t have enough time for their children. Continue reading to learn how employers can help working parents.
Can working moms have it all? Say goodbye to the broad-shouldered power suits of the ’80s and ’90s. Juggling a career and raising children is no longer a women’s-only issue.
While mothers are now the primary or sole source of income for 40% of American households with children, 75% of employees of all genders report their biggest concern as a working parent is not having enough time for their children. From single dads to same-sex couples, breadwinning moms to full-time working grandparents, the parenting workforce is changing.
No matter a family’s parenting makeup, employers can take an active role to help alleviate daily stressors affecting all working parents in the new, high-demand workplace. Here are 10 ways to do so.
1. Get real about childcare.
2. Offer flexibility.
3. Make it convenient.
4. Help tackle the “hate-to-do” list.
5. Promote total health.
6. Prioritize mental wellness.
7. Remember the older kids.
8. Simplify travel.
9. Don’t forget the “working” in working parents.
10. Stay inclusive.
Remember that caregiving responsibilities can encompass a wide range of family situations. Make sure programs and policies — as well as communications about them — support fathers, single parents, adoptive and foster parents, same-sex couples and grandparent-caregivers.
Being a parent is a rewarding and enriching experience — but it can also be exhausting and thankless, especially for those juggling work and family. Fortunately, it doesn’t take much to make the workplace a more supportive, less stressful place for working parents, who will likely return the favor with greater productivity, engagement and loyalty.
Checklist: Updating your employee handbook
Employee handbooks can be confusing to prepare and revise. Ensure you don't miss any information when preparing or revising your company's employee handbook with this simple checklist:
When you are preparing or revising an employee handbook, this checklist may be helpful.
Acknowledgment
- Do employees sign a signature page, confirming they received the handbook?
- On the signature page, do employees agree to follow the policies in the handbook?
- Does the signature page state that this handbook replaces any previous versions?
- On the signature page, do employees agree that they will be “at-will” employees?
- Do employees agree that the employer may change its policies in the future?
Wage and hour issues
- Does the employer confirm that it will pay employees for all hours worked?
- Before employees work overtime, are they required to obtain a supervisor’s approval?
- During unpaid breaks, are employees completely relieved of all duties? (For example, while a receptionist takes an unpaid lunch break, this person shouldn’t be required to greet visitors or answer phone calls.)
- Are employees paid when they attend a business meeting during lunch?
- Are employees paid for attending in-service trainings?
- Are employees paid while they take short breaks?
Paid Time Off
- Has the employer considered combining vacation time, sick time, and personal time into one “bucket” of paid time off?
- Does the paid time off policy line up with the employer’s business objectives? (For example, does it provide incentives for employees to use paid time off during seasons when business is slower?)
- Does the handbook say what will happen to paid time off when employment ends? (In Pennsylvania, employers are not required to pay terminated employees for the value of their paid time off. Some employers choose to do this, as an incentive for employees to give at least two weeks’ notice.)
- If the Family and Medical Leave Act (FMLA) applies to the employer, does the handbook inform employees of their rights?
- Does the handbook list all types of leave that are available? (For example, does the employer offer bereavement leave? How about leave while an employee serves as a juror or witness? What about municipal laws that provide certain types of leave, such as paid sick leave?)
Reasonable accommodations
- How should employees request a reasonable accommodation?
- Does the employer permit employees with disabilities to bring service animals to work (Employers should avoid blanket policies that ban all animals.)
- May employees deviate from grooming and uniform requirements for a religious reason, or a medical reason? (For example, an employee may have a religious reason to wear a headscarf, even if the employer has a blanket policy that would otherwise prohibit this.)
Discrimination and retaliation
- Does the employer inform employees that they are protected against discrimination and retaliation?
- Is there an accurate list of protected categories? (Confirm all locations where the employer does business. Some states or municipalities may provide employees with greater protection than federal law. Are there any categories, such as sexual orientation, that the employer should add?)
- Do employees have a clear way to report discrimination and retaliation?
- Is there more than one way to report discrimination and retaliation? (In other words, employees shouldn’t be required to make a report to the same person who they believe is committing acts of discrimination.)
Restrictive covenants/trade secrets
- Are employees required to keep the employer’s information confidential?
- Do employees confirm they are not subject to any restrictive covenants (such as non-compete agreements) that would limit their ability to work for the employer?
- Are employees prohibited from giving the employer confidential information that belongs to a previous employer?
Labor law issues
- If employees belong to a union, does the employer state that it doesn’t intend for the handbook to conflict with any collective bargaining agreement?
- Does the employer have a content-neutral policy on soliciting and distributing materials in the workplace? (In general, if an employer wants to limit union-related communications, the employer must apply the same rules to solicitations which don’t involve a union.)
- Does the handbook accurately reflect whether employees may wear union-related apparel, such as hats, buttons, T-shirts and lanyards?
- Are employees permitted to discuss their wages with each other? (Some employers try to prohibit this, but the National Labor Relations Act entitles employees to discuss their wages with each other. This rule applies to all employers—whether or not they have a union.)
Other
- If the employer has a progressive discipline policy, does the employer reserve the right to deviate from this policy?
- Does the employer reserve the right to inspect company computers and email accounts?
- Does the employer have a social media policy, or a medical marijuana policy?
- If the employer has other policies, how do they fit together with the handbook? (Does it make sense to incorporate the policies into the handbook? Or, should the handbook clarify which other policies will remain in effect?)
- Does the handbook contain any provisions that the employer is unlikely to enforce? (For example, does the handbook prohibit employees from using all social media? Does it prohibit employees from talking on the phone while driving?)
SOURCE: Lipkin, B (20 August 2018) "Checklist: Updating your employee handbook" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/08/20/is-your-employee-handbook-up-to-date-compare-it-wi/
ACA: 4 things employers should focus on this fall
Yes, employers still need to worry about the Affordable Care Act and its many rules and regulations. Read this blog post for more information.
During the coming months, employers may have questions about whether they still need to worry about the Affordable Care Act (ACA). The answer is yes; the ACA is alive and well, despite renewed legal challenges and the elimination of the individual mandate beginning next year.
While the Tax Cuts and Jobs Act reduced the tax penalty for individuals who don’t have health coverage to $0, effective for 2019, employers are still subject to penalties for failing to comply with certain ACA rules. For example, the IRS is currently enforcing “employer shared responsibility payments” (ESRP) penalties against large employers who fail to meet the ACA requirements to offer qualifying health coverage to their full-time employees. For this purpose, large employers are those with 50 or more full-time or full-time equivalent employees. Here are four things about the ACA that employers should focus on now to avoid significant financial liabilities.
1. The IRS is currently assessing penalties using 226-J letters
In 2017, the IRS began assessing ESRP penalties against large employers that failed to offer qualifying health coverage to at least 95 percent of their full-time employees. An ESRP penalty assessment comes in the form of a 226-J letter, which explains that the employer may be liable for the penalty, based on information obtained by the IRS from Forms 1095-C filed by the employer for that coverage year, and tax returns filed by the employer’s employees. The employer has only 30 days to respond to the 226-J letter, using IRS Form 14764, which is enclosed with the 226-J letter. The employer must complete and return IRS Form 14765 to challenge any part of the assessment.
The short timeframe for responding to a 226-J letter means that staff who are likely to be the first to receive communications from the IRS should have a plan in place to react quickly. Training for staff should include information about who to notify and what documentation to keep readily available to support an appeal. Not responding to the IRS 226-J letter will result in a final assessment of the proposed penalty. These penalties can be significant. In the worst case, an employer with inadequate health coverage could pay for the cost of the coverage, as well as penalties of $2,000/year (as indexed) for every full time employee (less 30), even those who received health coverage from the employer.
Depending on the employer’s response to the initial assessment, the IRS will then send the employer one of four types of 227 acknowledgment letters. If the employer disputes the penalty, the IRS could accept the employer’s explanation and reduce the penalty to $0 (a 227-K letter). But if the IRS rejects any part of the employer’s response, the employer will receive either a 227-L letter, with a lower penalty amount, or a 227-M letter, a notice that the amount of the initial assessment hasn’t changed. These letters will explain steps the employer has to take to continue disputing the assessment, including applicable deadlines. The next phase of the appeal might include requesting a telephone conference or meeting with an IRS supervisor, or requesting a hearing with the IRS Office of Appeals.
2. ACA reporting requirements and penalties still apply
Along with the ESRP penalties, the Form 1094-C and 1095-C reporting requirements still apply to large employers. The IRS uses information on Forms 1095-C in applying the ESRP rules and deciding whether to assess penalties against the reporting employer. Large employers must file Forms 1095-C every year with the IRS and send them to full-time employees in order to document compliance with the ACA requirement to offer qualified, affordable coverage to at least 95 percent of full-time employees. Technically, the forms are due to employees by January 31, and to the IRS by March 31, each year, to report compliance for the prior year. In the past, the IRS has extended the deadline for providing the forms to employees, but not the deadline for filing with the IRS.
Penalties can apply if an employer fails to file with the IRS or provide the forms to employees, and the penalty amount can be doubled if the IRS determines that the employer intentionally disregarded the filing requirement. These penalties can apply if an employer fails to file or provide the forms at all, files and provides the forms late, or if the forms are timely filed and provided, but are incorrect or incomplete.
In some instances, the IRS has assessed ESRP penalties based on Form 1095-C reporting errors. So, in addition to the reporting-related penalties, inaccurate information on Forms 1095-C can lead to erroneous ESRP assessments that the employer will then need to refute, using the IRS forms and procedures described above.
Employers should carefully monitor their ACA filings and reports, and consider correcting prior forms if errors are discovered. Employers should also continue tracking offers of coverage made for each month of 2018, to prepare for compliance with the Form 1095-C reporting requirement early in 2019.
3. “Summary of Benefits and Coverage” disclosure forms are still required
The ACA added a new disclosure requirement for group health plans, called a “Summary of Benefits and Coverage” or “SBC,” that’s intended to help employees make an “apples to apples” comparison of different benefit plan features, such as deductibles, out-of-pocket maximums, and copayments for various benefits and services. This requirement still applies, and SBCs must be provided during open enrollment, upon an employee’s initial eligibility for coverage under the plan, and in response to a request from an employee. The template SBC form and instructions for completing it were updated for coverage periods starting after April 1, 2017. For 2018, a penalty of $1,128 per participant can apply to the failure to provide an SBC as required.
4. The “Cadillac Tax” has not been repealed
The ACA’s so-called Cadillac tax — an annual excise tax on high-cost health coverage — was initially scheduled to take effect in 2018. The Cadillac tax has been repeatedly delayed, and the federal budget bill passed in January delayed it again through December 31, 2021. Despite the repeated delays, the Cadillac tax has not been repealed and is currently scheduled to apply to health coverage offered on or after January 1, 2022. This might be an issue to consider for employers who are negotiating collective bargaining agreements in 2018 that include terms for health benefits extending beyond 2021.
While uncertainty continues to surround the ACA, employers should remain aware of continuing compliance requirements to avoid the potentially significant penalties that remain in effect under the ACA.
Boyette, J; Masson, L (21 August 2018) "ACA: 4 things employers should focus on this fall" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/08/21/aca-4-things-employers-should-focus-on-this-fall/
Avoiding red flags: How to lower your plan's audit risk
Any size plan can be selected for an IRS or DOL audit. Businesses should learn how to avoid the red flags to help lower their plan’s audit risk. Read this blog post to learn more.
Are only the largest retirement plans audited? The truth is that plans of any size can be audited by the IRS and the DOL. Your plan could be selected for a random audit, or as a result of IRS datasets that target certain types of plans. However, lots of audits are triggered by specific events. Learning to avoid the red flags can help reduce your risk and increase the odds that you will survive any audit for which you are selected without major problems.
Your Form 5500 can be audit bait
Bad answers to Form 5500 can attract the Labor Department’s attention and serve as audit bait. The best way to make sure that your Form 5500 filing doesn’t lead to an audit is to check it carefully — with outside assistance if necessary — to make sure that the compliance questions are answered correctly.
For example, one compliance question asks whether the plan is protected by an ERISA bond and if so, the amount of coverage. Never answer “no” to this question. If for some reason you didn’t have a bond before, get one now. It is even possible to obtain retroactive coverage.
A coverage amount that is too low is also a red flag. In most cases, the bond must be for at least 10% of plan assets at the beginning of the year, although plans with certain types of investments must have higher coverage. Since assets at prior year end and at the beginning of the year are also shown on the 5500, showing an amount lower than 10% of those assets will invite the DOL to follow up.
The DOL will also look at the investment and financial information shown in the asset report. If your plan has many alternative investments such as hedge funds, has invested in other hard-to-value investments, or if you have large amounts of un-invested cash, you may also be inviting a follow up by the DOL. If your asset values as of the end of the prior year do not match your opening year balance for the succeeding year, you are also inviting unwanted inquiries.
Other answers that may get you targeted for further investigation are: if you indicate that you have late deposits of employee contributions or that you have not made required minimum distributions to former employees who are 70.5 years old. Note that this question does not need to be answered “Yes” if reasonable efforts have been made to find the participants but they still can’t be located.
Don’t ignore employee claims and complaints
Many plan sponsors don’t realize that employee complaints to the IRS and DOL often lead to audits. Make sure that employee questions and complaints receive a response, and if a formal claim for benefits is filed, make sure to follow the ERISA regulations on benefit claims and appeals. It is a good idea to run any denials past your ERISA attorney to make sure they are consistent with the written plan terms and clearly explain the participant’s appeal rights and the reason for the denial.
Be prepared
If your plan is selected for IRS or DOL audit, expect to be asked to provide executed plan documents, participant notices and fiduciary policies, such as your Investment Policy Statement. Keep these in a file to avoid a last-minute scramble to satisfy the auditor’s requests. You should also be prepared to show that you are making diligent efforts to find missing participants, deal with defaulted loans and review plan fees, which are current hot issues for auditors.
To be even better prepared, you can do a self-audit to identify problems that need correction before the IRS or DOL do.
SOURCE: Buckmann, C (29 June 2018) "Avoiding red flags: How to lower your plan's audit risk" (Web Blog Post). Retrieved from: https://www.benefitnews.com/opinion/irs-dol-audit-red-flags-and-avoiding-plan-risks
Five frequently overlooked mistakes in HIPAA compliance
HIPAA regulations can be confusing and often healthcare entities overlook certain HIPAA regulations. Read this blog post to learn about the 5 most frequent tripwires.
HIPAA was enacted in 1996. In the years since, most healthcare entities have adapted to the major requirements imposed by HIPAA, HITECH and the Privacy and Security Rules. Nevertheless, the thicket of regulations still leaves some traps for the unwary. Here are the most frequent tripwires.
First, the goal of HIPAA is integrity and availability of records along with confidentiality. For workflow or other reasons, hospitals or other covered entities are often reluctant to share patient records.
With the exception of certain specific carve outs, such as psychotherapy notes, this violates HIPAA. Patients are entitled to their records. Compliance programs must accommodate this legal reality
Second, HIPAA requires that disclosure of healthcare records be minimized to the extent necessary to accomplish the objective. In other words, a contractor or other entity with access to personal health information is only entitled to those data points necessary to perform their function e.g. names and addresses.
For practical purposes, a technical solution is not always available — a covered entity may have a single computer system, and cannot realistically reconfigure it for every purpose.
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In such instances however, compliance may not be left by the wayside. It must be accomplished by alternative means such as administrative safeguards. For example, a covered entity and business associate may contractually agree to limit access, and combine this restriction with random audits to ensure compliance.
Third, the requirement of minimal disclosure also extends to individual employees and contractors. They are entitled only to those records they need to perform their job functions.
Of course, in the real world those functions continually evolve. Employees often switch roles, go on leave, rotate to different units or complete the tasks that entitled them to access in the first place.
Yet access is rarely calibrated to fluctuating business needs. Excessive access is a regulatory risk. Any compliance program needs to regularly reassess employee access. It must adjust PHI access rights to conform to current responsibilities.
Fourth, HITECH and the Security Rule require a security assessment and the institution of safeguards to protect against reasonably anticipated disclosure. They also require that all business associates be bound to adhere to the safeguards program.
The Business Associate Agreement needs to specifically incorporate this requirement. Technically, the failure to do so, even in the absence of a breach, is a violation. Yet many covered entities overlook this requirement.
If the business associate is unwilling to accommodate the requirement, the covered entity needs to evaluate the contractual arrangement, ensure that it meets the identified security criteria, and document the basis for this determination.
Finally, the healthcare sector is consolidating. The acquisition and consolidation of practices results in transition periods where the successor entity has multiple sets of PHI records under multiple compliance regimes.
The result is a program that is either incomplete, incompatible, or is otherwise deficient. This is a serious regulatory risk. While a seamless transition may not be possible, incorporating compliance into the succession plan at the earliest possible stage is the prudent approach.
None of these five steps require mastery of particularly arcane aspects of the HIPAA regulatory scheme. Yet covered entities and business associates regularly stumble on them. Each of these pitfalls is easily remedied. In compliance, as in medicine, an ounce of prevention is worth a pound of cure.
SOURCE: Gul, S (2 August 2018) "Five frequently overlooked mistakes in HIPAA compliance" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/five-frequently-overlooked-mistakes-in-hipaa-compliance