Benefits, Inc. Welcomes New Resource

Ms. Norma Shirk, owner of Corporate Compliance Risk Advisor, LLC, is now a resource for our clients with human resources and employment law questions. Ms. Shirk will provide general information in answer to questions posed by our clients. She will also do presentations on hot topics of interest to employers.  

Ms. Shirk received her J.D. from the University of Tennessee, School of Law in 1989 and a B.A. in History from Middle Tennessee State University in 1986. She holds an attorney license in Tennessee, Texas and Colorado.

Previous employment experience includes working for several insurance companies and agencies, with duties ranging from assistant corporate secretary to chief compliance officer. Notable experience includes serving as a staff attorney in the liquidation division of the Federal Deposit Insurance Corporation (FDIC), resolving claims against insolvent banks and pursuing collections actions against defaulted borrowers. She also worked as a claims attorney for Fidelity and Deposit Company of Maryland, investigating employee dishonesty claims, directors and officers liability insurance claims, and resolving payment and performance bond claims on construction jobs. In addition, Ms. Shirk has owned and managed a small business.

Ms. Shirk is a member of several professional or community organizations, including the Middle Tennessee Chapter of the Society of Human Resource Management (MT/SHRM), Tennessee Bar Association, the Breakfast Club of Nashville, and the Madison-Rivergate Area Chamber of Commerce. She is a volunteer instructor in an adult literacy and job skills program.

The New Year brings new requirements under Health Care Reform. The following checklist highlights key changes that may affect employers and insured group health plans this year.

Please Note: This list is for general reference purposes only and is not all-inclusive. The information is subject to change based on new requirements or amendments to the law. If you have questions regarding your responsibilities, please contact a knowledgeable employment law attorney, benefits advisor, or your carrier. 

1. Evaluate Grandfathered or Non-Grandfathered Status of Plan
A grandfathered plan is one that was in effect on March 23, 2010. 

If a plan loses its grandfathered status, it may no longer be exempt from certain requirements under Health Care Reform.

• Determine whether any changes to the plan that reduce benefits or increase costs to employees and dependents enrolled in coverage result in a loss of grandfathered status.
• To maintain grandfathered status, provide a statement indicating the plan believes it is a grandfathered health plan, along with contact information for questions and complaints, whenever a summary of benefits under the plan is provided to participants and beneficiaries.

2. Review Plan Documents for Required Changes to Plan Benefits
Certain requirements apply on a plan year basis, meaning the changes take effect when a group health plan begins a new plan year. As a result, compliance deadlines may vary.

• Annual limits on "essential health benefits" are being phased out according to the limits set by law (no lower than $2 million for plan years starting between September 23, 2012 and January 1, 2014).
  • Note: Stand-alone HRAs in effect prior to September 23, 2010, which are automatically exempt from the rules concerning annual dollar limits until January 2014, must distribute an annual notice to participants and subscribers stating that the plan has restrictive coverage and includes low annual limits.
• For plan years beginning on or after January 1, 2013, salary reduction contributions to health FSAs are limited to $2,500 annually, indexed for inflation for subsequent plan years. Written cafeteria plans must be amended by December 31, 2014 to reflect this change.
• Except for grandfathered plans, coverage of additional women's preventive services such as well-woman visits, breastfeeding support, domestic violence screening, and contraception is provided without cost-sharing requirements, starting with plan years beginning on or after August 1, 2012.

3. Provide Required Notices to Employees and Dependents
Please contact your carrier or employment law attorney if you have questions about these notices.

• Summary of Benefits and Coverage (SBC). Starting with plan years and open enrollment periods beginning on or after September 23, 2012, provide participants and beneficiaries a summary of benefits and coverage at specified times during the enrollment process and upon request.
  • Note: Insured group health plans may satisfy this requirement if the issuer provides a timely and complete SBC to the participant or beneficiary.
• Notice of Plan Changes. Additionally, if any material modification is made in any of the terms of the plan or coverage that would affect the content of the SBC, that is not reflected in the most recently provided SBC, and that occurs other than in connection with coverage renewal or reissuance, the plan or issuer must provide notice to enrollees not later than 60 days prior to the effective date of the change.
• Availability of Health Insurance Exchanges. Beginning March 1, 2013, provide each new employee at the time of hiring (and each current employee no later than March 1) a written notice containing certain information about a Health Insurance Exchange.
  • Note: The DOL is expected to issue a model notice that employers may use to satisfy this requirement along with regulations, which may delay the March 1 compliance deadline.

4. Report Employer-Provided Health Plan Coverage on Forms W-2
This requirement does not apply to employers that were required to file fewer than 250 Forms W-2 for the preceding calendar year, unless and until the IRS publishes further guidance giving at least 6 months' advance notice of any changes.

• Beginning with calendar year 2012 Forms W-2 (required to be furnished to employees in January 2013), employers that provide a group health plan to their employees are generally required to report the cost of the coverage provided to each employee annually.

5. Other Action Items for 2013
The following additional items may be of significance for certain employers and group health plans.

• Additional Medicare Tax for High Earners. Employers are required to withhold Additional Medicare Tax (at a rate of 0.9%) on wages or compensation paid to an employee in excess of $200,000 in a calendar year, for taxable years beginning after December 31, 2012.
• Medical Loss Ratio (MLR) Rebates. Employers who receive rebates, as a result of insurance companies not meeting specific standards related to how premium dollars are spent, may be responsible for distributing the rebates to eligible plan enrollees. Rebates are due to employer-policyholders by August 1 each year.
• Simple Cafeteria Plans. If eligible, consider whether your company could benefit from establishing a simple cafeteria plan, which may be treated as meeting certain IRS nondiscrimination requirements.
• Small Business Health Care Tax Credit. Determine if your company qualifies for the small business health care tax credit. For tax years 2010-2013, the maximum credit is 35% for small business employers.

Stay up-to-date on the latest information by visiting our section on Health Care Reform.

Source:  HR360.com 

New Guidance on Employer "Pay or Play" Requirements

Newly issued proposed rules and a set of related questions and answers provide guidance for employers regarding the shared responsibility ("pay or play") requirements under Health Care Reform. Under the proposed rules, an employer who is subject to the requirements would generally be treated as offering coverage to its full-time employees for a calendar month if, for that month, it offers coverage to at least 95% of its full-time employees.

Background
Beginning in 2014, employers with 50 or more full-time employees (including full-time equivalents) may be required to pay a penalty tax, also known as a "shared responsibility payment," if any of the employer's full-time employees are certified to receive a premium tax credit or cost-sharing reduction for enrolling in coverage through a Health Insurance Exchange.

Determining Whether the Penalty Applies
Under the proposed rules, an employer who meets the 50 full-time employee threshold would be liable for the penalty only if:

• The employer does not offer health coverage or offers coverage to less than 95% of its full-time employees, and at least one of the full-time employees receives a premium tax credit;

or

• The employer offers health coverage to at least 95% of its full-time employees, but at least one full-time employee receives a premium tax credit, which may occur because the employer did not offer coverage to that employee or because the coverage offered was either unaffordable or did not provide minimum value.

After 2014, these provisions would apply to large employers that do not offer health coverage or that offer coverage to less than 95% of their full time employees and the dependents of those employees. (Note that "dependent" is defined in the proposed rules as an employee's child who is under 26 years of age, and does not include an employee's spouse).

Other Key Issues Addressed in the Proposed Rules
Additional issues addressed in the proposed regulations include:

• Determining which employers are subject to the "pay or play" requirements;
• Determining who is a full-time employee, including approaches that can be used for employees who work variable hour schedules, seasonal employees, and teachers who have time off between school years;
• Determining whether coverage is affordable and provides minimum value; and
• Calculating the amount of the penalty due and how the penalty will be assessed.

The proposed rules also provide a number of transition relief provisions, including for employers sponsoring plans that do not operate on the calendar year (i.e., fiscal year plans), as well as relief to help employers that are close to the 50 full-time employee threshold determine their options for 2014.

Employers may rely on the proposed rules for purposes of compliance with the "pay or play" requirements; any final rules that are more restrictive will be applied prospectively and employers will be given sufficient time to come into compliance.

For More Information
Due to the complexity of the law in this area, and the absence of finalized guidance, employers are strongly advised to review their benefit plans with a knowledgeable attorney or trusted benefits advisor to prepare for the changes ahead. Additional information regarding the penalty is featured on our Employer Shared Responsibility page. 

Reminder: Employee Payroll Tax Cut Expires 

The Social Security payroll tax cut for employees (which had been in effect since 2011) has expired as of the end of December 2012. As a result, the combined FICA tax rate for employees in 2013 is 7.65%, with the Social Security portion of the tax at 6.2% of earnings up to the first $113,700 of wages. And don't forget that under Health Care Reform, for taxable years beginning after December 31, 2012, employers are required to withhold an Additional Medicare Tax (at a rate of 0.9%) from wages paid to an employee in excess of $200,000 in a calendar year.

Employers should confirm that payrolls will reflect the new tax rate(s) and watch for further updates on IRS.gov.

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