Lately, there’s been a big focus on America’s opioid addiction in the news. Whether it’s news on the abuse of the drug or it’s information sharing on how the drug works, Americans are talking about this subject regularly. We want to help educate you on this hot topic. Check out this short video for more!
Workplace rules are back, baby!
Peter Robb, General Counsel for the National Labor Relations Board (and my new hero), issued a memorandum on Wednesday that employers should love. Mr. Robb has declared that nine standard employer policies will now be presumed lawful under the National Labor Relations Act.
The memorandum was based on the Board’s decision in The Boeing Company, issued in December 2017. Before Boeing, the NLRB under the Obama Administration had taken the position that these policies were unlawful because they could have a “chilling effect” on employees’ exercise of their rights to engage in “protected concerted activity” under Section 7 of the NLRA.
So, without further ado, here are nine standard employment policies that the Board says are legal again, absent evidence that they’re being applied to protected concerted activity. (Welcome back!) I’ll also go over workplace rules that continue to violate the NLRA, and workplace rules that will be evaluated on a case-by-case basis.
Workplace rules that are presumed lawful
No. 1: Civility rules. The Equal Employment Opportunity Commission must be happy about this one because their proposed guidance on workplace harassment recommended civility training for employees as a harassment-prevention measure. The EEOC had to include a footnote that its recommendation could be problematic from an NLRA standpoint. (I’d been recommending to clients that they restrict civility training to management until this conflict between the EEOC and the NLRB was resolved.)
Conflict hereby resolved! According to the General Counsel, an expectation of civility does not interfere with employees’ right to engage in protected concerted activity because they can almost always criticize the employer, or individual supervisors, in a civil manner.
No. 2: No photography, no recording. Although there are occasions when employees may want to photograph or record working conditions or labor protests, the General Counsel says, for the most part rules prohibiting unauthorized recordings have no impact on Section 7 rights and therefore are lawful. However, “a ban on mere possession of cell phones at work may be unlawful where the employees’ main method of communication during the work day is by cell phone.” In other words, the ban should be on unauthorized recording, not on possession of a device that can record.
No. 3: Bans on insubordination, non-cooperation, adversely affecting operations. “An employer has a legitimate and substantial interest in preventing insubordination or non-cooperation at work. Furthermore, during working time an employer has every right to expect employees to perform their work and follow directives.”
Duh. It’s sad that this even had to be said, but thank you, General Counsel Robb, for saying it.
(Of course, if the “insubordination” is engaging in protected concerted activity, then the application of the rule would violate the NLRA.)
No. 4: Bans on disruptive behavior. Employers again have the right to prohibit “fighting, roughhousing, horseplay, tomfoolery, and other shenanigans.” Also, “yelling, profanity, hostile or angry tones, throwing things, slamming doors, waving arms or fists, verbal abuse, destruction of property, threats, or outright violence.”
There may, however, be instances when some of this activity is associated with a strike or walkout and may be protected. And you can’t ban strikes or walkouts.
No. 5: Protecting confidential and proprietary information, and customer information. Yes, employers, it is again legal for you to prohibit employees from disclosing your confidential and proprietary information. “In addition, employees do not have a right under the Act to disclose employee information obtained from unauthorized access/use of confidential records, or to remove records from the employer’s premises.” (Emphasis added.) To be lawful under the new standard, the employer should ban the unauthorized access or disclosure of confidential employee information rather than flatly banning disclosure of any employee information.
No. 6: Bans on defamation or misrepresentation. According to the General Counsel, because “defamatory” statements or “misrepresentations” imply some level of deliberate falsehood or misleading, “Employees will generally understand that these types of rules do not apply to subjectively honest protected concerted speech.”
No. 7: Bans on unauthorized use of company logo or intellectual property. “Most activity covered by this [type of] rule is unprotected, including use of employer intellectual property for unprotected personal gain or using it to give the impression one’s activities are condoned by the employer,” the memorandum says. And I love this:
“Employers have a significant interest in protecting their intellectual property, including logos, trademarks, and service marks. Such property can be worth millions of dollars and be central to a company’s business model. Failure to police the use of such property can result in its loss, which can be a crippling blow to a company. Employers also have an interest in ensuring that employee social media posts and other publications do not appear to be official via the presence of the employer’s logo.”
No. 8: Requiring authorization to speak for the employer. Yet another “duh” moment: “Employers have a significant interest in ensuring that only authorized employees speak for the company.”
No. 9: Bans on disloyalty, nepotism, or self-enrichment. Even the Obama Board didn’t have much of a problem with employer rules that banned (or required disclosure of) conflicts of interest, or employees who had financial interests in competitors of the employer. The Trump Board agrees.
Workplace rules that are presumed unlawful
The memorandum lists two types of employer rules that will continue to be found unlawful, and I believe most employers are already aware of these:
- Prohibiting employees from discussing or disclosing information about wages, benefits, or other conditions of employment.
- Prohibiting employees from joining outside organizations or “voting on matters concerning” the employer.
These rules are directly related to activity protected by Section 7 of the NLRA. Therefore, they are presumed unlawful, and NLRB Regional Offices are instructed to issue complaints “absent settlement.” (The Regional Offices do have the option of asking for advice from the Office of the General Counsel if they think special circumstances apply.)
Workplace rules that require case-by-case assessment
The memorandum also discusses some “gray area” rules, which may or may not violate the NLRA depending on the circumstances. The following types of rules will be submitted to the Office of the General Counsel and evaluated on a case-by-case basis:
- “Broad conflict-of-interest rules that do not specifically target fraud and self-enrichment . . . and do not restrict membership in, or voting for, a union.”
- Broad or vague “employer confidentiality” rules that don’t focus on confidential and proprietary, or customer, information and that don’t specifically restrict Section 7 activity (discussion of wages, benefits, or other terms and conditions of employment).
- Rules prohibiting disparagement of the employer, as opposed to disparagement of employees.
- Rules restricting use of the employer’s name, rather than just its logo or trademarks.
- Rules that prohibit employees from speaking to the media or third parties at all (as opposed to communications to third parties where the employee purports to represent the employer).
- “Rules banning off-duty conduct that might harm the employer.” A little vague.
- “Rules against making false or inaccurate statements (as opposed to rules against making defamatory statements) . . ..”
For the past several years, employers have been struggling to comply with the Board’s interpretations while retaining the right to maintain some semblance of order in their workplaces. The General Counsel’s memorandum is a giant step in the right direction.
Article written by: Robin Shea, partner with leading national labor and employment law firm (and ThinkHR strategic employment law partner) Constangy, Brooks, Smith & Prophete, LLP
Originally posted on thinkhr.com
Vince Murdica, chief revenue officer at ThinkHR, discusses what it takes to become scalable and sustainably staff companies through bursts of rapid growth.
I’ve seen it in my own career: When companies go through rapid growth — quickly moving from 50 to 100+ employees — things start to get shaky. This period of acceleration can be compared to when a jet breaks through the sound barrier. The flight is smooth until that moment, then the plane rattles violently and feels like it’s going to break apart. But when it gets through to the other side, it’s smooth skies again and you’re now flying even faster and higher.
There is a loss of control as a company gets bigger, and not all leaders can handle it. Some career entrepreneurs prefer to start companies, grow them to around 50 people, then sell them because they are uncomfortable with the growing pains that inevitably happen beyond this point. They will do it again and again.
Other leaders are better at growth and mastering scalability. They have what it takes to grow their companies over the 100-person mark. I believe these leaders consistently do three key things when growing their staff:
#1 Hire People You Trust
When you scale up, the ability of senior management to be involved in every detail — to be in all the meetings, involved with every decision, leading all the major initiatives — breaks down. There is a human limit to how many one-on-one relationships you can manage, so your ability to manage as you gain more direct reports goes down. When growing from 50 to 100 employees, new layers of management must get formed.
At this point, delegation becomes critical, or productivity will come to a screeching halt. That’s why it’s crucial to hire managers and other people you can trust. This takes time and effort, but I believe the key to establishing this environment of trust is “hiring slow and firing fast.”
#2 Delegate Responsibility and Authority
Once you’ve hired great, trustworthy people, don’t ever delegate responsibility without also delegating authority. Your staff needs to keep everything moving while you are doing other things for the organization. They can’t wait around for you to make decisions. Hand them the power to innovate, solve problems, and reach the goals you’ve set out for them.
A mantra I borrowed from a mentor is, “I don’t mind giving speeding tickets, but if I need to give too many parking tickets, we have a problem.”
I would rather an employee charge ahead and make an informed, strategic decision that turns out to be a mistake instead of hold back and move too cautiously. Everyone on my team feels empowered. We get it done and we don’t wait. (Wait is a four-letter word.) The burden on leadership is to be sure that goals and strategy are clear, so people can move quickly, with confidence and creativity.
#3 Learn from Mistakes
To me, business is like a sport. It’s a competition. There is a winner and a loser and it’s a real-world game. Approaching it that way enforces a specific mindset around it. To use football as an example: On Monday you review the film from Sunday’s game and see how you can improve. You practice all week to make tweaks, try new plays, and fix what’s broken. Then your next game is a fresh opportunity to be a new team with a new opponent.
In business, like in any sport, we are going to make mistakes. That’s how we learn, but what’s important is that we don’t make those same mistakes again. We get into the mindset of always improving. Failing isn’t necessarily bad — it means your people aren’t afraid to innovate and achieve.
Smooth Skies Ahead
Do these three things — trust, delegate, and learn — which are so core to building a scalable team, and soon your company will be breaking through the sound barrier and once again flying smooth skies.
In the end, growth can be fun, and winning is really fun. Your team will be fulfilled and feel like they are making an impact. So to mix metaphors: Go let your team get some speeding tickets!
Summer internships offer students opportunities to gain real-world experience and hands-on career development. Conversely, internship programs give employers access to highly motivated and educated young workers and give junior managers more experience training and supervising. There are benefits for everyone involved.
However, there are some potential legal and administrative pitfalls that many employers overlook. One of the largest issues is determining what interns should be paid – or not paid.
The Department of Labor issued new guidance on January 5, 2018, that gives employers more flexibility in deciding whether to pay interns. A seven-criteria test is now used to determine if an internship may be unpaid, but the biggest change is that not all factors need to be met – no single factor is decisive, and the determination is made on the unique circumstances of each case.
If the job training program primarily provides professional experience that furthers a student’s educational goals, a student may not be considered an employee entitled to compensation. However, if students are doing work usually done by employees and are not receiving training and close mentoring, they should be paid wages. If there is any doubt, the best approach is to pay the student.
4 Reasons to Pay Interns
However, while it’s now legally permissible to classify more interns as unpaid, there are still compelling reasons to pay interns even when the internship does meet the criteria for unpaid status.
Unpaid internships tend to exclude students from lower- and middle-income backgrounds, who cannot afford not to work at paid jobs during the summer. In addition, they may need to pay up to several thousand dollars for course credit, in addition to coming up with funds for housing, clothing, and transportation related to the internship. This can put internships out of reach for some of the students who can benefit from them the most.
Unpaid internships may devalue the work paid employees are doing. After all, interns are working alongside regular employees — often doing some of the same tasks — and not being compensated for that work. This may send the message to employees that their work, or time, is not valued.
Unpaid internships can create a negative impression of your company. Customers or the community may see you as taking advantage of these students, which is not the message you want to portray. It’s a good community relations move to offer youth paid opportunities.
The work the unpaid intern is doing may actually be work that should be compensable. Improperly classifying an internship and not paying the student could result in wage claims that include back pay, penalties, and fines. To mitigate those risks, once again, the best approach is to pay the student.
Hiring summer students is a great way to help youth learn what it takes to be successful in business while helping employers get special projects completed. Plan ahead and structure your program so that your summer internship program is a great experience for everyone.
by Rachel Sobel
Originally posted on thinkHR.com
Managing pay can be tricky. Handled incorrectly, pay can create problems for an employer — everything from the inability to attract the right candidates and losing great employees to the competition to presenteeism (employees who are physically in the workplace but not engaged in their work), employee relations issues, compliance audits, and lawsuits. These outcomes impact productivity. They infect the company culture. And they tarnish the employer brand.
In your role as a trusted advisor to clients who may be struggling with their total compensation programs, you need to be ready to help them determine how to make the right decisions. This requires you to be aware of new trends while also helping clients manage risk by complying with wage and hour rules.
Pay Versus Employee Motivation and Retention
Many employee engagement reports note that pay doesn’t impact motivation as much as other work factors, such as:
- The quality of the company and its management.
- Belief in the organization’s products.
- Alignment with the company’s mission, values, and goals.
- Ability to make a meaningful contribution.
- Ability to develop new professional skills.
IBM’s Smarter Workforce Institute’s 2017 study looked at employees’ decisions to leave their jobs and found that the three generations comprising most of today’s workforce would be open to considering new job opportunities for better compensation and benefits: Millennials at 77 percent, Generation X at 78 percent, and Baby Boomers at 70 percent. Those are big numbers, and they shouldn’t be ignored when designing pay plans.
Further, while pay may not be a motivator, it can be a powerful dissatisfier when employees believe that they aren’t being paid correctly for the value they are bringing to the organization, or at the market value of their jobs. Worse yet is the perceived — or real — belief that their pay is lower than what their co-workers are earning. In some markets, this problem is genuine, as companies in hot labor markets struggle with paying new people more than current employees, causing pay compression. Employees do talk and pay information is readily available.
Considering every variable that goes into compensation planning can be complicated. Your clients can start by: setting a compensation strategy to fit their company’s needs and budget; developing compensation programs to fit that strategy, the talent marketplace, and employee demographics; and then administering the compensation program fairly and in compliance with federal, state, and local laws.
Equal Pay Mandates
The Equal Employment Opportunity Commission’s (EEOC) Strategic Enforcement Plan prioritizes enforcing the Equal Pay Act (EPA) to close the pay gap between men and women, and the Trump administration has been silent about changing this direction. This topic is trending, as legislators in more than 40 jurisdictions introduced bills related to equal pay in 2017. California, New York, Massachusetts, and Maryland are setting the pace with laws addressing this issue. These states have set rules that more broadly define the equal pay standard requiring different factors, such as skill, effort, working conditions, and responsibility, in justifying gender pay disparities. These states are also broadening the geographic restrictions for employee pay differentials.
We expect that more states will enact equal pay rules in 2018. Companies should review gender pay differences in their workforce, document the bona fide business reasons for the differences, and correct wage disparities as needed. Permitted differences could include seniority, documented merit performance differences, pay based on quantity or quality of production or sales quotas, or geographic differentials.
Salary History Ban
The issue of pay has traditionally been an inevitable topic of discussion in any job interview. However, in a growing number of places throughout the country, an employer can no longer ask an applicant about his or her salary history. At least 21 states and Washington, D.C., along with several municipalities, have proposed legislation that would prohibit salary history questions. California (effective January 2018), Delaware (effective December 2017), Massachusetts (effective July 2018), and Oregon (effective January 2019) have enacted laws impacting private employers. More bans are expected at both the state and local level.
While the provisions of each law vary, they make it illegal for employers to ask applicants about their current compensation or how they were paid at past jobs. The rationale for these laws stems from the equal pay issue and the premise that pay for the job should be based on the value of the job to the organization, not the pay an applicant might be willing to accept. These laws are designed to reverse the pattern of wage inequality that resulted from past gender bias or discrimination.
For employers, this means:
- Establishing compensation ranges for open positions and asking applicants if the salary range for the position would meet their compensation expectations.
- Updating employment applications to remove the salary history information.
- Training hiring managers and interviewers to avoid asking questions about salary history.
Outside of certain industries, the public sector, and unionized environments where pay grades and step increases are common knowledge, historically many employers have had a practice of discouraging employees from openly discussing their compensation. That practice is fast becoming history, due to another notable trend in state legislatures: enacting laws that allow employees to discuss their wages and other forms of compensation with others. Although the provisions of the laws vary, California, Colorado, Connecticut, Delaware, Washington, D.C., Illinois, Louisiana, Maine, Maryland, Michigan, Minnesota, New Hampshire, New Jersey, New York, Oregon, and Vermont now have laws in place allowing pay transparency.
In addition to these state laws, Section 7 of the National Labor Relations Act (NLRA) allows employees to engage in pay discussions as “concerted and protected activities for the purpose of collective bargaining or other mutual aid or protection.” During the Obama administration, the National Labor Relations Board (NLRB) broadly interpreted the NLRA’s Section 7 to side with employees’ rights to discuss wages and other terms and conditions of employment. Unless the Trump administration’s NLRB changes direction on this issue, which is not expected, the clear message for employers is to remove any prohibitions of employees discussing pay or working conditions with others.
Employee compensation has always been a hot topic, and this year the temperature will continue to rise. Keep abreast of legislative and regulatory changes that impact pay practices to help your clients stay in compliance with the pay laws that are spreading throughout the country.
Now is a good time to suggest that your clients consider conducting pay audits, updating compensation plans, making compensation adjustments where needed, training managers regarding pay strategy and practice, and communicating the company’s compensation strategy and incentive plans to employees.
By Laura Kerekes, SPHR, SHRM-SCPz
Originally posted on thinkHR.com
As the costs of health care soar, many consumers are looking for ways to control their medical spending. Also, with the rise of enrollment in high deductible health plans, consumers are paying for more health care out-of-pocket. From medical savings accounts to discount plans for prescriptions, patients are growing increasingly conscious of prices for their healthcare needs. Price shopping procedures and providers allows you to compare prices so that you are getting the best value for your care.
Why do you need to look beyond your nearby and familiar providers and locations for healthcare? Here’s a hypothetical example: Chris is a 45-year old male in good physical health. During his last check-up he mentions to his doctor that he’s had some recent shortness of breath and has been more tired as of late. His doctor orders an EKG to rule out any problems. If Chris went to his local hospital for this procedure, it would cost $1150. He instead looks online and shops around to find other providers in his area and finds he can get the same procedure for $450 at a nearby imaging center. His potential savings is $700 simply by researching locations.
So where do you start when shopping around for your health care? A good place to begin is by researching your health plan online. Insurance companies will post cost estimates based on facility, physician, and type of procedure. Keep in mind that these are just estimates and may vary based on what coverage you are enrolled in. Another way to shop is by checking out websites that have compiled thousands of claims information for various procedures and locations to give an estimate of costs. However, deciphering whether a site is reporting estimates based on the “medical sticker price” of charges or rates for private insurance plans or Medicare is difficult. There are huge differences in prices at different providers for the exact same procedure. This is because contracts between insurance agencies and providers vary based on negotiated amounts. This makes it hard to get consistent pricing information.
Check out these sites that do a great job comparing apples to apples for providers:
- Healthcare Blue Book
- What Kelly Blue Book is to cars, Healthcare Blue Book is to medical pricing
- New Choice Health
- Reports on pricing of medical procedures, providers, quality of facilities, and customer feedback for healthcare in all 50 states
- The Leapfrog Group
- Publishes data on hospitals so patients can compare facilities and costs for treatments and procedures
After compiling all the information on prices and procedures, you can still call and negotiate costs with the location of your care. Fair Health Consumer has tips on how to negotiate with providers and plan for your healthcare needs.
Knowledge is POWER and when you spend time researching and comparing healthcare costs, you are empowering yourself! Exercising due diligence to plan for you and your family’s medical needs will save you money and give you confidence in your decisions for care.
The Internal Revenue Service (IRS) recently updated its longstanding Questions and Answers about Information Reporting by Employers on Form 1094-C and Form 1095-C that provides information on:
- Basics of Employer Reporting
- Reporting Offers of Coverage and other Enrollment Information
- Reporting for Governmental Units
- Reporting Offers of COBRA Continuation Coverage and Post-Employment Coverage
- Reporting Coverage under Health Reimbursement Arrangements (Form 1095-C, Part III)
Generally, the Q&A describes when and how an employer reports its offers of coverage and describes the codes that employers should use when completing Form 1094-C and Form 1095-C for calendar year 2016 that are to be filed in 2017. The Q&A should be used in conjunction with the Instructions for Forms 1094-C and 1095-C which provide detailed information about completing the forms.
The updated Q&A provides information on COBRA reporting that had been left pending in earlier versions of the Q&A for the past year. UBA’s ACA Advisor “IRS Q&A About Employer Information Reporting on Form 1094-C and Form 1095-C” reviews the new information and explains other reporting obligations covered under the Q&A.
Reporting Offers of COBRA Continuation Coverage
An offer of COBRA continuation coverage that is made to a former employee due to termination of employment is not reported as an offer of coverage in Part II of Form 1095-C.
If the applicable large employer is required to complete a Form 1095-C for the former employee (because, for example, the individual was a full-time employee for one or more months of the year before terminating employment), the employer should use code 1H, No offer of coverage, on line 14 for any month that the former employee was offered COBRA continuation coverage. For those same months, the employer should use code 2A, Employee not employed during the month, on line 16 for each month in which the individual is not an employee (regardless of whether the former employee enrolled in the COBRA continuation coverage).
An employer that provides COBRA continuation coverage through a self-insured health plan generally must report that coverage for any former employee or family member who enrolls in that COBRA continuation coverage in Part III of the Form 1095-C. Also, the employer may report the coverage on Form 1095-B for any individual who was not an employee during the year and who separately elected the COBRA continuation coverage.
By Danielle Capilla
Originally published by www.ubabenefits.com
Cafeteria plans, or plans governed by IRS Code Section 125, allow employers to help employees pay for expenses such as health insurance with pre-tax dollars. Employees are given a choice between a taxable benefit (cash) and two or more specified pre-tax qualified benefits, for example, health insurance. Employees are given the opportunity to select the benefits they want, just like an individual standing in the cafeteria line at lunch.
Only certain benefits can be offered through a cafeteria plan:
- Coverage under an accident or health plan (which can include traditional health insurance, health maintenance organizations (HMOs), self-insured medical reimbursement plans, dental, vision, and more);
- Dependent care assistance benefits or DCAPs
- Group term life insurance
- Paid time off, which allows employees the opportunity to buy or sell paid time off days
- 401(k) contributions
- Adoption assistance benefits
- Health savings accounts or HSAs under IRS Code Section 223
Some employers want to offer other benefits through a cafeteria plan, but this is prohibited. Benefits that you cannot offer through a cafeteria plan include scholarships, group term life insurance for non-employees, transportation and other fringe benefits, long-term care, and health reimbursement arrangements (unless very specific rules are met by providing one in conjunction with a high deductible health plan). Benefits that defer compensation are also prohibited under cafeteria plan rules.
Cafeteria plans as a whole are not subject to ERISA, but all or some of the underlying benefits or components under the plan can be. The Patient Protection and Affordable Care Act (ACA) has also affected aspects of cafeteria plan administration.
Employees are allowed to choose the benefits they want by making elections. Only the employee can make elections, but they can make choices that cover other individuals such as spouses or dependents. Employees must be considered eligible by the plan to make elections. Elections, with an exception for new hires, must be prospective. Cafeteria plan selections are considered irrevocable and cannot be changed during the plan year, unless a permitted change in status occurs. There is an exception for mandatory two-year elections relating to dental or vision plans that meet certain requirements.
Plans may allow participants to change elections based on the following changes in status:
- Change in marital status
- Change in the number of dependents
- Change in employment status
- A dependent satisfying or ceasing to satisfy dependent eligibility requirements
- Change in residence
- Commencement or termination of adoption proceedings
Plans may also allow participants to change elections based on the following changes that are not a change in status but nonetheless can trigger an election change:
- Significant cost changes
- Significant curtailment (or reduction) of coverage
- Addition or improvement of benefit package option
- Change in coverage of spouse or dependent under another employer plan
- Loss of certain other health coverage (such as government provided coverage, such as Medicaid)
- Changes in 401(k) contributions (employees are free to change their 401(k) contributions whenever they wish, in accordance with the administrator’s change process)
- HIPAA special enrollment rights (contains requirements for HIPAA subject plans)
- COBRA qualifying event
- Judgment, decrees, or orders
- Entitlement to Medicare or Medicaid
- Family Medical Leave Act (FMLA) leave
- Pre-tax health savings account (HSA) contributions (employees are free to change their HSA contributions whenever they wish, in accordance with the their payroll/accounting department process)
- Reduction of hours (new under the ACA)
- Exchange/Marketplace enrollment (new under the ACA)
Together, the change in status events and other recognized changes are considered “permitted election change events.”
Common changes that do not constitute a permitted election change event are: a provider leaving a network (unless, based on very narrow circumstances, it resulted in a significant reduction of coverage), a legal separation (unless the separation leads to a loss of eligibility under the plan), commencement of a domestic partner relationship, or a change in financial condition.
There are some events not in the regulations that could allow an individual to make a mid-year election change, such as a mistake by the employer or employee, or needing to change elections in order to pass nondiscrimination tests. To make a change due to a mistake, there must be clear and convincing evidence that the mistake has been made. For instance, an individual might accidentally sign up for family coverage when they are single with no children, or an employer might withhold $100 dollars per pay period for a flexible spending arrangement (FSA) when the individual elected to withhold $50.
Plans are permitted to make automatic payroll election increases or decreases for insignificant amounts in the middle of the plan year, so long as automatic election language is in the plan documents. An “insignificant” amount is considered one percent or less.
Plans should consider which change in status events to allow, how to track change in status requests, and the time limit to impose on employees who wish to make an election.
On December 13, 2016, former President Obama signed the 21st Century Cures Act into law. The Cures Act has numerous components, but employers should be aware of the impact the Act will have on the Mental Health Parity and Addiction Equity Act, as well as provisions that will impact how small employers can use health reimbursement arrangements (HRAs). There will also be new guidance for permitted uses and disclosures of protected health information (PHI) under the Health Insurance Portability and Accountability Act (HIPAA). We review the implications with HRAs below; for a discussion of all the implications, view UBA’s Compliance Advisor, “21st Century Cares Act”.
The Cures Act provides a method for certain small employers to reimburse individual health coverage premiums up to a dollar limit through HRAs called “Qualified Small Employer Health Reimbursement Arrangements” (QSE HRAs). This provision will go into effect on January 1, 2017.
Previously, the Internal Revenue Service (IRS) issued Notice 2015-17 addressing employer payment or reimbursement of individual premiums in light of the requirements of the Patient Protection and Affordable Care Act (ACA). For many years, employers had been permitted to reimburse premiums paid for individual coverage on a tax-favored basis, and many smaller employers adopted this type of an arrangement instead of sponsoring a group health plan. However, these “employer payment plans” are often unable to meet all of the ACA requirements that took effect in 2014, and in a series of Notices and frequently asked questions (FAQs) the IRS made it clear that an employer may not either directly pay premiums for individual policies or reimburse employees for individual premiums on either an after-tax or pre-tax basis. This was the case whether payment or reimbursement is done through an HRA, a Section 125 plan, a Section 105 plan, or another mechanism.
The Cures Act now allows employers with less than 50 full-time employees (under ACA counting methods) who do not offer group health plans to use QSE HRAs that are fully employer funded to reimburse employees for the purchase of individual health care, so long as the reimbursement does not exceed $4,950 annually for single coverage, and $10,000 annually for family coverage. The amount is prorated by month for individuals who are not covered by the arrangement for the entire year. Practically speaking, the monthly limit for single coverage reimbursement is $412, and the monthly limit for family coverage reimbursement is $833. The limits will be updated annually.
Impact on Subsidy Eligibility. For any month an individual is covered by a QSE HRA/individual policy arrangement, their subsidy eligibility would be reduced by the dollar amount provided for the month through the QSE HRA if the QSE HRA provides “unaffordable” coverage under ACA standards. If the QSE HRA provides affordable coverage, individuals would lose subsidy eligibility entirely. Caution should be taken to fully education employees on this impact.
COBRA and ERISA Implications. QSE HRAs are not subject to COBRA or ERISA.
Annual Notice Requirement. The new QSE HRA benefit has an annual notice requirement for employers who wish to implement it. Written notice must be provided to eligible employees no later than 90 days prior to the beginning of the benefit year that contains the following:
- The dollar figure the individual is eligible to receive through the QSE HRA
- A statement that the eligible employee should provide information about the QSE HRA to the Marketplace or Exchange if they have applied for an advance premium tax credit
- A statement that employees who are not covered by minimum essential coverage (MEC) for any month may be subject to penalty
Recordkeeping, IRS Reporting. Because QSE HRAs can only provide reimbursement for documented healthcare expense, employers with QSE HRAs should have a method in place to obtain and retain receipts or confirmation for the premiums that are paid with the account. Employers sponsoring QSE HRAs would be subject to ACA related reporting with Form 1095-B as the sponsor of MEC. Money provided through a QSE HRA must be reported on an employee’s W-2 under the aggregate cost of employer-sponsored coverage. It is unclear if the existing safe harbor on reporting the aggregate cost of employer-sponsored coverage for employers with fewer than 250 W-2s would apply, as arguably many of the small employers eligible to offer QSE HRAs would have fewer than 250 W-2s.
Individual Premium Reimbursement, Generally. Outside of the exception for small employers using QSE HRAs for reimbursement of individual premiums, all of the prior prohibitions from IRS Notice 2015-17 remain. There is no method for an employer with 50 or more full time employees to reimburse individual premiums, or for small employers with a group health plan to reimburse individual premiums. There is no mechanism for employers of any size to allow employees to use pre-tax dollars to purchase individual premiums. Reimbursing individual premiums in a non-compliant manner will subject an employer to a penalty of $100 a day per individual they provide reimbursement to, with the potential for other penalties based on the mechanism of the non-compliant reimbursement.
By Danielle Capilla
Originally published by www.ubabenefits.com
Employer-sponsored health insurance is greatly affected by geographic region, industry, and employer size. While some cost trends have been fairly consistent since the Patient Protection and Affordable Care Act (ACA) was put in place, United Benefit Advisors (UBA) finds several surprises in their 2016 Health Plan Survey.
Based on responses from more than 11,000 employers, UBA announces the top five best and worst states for group health care costs.
Watch this short video and contact us for more information about the Survey!