Discussions of legislative changes affecting HR and Payroll professional

HSA Redesigns?

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:

  1. 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.
  2. 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.
  3. Remove the requirement that a prescription be required for over-the-counter medications to be eligible for payment from an HSA account.
  4. Lower the penalty for non-qualified early withdrawals from an HSA plan from 20% to 10%.
  5. 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.
  6. 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  That means that contributed funds are never lost and can be withdrawn without penalty after age 65.

 

Future of the Overtime Rule

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.

ACA – What Now?

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.

 

 

HR To Do List for November

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.

http://www.inc.com/suzanne-lucas/how-to-tell-your-salaried-employees-they-are-now-hourly.html

Is that Manager Exempt?

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:

  1. The employee regularly supervises two or more other employees,
  2. The employee has management as the primary duty of the position.
  3. 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.

Supervision

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.

Management

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.

Conclusions

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.

 

ACA – What to tell Employees

Employees are starting to receive their 1095-C forms.  Many have questions and they are  looking to you for answers.  Here are the most important questions and answers from an employee point of view.

Q.  What is this for?

  •  IRS Form 109-C provides information about your employer-provided health insurance, or offers of coverage if you chose not to accept it.

Q.  What should I do with it?

  •  You should keep it with the forms you give to your tax preparer.  If you prepare your own taxes you should refer to it as necessary to answer new questions this year about your health insurance coverage.

Q.  Do I have to wait for this form before I file my taxes?

  • Maybe.  It does not need to be submitted with your tax forms but your tax  preparer may want to review it to make sure the questions on your return are answered properly.  If you were covered by your employer all year you should be able to answer those questions without waiting for the form.  You do not need to include a copy of the form with your return.

Q. Why might I need to wait for the information?

  • If you received an advance premium tax credit or if you had a gap in coverage or more than three consecutive months you may need to refer to the 1095-C to prepare your return.

Q.  Why don’t I have it yet?  I got my W-2 already.

  • Since this is the first year the IRS extended the deadline for your employer to send out the 1095-C forms to March 31, 2016.

Q.  What if I didn’t get one?

  • Not every employer is required to send 1095-C forms to their employees.  If your employer has less than 50 full time employees you will not receive one.  You will need to rely on your own records to answer the coverage questions on your return.

 

 

All About EEO

September is here and that means that EEO reports are due this month, September 30 as a matter of fact.  Most large employers are used to the idea that they need to file these annual reports, but if you are a smaller employer that is growing this may be new to you.

WHO HAS TO FILE?

You need to file an EEO-1 report if you fit in one of the following categories:

  1. Your company employs 100 or more employees.
  2. Your company has over 50 employees and has a federal contract or subcontract amounting to $50,000 or more.
  3. Your company has over 50 employees and serves as an issuing and paying agent for U.S. Savings Bonds.

If you have been filing the EEO-1 report for years, you have probably received information from the U.S. Equal Employment Opportunity Commission with information and instructions.  However, if you have just recently added employee number 100, you may need to be proactive in starting the filing process, and it is always better to start filing rather than wait for the government to ask why you haven’t been filing.  So if this is your first year to file, go to http://www.eeoc.gov/employers/eeo1survey/index.cfm.  In the upper right-hand corner you will see a link for First Time Filers just under the LOGIN button.  Follow the link to answer a few questions and set up a user id and login.

Fortunately, if you use Sage Abra Suite or Sage HRMS you will have all the information you need to file your EEO report.  To make sure that your information is accurate you will want to review the Ethnic Origin field for each employee.  Then take a look at the Job Code table and review the EEO Class.  If you need assistance you can take a look at http://www.eeoc.gov/employers/eeo1survey/jobclassguide.cfm.  It will show each classification and the jobs titles that belong to that classification.

Once you have filed your first report you will receive notices each year letting you know when it is time to file again.  With the information in Sage Abra Suite or Sage HRMS you should have everything you need to complete the filing quickly and easily.

Written by Arlie Skory

WAC Solution Partners- Employer Solutions

 

Overtime in the news

Just as we have all been busy trying to figure out how to deal with reporting for the Affordable Care Act, another major project for Human Resources and top management is looming.  The Obama Administration has proposed updated overtime rules that could become law as early as January 2016.  Under the current overtime rules employees making under $455 per week ($23,660/year) are automatically considered non-exempt and eligible for overtime.  For employees above this pay level the overtime classification is based on what is called the “duties test.”  The duties test is designed to determine whether a job is exempt from the overtime requirement due to classification as Executive, Administrative, Professional or Outside Sales.

Under the proposed rules changes, the compensation test would be based on a salary level equal to the 40th percentile of earnings for full-time salaried workers.  That works out to $970 per week or $50,440 annually or thereabouts for 2016.

What should you be doing?

  • Now is definitely time to review your current job classifications, especially those jobs that are paid between $23,660 and $50,000 per year.
  • Take a look at your other policies – Do you have benefits that are different for Salaried and Hourly employees?  How many employees will be affected?
  • Consider what time keeping policies will need to be changed.
  • Decide whether some salaries will need to change to maintain and exempt status.

Above all, you should pay attention to the news about the proposed overtime rule changes.  We are now in the comment period and changes could still be made.  No matter what, however, you can expect increased attention as to who should be getting overtime pay in your company.

 

 

My Workforce Analyzer Webcast Registration

Need help with the Affordable Care Act?  Sign up for a webcast on My Workforce Analyzer from Sage.

My Workforce Analyzer Webcast Registration

 

Learn more about your responsibilities as they relate to ACA compliance and find out how Sage can help.

Track the information needed for 1094-C and 1095-C reporting and monitor your employees’ hours of service so you can make informed decisions about healthcare and the requirements of the ACA. Join this webcast to learn more about the newest version of My Workforce Analyzer.

In this webcast you’ll learn:

• Address 1094-C and 1095-C reporting for January, 2016.
• Handle ACA requirements if you are self-insured.
• Use the available Sage tools to meet your ACA demands.
• Create Online Dashboards of your workforce to view ACA related information, make decisions, and more.
Date: 4/23/2015

2:00 PM (Eastern Time)
Registration Ends: 4/23/2015 11:59 PM

These ACA Reports

It’s a fact.  It is time to start thinking about reporting requirements for the ACA for your 2015 information.  So what do you need to know?

  1. You may be a “large employer” for ACA purposes even if you don’t have 50 full time employees.  A full-time employee is considered someone who averages 30 hours per week.  The IRS looks at your prior year employee count and looks at full-time equivalents.  That means that having 100 part time employees working an average of 15 hours per week is the same as having 50 full-time employees.
  2. If you have multiple entities with the same ownership, they must be combined for purposes of the ACA.  So having one company with 30 employees and another company with 20 employees means the combined organization is a “large employer.”
  3. Just providing insurance is not enough.  You will have new reporting requirements for 2015 data due in 2016:  the 1095-C and the 1094-C.  Information needed for these forms include:
    • Who is a full-time employee for each month,
    • Name and address for each employee,
    • Information about health coverage offered by month,
    • The employee’s share of the monthly premium for lowest-cost self-only minimum value coverage,
    • Months the employee was enrolled in your coverage,
    • Months the employer met an affordability safe harbor with respect to an employee and whether other relief applies for an employee for each month
    • If you offer a self-insured plan, information about the covered individuals enrolled in the plan, by month.
    • Information about whether you offered coverage to 70% of your full-time employees and their dependents in 2015 (95% for years after 2015)
    • Total number of Forms 1095-C you issued to employees
    • Full time employee counts by month,
    • Total employee counts by month,
    • Whether you are eligible for certain transition relief as an employer.
  4. If you are hoping that your broker can prepare these forms for you, it is pretty obvious that you will still have to provide a lot of information.
  5. Trying to come up with all of this information at year end is obviously not the best approach.  It would be like trying to piece together W-2 forms working from copies of pay stubs.

Stay up-to-date with what is required and how you can deal with the administrivia.  Check out http://SageCanHelp.com