Current State of Affairs

Current State of Affairs

Updated: 8-2014. Disclaimer: The materials and information contained herein are intended only to provide general information and in no way constitute legal advice. If you have specific questions or concerns, please consult legal counsel.


ACA – It’s All About the Numbers


WHAT is ObamaCare?

ObamaCare (AKA The Affordable Care Act) is a US law aimed at reforming the American health care system. ObamaCare's main focus is on providing more Americans with access to affordable health insurance improving the quality of health care and health insurance, regulating the health insurance industry, and reducing health care spending in the US.


http://sthp.com/a/ocf/?on=ocf-hlink-sthp







What makes an ACA compliant health plan in 2014?

• Out of Pocket Maximums capped at $6,350 for individuals ($12,700 for families)

• Guaranteed Eligibility for ALL individuals – No Pre-Existing Condition Limitations

• Preventative Care must be covered 100%• No lifetime or annual limits in 2014• Stand Alone HRAs are GONE.• Maximum Wait period – 90 days in 2014 upon plan

year renewal.

Which Sandbox is yours


Small group?

Mid-Size ALE?

Large ALE?

Who has to “Pay or Play”?Applicable Large Employers “ALEs” are those with 50 or more FTEs and have to offer Affordable and Minimum Value healthcare to all Eligible Full-Time Employees.

Formula: FT (30 hrs+ a wk) + (Total part-time hours worked in a month/120) = FTE (Full-Time Equivalents)

Example: 93 FTs + (960 hrs/120 = 8) = 101 **RUN FORMULA FOR 6 Consecutive Months in 2014.

For 2015, only ALEs with 100+ FTEs are required to offer coverage. Those ALEs with between 50 and 99 FTEs must certify numbers.

Employers with fewer than 50 FTEs are Small Group Employers and are NOT mandated to offer coverage.


Counting your Workforce- All of them

• Control Group Rules – multiple EINs equate to one ALE.

• Affiliated Service Group Rules – Management Company.

• Misclassification of independent contractors.• Common Law Employer and co-employment

relationships.


Common Ownership and Control Group Tests

• Internal Revenue Code’s controlled group rules under IRC §§414(b), (c), (m) or (o). • All count for determination of Pay or

Play.• Penalties of non-compliance are

entity specific.Updated: 8-2014. Disclaimer: The materials and information contained herein are intended only to provide general information and in no way constitute legal advice. If you have specific questions or concerns, please consult legal counsel.


Individual Mandate Fines and Penalties


$95 – 2014$325 – 2015$695 - 2016

• FOR NOW, INDIVIDUALS STILL SUBJECT TO THE FOLLOWING:

Small Group Employer Obligations and Options

Fewer than 50 FTEs for 2014.


Insured Small Group Requirements• Essential Health Benefits (not Self-Insured Plans)

•Ambulatory Patient Services•Emergency Services•Maternity & Newborn Care•Pediatric Services•Prescription Drugs•Laboratory Services

•Mental Health & Substance Use Disorder•Preventive & Wellness Services•Chronic Disease Management•Hospitalization•Rehabilitative/Habilitative Services & Devices (devices tax)


Insured Small Group Requirements

3:1 Modified Community Rating1. Age2. Community3. Smoking (5:1)4. Family Size

Deductibles cannot exceed $2,000/$4,000 unless carrier obtained a waiver from HHS.

Guarantee Issue and No Medical Underwriting

Potential Liability – be careful that you have a justifiable business reason for hiring someone younger aside from ACA.



Large Group Employer Obligations and Options


What do You have to do in 2015?

FT + (PT monthly hrs/120) = Perform for 6 consecutive months; add; divide by 6; round down.

FTE 100+ Have to comply with ALE rules in 2015.

FTE 50-99

This means TRACKING.

Offer A/MV Coverage to all Eligible employees or face potential fines/penalties.

Do not have to comply in 2015 but have to certify numbers to IRS.

Be careful – if you have over 100 FTEs as of 2-9-14, and your numbers drop later in the year, make sure there are sound business reasons for the drop unrelated to ACA.


Mid-Size ALEs 2015


(1) Limited Workforce Size. The employer must employ on average at least 50 full-time employees (including full-time equivalents) but fewer than 100 full-time employees (including full-time equivalents) on business days during 2014.

(2) Maintenance of Workforce and Aggregate Hours of Service. During the period beginning on Feb. 9, 2014 and ending on Dec. 31, 2014, the employer may not reduce the size of its workforce or the overall hours of service of its employees in order to qualify for the transition relief. However, an employer that reduces workforce size or overall hours of service for bona fide business reasons is still eligible for the relief.

Maintenance of Previously Offered Health Coverage. During the period beginning on Feb. 9, 2014 and ending on Dec. 31, 2015 (or, for employers with non-calendar-year plans, ending on the last day of the 2015 plan year) the employer does not eliminate or materially reduce the health coverage, if any, it offered as of Feb. 9, 2014.

Certification through Form 6056 of the above.

Large ALE (100+ FTEs in 2014) – Compliance in 2015, when?

If on 12-27-12, had a fiscal year plan…. Fiscal Date hasn’t changed

Offered coverage to at least 1/3 Full-time employees or ¼ Full-time employees on coverage as of 2-9-14…..

Changed fiscal

plan yearAfter

12-27-12

Compliance at beginning of Fiscal Plan year in 2015.

Have to offer coverage to comply with ACA on January 1, 2015.

UNLESS, ALE did not know if over or under 100 FTEs and performs 6 month calculation for last 6 months of 2014 – then does not have to offer ACA compliant plan to all eligible until 4-1-15 BUT.

This ONLY applies to those ALEs unsure of their Large or Mid-size status.


Large ALE’s Failure to Offer CoverageSec. 4890H(a) Penalties “Sledgehammer Penalties” for

2015 onlyDoes ALE offer coverage to “substantially all” eligible employees?

No Eligible EE seeks coverage through Marketplace and receives premium tax credits.

yes

2015 - Substantially all = All but 30% of eligible EEs

Employer must pay $2,000 per annum for all eligible EEs (minus 80) regardless of whether Eligible EEs have coverage.

No 4980h(a) penalty payment owed by employer.

CAUTION: Employer still potentially subject to other fines and penalties for the 30% not offered coverage**

**Please see 3-1-14 ETC Newsletter for more on the other penalties.


SLEDGEHAMMER PENALTY

Example: 500 FTs and WE DO NOT OFFER COVERAGE TO 151 FTs. 349 FTs are on plan.

Penalty: 500 FTs – 80 FTs = 420 X $2,000 = $840,000


Example: 103 FTs + (960 hrs/120 = 8) = 101 = ALE

Penalty: 103 FTs – 80 FTs = 23 X $2,000 = $46,000

You need TRACKING.

You need TRACKING.


We offered to all 500 FTs but did not keep proof of when and how it was offered so it looks as though no one was offered coverage. ONE employee seeks coverage and subsidies:

Penalty: 500 FTs – 80 FTs = 420 X $2,000 = $840,000


You need TRACKING and Record Keeping.

Remember – burden of proof is ON EMPLOYER always!

A/MV Failures and PenaltiesSec. 4890H(b) Penalties “TackHammer Penalties”

Does employer offer A/MV coverage to all FT EEs?

A = affordable (9.5% or less of

employee income)

MV = minimum value (the plan’s share of the total allowed costs of benefits is at least 60% of such costs )

YES

No and Employee seeks Marketplace Coverage:

Employer must pay $3,000 penalty for all employees who buy coverage through Marketplace and receive premium tax

credits.

No penalty owed by employer.


You need TRACKING.

Figuring out Affordability

9.5% of Employee ONLY income compared to lowest cost option of ACA compliant plan: Box 1 of W2 (taxable wages) Federal Poverty Line

– $11,490 (100%) up to $45,960 (400%) for one individual.– $15,510 (100%) up to $62,040 (400%) for a family of two.– $23,550 (100%) up to $94,200 (400%) for a family of four.

Hourly Rate (Rate of Pay) BUT* Can’t use this for tipped or commission employees.


TackHammer PENALTY

Who is not eligible for premium tax credits even if coverage is deemed not AFFORDABLE?

Medicaid EligibleMedicare EligibleEarnings over 400% FPL


LEGAL CHALLENGES AND SOLUTIONS


Legal Risks??• Adjusted Community Rating – based on age

brings potential ADEA discrimination claims.

• Offer of coverage to 70% of eligible employees could subject employers to ERISA liabilities in 2015.

• 90 days means 90 days, or does it??

Private lawsuits

$100 a day per affected employee.

Violations of PHS 2708 if use 4th month to offer coverage.


Potential 4980H(b) $3,000 penalty. Possible discrimination lawsuit.

What are Variable Hour (VH) Employees?

• It cannot be determined if employee is going to work full-time on hire date.

• Track hours worked and if average 30+ a week, offer coverage effective no later than 90 days after eligible.

• Seasonal Employees can be considered variable hour but..

Consider putting a Measurement Period/Stability Period (MP/SP) Safe Harbor in place.


ADMINISTRATIVE NIGHTMARE

Variable Hour Rules


1. Measurement Period 3 months to 12 months.2. Stability Period must be not less than 6 months – equal

to MP.3. New hires if eligible for coverage must be offered within

13 months.4. Hours counted are PAID hours not only hours worked.5. FMLA, USERRA, Jury Duty absences are ignored.

REMEMBER: 90 Day Eligibility Period

90 days MEANS 90 days – Calendar days not business days– Holidays and weekends COUNT

2 Year Extension for Canceled Health Plans – still cannot have a wait period longer than 90 days.

Orientation Period – hmmmmm- no longer than 30 days- have to have a justified business reason (not ACA

avoidance)Updated: 8-2014. Disclaimer: The materials and information contained herein are intended only to provide general information and in no way constitute legal advice. If you have specific questions or concerns, please consult legal counsel.

Participation Rules2-27-13 & 2-10-14 Regs (Small Group up to 100): - Guaranteed coverage regardless of Participation. - Limitation on Open Enrollment Periods.2-27-13 HHS Final Regulations, p. 13416; 2-10-14 Department of Treasury Regulations, pg. 90-91; 45 CFR 147.104(b)(1)

2-10-14 Regs (Large Group):“ In the large group market, a minimum participation requirement cannot be used to deny guaranteed issue.” What about rating the group for lack of participation?


Non-Discrimination Rules

• IRC 105(H) Plans – Self Insured Plans

• Fully Insured Plans – Not yet decided

• Carve Out Issues– How do we handle these


2 Prong TestEligibility Benefits Analysis

Legal Analysis Needed.


I GIVE UP - but wait??

No offer of coverage• Fines assessed for entire

eligible workforce• Fines are NOT tax

deductible• Employees leave b/c no

coverage• Offering NOTHING means

no value

Offer coverage of some sort• Can use MP/SP safe harbor

for variable hour workers• Employer premium – tax

deductible• Build something they want

– you have options• Build a MEC plan or

alternative – inexpensive down to maybe $50 a month per employee



The Playgrounds – just to name a few

Self-Insured Plans

Minimum Essential Coverage Plans

Excepted Benefits

Voluntary Products – add ons

Fixed indemnity Plans

Critical Illness Plans

Accident Plans

Supplemental Medical (Gap) Insurance-Stand alone Pharmacy benefits

Integrated HRAs

HSAs/FSAs

Helpful Hints

1. Figure out Your Sandbox.2. Is current plan ACA Compliant? 3. Participation Challenges?? – look at

alternative plan and MP/SP options TODAY.4. Figure out what benefits employees want.

Most Importantly, START MEASURING NOW.


Recordkeeping, Tracking and Reporting

• Forms 6055/6056 – for 2015 (voluntary for 2014)

• Mid-Size ALE Safe Harbor 2015?• October 1, 2013 Notice• Use of independent contractors– Texas Workforce Commission– Federal agencies


Interplay of ACA – and Other Governmental Regulatory Initiatives



Governmental Compliance• More than 180 federal laws enforced by DOL• Most common laws that result in lawsuits:

–Age Discrimination in Employment Act (ADEA)–American With Disabilities (ADA)–Consolidate Omnibus Budget Reconciliation Act (COBRA)–Employment Retirement Income Security Act (ERISA)

–Fair Labor Standards Act (FLSA)–Family and Medical Leave Act (FMLA)–Genetic Information Non-discrimination Act (GINA)–Health Insurance Portability & Accountability Act (HIPAA)

–Immigration Reform and Control Act (IRCA)–Occupational Safety & Health Act (OSHA)–Personal Responsibility Work Opportunity Reconciliation Act (PRWORA)

–Harassment & Discrimination–Title VII of Civil Rights Act–Uniformed Service Employment/Re-employment Rights Act (USERRA)


ACA – What is the US Department of Labor Doing?


Wage & Overtime andEBSA Audits

DOL EBSA Audits• Plan Compliance Audits– Large Group (Grandfathered; fully insured)– Small Group (Tax credits; no 5500 filing)

• The DOL has estimated that three out of four plans they audit have an ERISA violation.

• DOL has also estimated that about 70% of audits with violation have resulted in $$$$$ FINES.

Take away:We need to audit Client SPDs, plan documents, and wrap documents NOW to ensure compliance.


Wage and Hour Enforcement Efforts in 2013….….

A Quarter Billion Dollars in Back Wages• benefited more than 269,250 workers who

recouped $249,954,412 in back wages. • Since the beginning of 2009, the Wage and

Hour Division has closed 145,884 cases nationwide, resulting in more than a billion dollars in back wages for 1,238,589 workers.


Fair Labor Standards ActHarris Health System –

– To pay over $4 million in back wages/fines– To 4573 employees– Failed to include incentive pay in overtime wages.

San Francisco Giants pay employees $545,000 in back wages, damages.

Take away: Perform internal w Wage and Overtime Audit and correct deficiencies.

December 2013, Hibachi Grill & Supreme Buffet sued by US Labor Department to recover nearly $2 million in unpaid wages and damages for 84 employees.

Norwood Commercial Contractors agrees to pay nearly $400,000 in back wages and damages to 96 workers Misclassified as independent contractors.

Houston Ear, Nose & Throat Clinic required to pay more than $17,000 in back wages for FMLA violations to ONE employee – went back to work in a part-time position.

Take away: Educate employers on what they can and cannot do before the regulators educate them and charge $$.


Wage and Overtime issues

Perform Exempt v. Non-Exempt analysis (salary v. hourly).

Track hours – useful for ACA as well.Pay for training time.Do not charge employees for uniforms.Consider the true “regular rate of pay”.Allowing hourly folks to work “off the clock”.

FLSAExemption Tests – avoiding Overtime

• Earn at least $455 a week ($23,660 a year).

Salary Level

• Predetermined amount earned regardless of quality or quantity of work.

Salary Basis

• White Collar Exemptions.

Job Duties


FLSA“White Collar” Exemptions

Apply to:1. Executives2. Administrative Employees3. Professionals – learned and creative4. Outside Sales Employees5. Computer Employees6. Highly Compensated Employees


Use and Misuse of Independent Contractors


Advantages to Independent Contractor Relationship

• Employer does not pay:– their share of Social Security and Medicare taxes; – unemployment taxes; – workers compensation premiums; – Employee benefits

• Worker not entitled to make Discrimination Claims.DOL quotes one study which estimated employers can cut labor costs by 20-40% by misclassifying employees as independent contractors.


Employee v. Independent Contractor Tests

• Economic Realities Test (FLSA)• IRS Control Tests• Common law 12 Significant Factors –

ERISA for benefit determination• EEOC Guidance for applicability of

discrimination laws



Independent Contractors

• Payroll Fraud: Targeting Bad Actors Hurting Workers and Businesses introduced in the Senate November 13, 2013– Amends FLSA requiring employers to put in writing

who is an employee (who is not) and why– Penalties assessed for misclassification– Require States to investigate and assess penalties– Information sharing between agencies


Example: 500 FTs and WE DO NOT OFFER COVERAGE TO 150 FTs because they are designated Independent Contractors. 350 FTs are on plan.

Penalty: 500 FTs – 80 FTs = 420 X $2,000 = $840,000


Other Governmental Regulatory Initiatives

- And a little good news….


Immigration and Customs Enforcement (ICE)

I-9 Audits

Only 250 Workplace Audits in 2007; more than 3000 in 2012.

Total fines grew from $1 million in 2009 to $13 million in 2012.

Texas SAW the most fines assessed in 2012 followed by NJ.

The official purpose of the ICE audits is to promote immigration compliance. However, many employers are fined for poor record keeping rather than for breaking immigration laws. Hence, good record keeping practices are essential to staying clear of fines.

The number of company owners, executives, and HR manager arrests also increased to 238.


I-9 Forms


• New Form out on March 8. Begin using by May 7, 2013. Find it here:

http://www.uscis.gov/files/form/i-9.pdf

Enforced by Equal Employment Opportunity Commission (EEOC)1. EEOC filings at an ALL TIME high.2. Texas and California tied for the most lawsuits filed

in 2011.3. $455.6 million paid by private employers in 2011

(more than $51 million increase over 2010)4. EEOC’s mediation program reached record levels in

2011 wherein employers paid more than $170 million in benefits, an increase of $28 million over 2010.


Take away: review policies from recruitment through termination to make sure no discrimination.


NLRB -what non-union employers need to know:

Board found:• Policy encouraging employees to resolve conflicts by

speaking with the particular individual was unlawful. • A prohibition on inappropriate or unprofessional

comments is unlawfully broad. • Seeking confidentiality for workplace investigations

may be unlawful unless employer can show confidentiality necessary to protect integrity of its investigations

Take away: employers need to review handbooks and clean up overly broad, unclear language.

WHAT IS WOTC?

• FEDERAL TAX CREDIT available to employers who hire and retain:– veterans – individuals from other target groups with

significant barriers to employment.

Annually, $1 billion in tax credits claimed under the WOTC program.

• $1,200 to $9,600 per individual qualified


Target Groups • Veterans • Temporary Assistance Needy Families (TANF) Recipients • SNAP (Food Stamp) Recipients • Designated Community Residents (living in

Empowerment Zones or Rural Renewal Counties)• Vocational Rehabilitation Referral • Ex-felons • Supplemental Security Income Recipients


Texas Workforce Commission and Unemployment Claims

BASIC ISSUES IN TEXAS:• EMPLOYMENT AT WILL– Fire or Quit at any time for any reason or no reason

whatsoever.– No obligation to provide severance– Careful rules about paying out vacation accrued

• JOB ABANDONMENT• TERMINATION FOR WORK MISCONDUCT• ONLY CONTROLLABLE PAYROLL TAX YOU HAVE

(somewhat – at least in some states)Updated: 8-2014. Disclaimer: The materials and information contained herein are intended only to provide general information and

in no way constitute legal advice. If you have specific questions or concerns, please consult legal counsel.

Why do employers need handbooks?

• Median award for all employment-related claims in 2009 skyrocketed by 60% over 2008 to $326,640.

• To Combat TWC claims.• To Educate workforce as to policies and

procedures.• To avoid a discrimination/harassment

claim.


EMPLOYMENT HANDBOOKS

The Dos and Donts of

1. Do identify “regular workweek”.2. Don’t prohibit your employees from discussing wages.3. Do prohibit retaliation for reporting concerns.4. Don’t have contractual terms in handbook.5. Do update your FMLA and USERRA policies.6. Don’t identify a probationary period.7. Do address No Call/No Show = Job Abandonment.


YOU HAVE OPTIONSHead in the sand….. How do you eat an elephant?


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=QY6RXtXMVJRQiM&tbnid=QT81d8HdCNm8TM:&ved=0CAUQjRw&url=http://www.123rf.com/photo_13541980_cartoon-illustration-of-an-elephant-boxer-with-boxing-gloves-and-red-shorts-as-republican-mascot.html&ei=voJWUszaAoXI9gSA64DIAQ&bvm=bv.53760139,d.eWU&psig=AFQjCNE5cGycDEyK3friaJAos34fBVON2A&ust=1381487635984177


Take Aways• START NOW to determine: – Are you an ALE?– Can you take advantage of variable hour safe

harbors?– Make sure you are teamed up with a GREAT Broker!

• Perform an internal HR audit on ALL aspects.• Identify potential risks/liabilities and put a plan

of action in place to resolve them.• Recordkeeping is KEY – find help if you need it!

Corporate Offices: 55 Vienna, San Antonio TX 78258

Phone: [email protected] [email protected] Cell: 210-325-2641 cell: 512-508-4353

Thank you!!


mailto:[email protected]

mailto:[email protected]

Date post:	03-Jan-2016
Category:	Documents
Upload:	september-dunlap
View:	38 times
Download:	1 times

Current State of Affairs

Documents