While it is anyone’s guess what might be included in the next health care bill once the dust settles, there are some proposed changes to Health Savings Accounts (HSA) designed to make them more attractive. Remember, HSAs are permitted for individuals and families enrolled in High Deductible Health Plans. Here are some of the proposed changes:
- Raise the HSA contribution limits. Right now, the limits are $3,400 for a single plan and $6,750 for a family plan. Proposed rule changes for 2018 would make that $6,550 for a single plan and $13,100 for a family plan.
- If an employee is not eligible for an HSA because they are enrolled in a traditional health plan, proposed legislation would remove the cap on contributions to Flexible Spending Accounts. The current limit for 2017 is $2,600. Since FSA plans require all funds to be spent or forfeited in the plan year there is a built-in cap on what reasonable contributions might be for a given family.
- Remove the requirement that a prescription be required for over-the-counter medications to be eligible for payment from an HSA account.
- Lower the penalty for non-qualified early withdrawals from an HSA plan from 20% to 10%.
- Allow for distribution to reimburse medical expenses that were incurred within 60 days of the start of coverage by the High Deductible Health Plan and before the HSA account was established.
- Allow spouses to make catch-up contributions to the same HSA instead of having to open a second account.
Remember, money can continue to accumulate in an HSA plan from year to year and contributions up to the limit are pre-tax. That means that contributed funds are never lost and can be withdrawn without penalty after age 65.
Remember that overtime regulation that was supposed to take effect on December 1, 2016? It would have doubled the Fair Labor Standards Act’s (FLSA’s) salary threshold for exemption from overtime pay from $23,660 to $47,476. Then in November, 2016 there was a federal court decision that halted the rule. Now what can we expect?
That probably depends on whether the current nominee for Secretary of Labor is confirmed. Alexander Acosta was questioned during a March 22 confirmation hearing before the Senate Health, Education, Labor and Pensions Committee. At that time he said that he believed the salary threshold figure should be somewhere around $33,000 after adjusting for the cost of living since the last time the threshold was adjusted back in 2004. He has not said what he thinks of the pending litigation, but he did suggest that if confirmed the Department of Labor will review the rule and possibly make changes. Acosta even said that he is not sure whether the dollar threshold would supersede a duties test, and therefore not be in accordance with the law. He said he would consult with officials at the Department of Justice to make a determination.
The Senate Committee is expected to approve Acosta’s nomination this week. If approved it will then go to a full senate vote. If confirmed Acosta said he would put all Department of Labor regulations through a review. Stay tuned for more changes in 2017.
If you have 10 or more employees and subject to the recordkeeping requirements of the federal Occupational Safety and Health Act you need to post the OSHA Form 300A, Summary of Work-Related Injuries and Illnesses, between February 1, 2017 and April 30, 2017. This is a record of serious work-related injuries and illnesses. Minor injuries requiring first aid only do not need to be recorded. The Form 300A lists the total number of job-related injuries and illnesses that occurred during the previous year and must be posted even if no work-related injuries or illnesses occurred during the year. It should be displayed in a common area where notices to employees are usually posted so that employees are aware of the injuries and illnesses that have occurred in the workplace. A company executive must review the OSHA 300 Log and certify that the annual summary is correct and complete.
Do all companies with 10 or more employees have to do this?
No, some companies may be partially exempt if they are in an industry that is typically safer than average, like legal offices, accounting offices, insurance agencies, advertising agencies, etc. Such organizations are not required to keep OSHA injury and illness records unless they are asked in writing to do so by OSHA, the Bureau of Labor Statistics (BLS), or a state agency operating under the authority of OSHA or the BLS.
The Big Exception?
All employers, including those partially exempted by reason of company size or industry classification, must report to OSHA any workplace incident that results in a fatality, in-patient hospitalization, amputation, or loss of an eye.
So let’s stay safe out there!
Tax Returns Due April 18
The Internal Revenue Service (IRS) has announced that tax season will begin Monday, January 23, 2017 and that the filing deadline to submit 2016 tax returns is April 18, 2017.
Tax Season Begins January 23
The IRS will begin accepting electronic tax returns on January 23, 2017. Many software companies and tax professionals will be accepting tax returns before January 23 and then will submit the returns when IRS systems open. The IRS will begin processing paper tax returns at the same time. According to the IRS, there is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting e-filed returns.
The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least 3 years. Taxpayers who are changing tax software products this filing season will need their adjusted gross income from their 2015 tax return in order to file electronically. The Electronic Filing Pin is no longer an option.
According to the IRS, “Where’s My Refund?” remains the best way to check the status of a refund.
April 18 Filing Deadline
The filing deadline to submit 2016 tax returns is April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday, April 17. However, Emancipation Day—a legal holiday in the District of Columbia—will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.
First and foremost, just because we had an election doesn’t mean that everything changes immediately. The Affordable Care Act forms are still going to be required for 2016 reporting. You do have a one month reprieve: the forms were originally due to employees on January 31, 2017 and now they are due on March 2, 2017. That extra time will be helpful to employers, but perhaps even more helpful is the IRS’s change regarding penalty relief. Originally the IRS said employers would have to show “reasonable cause” to have penalties waived for 2016 reporting. Instead, they are extending the good faith penalty relief from 2015 reporting for another year. Saying ” I though this would go away after the election” will probably not be considered a good faith excuse, however so you should be prepared to take the forms seriously again this year.
There are some changes for 2016 reporting. Most notable is the change to the indicator codes denoting spousal coverage. Codes 1J and 1K have been added to indicate conditional offers of healthcare coverage to spouses. The codes go on Part II, Line 14 of Form 1095-C. These codes will cover situations where coverage is available to the spouse only under certain situations such as when the spouse certifies that he or she is not eligible for other group coverage through an employer or not eligible for Medicare.
The deadlines for filing with the feds remain the same. The deadline for filing employer copies on paper is February 28, 2917. The deadline for electronic filing is March 31, 2017. One reason to consider getting it all done in January is that you can get a special discount if you use the Aatrix tax filing service and are ready to send out W-2’s and 1095-C’s at the same time.
If you are in Human Resources or upper management you have a busy month ahead of you. You are probably in the middle of Open Enrollment, you are rgetting ready for your ACA reporting in January, and now you have to get the word out to affected employees that some of them are going to be paid hourly effective December 1, 2016. Here is a little checklist to help you with that last one.
- Review all exempt salaried employees who earn less than $47,476 per year or $913 per week. Determine their new hourly rate.
- Make sure that they are set up to record time the same way the rest of your hourly employees record time. Set them up in the timeclock and get their badges ready.
- Be sure that the managers of the affected employees sit down with them to discuss what will be changing.
- Don’t assume that they know the rules they will need to follow. Spell them out in a written communication as well and have them sign an acknowledgement.
Suzanne Lucas has provided an excellent letter example for Inc. Magazine. Take a look at her example and it will help you with a tough communication.
There has been a lot of discussion lately about the upcoming changes to the requirements for employees to be considered exempt from the overtime provisions of the Federal Labor Standards Act (FLSA). While most people know that the salary level test is changing from $23,600 per year ($455 per week) to $47,476 ($913 per week) many may not understand the other requirements. The FLSA looks at job duties as well, rather than just job titles. We are going to focus on one of the “Duties” tests.
Perhaps one of the most abused tests is the one for Exempt Managers. Merely assigning the job title is not enough to qualify as exempt. The basic job duties are pretty straightforward:
Job duties are exempt Executive/Managerial if:
- The employee regularly supervises two or more other employees,
- The employee has management as the primary duty of the position.
- The employee has some genuine input into the job status of other employees (such as hiring, firing promotions, or assignments).
Let’s look at each of these requirements.
This requirement means just that. Supervision must be a regular part of the employee’s job, and must be of other employees. Non-employees do not count. The requirement for two or more employees refers to two or more full-time equivalent employees. Therefore this requirement could be met by supervising 4 part-time employees working at least half the full time hours.
Merely supervising the day to day duties of employees is not enough. The employee must have management as the primary duty of the job. In California this spelled out as being at least 50% of the employee’s work time. Typical management duties are considered to include:
- interviewing, selecting, and training employees;
- setting rates of pay and hours of work;
- maintaining production or sales records;
- appraising productivity, handling employee grievances or complaints, or disciplining employees;
- determining work techniques;
- planning the work;
- apportioning work among employees;
- determining the types of equipment to be used in performing work, or materials needed;
- planning budgets for work;
- monitoring work for legal or regulatory compliance;
- providing for safety and security of the workplace.
Input into Personnel Matters
While the employee may not be the final decision maker on personnel matters, they should be involved in make recommendations regarding hiring, firing, promotions and demotions. Higher management may make the final approval of such recommendation.
What you call a position does not have any weight when it comes to the exempt classification. Accurate job descriptions and regular review of job duties will help companies correctly classify their employees and protect them from the inevitable audits that will be occurring with the new focus on overtime.
Trying to determine whether someone is an employee can have a big impact on both the employer and the worker. If the worker is an employee you must withhold income tax and Federal Employment Taxes. You may also have benefits costs, worker’s compensation and other costs to consider. If the worker is truly an independent contractor you only have to worry about paying them for their services. That makes it very tempting to define someone as an independent contractor but you have some risks if you classify someone incorrectly.
The IRS has a form that you can use to help determine whether someone is a contractor or should be an employee. They also have a voluntary program to change someone’s status and limit your exposure to back taxes and penalties. This form can be filed with the IRS by an individual who thinks they have been mis-classified or a company wanting a determination. Here are examples of some of the questions on the form:
- What specific training and/or instruction is the worker given by the firm?
- How does the worker receive work assignments
- Who determines the methods by which the assignments are performed?
- At what location(s) does the worker perform services?
- Did the worker perform similar services for others during the time period?
- How does the firm represent the worker to its customers (for example, employee, partner, representative, or contractor), and under whose business name does the worker perform these services?
Now that Microsoft is no longer supporting FoxPro people keep asking questions:
- How long can I stay on Abra Suite?
- Is it going to suddenly stop working?
- When should I upgrade to SQL?
There is no one correct answer to any of these questions but there are some guidelines.
- Sage is committed to continuing support for Sage Abra Suite with tax updates and and legislative changes that fit within the current engine. They will not be devoting resources to the development of new features, however. If you are interested in having the latest and greatest features, you may want to consider upgrading to Sage HRMS.
- Some states are starting to develop some unusual employment laws such as the California Sick Pay law that don’t easily fit into the Abra Suite calculation methods. Customers in some states may find they need the greater flexibility and development of the SQL version.
- As time goes on there may be components that are not compatible with current operating systems. These may be Microsoft components like .Net 4.5.2 that is not compatible with older versions of Windows Server.
- If you have a number of people using Abra Suite HR and Payroll you have doubtless had to log out of the system while a user needs exclusive access for updates or backups. This is minimized in a SQL environment.
In general, if you are a single user with Abra Suite installed on one workstation you may be happy staying with Abra Suite for quite some time. If you are in a state like California with new laws all the time, a company with lots of diverse users, or an organization that tends to move to the latest operating systems, you should be considering a move to Sage HRMS if you have not already moved. If you are somewhere in between, then talk to us. We would be happy to help you evaluate your best move.