5 Steps that can bring you closer to ACA compliance
Vic Saliterman shares 5 steps to help advisers and organizations focus on ACA compliance efforts as the heathcare market system continues to morph.
Original Article Posted on EmployeBenefitAdviser.com
Posted: September 27, 2016
1) Validate the ACA status of employees every month. Identifying who is eligible to be offered coverage under ACA rules is a core ingredient of attaining compliance and can be challenging and complex. In the 2016 plan year, the number of full-time employees who must be offered healthcare coverage increased to 95% from 70% in 2015 — a much higher threshold. Validating each month is far easier and far less stressful than doing so all at once at the end of the year.
a. Categorizing your employees incorrectly can lead to negative consequences such as unanticipated penalties. Keep in mind that any Employer Shared Responsibility assessments are determined independently for each month, even though reporting and IRS notices will be annual. So you should assess monthly to make sure you’re hitting the 95% mark. It also pays to know the difference between “HR full-time” and “ACA full-time” definitions.
2) Gather the correct data now — especially benefits data. According to an ADP study, many organizations have said that it was extremely challenging to gather benefits and payroll data for the annual reporting task of completing Forms 1094-C/1095-C for 2015. HR and finance leaders underestimated the time and effort needed to obtain the correct data from the necessary systems, such as benefits, payroll, time and labor management, and HR. In addition, source data may have resided in non-integrated systems or was inconsistent with ACA definitions, resulting in a time-consuming task of analyzing and adjusting it manually. Employers anticipate that the accuracy of forms, annual reporting, and affordability measures will be their top ACA challenges in 2016. So, begin to gather the correct employee data now.
3) Address Marketplace Notices sooner rather than later. Receiving a Marketplace Notice is like an early warning system. It can alert you that there may be a problem before a fine occurs. Understanding the implications of receiving a notice can help you prepare to manage the situation in the most efficient and cost-effective way possible. Acting now may save your business the expense of penalties later.
a. A Marketplace Notice is generated by an individual state’s Marketplace or the U.S. Department of Health and Human Services whenever an employee receives a premium tax credit to help them pay for healthcare coverage from state or federal marketplaces. The notice gives the employer a chance to appeal the premium tax credit eligibility if they did offer the employee affordable healthcare coverage.
b. An ADP study found that among large employers, those with 1,000 or more employees, 23% said that “responding to Exchange Notices” is their top ACA compliance concern for 2016. For large employers handling compliance on their own, the percentage rose to 27%. One thing to keep in mind is that the notice will be sent to the address provided by the employee, which means it may not go where you expect. So, it may be important to educate and alert local work locations that may receive these notices.
c. In fact, receiving a Marketplace Notice for an employee is an opportunity to look at the coverage offered and verify that your business complies. If appropriate coverage is not being offered, the notice gives you time to make an offer and potentially limit any penalty that may be assessed by the IRS.
4) Pay attention to the “little” things. Did you know that there were nearly 170 IRS error codes for 2015 that could have applied to Form 1094-C/1095-C transmissions? Some errors were technical in nature (format, schema, etc.) whereas others were based on data provided. The point is simple mistakes can lead to rejected IRS forms or accuracy penalties.
a. Many of these errors were the result of inaccurate Social Security numbers, Tax Identification Numbers (TINs), Federal Employer Identification Numbers (FEINs) and, believe it or not, incorrectly listing a company’s legal name. It may help to become familiar with the TIN solicitation rules. In 2015 reporting, the IRS said it will not impose penalties on a filer for reporting incorrect or incomplete information if the filer can show that he or she made a good-faith effort to comply with the information reporting requirements for 2015. But that won’t be the case moving forward.
b. And there are other potential penalties. At some point — likely December 2016 or early 2017 for 2015 filings — you may receive an Employer Shared Responsibility assessment notice from the IRS. The only way you can avoid paying those penalty assessments is by showing the IRS that you, in fact, complied. You’ll need to be able to show who was a full-time employee for each month, who was offered coverage, and whether that coverage met affordability standards. Make sure that several years of employee data is available because you may need that employee history to respond to an IRS inquiry.
5) Look ahead. ACA compliance will continue to be an evolving activity as laws and requirements change. For instance, annual reporting and Form 1095-C will have some new codes, such as “plan start month” (optional for 2015 and 2016) and two new Line 14 codes to identify conditional offers to spouses. Most 2015 transition relief codes will remain for any 2015 plan-year months in 2016. And that’s not all. The IRS also has issued a proposed rule on expatriates and expatriate plans. Begin to familiarize yourself with these planned and proposed changes today, so your overall compliance process becomes more routine.
Managing the requirements of the ACA as a part of day-to-day HR and finance activities doesn’t have to be overwhelming, but you do need to get started.
By engaging a knowledgeable, trusted partner and applying a little diligence and forethought, adhering to ACA rules can begin to integrate into your ongoing operating model.
See the Original Article Here.
Source:
Saliterman, V. (2016, September 27). 5 steps that can bring you closer to ACA compliance [Web log post]. Retrieved from https://www.employeebenefitadviser.com/opinion/5-steps-that-can-bring-you-closer-to-aca-compliance
2016 Draft Forms & Instructions Released: Affordable Care Act Reporting Update
Great feature from The National Law Review by Damian A. Myers,
Since our last ACA Reporting Update, the extended deadlines to distribute Forms 1095-B and 1095-C to covered individuals and employees and to file the forms with the IRS have passed. The IRS has stated, however, that late forms can still be submitted via electronic filing and the forms that received an error message should be corrected. By many accounts, the first ACA reporting season presented numerous challenges. From collecting large amounts of data to compiling the forms, to working with service providers that faced their own unique challenges, to facing form rejections and error notifications from an inadequate IRS electronic filing system, employers and coverage providers faced obstacles nearly every step of the way. Nevertheless, most employers and coverage providers were able to get the forms filed and put the 2015 ACA reporting season behind them.
But, alas, there is no rest for the weary. In late-July, the IRS released new draft 2016 Forms 1094-B and 1095-B (the “B-Series” Forms) and Forms 1094-C and 1095-C (the “C-Series” Forms). Additionally, on August 1, the IRS released draft instructions to the C-Series Forms (as of the date of this blog, draft instructions for the B-Series Forms have not been released). For the most part, the 2016 ACA reporting requirements are similar to the 2015 requirements, subject to various revisions described below.
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Various changes have been made to the forms and instructions to reflect that certain forms of transition relief are no longer applicable. For example, the non-calendar year transition relief (for plan years starting in 2014) that applied in 2015 does not apply in 2016. Similarly, changes have been made to reflect that the “Section 4980H Transition Relief” is still relevant only for non-calendar year plans though the end of the plan year ending in 2016. The Section 4980H Transition Relief exempts applicable large employers (“ALEs”) with 50-99 full-time employees from penalties under Section 4980H of the Internal Revenue Code (the “Code”) and reduces the 95% threshold to 70% for other ALEs. The relief also exempts ALEs from having to offer coverage to dependents if certain requirements are met. For calendar year plans, the threshold is at 95% throughout 2016 and dependent coverage must be offered during each month of the year.
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The draft instructions to the C-Series Forms provide more detail and examples on how ALEs should prepare the forms. Instead of referring to “employers” throughout the instructions, the IRS has replaced that term in most cases with “ALE Member.” The reason for this change is to highlight the fact that each separate ALE Member must file its own forms. Examples related to completing the authoritative Form 1094-C highlight that each separate entity (determined based on employer identification number) is required to file its own authoritative Form 1094-C.
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As promised by the IRS last year, there are two new indicator codes for Line 14 of Form 1095-C. These new codes ask employers to indicate whether a conditional offer was made to a spouse. An offer of coverage to a spouse is conditional if it is subject to one or more reasonable, objective conditions. For example, if a spouse must certify that he or she is not eligible for group health coverage through his or her employer, or is not eligible for Medicare, in order to receive an offer of coverage, the offer is considered conditional.
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The draft instructions to the C-Series Forms reflect that the good faith compliance standard applicable to 2015 forms (under which filers could avoid reporting penalties upon a showing of good faith) no longer applies for 2016 ACA reporting. Going forward, reporting penalties may be waived only upon the standard showing of reasonable cause.
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The draft instructions to the C-Series Forms include new information related to coding for COBRA continuation coverage. There has been some uncertainty regarding how to treat offers of COBRA continuation coverage since the IRS removed relevant guidance from its Frequently Asked Questions website in February 2016. Similar to the 2015 instructions, the draft 2016 instructions provide that offers of COBRA coverage after termination from employment should be coded with 1H (Line 14) and 2A (Line 16) whether or not the COBRA coverage is elected. The new instructions now state that this coding sequence also applies for other, non-COBRA post-employment coverage, such as retiree coverage, when the former employee was a full-time employee for at least one month of the year.
In the case of an offer of COBRA coverage following a reduction in hours, the basic coding requirement is the same as in 2015 – the offer of COBRA coverage is treated as an offer of coverage on Line 14 of the Form 1095-C. The draft instructions expand on this basic requirement to explain how to code Lines 14 and 16 when the offer of COBRA coverage is not made to a spouse or dependent. In general, for purposes of Code Section 4980H, an offer of coverage made once per year to an employee and his or her spouse and dependents is treated as an offer for each month of the year even if the coverage is declined for the employee, spouse, and/or dependents. Under general COBRA rules, only those individuals enrolled in coverage immediately prior to the qualifying event receive an offer of COBRA coverage.
So how does this play out when an employee with a spouse and dependents elects self-only coverage during open enrollment and later loses that coverage due to a reduction in hours? The draft instructions treat the initial offer of coverage at open enrollment and the offer of COBRA coverage as two separate offers of coverage. To determine the proper coding, the employer must look at who had the opportunity to enroll at each offer. During open enrollment, the employee, spouse and dependent had the opportunity to enroll. Thus, until the reduction in hours and loss of coverage, the coding should be 1E (offer to employee, spouse and dependent) in Line 14 and 2C (enrolled in coverage) in Line 15.
In contrast, the offer of COBRA coverage was only available to the employee and, therefore, after the reduction in hours, the coding should be 1B (offer to employee only) in Line 14. If the employee does not elect the COBRA coverage, code 2B (part-time employee) could be inserted in Line 16. If, however, the employee does elect COBRA coverage, it appears that code 2C (enrolled in coverage) should still be inserted in Line 16. Although this latter coding sequence is likely intended to protect the spouse and dependents from being “firewalled” from a premium credit, there appears to be nothing to indicate that the employer should not be assessed a penalty for failing to make an offer to the employee’s dependents.
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The draft instructions for the C-Series Forms provide additional insight into how to calculate the number of full-time employees for purposes of column (b) in Part III of the Form 1094-C. The draft instructions clarify that the determination of full-time employee status is based on rules under Code Section 4980H and related regulations and not on other criteria established by an employer. Note that, currently, the draft instructions state that the monthly measurement period must be used for this purpose, but it appears that this is a mistake and that it should reference both the monthly measurement and look-back measurement methods. The IRS may clarify this in the final instructions.
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One important non-change in the draft instructions is that the specialized coding for employees subject to the multiemployer plan interim guidance remains in effect for 2016 reporting. The interim guidance provides that an employee is treated as having received an offer of coverage if his or her employer is obligated pursuant to a collective bargaining agreement to contribute to a multiemployer plan on the employee’s behalf, provided that the multiemployer plan coverage is affordable and has minimum value and the plan offers dependent coverage to the eligible employee. The coding for such as employee is 1H (no offer of coverage) for Line 14 and 2E (multiemployer plan interim guidance) for Line 16.
There will undoubtedly be tweaks to the draft instructions to the C-Series forms, but significant changes appear unlikely. Given that only five months remain in 2016, employers should start planning now for 2016 ACA reporting based on the draft instructions and make alterations as necessary when final instructions and other guidance is released.
See the original article Here.
Source:
Myers, D. A. (2016 August 4). 2016 draft forms & instructions released: affordable care act reporting update. [Web blog post]. Retrieved from address https://www.natlawreview.com/article/2016-draft-forms-instructions-released-affordable-care-act-reporting-update
Report highlights employers’ biggest concerns: ACA, new bias claims and OT regs
What are your top concerns as an employer? See what others had to say in the article by Tim Gould.
What’s keeping C-level execs up at night? Just a few small concerns like the new overtime rules, a likely increase in bias claims based on sexual orientation, the Affordable Care Act and the threat of workplace violence.
Those are the takeaways from the 2016 Executive Employer Survey from Littler, the giant employment law firm. The fifth annual survey, completed by 844 in-house counsel, human resources professionals and C-suite executives from some of America’s largest companies, examines the key legal, economic and social issues impacting employers as the 2016 presidential election approaches.
Those pesky OT rules
As you well know, the Department of Labor (DOL) has advanced several regulatory initiatives that have brought the agency’s enforcement of federal employment laws to the forefront for employers. This concern is no doubt driven in large part by the recently finalized Fair Labor Standard Act overtime regs, which will dramatically increase the number of Americans who can qualify for overtime pay. Although respondents completed the survey in the weeks prior to the release of the final rule, 65% had already conducted audits to identify affected employees.
“Employers are clearly feeling the impact of the DOL’s increasingly aggressive regulatory agenda, most notably the new overtime regulations,” Littler attorneys Tammy McCutchen and Lee Schreter said in a joint statement.
They added a sobering note: “While it is encouraging that the majority of respondents started to prepare before the rule was finalized, more than a quarter (28%) said they had taken no action given delays in the rulemaking process. Given that the reclassification process can take up to six months and the rule is unlikely to be blocked from going into effect on December 1, 2016, employers should move quickly to ensure compliance.”
And participants are pretty sure the DOL’s going to be aggressive about making the new rules stick: The vast majority of respondents to this year’s survey (82%) expect DOL enforcement to have an impact on their workplace over the next 12 months, with 31% anticipating a significant impact (up from 18% in the 2015 survey).
Where are the presidential candidates likely to land on employment policies? The majority of respondents (75%) said income inequality (e.g., overtime rules, state equal pay, minimum wage laws, etc.) would be a significant priority of the Democratic candidate. Only 4% felt income inequality would be a significant priority of the Republican candidate.
Top regulatory and legislative issues
With the National Labor Relations Board’s recent expansion of the definition of a “joint employer,” 70% of respondents to the Littler survey expect a rise in claims over the next year based on actions of subcontractors, staffing agencies and franchisees. Approximately half of respondents predicted higher costs (53%) and increased caution in entering into arrangements that might constitute joint employment (49%).
As was the case in the 2015 survey, 85% of employers said the Affordable Care Act (ACA) would have an impact on their workplace in the next 12 months. While two-thirds said they do not expect a repeal of the ACA if a Republican is elected president this fall, respondents saw a greater likelihood of changes to individual provisions. Fifty-three percent said a Republican administration could lead to a repeal of or changes to the Cadillac excise tax and 48% saw a likelihood for changes to the play-or-pay mandate.
Social issues come to the forefront
Today’s companies are increasingly experiencing the incursion of social issues into the workplace, the survey indicated.
In the largest year-over-year change in Littler’s survey results, 74% of respondents expect more discrimination claims over the next year related to the rights of LGBT workers (up from 31% in 2015) and 61% expect more claims based on equal pay (up from 34% in 2015).
This change is driven by LGBT discrimination and equal pay ranking among the top enforcement priorities for the Equal Employment Opportunity Commission (EEOC), but it also mirrors key focus areas for the Obama administration, government efforts at the state and federal levels, and increased public awareness.
Preventing workplace violence
In response to tragic mass shootings across the nation, companies are taking a range of actions to keep their employees safe, including updating or implementing a zero-tolerance workplace policy (52%), conducting pre-employment screenings (40%) and holding training programs (38%). Only 11% of respondents said they had not taken any action because violence is not a concern for their company.
“Putting policies in place to increase awareness of workplace violence and ensure that employees understand how to report threats in the workplace are steps that all employers would be advised to take,” said Littler’s Terri Solomon, who has extensive experience counseling employers on workplace violence prevention. “Unfortunately, even though workplace violence – and particularly active shooter instances – are statistically rare, no employer is truly immune.”
See the original article from HRMorning.com Here.
Source:
Gould, T. (2016, July 13). Report highlights employers' biggest concerns: ACA, new bias claims and OT regs [Web log post]. Retrieved from https://www.hrmorning.com/report-highlights-employers-biggest-concerns-aca-new-bias-claims-and-ot-regs/
The Next Innovation In Controlling Healthcare Costs
As healthcare costs continually increase, understanding where the cost come from and how to manage them is critical. Bruce Barr gives a great editorial on why new trends are essential in controlling costs.
Original post from EmployeeBenefitAdviser.com on August 1, 2016.
Four decades ago, PPOs were hailed as the “silver bullet” to control healthcare costs. Participating providers were contractually obligated to accept discounted fees, which seemed like an obvious solution to out-of-control increases in healthcare costs. Self-funded plan sponsors readily adopted this approach to gain access to network discounts and lower their healthcare costs. In fact, some self-funded plan sponsors still periodically conduct a re-pricing analysis or another method of comparing which PPO yields the best discounts for their specific group.
However, as provider contacts expired, they were renegotiated at higher rates for providers and higher costs for plan sponsors. In addition, hospital charge-masters have increased at an exorbitant pace and have largely gone unregulated and uncontrolled. As a result, the significant discounts once achieved by PPOs no longer deliver the true savings that were seen in the 1980s and 1990s.
For example, a 60% discount on a $1,000 “oral cleansing device” (more commonly referred to as a toothbrush) clearly does not deliver value for the plan sponsor or member and is indicative of some of the billing practices that go undetected. The same could be said of a $150,000 knee replacement. Using a PPO for its discounted fees is somewhat analogous to buying a car by negotiating a discount off the list or sticker price.
As employers gain a better understanding of the questionable value of PPO discounts and pricing optics, reference based pricing (RBP) and reference based reimbursement (RBR) provide possible solutions by addressing the demand for:
· Price transparency,
· Benchmarking the cost of claims,
· Eliminating inappropriate charges, and
· A fiduciary or co-fiduciary serving on behalf of the plan sponsor.
With RBP, the plan specifies the amount that will be allowed for certain common procedures such as MRIs or knee replacements based on prevailing charges. Covered members have access to a list of participating providers who have agreed to accept these payments. Should the member choose a higher-priced provider, he or she may be responsible for the balance of the payment.
RBR uses a common “pricing reference” — often tied to the Medicare allowance and the actual cost for a specific service – and then reimburses the hospital or facility an additional 20-80%, allowing for the provider to make a “fair and reasonable” profit. For context, many PPO discounts result in net payments equal 250% or more of the Medicare allowance.
There are different ways this strategy can be implemented. Some employers begin using RBR exclusively for out-of-network claims. In other cases, RBR is used for all facility claims in conjunction with a PPO network for physician claims or an accountable care organization.
While used successfully by many employers, RBR can be disruptive for some employees when a provider attempts to “balance bill” patients for the difference between the set plan allowance and the provider’s billed charges. In the overwhelming majority of cases, however, these issues are quickly and easily resolved in favor of the plan sponsor and member. Rarely does a discrepancy like this lead to legal action.
Employers who decide to implement a RBR strategy need to carefully select a partner with expertise in communicating and educating employees about how these arrangements work and what to do should they receive a balance bill. The RBR partner should also have expertise in negotiating pricing discrepancies with providers, providing employee advocacy, indemnifying the plan and its members, and modifying the language in the plan document.
Many early adopters of this approach were often those who were subject to extreme increases in healthcare costs and who saw RBP and RBR as a last ditch effort that would enable them to continue to provide medical benefits for their employees. We’re now beginning to see more employers adopt this approach as a way to more effectively determine and control the cost of healthcare.
See Original Post Here.
Source:
Barr, B.F., (2016, August 1). The next innovation in controlling healthcare costs [Web log post]. Retrieved from https://www.employeebenefitadviser.com/opinion/the-next-innovation-in-controlling-healthcare-costs
The ACA’s uncertain lifespan following the Cadillac Tax delay
Are you questioning how the ACA will continue with the delay of the Cadillac Tax? Neil Model gives a breakdown of the "what-ifs" scenarios.
Original Post from BenefitsPro.com on July 26, 2016.
Since the delay of the Affordable Care Act’s (ACA) “Cadillac Tax” provision, which was passed on December 18, 2015, some may be wondering how the ACA will be funded until 2020. I do not believe we have been given the answer.
The Cadillac Tax was to be imposed as a means of funding the ACA by penalizing employers for offering high-cost employer sponsored health insurance plans to employees. One must take into consideration that with continued double-digit healthcare premium increases, the so-called “high cost” plans are not so far-fetched for many more employer sponsored plans in the future. The Cadillac tax was also to double as an incentive for plan sponsors to look at less expensive plan alternatives by the time the tax would be imposed, which is now 2020.
The tax, were it not delayed, would have assessed a penalty of 40 percent for plans costing an employee more than $10,200 annually, and family plans costing an employee $27,500 annually. I have little doubt that the craftsman of the ACA actuarially assumed there would be more employers subject to penalties in future years, despite most efforts to curb premiums.
But because the tax has been delayed, questions about how the ACA will be funded until 2020 have arisen. While still some plan sponsors speculate about whether the ACA will ultimately be repealed, others are still preparing for 2020 by attempting to provide affordable plan options for their employees. This is and will become increasingly more difficult due to spiraling health care costs and corresponding premiums. I have heard it asked many times: “How much more can I impose on my employees?” Add to that concern the even greater Rx inflation due to new and very expensive drugs coming to market for Hepatitis C, rheumatoid arthritis and cholesterol.
Though there have been no definitive plans announced to supplement the funding that would have resulted from the Cadillac Tax, other taxes and fees have been responsible for the partial funding of health care reform, some paid by individuals, others paid by employers, including numerous taxes on medical device manufacturers, indoor tanning services, charitable hospitals that fail to comply with Obamacare requirements, brand name drugs and health insurers. Other fundraising for the ACA comes through the elimination of tax deductions for certain drug coverage and tax increases for those with a certain income threshold.
Since the ACA’s emergence, we have read about failed state exchanges, bankrupt cooperatives, and the significant losses the major insurance carriers have incurred participating in the federal exchanges. We have also seen the failure of the government to pay the subsidies to insurance carriers in the timely fashion promised and expected. With the various delays and elimination of ACA funding clauses, we all must wonder where the money to pay for ACA will ultimately come from. Does everyone have a mirror?
According to an article by Reuters with information from the Congressional Budget Office, U.S. taxpayers will ultimately be responsible for $660 billion this year alone as a subsidy to those receiving health insurance under the age of 65. Those figures are expected to rise to $1.1 trillion over the next decade.
The burden will not only fall on the backs of the consumer, but on employers that want to help lift the burden of the high cost of health care. And, providing major medical insurance might not be enough in today’s environment. Ultimately, it will come down to employers educating themselves on the most effective strategies and seeking the guidance from benefits brokers to come up with creative, alternative solutions that will make it easier for employees to live healthy lives.
As the lifespan of the ACA remains undetermined, employers need to educate and prepare as best as possible. Uncertainty, especially with the election around the corner, will be a key theme the rest of this year, particularly in the health care realm.
So, the question remains: Will the ACA keep fighting the good fight going forward, or will it crumble under pressure?
How to Avoid Penalties Under the Affordable Care Act
Original Post from SHRM.org
By: Lisa Nagele-Piazza
2016 is expected to be the most expensive year for businesses complying with the Affordable Care Act (ACA), said David Lindgren, senior manager of compliance and public affairs for Flexible Benefit Service Corporation, a benefit administrator headquartered in Rosemont, Ill.
It’s the first year for dealing with ACA reporting, which many employers will have to complete by the end of June, Lindgren said during a concurrent session at the Society for Human Resource Management 2016 Annual Conference & Exposition.
There are more than 30,000 pages of guidance about the law, but Lindgren said the ACA is fairly easy to comprehend. “Of course, many people would disagree with me,” he noted.
“It’s not necessarily easy to comply with the ACA, and it’s not financially inexpensive, but most of the rules aren’t overly complicated,” he said.
The federal agencies that regulate the ACA have said they intend to monitor all businesses for compliance. This may not be realistic, but employers should keep in mind that more auditing can be expected.
Lindgren identified 30 penalties associated with noncompliance and provided insight on how to avoid them.
Employers can choose to pay the penalties for noncompliance, but steep fines are often attached, he said. For example, market reform violations carry a penalty of $100 per participant per day, up to $500,000 for each violation.
Employees Must Receive Notices
Some noteworthy penalties to avoid are those associated with the failure to provide required notices to plan participants, including a written notice of patient protections.
Lindgren said sometimes employers aren’t clear about who has been designated to provide this notice. “A lot of times the insurance company thinks the employer provided it and the employer thinks the insurance company did,” he said. “So it’s important to double check who is in fact giving the notice.”
Participants must also be provided with a summary of benefits and coverage in a standardized format. Lindgren likened this format to a nutrition label on a can of soup.
A participant should be able to easily compare the benefits to other plans, such as a spouse’s plan, just as the nutrition facts for two cans of soup can be easily compared.
There is a standardized template for the summary of benefits and coverage on the Department of Labor website.
The requirement to provide a summary of benefits and coverage applies to medical plans, but not to dental or vision plans.
The summary should be distributed at the time of open enrollment and special enrollments related to qualifying events, as well as at the request of participants and when a material modification has been made to the plan.
Although there is no penalty attached for noncompliance, employers must also provide written notice about the health insurance marketplace to new hires within 14 days of their start date.
This applies even for organizations that don’t offer benefits and even to those employees who aren’t eligible for benefits, Lindgren said.
There are some exceptions. For example, if an employer isn’t subject to the Fair Labor Standards Act, then it doesn’t have to provide the marketplace notice.
Exceptions for Grandfathered Plans
Grandfathered plans aren’t subject to some of the requirements under the ACA. This includes plans purchased on or before March 23, 2010, that haven’t made certain material changes.
Lindgren noted that employers with grandfathered plans must provide written notice to participants notifying them that it is a grandfathered plan and describing what that means for participants.
If participants aren’t provided this information, the plan will lose its grandfathered status, Lindgren said.
HR Takes the Lead
Benefits compliance isn’t just a human resources issue anymore, but HR often takes the lead in compliance efforts, according to Lindgren.
However, other departments, such as finance, legal and information technology, are increasingly getting more involved.
Are You Ready for the Marketplace Notices?
Original Post from ThinkHR.com
By: Laura Kerekes
Under the Affordable Care Act (ACA), each Health Insurance Exchange (Marketplace) must notify employers when they have an employee who has received a government subsidy to enroll in a health plan through the Marketplace. These notices will begin being sent to employers in the coming weeks and months, either individually or in batches. Because the notice procedure is being phased in, you may or may not receive notices, even if you have employees who received subsidies through a Marketplace. Here’s what you need to know.
Reason for Notice
These notices, also called 1411 Certifications in reference to the pertinent section of the ACA, will be sent to employers as part of the government’s verification efforts regarding persons who received Marketplace subsidies for individual health insurance. Marketplaces want to confirm whether the individual was eligible for, or enrolled in, an employer’s health plan since those facts can affect someone’s eligibility for subsidies.
You may receive a notice (similar to the sample found here) for each employee that received a subsidy to enroll in insurance through a Marketplace. The notice only informs you that the employee was granted a subsidy — it is not a notification that you have been assessed any penalty. Under the ACA’s play or pay rules, penalties may be assessed later by the Internal Revenue Service to applicable large employers for failing to offer full-time employees affordable minimum value coverage; however, play or pay penalties, and notice of them, are a separate process entirely.
What You Should Do
- Even if you do not believe that any of your employees obtained individual coverage through a Marketplace, be on the lookout for these notices because you have 90 days from the date of the notice to file an appeal, if necessary. Notices may go to a subsidiary instead of the parent company or to a particular worksite instead of the employer’s main office, depending on the information the employee provided to the Marketplace. Alert all departments and worksites to watch for mail in envelops from a government agency or insurance Marketplace.
- Important:Keep these notices confidential because employers are prohibited by law from discriminating or retaliating against employees who may receive subsidies. Consider segregating functions so staff involved in reviewing notices is separate from staff involved in employment or benefit plan decisions.
- Establish your audit process for reviewing any notices you may receive and for filing appeals when appropriate. Confirm that the information is correct based on your employment and payroll records. If you are an applicable large employer subject to the ACA’s play or pay rules, you also should check if the employee was a full-time employee and, if so, whether you had offered affordable minimum value coverage to the employee. Read more about the notice and appeal process here.
- File an appeal within 90 days of receipt of the notice if any of the information is incorrect. To do this, be sure to retain the notice and follow the directions for appeal. Remember that these notices will not advise you of any penalties on large employers, so appeals at this stage are to correct any mistakes in employment information. In addition:
- If you are a small employer and not subject to the ACA play or pay rules, you are not impacted directly but your appeal may alert the Marketplace that the individual was enrolled in your group health plan and not eligible for subsidies.
- If you are an applicable large employer who is subject to the ACA’s play or pay rules, you should be proactive in appealing the Marketplace’s subsidy determination if any information is incorrect. (An applicable large employer generally is one that employed an average of 50 or more full-time and full-time-equivalent employees in the prior calendar year. Related employers in a controlled group are counted together.) Although Marketplaces cannot access play or pay penalties, your appeal may help establish the facts and head off later penalty action by the IRS.
You may not receive Marketplace notices, but if you do, be prepared, review them thoroughly, and appeal incorrect information quickly.
DOL Overtime Rule Will Impact Hospitality Industry
Originally Posted by SHRM.org
By: Allen Smith
The hospitality industry will be hit hard by the Department of Labor’s updates to the overtime rule implementing the Fair Labor Standards Act (FLSA), experts say. With high overhead costs and a low-profit margin, hotels and restaurants typically don’t have enough money in reserve to give employees big raises to preserve their exempt status or to pay many hours of overtime if employees are eligible.
As a result, hospitality employers will need to explore alternative compensation models, schedules and staffing options to try to mitigate costs, according to Ryan Glasgow, an attorney with Hunton & Williams in Richmond, Va.
Some choices will be simple, he noted. For employees with relatively high salaries who work long hours, the logical choice is to increase their salaries, as the minimum increase in salary likely will be less than the employer would have to pay in substantial overtime hours. As for employees with low salaries who don’t work much overtime, it makes sense to convert them to nonexempt and pay overtime for the few overtime hours they might work.
“For all other employees, the decision will be much more difficult and will require a lot of strategic planning and analysis,” Glasgow said. “For example, in certain circumstances, it may be feasible for the employer to combine two exempt positions into one position so that the cost of increasing the salary for the remaining one employee is offset by the cost-savings from the elimination of the other employee’s position.”
He added that it may be better for the employer to convert a position to nonexempt and hire more employees to perform the work so that none of the employees work overtime. “Similarly, employers should evaluate each impacted position to determine whether there are unnecessary and/or inefficient tasks that can be eliminated or given to another employee so that the position requires fewer hours of work, thus lowering the impact of paying overtime,” he noted.
Domino Effect
Be aware of the potential domino effect when an employee’s salary is increased above the new salary level. The employee and the employee’s supervisor may suddenly be making similar salaries. Supervisors may ask for an increase as well, leading to salary increases up the organizational chart, Glasgow said.
Bonus and commission plans will have to be re-evaluated since there may be overtime pay consequences if employees who have been converted to nonexempt are paid bonuses or commissions, noted Robert Boonin, an attorney with Dykema in Detroit and Ann Arbor, Mich., and immediate past chair of the Wage and Hour Defense Institute, a network of wage and hour lawyers.
Rule’s Potential Winners
Salaried workers earning less than $913 a week or $47,476 annually and who regularly work more than 40 hours per week stand to gain from the overtime rule, said Wendy Stryker, an attorney with Frankfurt Kurnit Klein & Selz in New York City. These workers will have their salaries raised above the new threshold, be paid overtime or have their hours reduced to a 40-hour workweek, she said. These employees include entry and midlevel professionals, such as chefs, sommeliers, and hotel or restaurant managers and assistant managers, she added.
The hospitality industry has a lot of employees earning in this range, according to Stryker. She noted that the average U.S. wage for chefs, head cooks and pastry chefs is $45,920. For bakers, the average U.S. wage is lower, at $26,270, Stryker noted.
While workers may benefit from the overtime rule, Michael Layman, vice president, regulatory affairs for the International Franchise Association in Washington, D.C., said the overtime rule will hit the hospitality industry particularly hard. Its employers “disproportionately face unpredictable season- or weather-dependent schedules and variable labor demands, which makes tracking hours and managing overtime costs a significant challenge,” he said.
“Given the need for onsite guest services, employers in the hospitality industry may have less flexibility than other employers to automate or offshore operations,” said Nancy Vary, director of the compliance consulting center at Xerox HR Services in New York City.
However, Carolyn Richmond, an attorney with Fox Rothschild in New York City, said, “I think we will see the live reservationist all but disappear as reliance on [online booking apps] OpenTable, Resy and the others grows.” She added, “Owners are looking at more and more automation—programs that monitor and control labor costs and even how to replace certain employees.”
Other Significantly Affected Industries
Hospitality isn’t the only industry to feel the brunt of the new overtime rule.
“The construction and retail industries will be impacted significantly because, like the hospitality industry, they have unusually high concentrations of low-salaried managers,” Glasgow said. He also expected large research and educational hospitals to be uniquely impacted because they have many low-salaried professionals.
“Any industry that has traditionally offered low pay to its skilled workers is likely to be hard-hit by the new overtime rules,” Stryker said. “In New York City, this is likely to be the creative industries such as advertising and film/television production, where hours are traditionally long, and the work product cannot necessarily be created on a 40-hour-per-week schedule.”
The point of the rule isn’t to benefit employers, though. “The new overtime rules were created to benefit employees,” Stryker said. “As the president noted when he directed the Department of Labor to update the relevant regulations, the FLSA’s overtime protections “are a linchpin of the middle class, and the failure to keep the salary level requirement for the white-collar exemption up to date has left millions of low-paid salaried workers without this basic protection.”
That said, Richmond noted that “While the Department of Labor hopes and expects these changes will lead to increased wages through overtime, I don’t expect that to be the case in [the hospitality] industry. Payroll has already risen dramatically with minimum wage increases and resulting wage compression, and owners will spend more time looking at controlling overtime.”
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.
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5 Things Employers Need to Know About Overtime Rules
Original post benefitsnews.com
With compensation taking up the biggest slice of the benefits pie, employers are paying close attention to the Department of Labor’s proposed changes to the overtime rules – expected to be released as early as this month – under the Fair Labor Standards Act.
The proposed rules bump the salary threshold for overtime from $23,600/year to $50,440/year. If the final rules stay the same as the proposed rules, employees currently working in salaried positions who make less than $50,440 will now be entitled to overtime pay. That’s a 113% increase, which is “incredibly dramatic,” says Lisa Horn, spokesperson for the Partnership to Protect Workplace Opportunity.
“Not only does it raise it that high, but what many have failed to hone in on is the fact that this is an annual increase,” she adds. “That’s quite impactful on top of that huge initial jump in the salary increase.”
Horn says some research predicts that because of that annual increase, which is tied to the 40th percentile of all full-time salaried workers in the country, the minimum salary threshold for overtime could rise as high as $90,000 within five to seven years.
It’s possible the final rules could include a lower salary threshold – Horn says she’s heard it could be $47,000/year instead of $50,440 – but even if that’s the case, it will still mean a big jump. Employers will have to decide whether to increase workers’ salaries to make them exempt from overtime or reclassify them as non-exempt.
And since many employers have different benefit structures for hourly and salaried workers, if some employees need to be reclassified as non-exempt they could see their benefits affected.
Moreover, in the eyes of employees, being reclassified as non-exempt is “seen as a demotion,” says Horn, who also works as SHRM’s director of Congressional affairs. “Because you’re continually trying to climb most employees from that non-exempt hourly status to the more professional exempt status.”
Here are five things employers need to know about the proposed rules from the PPWO, a group of more than 70 employer organizations and companies created to respond to the overtime rule changes:
1. This proposal represents a 113% immediate increase plus an annual increase. The proposed overtime rule would initially raise the salary threshold defining which employees must be paid overtime by 113%, from $23,600 to $50,440. In addition, the DOL has proposed increasing this minimum salary on an annual basis.
2. The proposal will impact millions of workers and cost billions to businesses.According to the DOL, the rule will affect over 10 million workers – workers who may see their workplace flexibility diminished or a loss in other benefits they rely on, says the PPWO. The National Retail Federation estimates retail and restaurant businesses will see an increase of more than $8.4 billion per year in costs.
3. The implementation window is very short. As proposed, the implementation timeline for this rule is only 60 days, which will place a massive burden on HR departments and organizations scrambling to comply, according to the PPWO. “That 60 days is just completely unworkable from an organization’s standpoint and having to implement these changes in such a short time frame,” says Horn. “These are, for some organizations, really massive changes.”
4. Many employees will need to be demoted. This change could force employers to reclassify professional employees from salaried to hourly – including many managers and those with advanced degrees – resulting in a loss in benefits, bonuses, and flexibility, and a reduction in professional opportunities.
5. This is a blanket increase that disproportionally impacts lower cost areas. A one-size-fits-all approach is inappropriate for the different industries and various regions of the country. While the threshold of $50,440 may be reasonable in New York City, a comparable cost of living in Birmingham, Alabama, for example, is only about $21,000 – making the threshold unattainable and unrealistic for many small businesses in lower cost of living areas, according to the PPWO.
Fiduciary Rollout: DOL to Extend a Hand
Original post employeebenefitadvisor.com
WASHINGTON -- As the dust begins to settle after the Department of Labor issued its hotly contested fiduciary regulation, one of the key officials who led the rulemaking initiative says that he anticipates issuing clarifying guidance on an ongoing basis as industry feedback trickles back on how the rules are working in practice.
“This is a major undertaking and that we need to be mindful of what impact it's having as people are implementing it,” said Timothy Hauser, a deputy assistant secretary at the Labor Department, on Tuesday at a policy forum hosted by the Investment Company Institute. “We need to have the courage to make changes and to be responsive as problems emerge. And I can assure you we have every intent of doing so."
The ICI is a trade group that has been sharply critical of the rulemaking process.
Rule opponents have argued that many firms would be more likely to abandon middle-income clients planning for retirement, rather than submit to the contractual provisions relating to best-interest advice. But Hauser noted that the department made changes as it redrafted the final rule, in a bid to make the provisions less burdensome.
FURTHER TWEAKS TO RULE
Hauser took pains to explain that that process is still ongoing, insisting that he will entertain further tweaks to the rule and will publish clarifying guidance, likely in a question-and-answer format on a "rolling basis."
"We did our level best, really, to try to find the legitimate concerns and objections people had to what we were doing and try to be responsive," Hauser said. "We'll continue to do that as we move forward."
At the same time, Hauser offered a strong defense of the rule and the underlying rationale for the department's effort to crack down on conflicted advice in the retirement sector.
"The basic idea, first and foremost, is that we want advice to be in the customer's interest rather than in the interest of the adviser," he said. "The basis for this project — the reason we undertook this in the first place — was our belief that there was a significant problem in this marketplace."
The department's solution: update its rules under the 1974 Employee Retirement Income Security Act to extend fiduciary obligations to financial professionals working with retirement savers and plans, a threshold that is generally met when an adviser makes an investment recommendation and in turn receives compensation, Hauser said.
Hauser acknowledged that the ERISA statute has a "strong default position against conflicts of interest," but pointed out that the new rule explicitly permits conflicts such as commissions and proprietary products, provided that advisers offer up-front disclosures and aver in a binding contract that they will act in their clients' best interests.
That so-called best interest contract exemption has been one of the chief complaints of industry critics. But Hauser was quick to remind his audience that the rule will have minimal impact on advisers who offer advice that is free of conflicts.
"[T]there's nothing in the natural order of things that requires people to receive conflicted compensation streams as a condition of giving advice," he said. "However, we also don't outlaw conflicted compensation streams. The firm can continue to get commissions, it can get 12b-1 fees, it can get revenue sharing, it can get the variety of third-party payments."
Hauser continued: "But there's a quid pro quo for that. There's a basic deal that you need to strike with your customer, by and large, if you want to do that, and the deal is simple. You have to make a commitment to the customer that you're going to act in their best interest, and it needs to be enforceable."
NOT FOR PUNITIVE ENFORCEMENT
Hauser also said the DoL is not looking at the rule as a vehicle for a punitive enforcement policy. Instead, he said that the department is hoping to serve as a resource for affected firms and to work with them in a collaborative spirit as they implement the new rules.
"Our primary efforts are not going to be about finding people to sue, it's going to be about helping people to comply," he said. "Any problems you're wrestling with, issues you're trying to deal with, operational issues you're confronting — we'd love to hear from you, we'd love to be able to give advice. I would much rather get advice out early rather than have you build entire systems only to have us say, 'Nah, we don't think that complies.' I think it's in all our interest to make this work."