A new law will require California employers with 20 or more employees to grant up to 12 weeks of unpaid, job-protected leave for employees to bond with a new child.
The New Parent Leave Act, enacted on Oct. 12, 2017, extends the state’s parental-bonding leave requirements, which currently apply only to employers with 50 or more employees, to smaller employers starting on Jan. 1, 2018.
The law will allow employees who are employed at a worksite where the employer has 20 or more employees within 75 miles to take parental leave within the first year after their child is born, adopted or placed with them for foster care.
California employers with 20 to 49 employees should become familiar with the new law and revise their leave policies as necessary to ensure compliance.
Employers Subject to the New Law
An employer is subject to the New Parent Leave Act if it:
||Has at least 20 employees working within 75 miles of each other; and
||Is not subject to the California Family Rights Act (CFRA) and the Family Medical Leave Act (FMLA)
Thus, the New Parent Leave Act generally applies to all California employers that have between 20 and 49 employees.
Employees Entitled to Leave Under the New Law
Under the New Parent Leave Act, an employee will be eligible to take leave if he or she:
||Has more than 12 months of service for the employer;
||Has at least 1,250 hours of service with the employer during the previous 12 months; and
||Works at a worksite in which the employer has at least 20 employees within 75 miles.
In addition, an employee that wishes to take leave under the New Parent Leave Act must request and take the leave within the first year after:
||The birth of the employee’s child;
||The employee’s adoption of a child; or
||The placement of a child for foster care with the employee.
An employer may require at least 30 days’ advance notice when the need for leave is foreseeable due to an expected birth or placement of a child for adoption or foster care. If 30 days’ advance notice is not possible, an employee may be required to provide notice as soon as practicable. Employers must respond to an employee’s leave request no later than five business days after receiving it.
Before the start of an employee’s leave under the New Parent Leave Act, the employer must provide the employee with a guarantee of employment in the same or a comparable position following the leave. An employer that fails to provide this guarantee may be deemed to have unlawfully refused the employee’s leave request.
Employers are not required to pay an employee while he or she is on leave under the New Parent Leave Act. However, employees may use, and employers may require employees to use, any accrued vacation pay, paid sick time, other accrued paid time off, or other paid or unpaid time off negotiated with the employer, during a period of parental leave.
Like the CFRA and FMLA, the New Parent Leave Act requires employers to maintain and pay for continued group health coverage for an employee while he or she is on parental leave.
The health coverage must be continued at the same level and under the same conditions as those provided prior to a leave period. An employer may recover the costs of maintaining an employee’s health coverage if the employee fails to return to work following a parental leave period for any reason other than a serious health condition or circumstances beyond the employee’s control.
If both parents of a new child are employed by the same employer, the employer is not required to grant more than a total of 12 weeks of leave under the New Parent Leave Act. However, an employer may allow both employees to take up to 12 weeks of leave at the same time.
The New Parent Leave Act prohibits employers from:
||Interfering with, restraining or denying an employee’s rights under the law; and
||Discharging, fining, suspending, expelling, refusing to hire or discriminating against an employee for exercising his or her rights under the law, or for providing information or testimony in any inquiry or proceeding related to the rights guaranteed under the law.
If an employer violates the New Parent Leave Act, an affected employee may file a complaint with the California Department of Fair Employment and Housing (DFEH), which may order the employer to:
||Hire, reinstate or upgrade the employee, with or without back pay;
||Refrain from committing any further violations; and
||Pay a fine of up to $25,000 for any discrimination.
The DFEH may also file or grant an employee the right to file a civil lawsuit against an employer for violations of the New Parent Leave Act. Until Jan. 1, 2020, however, employers will have the right to request that all parties participate in mediation before an employee is allowed to file a lawsuit. An employer that receives a right-to-sue notice from the DFEH will have 60 days to submit a mediation request.
Interaction with Existing State Laws
Currently, the CFRA and the FMLA require California employers with 50 or more employees to provide up to 12 weeks of unpaid, job-protected leave for employees to bond with a new child born to, adopted by or placed for foster care with them. The New Parent Leave Act, which was signed into law on Oct. 12, 2017, will require smaller employers in California to provide the same leave.
Unlike the CFRA and the FMLA, however, the New Parent Leave Act will not require employers to provide leave for an employee’s own serious health condition or for the serious health condition of a family member.
Under another existing state law, California employers with five or more employees must grant up to four months of unpaid, job-protected leave to female employees who are disabled by pregnancy, childbirth or a related medical condition. Because of this, an employee cannot take leave under the CFRA for these conditions. Likewise, an employee will not be allowed to take leave for those conditions under the New Parent Leave Act.
However, an employee who works for an employer with 50 or more employees may take CFRA leave to bond with a new child (or to deal with a serious health condition) once her pregnancy disability leave ends. Under the New Parent Leave Act, employees who work for smaller employers will also be allowed to take parental leave after a period of pregnancy- or childbirth-related disability leave.
Contact Scurich Insurance or visit the DFEH website for more information on California’s leave laws.
The Problem with Minimum Coverage
Most states require drivers to carry basic liability coverage, which pays for injury and property damages if you are found at fault following an accident. These limits vary by state but can be as low as $10,000 per person or $20,000 per accident.
If you get into an accident, there’s a chance you could be sued. When this happens, minimum liability coverage may not be sufficient to cover the damages, and you could end up paying thousands of dollars out of your own pocket.
What’s more, if you cause an accident and your liability limits are too low to cover the expenses, the other party might go after your assets in court. To protect yourself, it’s important to think critically about how much coverage you need and to secure the proper limits.
How Much Auto Insurance Should I Carry?
While it can be tempting to simply pay the lowest amount possible for auto insurance, doing so can leave you exposed to serious financial risks. In general, it’s recommended that you carry more than the minimum coverage unless you are driving an older car with little value and have no assets to protect.
Did You Know? Insurance is mandatory in order to operate a vehicle in the United States, and every state has specific coverage limits that you must meet. While meeting these minimum limits may be enough to get you on the road, they are often inadequate if you are involved in a serious accident. As such, you may want to consider raising your limits in order to secure the right protection.
The higher you set your coverage limits and the lower you set your deductibles, the less you’ll pay out of pocket after a claim. You will need to determine how much you can comfortably afford when setting your coverage limits and deductibles.
Raising your limits and paying a little more each month will allow you to get the most out of your investment.
Customize Your Policy
When it comes to auto insurance, you have many options. Contact your insurance broker today. They will be able to discuss different ways to customize auto insurance policies, including adjusting collision, comprehensive, medical expenses, uninsured motorist and no-fault coverage. They can also recommend specific policy limits given your situation.
The Affordable Care Act (ACA) has made a number of significant changes to group health plans since the law was enacted in 2010. Many of these key reforms became effective in 2014 and 2015, including health plan design changes, increased wellness program incentives and the employer shared responsibility penalties.
Certain changes to some ACA requirements take effect in 2018 for employers sponsoring group health plans, such as increased dollar limits. To prepare for 2018, employers should review upcoming requirements and develop a compliance strategy.
This ACA Overview provides an ACA compliance checklist for 2018. Please contact Scurich Insurance for assistance or if you have questions about changes that were required in previous years.
PLAN DESIGN CHANGES
Grandfathered Plan Status
A grandfathered plan is one that was already in existence when the ACA was enacted on March 23, 2010. If you make certain changes to your plan that go beyond permitted guidelines, your plan is no longer grandfathered. However, grandfathered status does not automatically expire as of a specific date. A plan may maintain its grandfathered status as long as no prohibited changes are made. Once a plan relinquishes grandfathered status, it cannot be regained and the plan must comply with additional reforms under the ACA.
Contact Scurich Insurance if you have questions about changes you have made, or are considering making, to your plan.
Review your plan’s grandfathered status:
- If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2018 plan year. Grandfathered plans are exempt from some of the ACA’s mandates. A grandfathered plan’s status will affect its compliance obligations from year to year.
- If your plan will lose its grandfathered status for 2018, confirm that the plan has all of the additional patient rights and benefits required by the ACA for non-grandfathered plans. This includes, for example, coverage of preventive care without cost-sharing requirements.
- If your plan will keep grandfathered status, continue to provide the Notice of Grandfathered Status in any plan materials provided to participants and beneficiaries that describe the benefits provided under the plan (such as the plan’s summary plan description and open enrollment materials). Model language is available.
Effective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans are subject to limits on cost sharing for essential health benefits (EHB). The ACA’s overall annual limit on cost sharing (also known as an out-of-pocket maximum) applies for all non-grandfathered group health plans, whether insured or self-insured. Under the ACA, a health plan’s out-of-pocket maximum for EHB may not exceed $7,350 for self-only coverage and $14,700 for family coverage, effective for plan years beginning on or after Jan. 1, 2018.
Health plans with more than one service provider may divide the out-of-pocket maximum across multiple categories of benefits, rather than reconciling claims across multiple service providers. Thus, health plans and issuers may structure a benefit design using separate out-of-pocket maximums for EHB, provided that the combined amount does not exceed the annual out-of-pocket maximum limit for that year. For example, in 2018, a health plan’s self-only coverage may have an out-of-pocket maximum of $6,000 for major medical coverage and $1,350 for pharmaceutical coverage, for a combined out-of-pocket maximum of $7,350.
Beginning with the 2016 plan year, the self-only annual limit on cost sharing applies to each individual, regardless of whether the individual is enrolled in self-only coverage or family coverage. This embeds an individual out-of-pocket maximum in family coverage so that an individual’s cost sharing for essential health benefits cannot exceed the ACA’s out-of-pocket maximum for self-only coverage.
Note that the ACA’s cost-sharing limit is higher than the out-of-pocket maximum for high deductible health plans (HDHPs). In order for a health plan to qualify as an HDHP, the plan must comply with the lower out-of-pocket maximum limit for HDHPs. HHS provided FAQ guidance on how this ACA rule affects HDHPs with family deductibles that are higher than the ACA’s cost-sharing limit for self-only coverage.
According to HHS, an HDHP that has a $10,000 family deductible must apply the annual limitation on cost sharing for self-only coverage ($7,350 in 2018) to each individual in the plan, even if this amount is below the $10,000 family deductible limit. Because the $7,350 self-only maximum limitation on cost sharing exceeds the 2018 minimum annual deductible amount for HDHPs ($2,700), it will not cause a plan to fail to satisfy the requirements for a family HDHP.
Check your plan’s cost-sharing limits:
- Review your plan’s out-of-pocket maximum to make sure it complies with the ACA’s limits for the 2018 plan year ($7,350 for self-only coverage and $14,700 for family coverage).
- If you have an HSA-compatible HDHP, keep in mind that your plan’s out-of-pocket maximum must be lower than the ACA’s limit. For 2018, the out-of-pocket maximum limit for HDHPs is $6,650 for self-only coverage and $13,300 for family coverage.
- If your plan uses multiple service providers to administer benefits, confirm that the plan will coordinate all claims for EHB across the plan’s service providers, or will divide the out-of-pocket maximum across the categories of benefits, with a combined limit that does not exceed the maximum for 2018.
- Confirm that the plan applies the self-only maximum to each individual in the plan, regardless of whether the individual is enrolled in self-only coverage or family coverage.
Health FSA Contributions
Effective for plan years beginning on or after Jan. 1, 2013, an employee’s annual pre-tax salary reduction contributions to a health FSA must be limited to $2,500 (as adjusted for inflation). The $2,500 limit was increased to $2,550 for taxable years beginning in 2015 and 2016, and then increased again to $2,600 for taxable years beginning in 2017. On Oct. 19, 2017, the IRS released Revenue Procedure 2017-58, which increased the FSA dollar limit on employee salary reduction contributions to $2,650 for taxable years beginning in 2018.
The limit does not apply to employer contributions to the health FSA, and does not impact contributions under other employer-provided coverage. For example, employee salary reduction contributions to an FSA for dependent care or adoption care assistance are not affected by the health FSA limit.
Update your health FSA’s contribution limit:
- Confirm that your health FSA will not allow employees to make pre-tax contributions in excess of $2,650 for the 2018 plan year.
- Communicate the health FSA limit to employees as part of the open enrollment process.
SUMMARY OF BENEFITS AND COVERAGE (SBC)
Health plans and health insurance issuers must provide an SBC to applicants and enrollees to help them understand their coverage and make coverage decisions. Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period, as well as to participants and beneficiaries who enroll other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees).
The SBC must follow strict formatting requirements. The Departments provided templates and related materials, including instructions and a uniform glossary of coverage terms, for use by plans and issuers. On April 6, 2016, the Departments issued a new template and related materials for the SBC.
- Plans with annual open enrollment periods must start using the new template on the first day of the first open enrollment period that begins on or after April 1, 2017, with respect to coverage for plan or policy years beginning on or after that date.
- Plans without an annual open enrollment period must start using the new template on the first day of the first plan or policy year that begins on or after April 1, 2017.
Begin using the new SBC template:
- Ensure that you are using the new SBC template for the 2018 plan year.
- For self-funded plans, the plan administrator is responsible for creating and providing the SBC. For insured plans, the issuer is required to provide the SBC to the plan sponsor. Both the plan and the issuer are obligated to provide the SBC, although this obligation is satisfied for both parties if either one provides the SBC. If you have an insured plan, confirm whether your health insurance issuer will assume responsibility for providing the SBCs.
The ACA includes a requirement for health plans to file a statement with HHS certifying their compliance with the Health Insurance Portability and Accountability Act’s (HIPAA) electronic transaction standards and operating rules. These HIPAA requirements are often referred to as the electronic data interchange (EDI) rules.
However, on Oct. 4, 2017, HHS withdrew its proposed rule in order to re-examine the issues and explore options and alternatives to comply with the HIPAA certification requirement. As a result, group health plan sponsors will not be required to certify their HIPAA compliance until HHS issues new guidance.
Although health plans are not required to certify their HIPAA compliance at this time, there is an enforcement process in place for the EDI rules. Civil monetary penalties and criminal penalties may be imposed on a covered entity that fails to comply with the EDI rules. Thus, health plans and business associates that conduct standard transactions should confirm that they are complying with the EDI rules.
EMPLOYER SHARED RESPONSIBILITY RULES
Under the ACA’s employer shared responsibility rules, applicable large employers (ALEs) are required to offer affordable, minimum value (MV) health coverage to their full-time employees (and dependent children) or pay a penalty. These employer shared responsibility requirements are also known as the “employer mandate” or “pay or play” rules.
An ALE will be subject to penalties if one or more full-time employees receive a subsidy for purchasing health coverage through an Exchange. An individual may be eligible for an Exchange subsidy either because the ALE:
- Does not offer coverage to that individual; or
- Offers coverage that is “unaffordable” or does not provide “minimum value.”
This checklist will help you evaluate your possible liability for an employer shared responsibility penalty for 2018. Please keep in mind that this summary is a high-level overview of the employer shared responsibility rules. It does not provide an in-depth analysis of how the rules will affect your organization. Please contact Scurich Insurance for more information on these rules and how they may apply to you.
Applicable Large Employer Status
The ACA’s employer shared responsibility rules apply only to ALEs. ALEs are employers with 50 or more full-time employees (including full-time equivalent employees, or FTEs) on business days during the preceding calendar year. Employers determine each year, based on their current number of employees, whether they will be considered an ALE for the following year.
Determine your ALE status for 2018:
- Calculate the number of full-time employees for each calendar month in 2017. A full-time employee is an employee who is employed, on average, at least 30 hours of service per week or 130 hours for the calendar month.
- Calculate the number of FTEs for each calendar month in 2017 by calculating the aggregate number of hours of service (but not more than 120 hours for any employee) for all employees who were not full-time employees for that month and dividing the total hours of service by 120.
- Add the number of full-time employees and FTEs (including fractions) calculated above for each month in 2017. Add up these monthly numbers and divide the sum by 12. Disregard fractions.
- If your result is 50 or more, you are likely an ALE for 2018.
- Keep in mind that there is a special exception for employers with seasonal workers. If your workforce exceeds 50 full-time employees (including FTEs) for 120 days or fewer during the 2017 calendar year, and the employees in excess of 50 who were employed during that time were seasonal workers, you will not be an ALE for 2018.
Offering Coverage to Full-time Employees
To correctly offer coverage to full-time employees, ALEs must determine which employees are full-time employees under the employer shared responsibility rule definition. A full-time employee is an employee who was employed, on average, at least 30 hours of service per week (or 130 hours of service in a calendar month).
The IRS provided two methods for determining full-time employee status for purposes of offering coverage – the monthly measurement method and the look-back measurement method.
MONTHLY MEASUREMENT METHOD
Involves a month-to-month analysis where full-time employees are identified based on their hours of service for each month. This method is not based on averaging hours of service over a prior measurement method. Month-to-month measuring may cause practical difficulties for employers that have employees with varying hours or employment schedules, and could result in employees moving in and out of employer coverage on a monthly basis.
LOOK-BACK MEASUREMENT METHOD
An optional safe harbor method for determining full-time status that can provide greater predictability for determining full-time status. The details of this method are based on whether the employees are ongoing or new, and whether new employees are expected to work full-time or are variable, seasonal or part-time.
This method involves a measurement period for counting hours of service, an administrative period that allows time for enrollment and disenrollment, and a stability period when coverage may need to be provided, depending on an employee’s average hours of service during the measurement period.
If an employer meets the requirements of the safe harbor, it will not be liable for penalties for employees who work full-time during the stability period, if they did not work full-time hours during the measurement period.
Determine your full-time employees:
- Use the monthly measurement method or the look-back measurement method to confirm that health coverage will be offered to all full-time employees (and dependent children). If you have employees with varying hours, the look-back measurement method may be the best fit for you.
- To use the look-back measurement method, you will need to select your measurement, administrative and stability periods. Please contact Scurich Insurance for more information.
An ALE is only liable for a penalty under the employer shared responsibility rules if at least one full-time employee receives a subsidy for coverage purchased through an Exchange. Employees who are offered health coverage that is affordable and provides MV are generally not eligible for these Exchange subsidies. Depending on the circumstances, one of two penalties may apply under the employer shared responsibility rules—the 4980H(a) penalty or the 4980H(b) penalty.
The 4980H(a) Penalty—Penalty for ALEs Not Offering Coverage
Under Section 4980H(a), an ALE will be subject to a penalty if it does not offer coverage to “substantially all” full-time employees (and dependents) and any one of its full-time employees receives a premium tax credit or cost-sharing reduction toward his or her Exchange plan. The 4980H(a) penalty will not apply to an ALE that intends to offer coverage to all of its full-time employees, but that fails to offer coverage to a few of these employees, regardless of whether the failure to offer coverage was inadvertent.
An ALE will satisfy the requirement to offer minimum essential coverage to “substantially all” of its full-time employees and their dependents if it offers coverage to at least 95 percent—or fails to offer coverage to no more than 5 percent (or, if greater, five)—of its full-time employees (and dependents). According to the IRS, the alternative margin of five full-time employees is designed to accommodate relatively small ALEs, because a failure to offer coverage to a handful of full-time employees might exceed 5 percent of the ALE’s full-time employees.
Under the ACA, the monthly penalty assessed on ALEs that do not offer coverage to substantially all full-time employees and their dependents is equal to the ALE’s number of full-time employees (minus 30) X 1/12 of $2,000 (as adjusted), for any applicable month. After 2014, the $2,000 amount is indexed for the calendar year, as follows:
- $2,080 for 2015
- $2,160 for 2016
- $2,260 for 2017
The 4980H(b) Penalty—Penalty for ALEs Offering Coverage
ALEs that do offer coverage to substantially all full-time employees (and dependents) may still be subject to penalties if at least one full-time employee obtains a subsidy through an Exchange because:
- The ALE did not offer coverage to all full-time employees; or
- The ALE’s coverage is unaffordable or does not provide minimum value.
The monthly penalty assessed on an ALE for each full-time employee who receives a subsidy is 1/12 of $3,000 (as adjusted) for any applicable month. However, the total penalty for an ALE is limited to the 4980(a) penalty amount. After 2014, the $3,000 amount is indexed as follows:
- $3,120 for 2015
- $3,240 for 2016
- $3,390 for 2017
Affordability of Coverage
Under the ACA, an ALE’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5 percent of the employee’s household income for the taxable year (as adjusted each year). The adjusted percentage is 9.56 percent for 2018.
This is the first time since these rules were implemented that the affordability contribution percentages have been reduced.
As a result, some employers may need to reduce their employee contributions for 2018 to meet the adjusted percentage.
“Household income” means the modified adjusted gross income of the employee and any members of the employee’s family. Because an employer generally will not know an employee’s household income, the IRS provided three affordability safe harbors that ALEs may use to determine affordability based on information that is available to them. These safe harbors allow an ALE to measure affordability based on the employee’s Form W-2 wages, the employee’s rate of pay or the federal poverty level for a single individual. ALEs using an affordability safe harbor may rely on the adjusted affordability contribution percentages.
Under the ACA, a plan provides MV if the plan’s share of total allowed costs of benefits provided under the plan is at least 60 percent of those costs. Three approaches may be used for determining MV: a Minimum Value (MV) Calculator, design-based safe harbor checklists or actuarial certification. In addition, any plan in the small group market that meets any of the “metal levels” of coverage (that is, bronze, silver, gold or platinum) provides MV.
In addition, plans that do not provide inpatient hospitalization or physician services (referred to as non-hospital/non-physician services plans) do not provide MV. An employer may not use the MV Calculator (or any actuarial certification or valuation) to demonstrate that a non-hospital/non-physician services plan provides MV. As a result, a non-hospital/non-physician services plan should not be adopted for the 2015 plan year or beyond.
Calculate potential penalties for 2017 and/or 2018:
- Review the cost of your health plan coverage to determine whether it’s affordable for your employees by using one or more of the affordability safe harbors.
- Determine whether the plan provides MV by using one of the four available methods.
- Calculate any penalties that may apply under these rules using the formulas above.
REPORTING OF COVERAGE
The ACA requires ALEs to report information to the IRS and to their full-time employees regarding the employer-sponsored health coverage they offer. The IRS will use the information that ALEs report to verify employer-sponsored coverage and administer the employer shared responsibility provisions. This reporting requirement is found in Code Section 6056.
The ACA also requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and any other entity that provides MEC to file an annual return with the IRS reporting information for each individual who is provided with this coverage. Related statements must also be provided to individuals. This reporting requirement is found in Code Section 6055.
Both of these reporting requirements took effect in 2015. Returns are due in early 2018 for health plan coverage offered or provided in 2017. Returns generally must be filed with the IRS by Feb. 28 (or March 31, if filed electronically) of the year after the calendar year to which the returns relate. For the 2017 calendar year, returns must be filed by Feb. 28, 2018, or April 2, 2018 (March 31, 2018, being a Sunday), if filed electronically. Written statements generally must be provided to employees no later than Jan. 31 of the year following the calendar year in which coverage was provided. For the 2017 calendar year, individual statements must be furnished by Jan. 31, 2018.
ALEs with self-funded plans are required to comply with both reporting obligations, while ALEs with insured plans will only need to comply with Section 6056. To simplify the reporting process, the IRS allows ALEs with self-insured plans to use a single combined form for reporting the information required under both Section 6055 and 6056.
ALEs that sponsor self-insured plans
- Information under Section 6055 about MEC provided; and
- Information under Section 6056 about offers of health coverage.
ALEs that sponsor insured plans
Must report information under Section 6056. These employers are not required to report under Section 6055.
Non-ALEs that sponsor self-insured plans
Must report information under Section 6055. These employers are not required to report under Section 6056.
Non-ALEs that sponsor insured plans
These employers are not required to report under either Section 6055 or Section 6056.
Forms Used for Reporting
Under both Sections 6055 and 6056, each reporting entity must file all of the following with the IRS:
- A separate statement for each individual; and
- A single transmittal form for all of the returns filed for a given calendar year.
Under Section 6055, reporting entities will generally file Forms 1094-B (a transmittal) and 1095-B (an information return). Under Section 6056, entities will file Forms 1094-C (a transmittal) and 1095-C (an information return) for each full-time employee for any month. Entities that are reporting under both Sections 6055 and 6056 will file using a combined reporting method, on Form 1094-C and Form 1095-C.
||FILE WITH THE IRS:
||FURNISH TO EACH INDIVIDUAL:
- One Form 1094-B; and
- A separate Form 1095-B for each responsible individual
|A copy of his or her Form 1095-B
- One Form 1094-C; and
- A separate Form 1095-C for each full-time employee
|A copy of his or her Form 1095-C
|Both Section 6055 & 6056
- One Form 1094-C; and
- A separate Form 1095-C for each full-time employee and each responsible individual
|A copy of his or her Form 1095-C
Any reporting entity that is required to file at least 250 returns under Section 6055 or Section 6056 must file electronically. The 250-or-more requirement applies separately to each type of return and separately to each type of corrected return. Entities filing fewer than 250 returns during the calendar year may choose to file in paper form, but are permitted (and encouraged) to file electronically. Electronic filing will be done using the ACA Information Returns (AIR) Program. More information on the AIR Program is available on the IRS website.
Individual statements may also be furnished electronically if certain notice, consent and hardware and software requirements are met (similar to the process currently in place for the electronic furnishing of employees’ Forms W-2).
A reporting entity that fails to comply with the Section 6055 or Section 6056 reporting requirements may be subject to the general reporting penalties for failure to file correct information returns (under Code Section 6721) and failure to furnish correct payee statements (under Code Section 6722).
Penalties may be waived if the failure is due to reasonable cause and not to willful neglect, or may be reduced if the failure is corrected within a certain period of time. Also, lower annual maximums apply for reporting entities that have average annual gross receipts of up to $5 million for the three most recent taxable years. The penalty amounts for failures related to returns and statements required to be filed or furnished in 2018 are as follows:
||ANNUAL MAXIMUM FOR EMPLOYERS WITH ≤$5 MILLION IN GROSS RECEIPTS
|Corrected within 30 days
|Corrected after 30 days, but before Aug. 1
*For failures due to intentional disregard, the penalty is equal to the greater of either the listed penalty amount or 10 percent of the aggregate amount of the items required to be reported correctly.
Prepare for Health Plan Reporting:
- Determine which reporting requirements apply to you and your health plans.
- Determine the information you will need for reporting and coordinate internal and external resources to help compile the required data.
- Complete the appropriate forms. Furnish statements to individuals on or before Jan. 31, 2018, and file returns with the IRS on or before Feb. 28, 2018 (April 2, 2018, if filing electronically).
EMPLOYEE NOTICE OF EXCHANGE
Employers are required to provide all new hires with a written notice about the ACA’s health insurance Exchanges. This notice must be provided at the time of hiring. In general, the notice must:
- Inform employees about the existence of the Exchange and describe the services provided;
- Explain how employees may be eligible for a premium tax credit or a cost-sharing reduction if the employer’s plan does not meet certain requirements; and
- Inform employees that if they purchase coverage through the Exchange, they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of the employer contribution to employer-provided coverage may be excludable for federal income tax purposes.
The DOL provided model Exchange notices for employers to use, which will require some customization. The notice may be provided by first-class mail, or may be provided electronically if the requirements of the DOL’s electronic disclosure safe harbor are met.
Ensure that the Exchange notice is provided to all new hires at the time of hiring:
- Customize the appropriate model Exchange notice.
- Confirm that the notice has been provided to all current employees.
- Prepare to provide the customized notice to all new employees when hired.
The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) recently made changes to the system for determining employers’ experience mods. Because experience mods are one of the largest factors when determining your workers’ compensation premiums, it’s important to know the details of these changes, and what they mean for your business.
Split Point Changes
The largest change the WCIRB made was to the split point, which had not been changed since 2010:
- Losses in excess of the split point will now be ignored during the calculation of an employer’s experience mod. These losses were previously considered, but did not carry as much weight as losses below the split point. Excess losses focus on the severity of injuries and illnesses in the workplace, a focus that will no longer be considered under the new changes to the rating system.
- Losses up to the split point will still count fully in the calculation of an employer’s experience mod. These primary losses focus on the frequency of injuries in the workplace, as they are fully weighted during the calculation of an experience mod. Because the WCIRB chose to focus on primary losses, the agency believes that employers will be encouraged to develop safe workplaces and reduce the occurrence of injuries and illnesses.
In addition to the focus on primary losses, the split point will now vary between approximately $4,500 and $75,000, based on the size of a business, instead of the previous $7,000 fixed split point. There will be approximately 90 threshold split points. The WCIRB believes that a varying split point will benefit smaller employers, who could previously expect abnormally high experience mods after a single, catastrophically large loss. Additionally, other states that use a fixed split point typically set them at $15,000 or higher, which the WCIRB believes is unfairly high for many small businesses.
For example, under the old split point system, a small employer with a single $60,000 loss would have a vastly different experience mod than a larger employer with 10 $6,000 losses. Under the new system, the WCIRB hopes to encourage safety at all times instead of punishing employers for abnormally high and rare losses.
What the Change Means for You
Although the varying split point can now reach extreme heights, the WCIRB believes that the elimination of excess loss consideration will cause premiums to remain flat. However, it’s possible that you could see your split point—and consequentially, your premiums—rise if you increase your workforce substantially.
The most important factor when working to lower your workers’ compensation premiums is to reduce the frequency of injuries and illnesses in the workplace—especially now that the calculation of your experience mod will be determined almost entirely by primary losses. For help keeping your workplace safe and responding to injuries and illnesses at your business, contact us at 831-661-5697 today.
OSHA’s final rule on electronic reporting requires certain employers to submit data from their injury and illness records electronically so it can be posted on the agency’s website. Because the rule is an extra requirement on top of existing OSHA recordkeeping standards, affected employers need to be ready to comply with the rule before the proposed Dec. 1, 2017, deadline.
Other News and Tips
Preparing for OSHA Inspections
If an unannounced OSHA inspection finds violations at your business, you may have to pay thousands in fines and watch as your reputation plummets. Fortunately, OSHA inspections generally follow an established procedure that you and your staff can prepare for.
When an OSHA compliance officer arrives at your business, it’s important to check his or her credentials and then determine if you’ll give consent to the inspection. Although you can refuse an inspection or give only partial consent, the compliance officer will take note of this and OSHA may take further action.
Once an inspection begins, the goal should be to determine its purpose and set any ground rules. You should also be prepared to provide proof that your business is in compliance with OSHA standards. During the walkaround process, be sure to take notes of what the inspector documents so you can review them later.
OSHA inspections can be stressful, even when your business is in full compliance. Scurich Insurance can provide you with our inspection guide, “Be Prepared for an OSHA Inspection,” and help your business impress OSHA compliance officers.
OSHA Removes Employee Fatalities from Home Page
Although OSHA used to include a URL link on its home page that would direct viewers to a list of employee fatalities, the agency recently moved the link to a separate page on its website.
According to a spokesperson from the Department of Labor, the link was moved in order to increase the accuracy of workplace data, as previous listings included fatalities that were outside OSHA’s jurisdiction. However, OSHA will keep the list of employee fatalities on its website and continue to review data from employers.
Although the electronic reporting rule initially required certain employers to start submitting their required information by July 1, 2017, OSHA’s Injury Tracking Application website wasn’t ready to receive electronic reports in time, and OSHA proposed Dec. 1, 2017, as the new deadline. The rule doesn’t change an employer’s requirements to complete and retain regular injury and illness records, but some employers will now have additional obligations. Here are the requirements for the rule:
- Establishments with 250 or more employees that are required to keep injury and illness records must electronically submit the following forms:
- OSHA Form 300: Log of Work-Related Injuries and Illnesses
- OSHA Form 300A: Summary of Work-Related Injuries and Illnesses
- OSHA Form 301: Injury and Illnesses Incident Report
- Establishments with 20 to 249 employees that work in industries with historically high rates of occupational injuries and illnesses must electronically submit information from OSHA Form 300A.
The final reporting requirements will be phased in over two years. After the initial Dec. 1, 2017, deadline, establishments with 250 or more employees must submit information from OSHA Forms 300, 300A and 301 by July 1, 2018. Beginning in 2019 and every year thereafter, the information must be submitted by March 2.
For more help preparing for this new rule, call us at 831-661-5697 and ask to see our comprehensive Compliance Overview on OSHA’s electronic reporting rule.
New Silica Rule Enforcement Begins
A new OSHA rule on respirable crystalline silica will require employers to limit their employees’ exposure to silica hazards and provide medical exams to monitor highly exposed employees. The rule is scheduled to come into effect on June 23, 2018; however, OSHA began enforcement of the new rule in the construction industry on Sept. 23, 2017.
Under the new rule, employers must reduce the permissible exposure limit (PEL) for respirable silica to 50 micrograms per cubic meter of air (50 µg/m3). The rule also requires employers to take the following steps:
- Establish engineering controls to limit employees’ exposure to the new PEL.
- Provide employees with respirators when engineering controls alone do not provide enough protection.
- Establish a written silica exposure control plan.
- Provide medical exams to employees who are exposed to levels of respirable silica at or above the new PEL for 30 or more days a year.
To see more information on the respirable silica rule, and to see specifics about the rule’s application in the construction industry, visit OSHA’s website.
The Insurance Research Council reports that an estimated 1 in 7 drivers in the United States are currently uninsured. As a result, many car insurance companies across the nation offer specific coverage in the event that you get into an accident with an uninsured driver, such as uninsured motorist (UM) coverage and underinsured motorist (UIM) coverage.
UM coverage applies if the uninsured driver was at fault in the accident or if you were the victim of a hit-and-run accident. UIM coverage applies if the other driver is at fault and lacks a high enough level of coverage to cover the cost of the accident. This means that if the underinsured driver’s policy limit is reached before the cost is covered, your insurance company would pay the remainder of the costs until your coverage limit is reached.
While UM/UIM coverage can be helpful, often times the level of coverage isn’t enough to cover the costs of the accident. Luckily, several states allow you to “stack” your UM or UIM coverage. Read on to learn the differences between stacked and unstacked UM/UIM coverage.
If you have unstacked UM/UIM coverage, your level of coverage is the limit on your policy. For instance, if you have a set limit of $20,000, that is the maximum amount of coverage you will receive after an accident with an uninsured or underinsured driver. Unstacked coverage is more common than stacked coverage, seeing as it is your only option if you insure just one car.
If you insure multiple vehicles and your state allows stacking, you are permitted to increase your level of UM/UIM coverage. You can utilize stacked coverage within one policy, or across policies.
Stacking your coverage within one policy means you are combining your coverage limits for multiple vehicles on a singular policy. For example, if you own two cars on one insurance policy and your UM/UIM limit is $20,000, you can combine your coverage limits for a total of $40,000.
Using stacked coverage across policies means you are combining your coverage limits between separate policies for a singular claim. For example, if you own two vehicles, each with separate policies and your UM/UIM limit is $25,000, you could file a claim using both policies, therefore using up to $50,000.
The Advantages and Disadvantages
There are both benefits and drawbacks to utilizing stacked UM/UIM coverage. Stacking can potentially raise the amount of coverage you can use in case of an accident with an uninsured or underinsured driver, and lets you increase your UM/UIM limits without increasing your liability coverage.
However, if you have stacked coverage, you may have higher rates, seeing as car insurance companies have to offset the risk of costly reimbursement.
In addition, while some states lack laws for stacked coverage, some states either forbid it or only allow it in specific circumstances. Aside from state laws, some car insurance companies have certain policies that disallow stacked coverage. Be sure to contact your car insurance company to discuss your options with stacked UM/UIM coverage.