Counting Employees Doesn't Always Add Up

Original post benefitspro.com

Employee counts are used to determine what laws, rules, fees and penalties apply to a health plan and/or the employer sponsor. But the methods for counting employees are as varied as the laws that affect them. This creates confusion and frustration among employers and can significantly hinder their compliance efforts. To make sense out of all this, we have put together a synopsis of 12 counting methods that employers must utilize to properly administer their health plans. Read on to find out how to stay compliant as you move forward.

Employers with at least 15 employees

Law or compliance requirement applied:
Title VII of the Civil Rights Act, as amended by the Pregnancy Discrimination Act (PDA): Employers may not consider a person's race, color, sex (including sexual orientation), national origin, religion, or pregnancy in determining eligibility for, amount of, or charges for employee benefits. Denying coverage for a condition or treatment that disproportionately affects members of a protected group is also considered a violation of Title VII.

Americans with Disabilities Act (ADA): An employer may not deny an individual with a disability equal access to insurance, or require such an individual to have terms and conditions of insurance different than those of employees without disabilities. The ADA also applies to wellness and disease management programs.

Who to count: Employees working 20 or more calendar weeks in the current or preceding calendar year.

How to count: Count each full-time and part-time employee as one.

Consequences of noncompliance: The EEOC may bring an action in court, and individuals may file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).

Employers with at least 20 employees

Law or compliance requriement applied:
Genetic Information Nondisclosure Act (GINA): Group health plans may not discriminate against individuals based on genetic information and may not use this information in underwriting or determining premiums or contributions. It also restricts questions that can be asked on a Health Risk Assessment (HRA) if an incentive is offered for its completion.

Age Discrimination in Employment Act (ADEA): Benefits provided to older workers (40 years and older) must be the same as those provided to younger workers in all respects, including payment options, types of benefits and amount of benefits (although certain exceptions may apply).

Who to count: Employees working 20 or more calendar weeks in the current or preceding calendar year.

How to count: Count each full-time and part-time employee as one.

Consequences of noncompliance: The DOL may assess special penalties and the EEOC may bring an action in court against a plan sponsor for violations. Individuals may file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).

Employers with at least 20 employees

Law or compliance requriement applied:
COBRA: COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates.

Who to count: Employees (in all commonly-owned businesses) on more than 50 percent of the typical business days in the previous calendar year.

How to count: Count each full-time employee as one. Each part-time employee counts as a fraction, with the numerator equal to the number of hours worked by that employee and the denominator equal to the number of hours that must be worked on a typical business day in order to be considered full-time.

Consequences of noncompliance: COBRA compliance failures can result in excise taxes and statutory penalties. Qualified beneficiaries may also file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).

Employers with 20 or more employees

Law or compliance requriement applied:
Medicare Secondary Payer (MSP) rules based on age: A group health plan is the primary payer and Medicare is the secondary payer for individuals age 65 or over if their group health coverage is by virtue of the individual's (or his/her spouse’s) current employment status.

Who to count: Employees on each working day in at least 20 weeks in either the current or the preceding calendar year. The 20-employee test must be run at the time the individual receives the services for which Medicare benefits are claimed.

How to count: Count each full-time and part-time employee as one.

Consequences of noncompliance: Medicare can collect any incorrect claim payments directly from the employer, regardless of whether the employer's plan is fully insured or self-insured.

Employers with at least 50 employees

Law or compliance requriement applied:
Family and Medical Leave Act (FMLA): FMLA requires employers that sponsor group health plans to provide group health plan benefits to employees on an FMLA leave. Please note that public agencies and public and private schools are covered regardless of the number of employees.

Who to count: Employees working 20 or more weeks in the current or preceding calendar year within a 75 mile radius of the applicable work location.

How to count: Count each full-time and part-time employee as one.

Consequences of noncompliance: The EEOC may bring an action in court and individuals may file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).

Applicable Large Employers (ALEs)

Law or compliance requriement applied:
Shared responsibility provisions of the Affordable Care Act (ACA): ALEs must offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees, must report to the IRS information about the health care coverage, if any, they offered to full-time employees, and must provide a statement to employees.

Who to count: Full-time employees and full-time equivalent (FTE) employees in each month of the preceding year. Divide this number by 12, and if the result is 50 or greater, the employer is an ALE for the current year.

How to count: Count full-time (30 or more hours per week determined on a monthly basis) and FTE employees as one. Aggregate part-time hours (no more than 120 hours per employee) and divide by 120 to determine FTEs. Special counting rules apply with respect to special situations, such as teachers, seasonal workers, etc.

Consequences of noncompliance: ALEs are subject to a penalty if one or more full-time employees are certified to the employer as having received an applicable premium tax credit or cost-sharing reduction, and either: 1) the employer fails to offer to its full-time employees (and their dependents) minimum essential coverage; or, 2) the employer's coverage is deemed to be unaffordable or does not provide minimum value (as defined by the ACA). Failure to file a return with the IRS or furnish a statement to employees can result in penalties up to $250 per return/statement, with a maximum penalty of $3 million.

Law or compliance requriement applied:
Mental Health Parity and Addiction Equity Act (MHPAEA):Group health plans that provide mental health coverage must provide parity between medical/surgical benefits and mental health/substance use disorder benefits.

Who to count: Employees on business days during the preceding calendar year.

How to count: Count each full-time and part-time employee as one.

Consequences of noncompliance: Individuals and the DOL may use ERISA's civil enforcement provisions to file lawsuits to enforce the MHPAEA's requirements. In addition, noncompliance with the MHPAEA can trigger an IRS excise tax.

Employers with 100 or more employees

Law or compliance requirement applied:
Medicare Secondary Payer (MSP) rules based on disability:A group health plan is the primary payer, and Medicare is the secondary payer for individuals under age 65 entitled to Medicare on the basis of a disability, if their group health coverage is by virtue of the individual's (or his/her spouse’s) current employment status.

Who to count: Employees on at least 50 percent of regular business days during the previous calendar year.

How to count: Count each full-time and part-time employee as one.

Consequences of noncompliance: Medicare can collect any incorrect claim payments directly from the employer, regardless of whether the employer's plan is fully insured or self-insured.

Welfare plans that cover at least 100 employees

Law or compliance requirement applied:
Form 5500: Employee benefit plans must file the Form 5500 reporting and disclosure document on an annual basis with the Department of Labor (DOL). Please note that the Form 5500 requirement applies to ERISA plans only.

Who to count: Employees enrolled in the plan at the beginning of the plan year.

How to count: Count each full-time and part-time employee as one.

Consequences of noncompliance: The penalty for failing to file a Form 5500 is $1,100 per day, which is cumulative from the filing deadline. Lesser penalties may be assessed for incomplete or otherwise deficient Form 5500s.

Employers that filed 250 or more W-2s 

Law or compliance requirement applied:
Reporting the cost of health benefits on W-2: The Affordable Care Act (ACA) requires employers to report the total cost of employer-provided health coverage on Form W-2.

What to count: W-2s filed with the IRS in the preceding calendar year.

How to count: W-2s for full-time and part-time employees count as one.

Consequences of noncompliance: Penalties for compliance failures range from $30 to $250 per form.

All self-insured medical plans

Law or compliance requirement applied:
Transitional reinsurance program fee: The ACA requires self-insured group health plans to make contributions to help stabilize premiums for coverage in the individual market during the years 2014 through 2016.

Who to count: Covered lives, which includes both employee and dependent lives.

How to count: The fee is calculated based on the average number of covered lives, which can be determined using one of the following four methods:

  • Actual Count: Add the total number of lives covered for each day of the first nine months of the calendar year and divide that total by the number of days in the first nine months.
  • Snapshot Count: Add the total number of lives covered on any date during the same corresponding month in each of the first three quarters of the calendar year, and divide that total by the number of dates on which a count was made.
  • Snapshot Factor: Use the Snapshot Count method, except the number of lives covered on a given date is calculated by adding the number of participants with self-only coverage to the product of the number of participants with coverage other than self-only coverage and a factor of 2.35. This method can be used to estimate the number of total lives included in coverage that is not self-only coverage.
  • Form 5500 Method: The number of participants as of the beginning and end of the plan year as reported on Form 5500 for the last applicable time period.

Consequences of noncompliance: As with any amount owed to the federal government, an unpaid/underpaid Reinsurance Program Fee will be subject to federal debt collection rules.

All self-insured medical plans

Law or compliance requirement applied:
Patient-Centered Outcomes Research Institute (PCORI) fee:The PCORI fee supports the Patient-Centered Outcomes Research Trust Fund and will be imposed for each policy year ending on or after October 1, 2012 and before October 1, 2019.

Who to count: Covered lives, which includes both employee and dependent lives.

How to count: The fee is calculated based on the average number of covered lives, which can be determined using one of the following three methods:

  • Actual Count Method: Add the total lives covered for each day of the plan year and divide that total by the total number of days in the plan year.
  • Snapshot Method: Add the total number of lives covered on one date during the first, second or third month of each quarter, and divide that total by the number of dates on which a count was made.
  • Form 5500 Method: The number of participants as of the beginning and end of the plan year as reported on Form 5500 for the last applicable time period.

Consequences of noncompliance: As with any amount owed to the federal government, an unpaid/underpaid PCORI Fee will be subject to federal debt collection rules.


Cost of benefits, ACA compliance main concerns of midsized businesses

Originally posted by Andrea Davis on http://ebn.benefitnews.com

The cost of health coverage, the Affordable Care Act and the volume of government regulations are the top three concerns of midsized business owners and executives, according to a new survey from the ADP Research Institute.

Seventy percent of midsized businesses – those with between 50 and 999 employees – surveyed said their biggest challenge in 2013 is the cost of health coverage and benefits. ACA legislation  came in as the No. 2 concern, cited by 59%, a 16% increase over last year. And rounding out the top three list of concerns was the level and volume of government regulations, cited by 54%.

“What was a surprise to us was that midsized business owners’ level of confidence in their ability to comply with the laws and regulations doesn’t reflect reality,” says Jessica Saperstein, division vice president of strategy and business development at ADP.

For example, the survey finds that, overall, 83% of midsized businesses are confident they’re compliant with payroll tax laws and regulations, nearly one-third reported unintended expenses – fines, penalties or lawsuits – as a result of not being compliant.

“The majority say they’re confident but many of them are experiencing these fines and penalties,” says Saperstein. “On average, it’s about six times a year and the average cost of one of these penalties or fines is $90,000.”

Nearly two-thirds of benefits decision-makers at midsized companies are not confident they understand the ACA and what they need to do to be compliant. Ninety percent aren’t confident their employees understand the effects of the ACA on their benefits choices.

 


What really scares us these days

Originally posted October 24, 2013 by Corey Dahl on http://www.lifehealthpro.com

When I was in sixth grade, I went to my first commercial (as in, non-neighbor’s-darkened-basement-strewn-in-cotton-cobwebs-and-paper-bats) haunted house.

It was the ‘90s, the heyday of those cheap, ill-produced FrightFezts and ScReAm ZoNes that sprouted in derelict shopping centers every fall, and you weren’t cool — by middle school standards, anyway — if you didn’t go to at least one. So my friends and I skipped trick-or-treating that year, stood in an hour-long line and paid $10 of our parents’ money to see what all the hype was about.

When we emerged about 15 minutes later, I wished I’d gone trick-or-treating instead. My friends were pumped — screaming and giggling — and, wanting to fit in, I played along. But really, the entire thing had bored me. I mean, toy chain saws? Fog machines? Cheap makeup? Yawn.

Maybe I was just a really jaded 11 year old, or maybe it was just a really crappy haunted house — this was before they became the multi-story productions they are today, after all — but there was nothing in that Hobby Lobby-cum-House of Horrors that scared me in the slightest.

And, while I haven't been to a haunted house since, I don’t think it would be much different for me these days, either. I spend the entirety of slasher movies critiquing plot holes and poor acting. I’m not really into the whole zombie trend. When the electricity goes out, I worry about my frozen foods melting, not a potential ghost attack.

Increasingly, it seems I’m not alone. I read an article last week about the scaring difficulties haunted houses have been facing lately. Despite spending thousands on machines, effects, masks and professional actors, the houses’ operators are watching a lot of their guests walk away unperturbed.

The haunted house operators blamed technology. Better movie and video game special effects have upped the ante considerably, they said. And yeah, okay. Maybe. But as a longtime non-scared, I think the better culprit might be real life.

Because, the more I look back on it, the more I’m convinced that my blasé attitude toward that strip-mall haunted house (and all cheap frights) was entirely due to the fact that I’d seen a lot of things scarier than pimply, dressed-up teenagers jumping out from behind cardboard trees.

By the time I was 11, one of my grandmas had died. The other was in failing health, requiring my mom to juggle nursing home bills and the care of a senior and three daughters.

Our house had been robbed a few years earlier, and they’d run off with my life savings ... which was $20 in an old Folgers coffee can.

And I’d traveled extensively with my somewhat directionally challenged family, which meant we often got lost in the bad neighborhoods of big cities. A homeless man, dressed in nothing but a garbage bag and asking for spare change, had chased me down a street in New York just a few months earlier.

So my lack of fear didn’t come from extraordinary bravery of some kind — I was scared of miller moths until I was well into college — but probably from simply knowing that rubber masks and strobe lights couldn’t hold a candle to most of the things real life had in store.

Following one of our country’s worst economic downturns and given the employment, retirement andlong-term care struggles most Americans continue to face — to say nothing of the real-life tragedies we’ve experienced, from hurricanes, tsunamis, mass shootings and the like — I suspect a lot of other people have started to realize the same. We’re living at a time when you’ll get more screams from people with a bank statement than a bludgeon.

Part of that makes me glad; it’s a sign that we’re finally facing facts, I think. But it’s also incredibly sad, this idea that our reality has outpaced the worst horrors we could previously imagine.

But it doesn’t have to be like this. If my theory’s even slightly correct, I think it also proves the dramatic need for the advice of insurance agents and financial advisors these days. With a suitable plan in place, a lot of people could avoid the real-life horrors of unpaid bills and underfunded retirements.

And the faster producers can ease clients’ worst fears, the sooner they can get back to freaking out over corn-syrup blood. Or, if they’re like me, making fun of it.

Happy Halloween!


Survey: Employees don't want control over health care

Report reveals a sobering gap in employee readiness to handle and take on the shift toward consumer-driven health plans

Original article from http://ebn.benefitnews.com

By Tristan Lejeune

As more and more employers look at defined contribution health care and other insurance shifts, will employees be ready? Last year, J.D. Power and Associates reported that 47% of employers "definitely" or "probably" will switch to a defined contribution health plan in the coming years.

The third annual Aflac WorkForces Report reveals a sobering gap in employee readiness to handle and take on the shift toward consumer-driven health plans and defined contribution health. A majority of workers (54%) would prefer not to have more control over their insurance options, citing a lack of time and information to manage it effectively, while 72% have never even heard the phrase "consumer-driven health care."

Aflac and Research Now surveyed 1,884 benefits leaders and 5,229 wage-earners and found arresting disconnects in their expectations, plans and views of the future. For example, 62% of employees think their medical costs will increase, but only 23% are saving money for those hikes. A full three-quarters of the workforce think their employer will educate them about changes to their health care coverage as a result of reform, but only 13% of employers say educating their employees about health care reform is important to their organization.

"It may be referred to as 'consumer-driven health care,' but in actuality, consumers aren't the ones driving these changes, so it's no surprise that many feel unprepared," says Audrey Boone Tillman, executive vice president of corporate services at Aflac. "The bottom line is if consumers aren't educated about the full scope of their options, they risk making costly mistakes without a financial backup plan."

Aflac reports what many benefits leaders instinctively know: Consumers already find health insurance decisions intimidating and don't welcome increased responsibility. Fifty-three percent fear they might mismanage their coverage, leaving their families less protected than they are now. And significant ignorance remains: Plan participants are "not very" or "not at all" knowledgeable about flex spending accounts (25%), health savings accounts (32%), health reimbursement accounts (49%), or federal or state health care exchanges (76%).

According to the report, 53% of employers have introduced a high-deductible health plan over the past three years, and that trend shows no sign of slowing. Yet more than half of workers have done nothing to prepare for changes from HDHPs, the Affordable Care Act or other system shifts.

"It's time for consumers to face reality," Tillman says. "Ready or not, they are being put in control of their health insurance decisions - and that means having to make choices that could have a big impact on personal finances. If employers aren't offering guidance to workers on how to make crucial benefits decisions, the responsibility lies in the hands of consumers to educate themselves."

The U.S. government estimates that by 2014, household out-of-pocket health care expenses will reach an annual average of $3,301. More than half (55%) of workers have done nothing to prepare for possible changes to the health care system, Aflac reports, and their savings reflect that: 46% have less than $1,000 put aside for unexpected, serious illness or injury. Twenty-five percent have less than $500.

Tillman says that what surprised her most about the data is how people seem to be ignoring such a large, tectonic shift in the landscape. It's not exactly like health care reform has been subtle and creeping.

"There's no greater awareness, no greater education, and it's a sea of change that's taking place," Tillman says. "It's all over the news; it's everywhere. But people aren't any more moved to action and education."

What happens with health care, she says, "seems to be evolving," and there may be a reluctance on the part of consumers to jump in because "hey, it may change." The shift to CDHPs, however, seems to be building in momentum, and employees would do well to wake up. The entire point of that shift, after all, is that they will be on their own, but employers do need to make sure they know that.

Benefits "are a great expense to your organization, and to have your workers and the people that you're charged with protecting not aware, not informed of how the benefits offering could impact their lives, to me that's not really safeguarding a very expensive and important benefit," Tillman says. "It benefits the employee, obviously, to know: What are my benefits, what is my employer thinking about doing, what do I need to be studying. But at the same time, it's very important to employers ... because otherwise they're not getting a very good return on their investment."

Tillman says "frequent communication is paramount" for instituting changes like this - don't send out the message once a year and then forget about it. And never underestimate the value of a personal example as a teaching method.

"A lot of times employers and HR get into a communicate-only-at-open-enrollment mode," she says. "And, even if health care reform weren't about to happen, I'd still say as an HR professional, communicate throughout the year. Communicate via every method that you can - to be sure, at open enrollment, but also on your intranet. If you've got a portal, including things in mailers, the paper tables in the cafeteria. ... the more we can highlight a benefit by showing how other employees have utilized it, that's a really impactful case."

 

 

 


Most Employees Not Given a Choice of Health Plans

Source: PLANSPONSOR.com

Most Americans get their health insurance coverage from employment-based plans, yet most employers do not offer a choice of health plans, according to the Employee Benefit Research Institute (EBRI).

In 2011, 84% of employers with health benefits offered only one plan; 15% had two choices; and 1% offered three or more options. Large firms were more likely to offer a variety of health plans than small firms; 42% of large firms gave two or more choices, compared with 15% of smaller firms. As a result, nearly one-half (47%) of covered workers had a choice of health plans, and according to the 2011 EBRI/MGA Consumer Engagement in Health Care Survey, 59% of adults ages 21 to 64 with employment-based health coverage had a choice of health plans.

Among individuals covered by an employment-based health plan, those in consumer-driven health plans (CDHPs) were more likely than those with traditional coverage to be given options. In 2011, 68% of CDHP enrollees had a choice of health plans, compared with 59% of individuals in traditional plans, and 48% of those with high-deductible health plans (HDHPs).

The greater variety for CDHP enrollees may be due to the fact that an increasing percentage of the CDHP population works for an employer with 500 or more employees and large employers tend to offer more benefit options, EBRI said in its July Notes.

Asked about the main reasons for enrolling in their plan, 50% of CDHP enrollees reported they chose that offering because of the lower premium, while 45% said the opportunity to save money in the account for future years was a primary concern. Among individuals with traditional health coverage, 39% cited the good network of providers and 32% reported the low out-of-pocket costs as the main reasons for enrolment.

Among individuals with a choice of plans, CDHP and HDHP enrollees were less likely than those with traditional coverage to say they were extremely or very satisfied with the quality of care received.

More information can be found in the July EBRI Notes at http://www.ebri.org.