ACA Employer Mandate Penalties Over The Next Ten Years Projects Billions

ACA Employer Mandate Penalties Over The Next Ten Years Projects Billions

Caren Adams, MBA, Employee Benefits

ACA Employer Mandate Penalties Over The Next Ten Years Projects Billions Share this...

Managing Your Benefits When Changing Jobs

Starting a new job can be exciting. But, as you look forward to your new opportunity, consider carefully how you will manage your employer-provided benefits while transitioning from one workplace to another.

When you leave a job, your employee benefits generally end, unless you elect to continue them. While you may receive benefits from your new employer, they will most likely differ from your previous employer's benefits package. So, if there are any benefits you want to take with you, for example, accumulated savings in a 401(k) plan or similar retirement account, you will need to decide how to manage those funds before you exit.

Insurance Conversions

Your new employer may not offer health insurance, or there could be a waiting period before health coverage begins, which sometimes can be from 30 to 90 days. To avoid becoming uninsured, even for a short period of transition, explore the possibilities of continuation or conversion under your former employer's health insurance.
Under a Federal law known as the Consolidated Omnibus Budget Reconciliation Act (COBRA), you are permitted to continue as a member of your previous company's health plan for up to 18 months after termination of employment, unless you are terminated for cause. Under COBRA, you are responsible for paying the entire premium, including the employer's contribution to the insurance, making COBRA premiums generally expensive. However, premiums may be less than you would pay for an individual policy. To continue coverage under COBRA, you must advise your employer that you are electing COBRA coverage.
COBRA continuation rights may not apply if you work for an employer with fewer than 20 employees. But, you may be able to convert your group health insurance policy to an individual policy without having to undergo a separate application for individual coverage. There may also be "interim" or "short term" policy options that could provide coverage for a couple of months for people between jobs. Or, you may need to secure individual health insurance coverage with a new provider that is not tied to your place of employment.
You may also have the option of converting other types of employer-sponsored insurance into individual policies. Depending on the group plan, you may be permitted to convert life insurance, disability income insurance, or long term care insurance. Be sure to talk with your benefits administrator about all your options.

Retirement Plan Rollovers

If you have a retirement savings account in your current employer's 401(k) plan or comparable account, you will have the choice of reinvesting, transferring, or cashing in the funds.
To keep your retirement savings on track, you may want to consider rolling over the funds into another qualified retirement savings account, such as a rollover IRA. There are two ways to roll over funds. With an indirect rollover, your former employer makes the distribution payable to you, less 20%, which is withheld for Federal taxes. You must then reinvest the distribution into an IRA or other qualified plan within 60 days. In order to achieve a tax-free rollover, you must reinvest the full distribution amount, which includes the 80% you receive in cash, as well as 20% from your own funds to cover the amount that is withheld. Your withheld funds are refunded after you file your tax return, provided your rollover occurred within the 60-day time limit. Failure to reinvest the 20% withheld may result in income tax and a tax penalty if you are under the age of 59½.
To avoid the 20% withholding requirement, you may request a direct rollover to an IRA set up in your name or another qualified plan. Be aware that not all qualified plans accept this type of transfer. Because this method is considered a distribution option, spousal consent and other similar participant and beneficiary rules of protection may apply.
Another option is to roll over your funds from your previous employer's retirement plan into your new company's plan. In some cases, however, it may make sense to leave the funds where they are. Ask both employers about restrictions on these options, as well as any tax implications.
You have the option to take the funds in your 401(k) account as a cash distribution. For most people, however, this is not the best choice. After cashing in, you owe taxes on the funds, and you may also be required to pay a 10% tax penalty if you are under age 59½. Further, you forfeit the long-term benefits associated with tax-deferred earnings, making it more difficult to build the financial resources for your retirement income.
Your decisions regarding benefits when changing jobs can have a great impact on your financial future. Before making such important decisions, be sure to discuss your circumstances with the benefit administrators at both companies and consult your professional advisors.

Physician shortages affect health plan network size

Physician shortages affect health plan network size Certain regions of the country have shortages of primary care physicians, psychiatrists, obstetricians, gynecologists and general surgeons, and those shortages may hinder health plans' ability to form high-value networks, according to a new report from AHIP. Policy proposals that could alleviate the issue include expanded telemedicine use and broadening the scope of practice for nurse practitioners and physician assistants.

California Obamacare rates to rise 13% Los Angeles Times | July 19, 2016 | 10:04 AM Premiums for coverage through the Covered California health exchange will rise by an average of 13.2% next year, officials announced today. The increase is more than three times that of the last two years and is bound to raise debate in an election year. Read more>>

Question: Would you please provide us with your comments regards the use of online estate planning documents?

Answer:  In estate planning, one size does not fit all. Over the years, I have found that no two families are alike.  Each family has unique issues and online documents typically cannot address those issues.  If your issues are overlooked or ignored, your estate plan will probably not work the way you intended. Most online documents lack the proper customization you need to address these overlooked or ignored issues.

• For example, when you begin the online document process, the software will ask you for basic information such as who you want to serve as your children’s guardian under your Will. After careful consideration, you determine that you want your sister and her husband (your brother-in-law) to serve as co-guardians of your children under your online Will.  After completing and signing your Will, you think your children will be properly cared for if something happens to you.  However, do you want your brother-in-law raising your children if he and your sister get divorced or if your sister passes away?  As a named co-guardian, your brother-in-law can present a strong case to the court that he should raise your children pursuant to the Will.  Although it was your intention for him to raise your children with your sister, the Will does not address what happens upon death or divorce.  An estate planning attorney should be able to recognize this co-guardian issue and could implement the appropriate contingency in your Will that would remove him as guardian upon your sister’s death or divorce.  If you use online documents to name your children’s guardian, you might be unaware of this issue or unable to customize your documents to address that concern.

• Furthermore, a lack of customization with online documents might cause the inclusion of wrong provisions in your documents. One essential estate planning document is the financial power of attorney (POA).  This document allows your designated agent to make financial decisions for you on your behalf.  A POA usually contains large amounts of standard boilerplate provisions that can be confusing to some people and may not be applicable to your situation.  For example, buried in your online POA might be a provision that allows your agent to make unlimited gifts to anyone.  For some, unlimited gifting might be necessary.  For others, unlimited gifting simply gives your agent a wonderful opportunity to deplete all of your assets.  Unfortunately, elder abuse is very common and it’s usually done by those who are appointed as POA.

Online document providers are not attorneys and do not counsel and recommend what provisions you should have in your documents.  Online providers do provide an option for you to consult with an attorney.  Will that attorney practice near you and be available to meet with you face to face?  Will you be able to select an attorney that has the experience in estate planning that you need?
In conclusion, those who use online estate planning documents might think that estate planning is as simple as filling names into blanks.  In reality, estate planning is complicated and needs to be customized to your specific needs even in the simplest of situations.  Simply filling in blanks can cause chaos for your loved ones down the road.  Online estate planning websites want you to believe that you have peace of mind that your affairs will be in order because ignorance is bliss! It has been often said that every attorney who represent himself or herself is a fool.

As Health Care Costs Continue to Rise, Retirees Hoping to Rely Solely on Social Security Better Think Again

June 2016

As Health Care Costs Continue to Rise, Retirees Hoping to Rely Solely on Social Security Better Think Again

Your clients may have an idea of how they want to spend their retirement years, and let's face it, it is a lot more fun to think about warm weather and golf clubs than prescription drugs and medical bills. No wonder only 12% of working Americans have taken any steps toward addressing medical expenses in retirement. I mean, that's what Social Security is for, right? Click here to read more.

Insurers Expected To Raise 2017 Premiums Significantly

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(6/12, Alonso-Zaldivar, Murphy) reports that healthcare insurance premiums are expected to increase next year “because major insurers have taken significant financial losses” under the Affordable Care Act due to lower than expected enrollment, new customers requiring more care than anticipated, “and a government system to stabilize the markets had problems.” The article says some 10 million consumers will receive subsidies through the ACA, but those who earn “more than $47,520 for an individual and $97,200 for a family of four” will not qualify. In addition, those who obtain private insurance “outside of HealthCare.gov or a state marketplace” are not eligible for subsidies, regardless of their income.

Insurers’ Actuaries Explain Need For Higher Premiums For ACA Plans.

 

The New York Times  (6/9, Pear, Subscription Publication) reports that actuaries typically garner little attention, yet “as they crunch the numbers for their Affordable Care Act business, their calculations are feeding a roaring national debate over insurance premiums, widely used to gauge the success of President Obama’s health care law.” Insurers in most states have submitted their rates for 2017, and many of them are seeking double-digit increases. State officials are still considering the requests, but the Obama Administration says those rates are often reduced significantly, and ACA subsidies will help to keep them low. The article mentions the Geisinger Health Plan, which requested a 40 percent rate increase, and whose chief actuary Kurt J. Wrobel says the rates are influenced by new Federal rules, recent losses, and an ever-changing marketplace.

From our HR Client Newletter

Question about Money Matters Do we have to require our employees who are being switched from exempt to non-exempt to take their lunch breaks if they prefer to eat while working?

Answer from Kara, one of our HR Pros Thank you for the question. The FLSA does not require private employers to provide rest periods for employees, so the answer is dependent on state law. Often state-mandated meal periods can be waived if the employee would prefer to work through them, but a few states do not allow this practice. If your state does allow the meal period to be waived, it may require that the employee agree to it in writing. Whether or not the state requires this documentation, we strongly recommend it. The written agreement shows that any employees who skipped a meal period did so freely. As long as you are within the bounds of state law, you are free to do whatever works best for your organization. For instance, if customers expect you to be open from 9:00 am to 5:30 pm, but employees are asking to work through (and thereby waive) their 30-minute lunch period so they can leave at 5:00 pm, there is nothing saying you must honor this request. But if it makes sense to let employees work through lunch so you can power down computers and turn off the lights 30 minutes earlier at the end of the day, you’re free to do that as well. Just make sure that you consistently apply your policies and that you document the legitimate business reasons when making any exceptions for a particular employee. If you have any additional questions, please let us know. We look forward to assisting you again soon!

Kara practiced employment and bankruptcy law for five years before joining us, and was a Human Resources Generalist at a mid-size Civil Engineering and Architecture firm for two years prior to that. As an attorney she worked on many wage and hour and discrimination claims in both state and federal court. She holds a Bachelor of Arts degree in Liberal Studies from Oregon State University and received her law degree from Lewis and Clark Law School.

Majority of millennials not participating in 401(k) plans

Majority of millennials not participating in 401(k) plans

Women, in particular, are lagging in earnings and in the amount of income they’re saving for retirement, according to research from T. Rowe Price. READ MORE »

Employers advised to proceed with caustion on wellness

Employers advised to proceed with caution on wellness

A program’s structure can determine which laws apply and federal agencies and courts are not always in agreement as to what is required for compliance. READ MORE »

Encouraging an employee to leave a group plan for a Medicare Supplement can be costly to the employer

Beware of CMS data match letters

Remind clients now that encouraging an employee to take Medicare versus staying on the group health plan is a potential minefield, says adviser David C. Smith. READ MORE »

 

Final FLSA White Collar Exemption Rules Announced

Final FLSA White Collar Exemption Rules Announced Today the Department of Labor announced the new salary threshold for certain employees to qualify as exempt from minimum wage and overtime under the Fair Labor Standards Act’s White Collar Exemptions. Effective December 1, 2016, the new minimum salary level will be $47,476 per year ($913 per week). Up to 10% of this income may come in the form of non-discretionary bonuses, incentive pay, or commissions, as long as that portion of the compensation is paid at least quarterly. In the event that an employee does not earn enough in bonuses and commissions to meet the full minimum salary requirement, a catch-up payment can be made by the employer once a quarter. The minimum salary requirement applies to all white collar workers who are classified as exempt executive or administrative employees, and to many who are classified as exempt professional employees. As anticipated, the duties tests for the White Collar Exemptions have not changed. Under the new rules, this salary threshold will increase every three years. It will be set at the 40th percentile of weekly earnings among full-time salaried (not necessarily exempt) employees in the country’s lowest income region – currently the South. It is expected that the next change, which will be effective January 1, 2020, will increase the minimum salary to approximately $51,168. The new rule also increases the minimum salary threshold for the Highly Compensated Employee (HCE) exemption from $100,000 per year to $134,004 per year. This exemption can be used when an employee carries out a limited number of executive, administrative, or professional duties, but is very well-compensated. The new rule sets the HCE threshold at the 90th percentile of all full-time salaried workers nationally. This number will also increase every three years, and is expected to rise to approximately $147,524 on January 1, 2020. Some state laws create different minimum salary levels. When state laws differ from the FLSA, an employer must comply with the standard most beneficial to employees. Presently, the federal minimum salary level is higher than any state-mandated minimum, and therefore must be followed. In preparation for the new rule, we have created the following materials, all of which can be found in the HR Support Center: FLSA Changes: Decision Making Guide FLSA Changes: Implementation Guide 2 Minute HR trainings on the new rule, the executive, administrative, and professional exemptions, and the salaried non-exempt classification A memo requesting that employees track their hours for planning purposes  A letter to employees regarding their classification change A guide to calculating overtime for non-exempt employees who receive non-discretionary bonuses or commissions

Americans underestimate cost of home care and nursing home.

Americans underestimate cost of home care by nearly 50%, while nursing home room now tops $92,000 per year

Huge disparity exists between what consumers think costs are and what they actually are, while Genworth’s just-released annual “Cost of Care” benchmark study finds cost of a private nursing home room now at $92,378 annually. VIEW ARTICLE

Employees report difficulty navigating healthcare options

Benefits issues can lead to diminished productivity, finds new research, as workers spend an average of three and a half hours a month dealing with healthcare issues at work. READ MORE »

California Passes Minimum Wage Hike

California Law Alert April 4, 2016

California Passes Minimum Wage Hike Today Governor Jerry Brown signed a bill that will incrementally raise the California minimum wage to $15 per hour over the next seven years. Below is the schedule of increases by size of employer. Employers with 26 or more employees: 1. $10.50 – January 1, 2017 2. $11.00 – January 1, 2018 3. $12.00 – January 1, 2019 4. $13.00 – January 1, 2020 5. $14.00 – January 1, 2021 6. $15.00 – January 1, 2022 Employers with 25 or fewer employees: 1. $10.50 – January 1, 2018 2. $11.00 – January 1, 2019 3. $12.00 – January 1, 2020 4. $13.00 – January 1, 2021 5. $14.00 – January 1, 2022 6. $15.00 – January 1, 2023 The bill allows the governor to delay a particular increase for one year in the event of a budget crisis or an economic downturn. With these increases, California joins New York in becoming the first states to pass legislation that will result in a statewide minimum wage of $15 per hour.

The ACA: What’s been repealed, delayed or retained

 By Zack Pace
January 20, 2016

SourceMedia's Partner Insights program enables marketers to deliver relevant content and insights directly to the Employee Benefit News audience via SourceMedia's digital media platforms. Partner Insights content is produced by the marketer. To find out more, contact Jim Callan at James.Callan@sourcemedia.com

 

Commentary: As you’ve no doubt noticed, the federal government made sweeping legislative and regulatory changes to the Affordable Care Act during the fourth quarter of 2015. During the last two weeks of December, I felt like I was drinking from a six-inch fire hose. How about you?
For 2016 planning purposes, I began making a list of the key items that have been repealed or delayed and those that we should continue to keep a keen eye on. With this list now complete, I thought I’d share.
Repealed provisions
1. Free-choice vouchers. Remember those? They were repealed back in 2011.
2. Form 1099 reporting. Remember how much added administrative work this provision would have created?
3. The $2,000-deductible ceiling. This provision coupled with Repealed Provision No. 5 (below) was scheduled to create a perfect storm this year for employers with 51 to 100 employees.
4. The automatic enrollment mandate. Reportedly, our elected representatives pressed for this provision’s repeal not because of its administrative infeasibility but because of the projected loss in tax revenue from increased salary reductions via Section 125 plans. Seriously.
5. The mandatory expansion of small group to 100 employees. I wish I had a quarter from everyone that joked, “Hey, Zack – they named an ACA after you!” How thrilling.
Delayed provisions
1. ACA nondiscrimination requirements. While these TBD rules were delayed indefinitely some time ago, some insiders expect finalization relatively soon. Sections 125 and 105(h) nondiscrimination rules remain alive and well.
2. The Cadillac tax. This excise tax is delayed until 2020. Per industry insiders, it seems awfully likely that this tax will be repealed before then. We’ll see. For those employers that began a multiple-year incremental mitigation strategy (aka glide path), they’ll need to decide if that strategy ought to be put in moth balls for a couple of years. Keep in mind that many employers can likely keep this excise tax at bay until 2022 by simply ending the flexible spending account, making health savings account contributions post-tax and eliminating their richest medical plan. 2022 is six years from now. Who knows where we’ll be by then. When it comes to increased taxation on employer- sponsored health plans, the more immediate concern, apparently, is that Section 125 becomes a bargaining chip during the budget negotiations next year between Congress and the new administration.
Lingering provisions of keen importance
1. Annually determining large-employer status. To determine status for 2016, ask your accountant to run Treasury’s formula to determine how many full-time employees plus full-time equivalents your firm averaged in the previous calendar year. Employers with 50 or more are generally subject to shared responsibility. Employers in most states with 51 or more are generally not subject to the fair health insurance premium rules (only fully insured plans are subject to these latter rules). Can anyone explain to me why they didn’t simply select 50 or 51 for both definitions?
2. Employer shared responsibility. Didn’t we make this topic a little more complicated than it needed to be? It turns out that it’s relatively easy to eliminate this penalty risk by offering to all employees that work 30 hours or more a week a low-cost plan (relatively speaking) that meets minimum value and that has an employee contribution rate for single coverage that meets the federal poverty-level safe harbor (i.e., less than around $93 per month). We can offer this “ACA easy button” plan, continue offering the normative health plans employees prefer and call it a day. Of course, for those employers with seasonal and/or variable-hour employees, tracking complications remain.
3. Eliminating opt-out credits. Under pending regulations, employers that offer cash to those employees that waive the health plan will find it harder to satisfy the affordability requirements of employer shared responsibility. See No. 5 in the below further reading list for more detail.
4. ACA reporting. Also known as Form 1095-C/1094-C reporting. The topic du jour.
5. The market reform rules. For example: elimination of pre-existing condition limitations, age 26 expansion, out-of-pocket limit ceiling, 100% coverage for preventive services (grandfathered plans are exempt from these latter three). If your health plan is fully insured, the insurer should have made these changes. If your plan is self-funded, the TPA should have. Either way, double-check.

Employers advised to prepare for questions on ACA reporting form

 

By Andrea Davis
January 21, 2016

 

As employers prepare to distribute Forms 1095 to employees by the newly extended IRS deadline of March 31, they should brace for increased questions from employees about the new forms.
In Notice 2016-4, issued by the IRS on Dec. 28, the agency extended the deadlines for both providing individuals with the reporting forms required as part of the Affordable Care Act and for filing them with the IRS, although it also said “employers and other coverage providers are encouraged to furnish statements and file the information returns as soon as they are ready.”
In the year-end notice, “the IRS indicated to employers that there’s going to be no more extensions,” says Laura Kerekes, chief knowledge officer with ThinkHR Corporation. “This is already more generous than what the initial filing extension was. The feeling is that you better get these done and into the government.”
The IRS notice also provides guidance to those who might not receive a 1095-C by the time they file their 2015 tax returns, saying people can rely on information they’ve already received from their employer outlining whether they’re enrolled in employer-sponsored coverage or not.
“That’s pretty important for employers to just make note of and maybe get ahead of with communication to their employees to say the filing deadlines have been extended so the company will not have your 1095-C done,” says Kerekes, adding employers can let employees know “this is the information we've already provided you, you can rely on it when you're working on your taxes and filing by your April 15 deadline.”
And while employers with more than 50 full-time employees need to compile data for the new forms to demonstrate employee healthcare coverage offerings under the ACA, two-in-five employers say they are unfamiliar with these forms altogether, finds a recent study from ADP.
“The good news is that 60% were highly or very familiar with the 1094-C and were working on it,” says Vic Saliterman, senior vice president and general manager of ADP’s healthcare reform business. “The fact that, given the nature of the way the law is written and the penalty, 40% were not familiar [with the forms] was certainly concerning.”
More than half (52%) of midsized businesses and 45% of large employers are unsure if they’re at risk of violating ACA compliance requirements this year and nearly one-in-five employers think they are at risk of not complying with Form 1095-C requirements, according to the ADP report.

Understanding the retiree benefit of HSAs

In this age of high-deductible healthcare plans, industry experts say employers and employees should increasingly consider the benefits of health savings accounts as a retiree benefit. HSAs, they say, offer cost-shifting benefits for employers and employees that advisers should be educating clients about.“Retiree benefits are going through a dramatic change,” says Seth Ravine, chief revenue officer of the Tampa, Fla.-based Acclaris. “Employers are looking for ways to cut costs, and retirees are feeling the brunt of that.”

According to Mercer’s latest data from the Inside Employees' Minds Survey, there is a growing concern about healthcare expenses in retirement. The survey also found most employees between the ages of 35 and 64 place a high value on an employer’s retirement benefits and low healthcare costs, ranking them as the second and third most valued elements of the employment deal, behind base pay.
A high-deductible healthcare plan coupled with an HSA is a way for employers to cut healthcare costs for the company, yet still satisfy employee retirement and healthcare needs, experts say.
Also see: “7 things employers and employees don’t know about HSAs.”
“The individual or employee is going to have to take on more control and financial burden than any other previous generation,” Ravine says.
“A high-deductible healthcare plan has short term and long-term gains,” he says, adding that advisers should work with employers to understand the short term and long-term goals.
“Most employers will see the short-term drops of healthcare costs immediately, but you haven’t actually changed the trend of your healthcare liability,” he says. “What HSAs can do long term is, if employees start them early, invest in them early, and learn how to utilize them — including when to draw from HSAs and when it is best to pay out of pocket — now you’re giving real dollars to individuals. At the same time you’re giving yourself as the employer the ability to push more costs onto employees.”
Education
Educating employees about what an HSA is and how it can be used as a tool for meeting healthcare costs in retirement is key, experts say.
“Most Americans are unprepared for healthcare costs in retirement, and an HSA is the best way to save for that,” said Eric Roberts, a consultant at Nyhart Actuary & Employee Benefits, during a recent webcast hosted by the Healthcare Trends Institute.
“If you have already made it into the retiree population and haven’t had the ability to open an HSA, you’re in a tight spot,” says Ravine. “Once you’re on Medicare, you can’t contribute to an HSA anymore, but the next generations have a real chance to utilize HSAs in their retirement.”
Still, employers and employees hold several misconceptions about how an HSA works, indicating a need for adviser help to understand them, including how an HSA differs from an FSA and an HRA.
Employees have a lack of awareness surrounding several HSA features and benefits, says HSA custodian company HealthEquity. For example, for some employees and employers the fact that HSA funds roll over and are not “use it or lose it,” is not common knowledge, the company says.
Many consumers also don’t know that after age 65, you can withdraw money from an HSA for any type of purchase (not just medical expenses) without penalty.
If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 20% penalty on the non-qualified withdrawal.

By Melissa A. Winn
      
 

Could state waivers undo the ACA's employer mandate?

The ACA allows states, beginning in January 2017, to ask the federal government to waive almost every major coverage requirement of the health care reform law, including the employer mandate. Employers and other benefit industry stakeholders hoping to be relieved from ACA requirements may consider state waivers the elixir they’ve been waiting for, but are they? READ MORE »