Category Archives: Benefits

ACA Standard Measurement Periods May Need to Be Set Now

Benefits, Forms and Policies, , ,

If your business employs at least 50 full-time equivalent employees, you know that the Affordable Care Act will penalize you in 2015 if your business does not provide your full-time employees with affordable health insurance. But did you know that the determination of who is a full-time employee may need to start as early as November 1, 2013?

When deciding if an employee works full-time (30 hours per week), the ACA allows employers to set measurement periods during which you keep careful track of an employee’s hours of service (hours actually worked and hours of pay for vacation, sick leave, etc.) and then decide if that particular employee has actually averaged 30 hours per week over that measurement period.

For current employees whose hours fluctuate over and under the 30 per week criterion or whose hours fluctuate over the course of the measurement period (such as construction employees who may work 60 hours per week during the height of a building project and 10 or 20 hours per week when the project slows down), this standard measurement period can be between 3 and 12 months.

The standard measurement period is followed by an administrative period of no more than 3 months, during which the employer can make the calculation and offer the employee insurance if he/she is averaging 30 hours or more per week.

That administrative period is followed by a stability period of at least as long as the standard measurement period, during which the employee must be allowed to stay on health insurance even if he/she drops below the 30-hour per week standard.

Many employers are choosing a standard measurement period that lasts the maximum of 12 months. Then they will need at least a couple of months for their administrative period to make their calculation and get their employees enrolled. For employers who are on an insurance plan that renews with the calendar year, or for those who want to make sure they are completely in compliance with the Affordable Care Act before the employer penalties start in 2015, they would be well-advised to start their standard measurement period on November 1, 2013 and conclude it on October 31, 2014. The administrative period would then take all of November and December 2014. The result would be that all employees who are full-time would be measured and offered health insurance in time for a January 1, 2015 enrollment. The stability period would then run from November 1, 2014 to October 31, 2015, concurrently with the next standard measurement period.

The employer who faces this issue will need a written policy setting out the dates that the employer has chosen for its measurement periods with an explanation of how it works for the employees.

All Employers Required to Send ACA Notice By October 1, 2013

Benefits

As an employer, you have a deadline quickly approaching. You are required to send a notice to all of your employees about the marketplace exchanges created under the Affordable Care Act. You can find the model notices at https://dol.gov/ebsa/healthreform. There is a model notice for those employers who provide group health insurance and a separate model notice for those employers who do not provide group health insurance. There are Spanish versions of both of those notices available on that same DOL website page.

This notice is required of all employers who are subject to the Fair Labor Standards Act (overtime and minimum wage law), regardless of how many employees you have and regardless of whether you offer health insurance or not.

You must provide this notice to all of your employees, even those who are not eligible for your group health insurance and those who are not enrolled in your plan.

The deadline for providing this notice to your current employees is October 1, 2013. Anyone you hire after that time must receive the notice within 14 days of employment. You may provide the notices by mail, or you can use e-mail to notify those employees who regularly have access to a work e-mail address.

For those employers who offer health insurance, the Model Notice has a page three that asks about the specifics of your health insurance plan. It is optional as to whether you as an employer answer the questions asked on page three. Because of the uncertainties of the health insurance market right now and the probability that many of you will be offered a renewal in December 2013 that will change this information, I suggest that those of you who offer a group health plan do not answer any of the questions on page three of this notice at this time.

PPACA Pay or Play Penalties Delayed

Benefits

You have probably heard the news by now that the Obama administration announced that it is delaying enforcement of one piece of the Patient Protection and Affordable Care Act (PPACA) for one year. The starting date for the mandate that employers with 50 or more full-time equivalent employees have to offer affordable health insurance to their employees beginning January 1, 2014 or face penalties of $2000-$3000 per employee has been delayed until January 1, 2015. This is a huge relief to many businesses, particularly restaurants, hotels, retail establishments and construction companies, who have not traditionally provided health insurance to all of their employees and were scrambling to try to figure out their strategy for complying with the law without the cost of the benefits putting them out of business. Employers still have to make those tough decisions, but will not do so in as big a rush as they were facing and hopefully will have more guidance in making those decisions.

However, every employer needs to understand that this delay in the pay or play penalties for employers and the reporting by employers of the details of the health coverage that they offer does not mean that many other parts of the PPACA aren’t going to be effective on January 1, 2014. For example, the individual mandate, requiring that every American have health insurance, has not been delayed. This means that every citizen has to have coverage in 2014, but many will not have any insurance offered through their employers on that date. Fortunately, the IRS penalty for a person who doesn’t have health insurance is only $95 for 2014 and won’t increase until after that.

PPACA provisions that are not going to be affected by the delay and will therefore need to be addressed in 2014 by employers who already provide health insurance include the 90-day limit on waiting period for benefits eligibility, the maximum deductibles of $2000 single/$4000 family on new plans and renewals, the “community ratings” guidelines, which require premiums not to be based on health status, but on age, geography and tobacco use (which will benefit older, sicker groups and hurt younger, healthier groups), the elimination of pre-existing conditions exclusions, the requirement to provide at no additional cost certain preventive care (including contraception), the summary of benefits and coverage disclosure rules that dictate how health plan benefits information has to be presented to participants, and the taxes on employers, including the $63/person fee for every participant in a health plan, the $2/person PCORI fee to fund research, and the premium tax of 2.54% for participants of fully-insured medical plans.

For those employers who do not provide health insurance yet to the majority of your workforce, you can take this time to shop around for better rates, to better structure your workforce as full-time or part-time, to set up better time-keeping systems to know how many hours each employee works each week, and to better train your human resources and benefits staff. However, you must understand that this delay should in no way stop your efforts to get ready for compliance with PPACA. It is breathing room, a break, but the work still needs to be done.

Gay Marriage Affects Texas Employers

Benefits, Discrimination, Employee Rights, Personnel Policies

 

Regardless of your political beliefs about gay marriage, you are going to need to start dealing with the legal implications in your business. The U.S. Supreme Court’s two decisions regarding gay marriage, issued June 26, will leave you as an employer with more questions than answers right now. Even though Texas doesn’t recognize same-sex marriages, there are going to be issues raised by your employees about the application of benefits and employment laws to same sex couples even within the 37 states that don’t yet allow gay marriages. As Justice Antonin Scalia wrote in his dissent:

Imagine a pair of women who marry in Albany and then move to Alabama, which does not “recognize as valid any marriage of parties of the same sex.” Ala. Code §30–1–19(e) (2011). When the couple files their next federal tax return, may it be a joint one? Which State’s law controls, for federal-law purposes: their State of celebration (which recognizes the marriage) or their State of domicile (which does not)? (Does the answer depend on whether they were just visiting in Albany?) Are these questions to be answered as a matter of federal common law, or perhaps by borrowing a State’s choice-of-law rules? If so, which State’s?

Justice Scalia could have continued with questions such as: Must an employer offer COBRA continuation coverage of health insurance to a same-sex spouse, since COBRA is federally regulated, not a state issue? Does an employer in Texas have to provide Family and Medical Leave for an employee to provide his same-sex spouse (who legally married elsewhere) with care for a serious medical condition? Again, FMLA is a federal law, not a state one. There is some speculation among lawyers that President Obama will direct federal agencies such as the Department of Labor, when interpreting federal statutes such as FMLA or COBRA, to treat the “State of celebration”, as Scalia called it, as the state that matters, not the state of residence. This could mean that you as a Texas employer could be liable under FMLA, for example, even though gay marriage isn’t allowed in Texas.

In addition, many employee handbooks define “immediate family” for purposes of bereavement leave, personal leave, nepotism and health insurance benefits and include just the word “spouse” without a definition. Are you going to make a distinction in your business that the “spouse” must be an opposite-sex spouse? And if you do, will you at some point face a federal lawsuit for discrimination?

Is your head spinning yet from these questions?

The courts and the administrative branch will eventually give us the answers to these questions, but as an employer, you have to deal with many of them now as best you can. My suggestion is that if any question involving same-sex marriage arises with your employees, you call an employment lawyer immediately to find out the very latest regulations on this issues.

New COBRA Notice Requirements

Benefits, Forms and Policies, ,

When an employee leaves your company (if you employ 20 or more people), he or she is entitled for at least 18 months to continue any group health insurance coverage that you provide to your employees. This continuation coverage requires that the employee pay the insurance premiums to remain on your group health plan. Therefore the employee must be notified when he leaves your employ of the rights he has to elect to continue that coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The same election notice must be provided to the employee or his/her dependents if the employee dies, the employee divorces, the employee becomes entitled to Medicare, or a dependent child ceases to be considered a dependent under the health plan.

On May 8, 2013, the Department of Labor updated the election notice you must provide to your employees under COBRA when these events happen. The notice has to be provided to the employee within 14 days of when the plan administrator (you as the employer or an administrator you pay to take care of this function) receives notice that one of the these events has occurred. The new election notice and a redlined version showing what has been changed from the notice you are now using is available on the DOL’s website at: https://www.dol.gov/ebsa/COBRA.html. COBRA carries a stiff daily monetary penalty for employers or administrators who do not timely and properly provide these election notices, so you should start using the new notice immediately.

The DOL also publishes a guide to help you understand and administer COBRA: https://www.dol.gov/ebsa/pdf/cobraemployer.pdf. However, because COBRA can be tricky, I prefer that my employer clients pay the little extra fee per month to have your insurance company act as your COBRA administrator and take responsibility to assure that the deadline and notice requirements are met.

 

 

TWC Creates Calculator to Estimate the Effect of Unemployment Claim

Benefits, Termination,

Whenever a Texas employer receives a Notice of Application for Unemployment Benefits, the first question that runs through the employer’s head is “How much is this going to cost me?” The answer to that question can influence whether the employer decides to protest the unemployment decision, how much time, effort and worry to invest in the protest and whether to hire a lawyer to protest the unemployment award. The cost estimate has been a difficult question for employment lawyers to answer. But now the TWC has provided all of us a calculator that will estimate how a particular employer’s tax rate will change if the former employee collects the maximum unemployment benefits.

When you receive the initial notice, go to this site and input your former employee’s salary for four of the last 6 quarters and the tax rate information off of your annual Tax Rate Notice from the TWC to get a tax rate estimate. With that estimated tax rate, you can compare it to your previous TWC reports and see the change that will occur in the Texas unemployment taxes that you will pay based on that one employee receiving unemployment benefits. Remember as you make that comparison that your tax rate increase will be effective for three years, not just one, after an employee files a successful unemployment claim.

Health Care Reform for Small Employers

Benefits, Hiring, Medical

Since the U.S. Supreme Court ruling upholding the Patient Protection and Affordable Care Act (“PPACA”), health care reform questions have been raised by many of my employer clients. It is important for small businesses to know if and how the PPACA will affect them.

The PPACA “mandate”, requiring employers to provide health insurance to employees or face a penalty, does not apply to employers with less than 50 full-time employees or the equivalent of 50 full-time employees. This is the small business exemption to the mandate.

To apply this small business exemption, Continue reading Health Care Reform for Small Employers →

COBRA Subsidies Extended

Benefits

If you have fired or laid off an employee since September 2008, you know about the group health insurance continuance provisions related to COBRA that allow an employee to only pay 35% of the premiums due, while the federal government subsidizes the rest of the premium. That subsidy was supposed to expire at the end of 2009, so that employees laid off after that date would not receive the subsidy. In addition, the subsidy was only supposed to cover the first 9 months after the employee lost his job.

On December 21, 2009, President Obama signed a COBRA subsidy extension that extends the expiration date to February 28, 2010. What that means is that if you involuntarily terminate the employment of one of your workers in the next two months, that employee will also be eligible for the COBRA subsidy.

Even more important, the new legislation extends the subsidy for 15 months rather than just 9 months after the employee loses his job. And yes it is retroactive, meaning that any employee who has used up the 9 months is eligible to receive 6 more months of subsidies and a refund of overpayments.

By February 19, you have to send out written notices of this opportunity to any employee who was involuntarily terminated on or after October 31, 2009. You also have to send notices to anyone who stopped paying COBRA premiums after 9 months or anyone who overpaid by continuing their premiums after the 9 month subsidy expired. So it is best to go back and review the COBRA files for any employee involuntarily terminated since September 30, 2008.

Your group health insurance agent should be able to help you with the required notice language and information on who has been receiving COBRA continuation coverage and for how long. Just don’t ignore this issue. You only have 60 days to get your paperwork in order and start paying subsidies to be reimbursed by the federal government through your payroll taxes.

COBRA Changes Affect Employers

Benefits
  • Do you provide group health, dental or vision insurance or a Health Reimbursement Account to your employees?
  • Do you have at least 20 employees, whether they are on the group health insurance or not?
  • Have you laid off or fired any employees since September 1, 2008?

If you answered these 3 questions “yes”, you are required to act immediately under the American Recovery and Reinvestment Act of 2009 (“ARRA”) to notify your former employees of subsidies available for their COBRA premiums (and those of their dependents). In addition, you as an employer have to advance that subsidy and then recoup it through payroll tax deductions.

If you have a knowledgeable group health insurance agent like my great friend, Julie Hulsey at Neely, Craig & Walton, LLP, in Amarillo (who supplied me with all of the information for this post), you probably have already been contacted about complying with these COBRA subsidy requirements.

If not, here is some very basic information that you need to digest quickly and an action plan for complying immediately (for example, Friday, April 18, 2009, is the deadline to mail notices to your former employees and their dependents).

Continue reading COBRA Changes Affect Employers →

Texas’ Group Health Insurance Problem

Benefits

There was a very informative article in Time Magazine last week called “The Health Care Crisis Hits Home”. The author, a journalist with 15 years covering health policy, wrote of her brother in Texas whose kidneys are failing. He had been insured for 6 years with one company, buying a new individual short-term policy each six months because group health insurance wasn’t available through his employer. After being diagnosed, he found out that the short-term policies he purchased were “junk”. One expert said, “No one should ever buy them. It is false security that is being sold”.

This article demonstrates the catch-22 which we face in Texas. None of us want our employees to face overwhelming medical bills. However, many of us as employers feel like we can’t afford to provide health insurance for our employees. In fact, the Time article says that only 37% of small companies in Texas (less than 50 employees) offer group medical coverage. As a result though, 1 in 4 Texans is without health insurance. Even more are underinsured, like the author’s brother, who have some type of coverage but find out when they become sick that their policy is insufficient.

What can you do about this as a small Texas employer? Talk to your employees about whether health insurance is important to them and if they want to make a sacrifice to obtain it. More and more surveys that I see in my human resources and employment law trade magazines indicate that benefits are equally as important to an employee as the salary offered. I know of many employees, such as my husband and his fellow high school teachers, who are highly motivated by the benefits that their jobs provide to them and their families, particularly since their salaries are nothing to get excited about considering the importance of the work they perform.

In Texas, you can obtain a group health insurance policy as long as the employer pays 50% or more of the employee’s premium. Because the group rates are so much lower than the rates for an individual policy and the coverage is so much more complete, your employees may be willing to pay for as much as half of their premiums in order to be protected. This could also mean that you and your own family could obtain decent coverage.