Payroll Tax Cut Extended

Employees will continue to receive larger paychecks for the rest of this year based on a lower Social Security tax withholding rate

of 4.2%. This reduced rate (from 6.2% to 4.2%), originally in effect for all of 2011, was previously extended through February 2012. A recently enacted law, the

Middle Class Tax Relief and Job Creation Act of 2012, further extends the payroll tax reduction to the end of 2012.

A rate reduction in the Social Security portion of the self-employment tax, from 12.4% to 10.4%, applies for self-employed individuals. For 2012, the Social Security tax applies to the first $110,100 of wages and net self-employment income received by an individual.

The new law also repeals the recapture provision included in the previous extension that effectively capped at $18,350 the amount of wages eligible for the payroll tax cut. As a result, the now repealed recapture provision does not apply.

Revised Payroll Tax Form Available for Employers 

Revised Form 941, Employer's Quarterly Federal Tax Return, is now available for employers to properly report the newly-extended payroll tax cut.  No action is required by employees to continue receiving the payroll tax cut. As before, the lower rate will have no effect on employees' future Social Security benefits.

Additional Information

The Internal Revenue Service will issue additional guidance, as needed, to implement the newly-extended payroll tax cut, and any further updates will be posted on IRS.gov. To read more about the Social Security and Medicare payroll taxes, please visit our section on the Federal Insurance Contributions Act (FICA).

Source:  HR360.com 

Flexible hours, also called "flextime," are schedules in which employees spend a portion of their workday onsite, and the rest from home or another location. For example, a flextime schedule might require an employee to work onsite from 9:30 a.m. to 2:30 p.m., and complete his or her work for the day from somewhere else.

The federal Fair Labor Standards Act (FLSA), which governs minimum wage and overtime pay for most employees, does not address flexible work schedules.  Alternative work arrangements are a matter of agreement between the employer and the employee.

If you decide that flextime is a good fit for one or more of your employees, you should create and distribute an official employer policy on alternative work schedules.

Among other considerations, you should address the following 3 issues when crafting your flextime policy:

• Which employees are eligible forflextime (management, sales, or others);
• What hours employees are required to work onsite; and
• Whether prior approval is required from management or human resources.

Your flextime policy should be included in your company's employee handbook, so that it is received by all employees who are or may become eligible for the alternative work schedule.

Benefits of Flexible Hours

Through the availability of smart phones and wireless Internet, the amount of work employees can complete offsite has grown significantly. Utilizing available technology for this purpose can increase productivity and even expand the geographic area in which a business operates.

Employees working offsite can also better attend to family and personal matters, improving their work-life balance and in some casesreducing the need for a leave of absence. Creating a virtual workplace that allows a company to offer a flextime schedule can result in a number of significant benefits, including:

• Saving money on workspace;
• Retaining valuable employees;
• Bringing on outside project teams;
• Expanding visibility  

Source:  HR360.com  

Final rules have been issued relating to the requirement under Health Care Reform that group health plans provide participants and beneficiaries a summary of benefits and coverage (SBC) and related notices. The final rules include a 6-month delay in the effective date for compliance (originally set for March 23, 2012), and make changes to a number of requirements proposed in earlier regulations.

The following highlights major areas of

importance employers should know about related to SBCs.

1. What notices are required in connection with the SBC? 

Group health plans are required to provide participants and beneficiaries, without charge, a written SBC containing specific information about the plan coverage, as well as a uniform glossary of terms commonly used in health insurance coverage, at several points during the enrollment process and upon request.

Additionally, notice of any material modification in any of the terms of the plan or coverage that is not reflected in the most recently provided SBC generally must be provided to enrollees at least 60 days before the effective date of the change.

SBCs provided in connection with group health plan coverage may be provided in combination with other summary materials (for example, a summary plan description or SPD), if the SBC information is intact and prominently displayed at the beginning of the materials (such as immediately after the Table of Contents in an SPD) and in

accordance with the timing requirements for providing an SBC.

2. Who is responsible for providing the notices?
An insured group health plan satisfies the requirement to provide an SBC if the issuer provides a timely and complete SBC to the participant or beneficiary. However, the final rules ultimately hold both the group health plan and the issuer responsible, so an employer (as the plan administrator or sponsor) should make arrangements with the issuer to ensure compliance.

Advance notice of material modification to

the plan or coverage must be provided by the group health plan or the issuer. Again, an employer should coordinate with the issuer to ensure compliance.

3. What information is required to be included in the SBC?

A complete list of required information is provided in the final rules. Some of the requirements include: uniform standard definitions of medical and health coverage terms; a description of the coverage and cost sharing requirements; and information regarding any coverage limitations or exceptions. The SBC also must include coverage examples, similar to the Nutrition Facts labels required for packaged foods, which illustrate sample medical situations and describe how much coverage the plan would provide in an event such as having a baby or managing Type II diabetes.

4. When is compliance required? 

The new requirements apply with respect to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period (including re-enrollees and late enrollees), beginning on the first day of the first open enrollment period that begins on or after Sept. 23, 2012.

For disclosures to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the requirements apply beginning on the first day of the first plan year that begins on or after Sept. 23, 2012.
 

Both the SBC and the uniform glossary must comply with certain appearance and format requirements and must use terminology understandable by the average plan enrollee. The SBC may not exceed 4 double-sided pages in length, with print no smaller than 12-point font.

An SBC template and uniform glossary, along with instructions and related materials that may be used to satisfy the notice requirements, are available from the Center for Consumer Information & Insurance Oversight. Updated templates and other materials will be issued for later years to accommodate certain changes under Health Care Reform that are scheduled to take place beginning in 2014.

For More Information
Check out our Health Care Reform Checklist for information on other key provisions of Health Care Reform that may impact your company this year. The links below contain additional details relating to

the summary of benefits and coverage and

uniform glossary requirements.

• News Release
• Fact Sheet
• Final Regulations
• Guidance for Compliance
• Templates, Instructions and Related Materials