Join us for a health care reform
webinar on November 20th
Michigan Business & Professional Association is offering a free webinar focused on how to determine full-time status for Employer Mandate purposes under Health Reform on November 20 at 10 AM EST.
The webinar will review important dates and deadlines, who must comply, how to measure full-time status, safe harbors (new hire and ongoing employees), applicable rules, and the 90 day waiting period requirements.
This webinar will be important for any employer or client who is subject to the employer mandate and employs part-time or seasonal employees.
The Webinar will be conducted by Attorney Larry Grudzien.
Title: Full-Time Determination under the Employer Mandate
Date: Wednesday, November 20, 2013
Time: 10:00 AM – 11:00 AM EST
After registering you will receive a confirmation email containing information about joining the Webinar.
System Requirements PC-based attendees Required: Windows® 7, Vista, XP or 2003 Server
Mac®-based attendees Required: Mac OS® X 10.6 or newer
Mobile attendees Required: iPhone®, iPad®, Android™ phone or Android tablet
Space is limited.
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-10-29 10:21:542015-10-08 00:00:00Join us for “Full-Time Determination under the Employer Mandate”
On Oct. 23, 2013, the Obama administration announced that as long as people obtain health insurance by March 31, 2014, they will not face tax penalties for being uninsured during those first three months of 2014. An earlier interpretation had some people thinking they needed to sign up by Feb. 15, 2014 to avoid a penalty; however, the Obama administration realized it made more sense for the deadline to coincide with the end of open enrollment, as well as meet the expectations of consumers who were under the impression signing up for coverage by March 31 kept them in compliance with the law.
Source: New York Times, “White House to Tweak Tax-Penalty Deadline,” Oct. 23, 2013
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-10-28 17:00:002015-10-08 00:00:00Clarification on Individual Insurance Date
On September 13, 2013, the Internal Revenue Service (IRS) issued Notice 2013-54 and the Department of Labor (DOL) issued Technical Release 2013-03. The two pieces of guidance are substantially identical and address many previously unanswered questions regarding how market reform and other provisions of the Affordable Care Act (Act) apply to health reimbursement arrangements (HRAs), including HRAs integrated with group health plans; health flexible spending arrangements (health FSAs); and employee assistance programs (EAPs).
The following series of questions and answers will review how these two pieces of guidance affect premium only plans (POPs) and health FSAs only in 2014.
1. In 2014, can an employer allow employees to pre-tax premiums for individual medical coverages purchased either inside or outside the public exchanges (marketplace)?
No. Code Section 125(f)(3), has been amended effective for taxable years beginning in 2014 to prohibit employees from purchasing coverage through a public Exchange on a pre-tax basis using the employer’s cafeteria plan (but, employees may still purchase coverage on a SHOP Exchange on a pre-tax basis using the employer’s cafeteria plan if the employer offers SHOP coverage to its employees).
For any individual health coverage purchased outside of the exchange, any pre-tax reimbursement of individual medical premiums under a POP would constitute an employer payment plan and would be disallowed.
Code Section 125 merely provides for the non-taxability of the choice between cash and pre-tax benefits. Code Section 125 does not provide the actual exclusion from employee income for employer-provided health coverage. That exclusion is reserved exclusively under Code Section 106. For tax (but not ERISA) purposes, amounts deducted from employees’ pay under a cafeteria plan election are treated as employer contributions. This is so because employee deferrals are made under a salary reduction agreement-the employee agrees to a reduction in salary in a specified amount and the employer agrees to contribute a like amount toward the purchase of qualified benefits (medical coverage, in this instance).
Therefore, any employee pre-tax contributions to a POP will be treated as employer funds and payment of premium by the employer with those funds (which are excluded from the employee’s gross income under Code Section 106) essentially becomes an employer payment plan. Employer payment plans for individual coverage fail Q&A-1 in Part III of IRS Notice 2013-54. This guidance provides that any employer payment plan, that reimburses employees for an employee’s substantiated individual insurance policy premiums must satisfy the market reforms for group health plans. However, the employer payment plan will fail to comply with the annual dollar limit prohibition because (1) an employer payment plan is considered to impose an annual limit up to the cost of the individual market coverage purchased through the arrangement, and (2) an employer payment plan cannot be integrated with any individual health insurance policy purchased under the arrangement.
2. Can an employee be reimbursed on a pre-tax basis under a POP for individual premiums for benefits other than medical coverage?
Yes. The above restrictions only apply to individual medical coverage. Under Proposed. Treasury Regulations Section 1.125-1(m)(1), it is possible to pre-tax individual premiums for dental, vision, disability, accidental death and dismemberment (AD&D), cancer insurance, hospital indemnity, and supplemental life insurance coverage, to name just a few. Please remember making a cafeteria plan available for individual policies (or paying for any portion of the premiums) raises issues under the Internal Revenue HIPAA, ERISA, COBRA, and other laws.
3. Which health FSAs are not subject to the Act and the market reforms in 2014?
IRS Notice makes clear that the Act’s market reform requirements do not apply to health FSAs that meet the “excepted benefit” definition.
A health FSA is considered an excepted benefit for a “class of participants” if the health FSA is a health FSA under Code Section 106(c)(2) and satisfies two conditions:
• Maximum Benefit Condition: The maximum benefit payable under the health FSA to any participant in the class for a year cannot exceed two times the employee’s salary reduction election under the health FSA for the year (or, if greater, the amount of the employee’s salary reduction election for the health FSA for the year, plus $500), as provided in Treasury Regulations Section 54.9831-1(c)(3)(v)(B); DOL Regulations Section 2590.732(c)(3)(v)(B); and HHS Regulations Section 146.145(c)(3)(v)(B); and
• Availability Condition: Other nonexcepted group health plan coverage (e.g., major medical coverage) must be made available for the year to the class of participants by reason of their employment, as provided in Treasury Regulations Section 54.9831-1(c)(3)(v)(A); DOL Regulations Section 2590.732(c)(3)(v)(A); and HHS Regulations Section146.145(c)(3)(v)(A).
Neither the regulations nor the preamble to the regulations explains what is meant by the term “class of participants.” The term appears to preclude a “participant-by-participant” approach to determining whether benefits under a health FSA are excepted benefits.
Examples of Health FSA Funding That Meet the Maximum Benefit Condition:
• A one-for-one employer match (employer $600, employee $600).
• An employer contribution of $500 or less (employer $500, employee $200).
Examples of Health FSA Funding That Do Not Meet the Maximum Benefit Condition:
• An employer contribution of more than $500, if the employee contributes $500 or less (employer $600, employee $400).
• An employer contribution in excess of a one-to-one match, if the employee contributes more than $500 (employer contributes $700, employee contributes $600).
Remember: Health FSAs funded exclusively by employee salary reduction contributions (with annual coverage capped by the amount of the annual salary reduction election) will, by definition, satisfy the Maximum Benefit Condition.
4. In 2014, can an employer still offer a stand-alone Health FSA?
Yes, so long as the stand-alone health FSA qualifies as HIPAA-excepted. For a stand-alone health FSA to be considered to provide only excepted benefits, it must meet one of the following designs:
• Limited scope dental and vision benefits that are not an integral part of a group health plan are excepted benefits.
• If other group health plan coverage not limited to excepted benefits is made available for the year to employees by the employer, and the FSA is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the arrangement for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election).
5. If a health FSA is considered to be a non-excepted benefit, what are the consequences?
A health FSA that does not qualify as an excepted benefit is generally subject to the Act’s market reforms, including the preventive services requirements, unless it is grandfathered. The IRS and DOL had previously ruled that a health FSA is not subject to the annual dollar limit prohibition, irrespective of whether the health FSA provides only excepted benefits. Because a health FSA that is not an excepted benefit is not integrated with a group health plan, it will fail to meet the preventive services requirements, unless it is grandfathered.
For failure to meet the Act’s market reforms, an employer could also be subject to fines and penalties.
Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-10-28 17:00:002015-10-08 00:00:00Review of Recent Guidance on the Impact of Health Reform on Cafeteria Plans
By Kristi R. Gauthier, Esq. Clark Hill PLC
Oct. 29, 2013
In order to make health insurance coverage more affordable to individuals and families with lower and moderate incomes, the Patient Protection and Affordable Care Act (PPACA) provides financial assistance, in the form of premium subsidies, for individuals purchasing insurance coverage on the Marketplace (also known as the Exchange). However, even with the Exchanges up and running as of October 1st, many people, including employers, are still struggling to understand who is eligible for a premium subsidy.
Who Is Eligible for the Exchange Premium Subsidies?
Citizens and legal residents of the United States in families with incomes between 100% and 400% of the federal poverty level and who not offered affordable, minimum value coverage through an employer are eligible to receive a premium subsidy to reduce the cost of health coverage on the Exchange.
Who Is Not Eligible for Exchange Premium Subsidies?
The following individuals are not eligible to receive subsidies for Exchange coverage:
Non-citizens or legal residents of the United States.
Individuals in families with household income in excess of 400% of the federal poverty level.
Individuals who are eligible for public coverage, such as Medicaid.
Individuals who are offered affordable and minimum value coverage through an employer.
What is the Amount of the Exchange Premium Subsidy?
The amount of the premium subsidy varies with income level and is structured so that the cost an eligible individual would have to pay for silver level coverage (a “70/30 plan”) does not exceed a specified percentage of the individual’s income, as follows:
Income Level
Premium as a Percent of Income
Up to 133% FPL
2% of income
133-150% FPL
3-4% of income
150-200% FPL
4-6.3% of income
200-250% FPL
6.3 – 8.05% of income
250 – 300% FPL
8.05 – 9.5% of income
300 – 400% FPL
9.5% of income
How Will Individuals Know They Are Eligible for Exchange Premium Subsidies?
When individuals shop for coverage on the Exchange, they will be asked to predict their income for 2014 and based on this information, as well as IRS information for the previous year’s income reporting, individuals will be informed of the applicable premium subsidy amount, if any.
If an individual’s income changes from what was predicted and reported to the Exchange, the individual will be obligated to reconcile the premium amount paid with the amount the individual was actually entitled to receive based on actual income levels. If the individual receives more than he/she was entitled to, he/she will owe it back in the form of additional federal taxes. (Note: There are some caps on the amount a person has to pay back, based on their income.)
How Does Employer Provided Coverage Impact an Individual’s Ability to Obtain a Premium Credit for Exchange Coverage?
If an employer, regardless of size, provides health coverage to its employees that is considered “affordable” and of “minimum value” the employees would not be eligible for any premium subsidies on the Exchange. This does not mean that the employees could not purchase coverage on the Exchange, it only means that they would not be eligible for any premium subsidies.
If an employer offers health coverage to its employees but that coverage is not affordable or of minimum value, such an offer of coverage would not preclude an individual from obtaining a premium subsidy. With that said, beginning in 2015 if the employer is an “Applicable Large Employer” (meaning an employer that averaged 50 or more full-time equivalent employees in the previous calendar year) and a full-time employee is eligible to obtain a premium subsidy, the employer could face potential penalties under PPACA’s employer shared responsibility provisions.
*This article is not intended to give legal advice. It is comprised of general information. Employers facing specific issues should seek the assistance of legal counsel.
Kristi R. Gauthier is a senior attorney in Clark Hill’s Birmingham office and concentrates her practice in Employee Benefits Law. Kristi has represented clients in a wide variety of employee benefits issues involving health and welfare benefits, as well as retirement plans. Kristi is admitted to practice in the State of Michigan, the U.S. District Court for the Eastern District of Michigan, and the U.S. Sixth Circuit Court of Appeals. She also is active in the legal community with memberships in the American Bar Association, the State Bar of Michigan, and the Oakland County Bar Association where she is a member of the Employee Benefits Committee. Kristi also serves as a member of the Clark Hill Diversity and Inclusion Committee. Kristi has lectured on various employee benefits issues, including ERISA compliance, healthcare reform, COBRA, section 125 plans, 403(b) plans and IRS plan correction programs. Kristi is also a co-author of the ABA publication ERISA Survey of Federal Circuits. Kristi was named a “Rising Star” by Michigan Super Lawyers in 2011.
By Bonnie Bochniak
Vice President, Government Relations
MBPA/MFBA
Oct. 29, 2013 – The Internal Revenue Service (IRS) and the United States Department of Labor (DOL) have recently sent up a flare to warn businesses who try to avoid the Affordable Care Act (ACA) penalties by classifying employees as “independent contractors.” Due to the penalties that are forthcoming in 2015 for businesses with 50 or more full-time employees that do not offer healthcare coverage or offer healthcare that is not affordable, some businesses may consider reclassifying their common law employees as independent contractors. The IRS and DOL are stating that the scrutiny over worker classification will be very thorough as to make certain those that intentionally reclassify will be penalized. Since there are more good apples than bad ones, both departments want to also educate business owners on how each classification is defined, to avoid a truly accidental misclassification.|
When classifying workers as employees or independent contractors a fact intensive inquiry must take place in order to properly count the number of employees a business has. This “count” is very important when calculating for the purposes of the Affordable Care Act, as indicated by the IRS. IRS says businesses must use the traditional common law test for determining employment status. The common law classification rules require that the employer examine 20 factors in determining employment status, and every employee counts. The factors focus on the degree of control that the employer exercises over the worker’s performance. Simply put, does the employer have the right to control what work will be done, and how it will be accomplished?
Important factors in analyzing employee status:
1. The worker is required to follow the business owner’s instructions;
2. Any training requirements are imposed upon the workers by a business owner;
3. Work is performed on the business owner’s premises;
4. There is continuing relationship between the worker and the business owner;
5. The worker’s travel expenses are paid by the business owner;
6. The business owner pays for administrative support; and
7. The work-related tools are provided by the business owner.
It is more critical now than ever to make certain business owners know the rules on how to classify their workers. The penalties for misclassification of workers as independent contractors have always been hefty, but with the additional ACA penalties the stakes are high. Please feel free to contact the MBPA legislative and agent relations team with any questions. Our association has the tools to help navigate you through the waters of the ACA, we look forward to your feedback.
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-10-28 17:00:002015-10-08 00:00:00Worker Classification: Independent Contractor vs. Employee
BASIC has eliminated the first year set up fee of $450.00 and the annual renewal fee of $395.00. (This removes any barrier for the employer to switch to BASIC)
BASIC has lowered the monthly Flex fee per participant from $4.50 plus $0.50 for the debit card, to a flat $3.95 pppm. (A single price including the debit card and smart phone app)
BASIC will pay a one time incentive of $5.00 per participant that is enrolled by 12-31-2013 to the agent/broker. No limit. (An agent that rolls 100 participants gets $500.00)
CLICK HERE to download information on agent incentive program.
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-10-24 11:53:282015-10-08 00:00:00Agents – BASIC is Running a Promotion On Their Flexible Spending Accounts (FSA) through 12/31/13!
As many of you are aware the Michigan Business & Professional Association launched its Health Care Reform Connect™ website and e-publication last fall.
We wanted to take a moment to update you on what we have been working on as it relates to supporting Michigan Businesses and your clients through the implementation of health care reform. Here is a summary of activities in case you missed one:
The development and launch of Health Care Reform Connect™ last fall has resulted in thousands of visits to our website by Michigan Businesses and independent agents who are looking for reliable information on health care reform and a source to get their reform questions answered.
We have been hosting health care reform seminars, monthly webinars, and reform conferences across the state with several hundred attendees who have learned about the impact of health care reform on their business.
We have published numerous health care reform articles from various subject matter experts from around the country – available via our secured site as downloadable PDF’s.
Our team has spent countless hours lobbying at the State and Federal level on health care reform and the impact on Michigan Businesses and its employees.
We have launched a dozen health care reform tools such as our Small Business Health Care Reform Guide, Tax Credit and FTE Calculators, Health Care Reform Timeline, and Reform Roadmap, to name a few, to help Michigan businesses and their agents through health care reform.
We have hosted dozens’ of onsite meetings with members and agents to help educate them on health care reform.
We have developed a reform “hotlink” giving members and agents the opportunity to ask their specific health care reform questions with a typical answer back in 24 hours. This free service for our members has saved them countless hours and helped to clear the fog on reform.
Health care reform alerts and e-publication available to members and agents. Each month we send out an updated e-publication via our Health Care Reform Connect™ brand with an overview of new tools, articles and white papers on reform. We also send out timely reform alerts when various federal departments make announcements regarding reform.
Please feel free to connect with our team today to ensure you and your clients are receiving our health care reform communications P: 888.277.8800 / E: info@michbusiness.org
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-10-22 16:00:552015-10-08 00:00:00Agent Health Care Reform – Updates
Keep sticking with AL and writing your Blues business with the MBPA.
MBPA is proud to reach over 150,000 businesses with the vast array of programs, conferences and educational resources provided to the business community. That’s one out of three businesses in Michigan.
Health Care Reform Connect™: MBPA’s exclusive tool to help answer all your questions and provide tangible resources and education for your clients. Over 50 health care reform resources available and serviced by the MBPA team.
Reform Compliant SPDs – Free for all association members.
Low dues structure – only $75 for the first year – pays for itself in financial value.
Over 100 member programs and 30 educational conferences per year.
In addition to the valuable membership benefits we offer to your clients, the MBPA continues contest and bonus rewards with our program partners. Choose from the following contests:
1. Staples Sizzler: For all your new 10+ groups signed up with MBPA membership now through December 31, 2013, receive an extra $100 in addition to the $500 you normally receive. That’s $600 thru 2013!
OR
2. BASIC’s COBRA Bonanza: Receive one year of complimentary COBRA Administration for qualifying groups of 20-99 lives, plus a $250 bonus.
Retention Rewards:
Agents that continue to keep their clients with the MBPA for renewals are part of our Retention Rewards perks and have opportunities for additional bonuses, contests and prizes throughout the year brought to you by the MBPA Community Partners.
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-10-22 16:00:452015-10-08 00:00:00When You Write Your Blues With Sponsored Code AL, You Get Enormous Value for Your Clients
The MBPA Provides Summary Plan Descriptions (SPDs) at No Cost to our Members!
The Employee Retirement Income Security Act (ERISA) guidelines make it mandatory for all businesses with 2 or more employees to provide employees with a Summary Plan Description (SPD). The MBPA continues to take a leading role in informing and helping our members meet their obligations under ERISA.
Types of benefits covered by Summary Plan Descriptions include: Medical, Long Term Disability, Short Term Disability, Life/AD&D and freestanding Dental/Vision.
• The MBPA SPD is a comprehensive document that satisfies all of the Department of Labor (DOL) requirements.
• The MBPA SPD is essentially a “wrap plan SPD” under which an employer can combine all of its benefits into one plan and one plan document for ease of administration and for purposes of DOL reporting requirements (e.g. Form 5500s) for those employers subject to such reporting.
• The MBPA SPD can be used for both insured and self-insured benefits.
NOW, Two Easy Ways to Get Your Client’s SPD for Active Members:
1. Let Us Do It For You:
• Access an SPD adoption agreement from our Agent Pavilion
• Complete it and e-mail it back to us IN WORD FORMAT at info@michbusiness.org, being sure to provide your complete contact information
• We will complete and return the documents within two business days.
2. Create Your Own On-Line (NEW):
• Go to our Agent Pavilion and click on Summary Plan Description on the main menu.
• Follow the instructions to create your client’s plan…..you can save it in your client’s ‘library’ for their/your future use.
Remember: SPDs are FREE for members and $125.00 for non-members.
We look forward to continuing to provide you and your clients with the most up to date and easily accessible services in this important area. If you have questions or are in need of assistance, please contact our Member Services Team at 1-888-277-6464 or 1-586-393-8800.
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-10-22 16:00:402015-10-08 00:00:00Are You Concerned with the Random DOL Audits?
Beginning with January 2014 renewals, Blue Care Network will now use experience rating for groups with 100 or more contracts enrolled.
Previously, BCN used community rating by class, which based premiums on the demographic profile of the geographic region or the total population covered on the policy.
Under community rating by class, the expenses of all participants are pooled together and then spread out equally across all participants.
Under BCN’s experience rating, it will now predict a group’s future medical costs based on its past experience, such as the actual cost of providing health care coverage to the group during a given period of time or the group’s claim history. Thus, the insurer calculates the group’s insurance premium based on its own, not the overall community’s experience.
Experience rating now gives groups more control over their health care spending because a portion of their rates are based on the company’s own demographics and claims experience and not on community or area pooled ratings.
An Experience Summary will be provided with all renewals showing claims experience used and associated factors for the renewal period. A Glossary and Benefit and Rate Schedule will also be provided.
Questions? Contact your managing or general agent.
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-10-22 16:00:352015-10-08 00:00:00BCN Will Now Begin Experience Rating for Groups 100+