Compliance Corner with Norma

Should I Pay the Penalty?

In 2014, "large" employers with more than 50 employees will be subject to a penalty if they don't offer health insurance to employees or if the coverage doesn't meet certain standards.

The employer penalty has two versions. The $2000 per employee version applies to large employers that do not offer group health coverage to employees. The $3000 per employee version applies to large employers that have group health coverage which does not offer minimum value or is unaffordable. In each version of the penalty, the employer excludes the first 30 employees from the headcount subject to the penalty.

How does the penalty compare to the cost of offering group health coverage to employees?

Annual average premiums for employer-sponsored health insurance in 2012 were $5,615 for single coverage and $15,745 for family coverage, according to an article in The Wall Street Journal on April 8, 2013.

Insurance companies estimate that 2014 premiums will be 50% - 116% higher than 2013 premiums due to rating changes, including the end of pre-existing condition exclusions for adults.

A simple math test indicates it is cheaper to pay the penalty than to offer employees a group health plan. But is the answer really that simple? Consider the following points.

1. Insurance premiums generally increase each year.
2. Insurance companies are estimating significant premium increases because there are still many unknown factors that will affect premiums in 2014. In essence, insurers are making their best guess based on the limited data available.
3. Employer premium contributions to the group health plan are tax deductible.
4. The employer penalty is not tax deductible.
5. Employee morale depends on many workplace conditions, including benefits offered by the employer. That's why 71% of employers surveyed by the National Small Business Association said they intend to continue to offer health coverage to employees, according to an April 8th article in The Wall Street Journal.

Employers should continue to gather information before making a final decision on whether to offer health coverage to employees or pay the penalty. Ask your company's insurance agent/broker for periodic updates on healthcare reform. 

Disclaimer: The information above is general in nature and does not constitute legal or tax advice on the issues discussed. Please consult a lawyer or tax professional to discuss your company's specific circumstances.   

Norma Shirk

Manager/Owner

Corporate Compliance Risk Advisor, LLC

norma.shirk@complianceriskadvisor.com

Supreme Court Strikes Down Key Part of Defense of Marriage Act

Source:  HR360.com   

Delay Finalized for Employee Choice of Health Plans in SHOP Exchanges

SHOPs are expected to begin operating in 2014 as an option for qualified small employers to purchase employee health coverage. The federal government will run SHOPs in states that do not elect to establish the program. Under the law, employers would be able to choose a level of coverage to offer (bronze, silver, gold, or platinum), select a premium contribution amount, and then offer employees choices of multiple insurers and plans.

As a result of the delay, for plan years beginning in calendar year 2014, federally-facilitated SHOPs will only permit employers to select a single qualified health plan from the choices available in the SHOP to offer qualified employees. State-based SHOPs have the option of allowing employers to offer qualified employees a choice of qualified health plans at a single level of coverage.

Our Summary by Year features additional upcoming changes under Health Care Reform.

5 Guidelines for Protecting Employees from Heat Stress

1. Provide heat stress training. Topics you may wish to address include worker risk, prevention, symptoms (including the importance of workers monitoring themselves and coworkers), treatment, and personal protective equipment.
2. Schedule hot jobs for the cooler part of the day. The best way to prevent heat illness is to make the work environment cooler. Monitor weather reports daily and reschedule jobs with high heat exposure to cooler times of the day. When possible, routine maintenance and repair projects should be scheduled for the cooler seasons of the year.
3. Provide rest periods with water breaks. Provide workers with plenty of cool water in convenient, visible locations in shade or air conditioning that are close to the work area. Avoid alcohol and drinks with large amounts of caffeine or sugar.
4. Monitor workers who are at risk of heat stress. Workers are at an increased risk of heat stress from personal protective equipment, when the outside temperature exceeds 70°F, or while working at high energy levels. Workers should be monitored by establishing a routine to periodically check them for signs and symptoms of overexposure.
5. Acclimatize workers by exposing them for progressively longer periods to hot work environments. Allow workers to get used to hot environments by gradually increasing exposure over a 5-day work period. OSHA suggests beginning with 50% of the normal workload and time spent in the hot environment and then gradually building up to 100% by the fifth day.

Resources for Employers and Workers   
OSHA's Heat Illness Website provides information and resources on heat illness for workers and employers, including how to prevent it, what to do in case of an emergency, educational materials and a curriculum to be used for workplace training.  The Centers for Disease Control and prevention also has a page dedicated to providing informaiton on heat stress (including symptoms and first aid), along with fact sheets and other resources for protecting employees.

Our section on Safety & Wellness includes more tips for maintaining a safe and healthy workplace.

Changes to Wellness Programs Coming in 2014

Final rules outline the amended criteria for wellness programs offered in connection with group health plans to comply with the federal Health Insurance Portability and Accountability Act (HIPAA). Highlights of the final rules, which are effective for plan years beginning on or after January 1, 2014, include:

• Increasing the maximum permissible reward under a health-contingent wellness program, from 20% to 30% of the cost of coverage;
• Further increasing the maximum permissible reward for wellness programs designed to prevent or reduce tobacco use, from 20% to 50% of the cost of coverage; and
• Clarifications regarding the reasonable design of health-contingent wellness programs and the reasonable alternatives they must offer in order to avoid prohibited discrimination.