Benefits and Compensation – Setnor Byer Insurance & Risk

Is Your Business Ready for New FLSA White-Collar Overtime Rules?

Over two years ago, the possibility of new overtime rules for white-collar employees under the Fair Labor Standard Act (FLSA) first appeared on the horizon. Last year, the Department of Labor (DOL) released proposed revisions to overtime exemption regulations, including those for executive, administrative and professional employees. Today, that once looming possibility is looking more like a fast approaching reality. Fast, as in possibly by mid-July, fast.

On March 14, 2016, the DOL submitted its final version of the revised overtime exemption regulations to the White House’s Office of Management and Budget (OMB) for review. Once the OMB completes its review, the final regulations will be published. After that, it’s just a matter of time. Unfortunately, there are some details we still don’t know about the final regulations. Minor details, really, like what they are or when they will go into effect.

What will be different under the final regulations?

No one really knows. The final regulations will not be made public until the OMB completes its review, and few details have leaked or been disclosed. Many expect the final regulations to be identical or very similar to the proposed regulations issued in July 2015, including the DOL’s proposal to:

Increase the minimum salary requirement for white collar exemptions from $455 per week ($23,660/year) to $921 per week ($47,892/year);
Increase the minimum compensation requirement for the Highly Compensated Employee exemption from $100,000 to $122,148 per year; and
Automatically update the new minimum salary and compensation levels annually.

It’s possible that the final regulations may include additional changes, particularly the duties test used to determine eligibility under the current white-collar exemptions . In the proposed regulations, the DOL asked for comments about whether changes need to be made to the duties tests. Though the DOL specifically stated that it’s not proposing any specific regulatory changes to the duties test, we don’t know for sure.

When will the final regulations become effective?

This is also uncertain, but it may be sooner than initially expected. The Solicitor of Labor has indicated that the effective date of the final regulations will be 60 days after publication. But, before they can be published, they must be reviewed. The OMB generally has 90 days to review regulations, which would put the deadline near the middle of June. However, because of the upcoming election, the middle of May is probably the OMB’s real deadline. Here’s why.

Under the Congressional Review Act (CRA), Congress is generally given 60 days to review and disapprove a major rule, like the DOL’s new overtime exemption regulations. However, the CRA makes an exception for “midnight rules” that are issued toward the end of an administration. If a rule is issued too late, the 60-day review period essentially resets to give the next session of Congress an opportunity to review and disapprove the rule.

The current administration does not want this to happen, so the OMB must complete its review before the date on which the CRA’s reset provision is triggered. Otherwise, the new overtime exemption regulations would be at the mercy of the next Congress and a new president.

According to calculations by the Congressional Research Service, this date is estimated to be May 16, 2016.

This date was estimated using projected congressional schedules, so it may change. Nevertheless, if we assume the final regulations are published by May 16, 2016, and add 60 days, the new regulations could become effective around July 15, 2016, maybe even sooner!

Or, maybe later. On March 17, 2016, the Protecting Workplace Advancement and Opportunity Act was introduced as a bill. If passed, this law would essentially void any changes made to the white-collar overtime exemptions. Before proposing any new changes, the law would also require the DOL to undertake a comprehensive analysis of how changing overtime regulations would impact employers, including small businesses.

In the meantime, potentially significant changes to overtime pay requirements for white-collar employees may soon be here. How can employers prepare? Unfortunately, plans cannot be finalized until the final regulations are released, but employers can use the July 2015 proposed regulations as a guide to begin developing preliminary plans. In case there are any surprises, these plans should be flexible and capable of adapting to possible contingencies.

The risk of employment-related lawsuits, particularly those involving overtime under the FLSA, is nothing new for employers. But, the prospect of new rules, and their uncertainty, is expected to increase that risk significantly. Employment Practices Liability Insurance can protect against various employment-related claims, and limited coverage for wage and hour claims may also be available.

Please contact us if you would like to learn more about protecting your business with employment practices liability insurance.

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Is Telemedicine Right For You?

Telemedicine generally refers to the practice of using telecommunications technologies (phone, Internet, etc.) to diagnose and treat patients, and in case you haven’t noticed, it’s come a long way. Consider this:

The Centers for Medicare & Medicaid Services describes telemedicine as a cost-effective alternative to providing medical care.
The American Medical Association says telemedicine is a key innovation that can maintain patient safety, improve access to health care and control costs.
Industry analysts expect significant growth in the telemedicine market over the next few years.

Employers are taking notice of the benefits of telemedicine. According to a recent survey, 22% of large U.S. employers currently offer telemedicine services to employees as a low-cost alternative to doctor office visits for non-serious medical issues; 37% expect to begin doing so in 2015.

A primary benefit of telemedicine is fewer unscheduled absences by employees needing to see or take their child to a doctor for non-serious medical issues. Research shows that a majority of doctor visits are unnecessary. A cough, for example, can often be treated safely and effectively with telemedicine. (According to the Centers for Disease Control and Prevention, the most frequent reason for going to the doctor is…a cough.)

Employers offering telemedicine services also benefit from:

Healthier employees
Fewer employee sick days
Increased productivity
Measureable reduction in health care (insurance) costs

Telemedicine service plans are typically structured as discount card programs. These plans are not insurance and should not be considered a substitute for health insurance. Employers considering a telemedicine program should work with a reputable broker to find the right plan and avoid those trying to take advantage of a rapidly growing market.

At Setnor Byer Insurance & Risk, we make it easy to:

Evaluate options
Find the best solution
Obtain competitive pricing
Implement and integrate a new plan into existing benefit programs

If you would like more information, please contact us.

Are You Ready for the New Affordable Care Act Reporting Requirements?

The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs) with 50 or more full-time or full-time equivalent employees to file information returns with the Internal Revenue Service and provide statements to their full-time employees about employer-offered health insurance coverage. This information will be used to administer the ACA’s employer shared responsibility provisions (employer mandate) and to determine whether an employee is eligible for the premium tax credit.

Filing Forms (Drafts)

In 2014, the IRS released non-final draft versions of two forms that ALEs can use to satisfy these reporting requirements.

Form 1095-C (Employer-Provided Health Insurance Offer and Coverage)
Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns)

Filing Deadlines

ALEs must file these forms with the IRS on or before February 28 (March 31 if filed electronically) of the year immediately following the calendar year for which the offer of coverage information is reported. For calendar year 2014, there is no filing requirement. For calendar year 2015, these forms must be filed by February 29, 2016 (or March 31, 2016 if filed electronically).

ALEs must also furnish a Form 1095-C to each full-time employee by January 31 of the following year. The first Forms 1095-C are due to these individuals by February 1, 2016.

Form 1095-C

ALEs must file a Form 1095-C (or a substitute form) for each employee who was a full-time employee for any month of the calendar year. This form is used to report specific health insurance coverage information for each full-time employee to the IRS, such as:

which months the employee was a full-time employee
any offers of health coverage that meet the minimum value standard made to the employee and family members each month
the employee’s share of the monthly premium for the lowest-cost insurance that offers minimum value health coverage
whether any safe harbors are applicable to the employee
whether the employee was enrolled in the plan

Form 1094-C

ALEs must use Form 1094-C to transmit its Forms 1095-C to the IRS. A Form 1094-C must be attached to any Forms 1095-C filed by an ALE. One transmittal form can be used to cover all Forms 1095-C filed by an ALE or multiple transmittal forms can be used. The information reported with this form includes:

the total number of Forms 1095-C submitted with this particular transmittal
the total number of Forms 1095-C that will be filed by the ALE
whether the ALE is a member of an aggregate group (multiple employers treated as a single employer)
whether special rules or transition relief apply to the ALE

Though these ACA reporting forms are not due until 2016, large employers cannot wait until the last minute. Given the technical nature and complexity of the new ACA reporting requirements, legal and tax professionals should be consulted when preparing any forms filed with the IRS.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the health care reform process. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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How Can Safety Reduce Workers’ Compensation Insurance Premiums?

Workers’ compensation insurance provides indemnity and medical benefits to employees injured on the job. Many states, including Florida, set the premiums for workers’ compensation insurance, so shopping around isn’t the way to save money. However, employers can reduce their workers’ compensation insurance premiums by maintaining a safe workplace

Insurance companies prefer safe workplaces because there are presumably fewer claims to pay. They encourage employers to maintain a safe workplace by using experience modification ratings to adjust premiums. Employers with fewer claims are rewarded with premium credits, and employers with more claims may face increased premiums.

The experience modification rating, or experience mod, is designed to tailor the final premium to an employer’s actual claims experience. An employer’s actual workers’ compensation claims experience, typically over a three year period, is compared to other employers operating in the same type of business with a similar number of employees.

If an employer’s claims experience is consistent with the industry average, the experience mod is 1.0, which when multiplied by the base premium, will not increase or decrease the premium. If the claims experience is 25% better than the industry average, the experience mod will be .75, which when multiplied by the base premium, will decrease the premium by 25%. Alternatively, if the claims experience is 25% worse, the experience mod will be 1.25, which will increase the premium by 25%.

The experience mod gives more weight to accident frequency than to accident severity. In other words, an employer with one loss totaling $100,000 will have a better experience mod than an employer with 10 losses totaling $100,000. Since any single injury could have astronomical costs, an employer with a higher frequency of small claims is considered a greater risk than an employer with a single, expensive claim.

Medical-only claims do impact the experience modification as much as indemnity claims, so employers are not necessarily penalized when they occur. However, the existence of open or unresolved claims can negatively impact the experience mod, so employers benefit from getting claims resolved and closed.

Insurers may offer dividend payments to employers with few or no claims. Dividends, which are generally reserved for the most attractive risks, are usually based on a sliding scale wherein the amount of the dividend decreases as the number of claims increases. Rather than focus on the most generous dividend percentage, employers should compare dividend percentages that comport with their specific claims history.

Employers can reduce their workers’ compensation insurance premiums by taking advantage of the experience modification rating system. Though it requires a commitment to workplace safety and loss control, the savings could be significant. Given the complexity, employers should work with an insurance agent who knows about the experience modification rating system and available dividend plans, and who can ensure claims are treated appropriately and resolved quickly.

If you would like more information about workers’ compensation insurance or how Setnor Byer Insurance & Risk can help control your workers’ compensation insurance costs, please contact us.

Summary Plan Descriptions under ERISA

The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most voluntarily established employee pension and welfare plans in the private sector. To protect individuals in these plans, ERISA requires plan administrators, which are oftentimes the employers, to provide plan participants and their beneficiaries with a Summary Plan Description (SPD).

SPDs are used to give plan participants and beneficiaries important information about pension plans, like 401(k) and profit sharing plans, and welfare plans, like group health, disability and pre-paid legal plans. SPDs provide information about the plan, what benefits are available under the plan, the rights of participants and beneficiaries under the plan, and how the plan works.

SPDs must generally be given to each plan participant and each beneficiary receiving benefits under the plan within 90 days after first becoming covered by the plan. Under ERISA, SPDs must generally:

Identify the plan name, plan number and employer identification number (EIN)
Describe the type of plan (ex. 401(k), profit sharing, group health, disability)
Describe the type of plan administration
Provide contact information for the plan administrator and service of process
Describe the plan’s eligibility requirements
Describe circumstances which may result in disqualification, ineligibility, denial, loss, forfeiture, suspension or reduction of benefits
State the date of the plan’s fiscal year
Describe the procedures governing claims for benefits, applicable time limits and remedies if claims are denied
Describe provisions governing termination of the plan
A statement of rights available to plan participants under ERISA

SPDs for employee pension plans must include additional information, such as:

The plan’s normal retirement age
A description of benefits, eligibility, vesting and accrual
A statement about whether the plan is covered by termination insurance from the Pension Benefit Guaranty Corporation
Source of contributions to the plan and the methods used to calculate contributions amounts

Similarly, SPDs for employee welfare plans must also include additional information, such as information about:

Cost-sharing provisions, including costs of premiums, deductibles, coinsurance and copayment requirements
Annual or lifetime caps or limits on benefits
Coverage for preventive services
Coverage for drugs, medical tests, devices and procedures
The use of network providers, the composition of provider networks and whether, and under what circumstances, coverage is provided for out-of-network services
Conditions or limits on the selection of primary care providers or providers of specialty medical care
Conditions or limits applicable to obtaining emergency medical care
Preauthorization requirements or utilization review as a condition to obtaining a benefit or service

Since comprehension is the key, SPDs must follow strict style and formatting requirements. For example:

SPDs must be written in a manner calculated to be understood by the average plan participant
SPDs must be sufficiently comprehensive to apprise the plan’s participants and beneficiaries of their rights and obligations under the plan
SPDs must not be formatted in a way that misleads, misinforms or fails to inform participants and beneficiaries
Advantages and disadvantages of the plan must be presented without either exaggerating the benefits or minimizing the limitations
Exceptions, limitations, reductions, and restrictions of plan benefits cannot be minimized, rendered obscure or otherwise made to appear unimportant (style, caption, printing type and prominence must be the same as that used to describe plan benefits)

In fulfilling these requirements, plan administrators must consider the level of comprehension and education of typical participants in the plan and the complexity of the terms of the plan. In most cases, this will usually require limiting or eliminating technical jargon and long, complex sentences, and using clarifying examples, illustrations, clear cross references and a table of contents.

Unlike the general descriptions provided in this article, the SPD requirements are highly technical and very specific. To avoid violations, employers must confirm strict compliance with ERISA’s SPD requirement. If you have questions about your employee welfare plans, or if you would like to see how Setnor Byer Insurance & Risk can help, contact us.

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No Penalty for Noncompliance with ACA’s Notice of Coverage Options

On September 11, 2013, the United States Department of Labor announced that employers will not be fined or penalized under the Affordable Care Act for failing to provide employees with notice about coverage options available through the ACA’s Health Insurance Marketplace (Exchanges). This comes just weeks before the October 1, 2013 deadline for employers to begin providing the notice to their employees.

The announcement, which was posted on the DOL’s website as a “FAQ on Notice of Coverage Options,” states:

Q: Can an employer be fined for failing to provide employees with notice about the Affordable Care Act’s new Health Insurance Marketplace?

No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.

A day later, the U.S. Small Business Administration posted similar information on its website.

This announcement comes as a surprise to those who assumed that noncompliance would be met with a fine or penalty. Though the ACA’s employer notice requirement does not contain a specific penalty provision, many assumed that the ACA’s general penalty of $100 per day would apply. And, since news of the DOL’s position came informally through its website rather than the formal regulatory process, some believe that fines or penalties for noncompliance remain a possibility in the future.

This new development has understandably left many employers unsure about how to deal with the ACA’s employer notice requirement. Though it is still the law, the DOL’s announcement has undoubtedly left many wondering whether a requirement can really exist without consequences.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the constantly changing health care reform landscape. Check back with us periodically for future informational updates about the Affordable Care Act.

If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, view our health product page.

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Affordable Care Act’s Employer Mandate Delayed Until 2015

Shortly before the July 4th holiday, the U.S. Department of the Treasury announced that enforcement of the Employer Shared Responsibility requirement under the Affordable Care Act (Act) will be delayed until 2015. The employer mandate, which generally requires employers with at least 50 full-time or full-time equivalent employees to offer health care benefits or pay a penalty, was scheduled to go into effect on January 1, 2014.

Through a dialogue with businesses about the Act’s employer and insurer reporting requirements, the administration learned of concerns about the complexity of the requirements and the need for more time to implement them effectively. As a result, the administration decided to delay the Act’s mandatory employer and insurer reporting requirements.

According to the announcement, this delay is designed to:

Provide the administration more time to consider ways to simplify the new reporting requirements consistent with the law.
Provide more time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.

The administration recognized that delaying the Act’s mandatory employer and insurer reporting requirements will make it impractical to determine which employers owe shared responsibility payments for 2014. As a result, the administration decided to also delay enforcement of the employer mandate, stating that “these payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.”

The Treasury says it will be publishing formal guidance regarding the delayed enforcement soon and that proposed rules will be published this summer. Once these rules have been issued, the administration says it will work with employers, insurers and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015.

So what should employers be doing now? The Employer Shared Responsibility provision is still the law, it just isn’t being enforced. Not surprisingly, talking heads are making predictions and debating whether it’s really speeding if nobody can pull you over. Unfortunately, the manner in which employer’s will be affected by the delay will not be known until additional guidance is issued.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the changing health care reform landscape. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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New Deadline for Affordable Care Act’s Employer Notice Requirement

Under the Affordable Care Act (ACA), employers are required to give employees written notice about their options for purchasing health insurance through Affordable Insurance Exchanges (Health Insurance Marketplaces). Though the original March 1, 2013 deadline was delayed, the Department of Labor (DOL) recently announced the new deadline for employers to begin giving this notice.

Beginning October 1, 2013, employers must provide the required ACA notice to new employees at the time of hiring. In 2014, the DOL will allow employers to satisfy this requirement by providing the notice within 14 days of an employee’s start date. An employer’s current employees must receive their notice no later than October 1, 2013.

Notice must be given to each employee regardless of their plan enrollment status or their part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan. The notice, which must be understood by the average employee, may be provided by first-class mail or, in some instances, electronically.

The ACA’s notice requirement applies to employers covered by the Fair Labor Standards Act (FLSA). The FLSA generally applies to employers with one or more employees who are engaged in, or produce goods for, interstate commerce. Also the FLSA typically does not cover enterprises with less than $500,000 in annual dollar volume of business. However, the FLSA does cover specific entities regardless of their dollar volume of business, including hospitals, preschools, elementary and secondary schools, institutions of higher education, and federal, state and local government agencies.

To help employers satisfy their notice requirement, the DOL has prepared two model notices. There is one model notice for employers who offer a health plan to some or all employees, and another model notice for employers who do not offer a health plan. Employers may also use modified versions of these model notices as long as the required information is present.

If you would like to learn more about your obligations under the Fair Labor Standards Act, click here. If you would like information about insuring against FLSA claims, click here.

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Will business owners buy insurance online?

Insurance companies such as Geico and Progressive started selling personal insurance online over a decade ago. So is it safe to assume that business insurance can also be sold online?

We decided to explore this endeavour and we’re not the only ones. Plenty of insurance agencies offer business insurance, but very few can offer clients an online quote.

Just because the tool is out there doesn’t mean business owners will use it. Getting a quote for business insurance is significantly more complicated than obtaining a personal quote. Some of the other agencies that are offering business quotes are approaching it quite differently than we did.

Hiscox is targeting small business with a page on their site dedicated to explaining the various types of insurance coverage small business owners need. Apogee lists the types of insurance they can quote instantly and features a video tutorial of how to use their quoting tool. Our tool lists all the instant quotes we offer including Property and Liability Quotes, Professional Liability Quotes, Business Auto Quotes, and many more.

The introduction of this tool to our website also created the need for a complete redesign. We call ourselves a full-service independent insurance agency and creating this tool made us realize the possibility for an online marketplace. If clients can get quotes online they should be able to service their policies online as well. That’s why we also created a service page which allows clients to manage their policies online

If successful, online quotes for business insurance could be a big game changer. It will be interesting to see how many more agencies begin offering business quotes online. Get a quote and let us know what you think.

At Setnor Byer Insurance & Risk, we are committed to offering you a seamless insurance experience. Check back with us periodically for informational updates about insurance news. If you have specific questions about our instant quoting tool or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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Health Benefits and Value under the Affordable Care Act

The Department of Health and Human Services (HHS) released final rules pursuant to the Affordable Care Act (Act) that are designed to help consumers shop for and compare health insurance options in the individual and small group markets. According to the HHS, these final rules will promote consistency among health plans, protect consumers by ensuring that plans cover a core package of health benefits and limit out of pocket expenses.

To make it easier for consumers to make apples-to-apples comparisons among health insurance plans, the final rules create uniform standards of coverage and value.

Essential Health Benefits

The Act provides that health plans offered in the individual and small group markets, including those available through Health Insurance Marketplaces (Exchange), must offer a core package of items and services known as Essential Health Benefits or EHBs, which must be equal in scope to those benefits offered by a typical employer plan. Under the Act, EHBs must provide:

Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use services, including behavioral health treatment
Prescription drugs
Rehabilitative services and devices
Laboratory services
Preventive and wellness services and chronic disease management
Pediatric services, including oral and vision care

To protect consumers against discrimination the final rules also:

Prohibit discriminatory benefit designs
Include special standards and options for coverage not typically covered by individual and small group policies
Include standards for prescription drug coverage

Actuarial Value

The final rules outline actuarial values of individual and small group plans to help consumers distinguish and compare plans offering different levels of coverage. Actuarial Value, or AV, is calculated as the percentage of total average costs covered by a plan. For example, if a plan has an AV of 70%, a consumer could expect to pay an average of 30% of the costs.

Beginning in 2014, non-grandfathered health plans in the individual and small group markets must meet certain AVs, which have been assigned the following “metal levels”:

A platinum health plan has an AV of 90%.
A gold health plan has an AV of 8%.
A silver health plan has an AV of 70%.
A bronze health plan has an AV of 60%.

To give health plans some flexibility, a plan can meet a particular metal level if its AV is within 2% of the standard. For example, a silver plan may have an AV between 68% and 72%. The final rules also provide flexibility, if necessary, for issuers in the small group market regarding annual deductible limits to achieve a particular metal level.

To streamline and standardize the calculation of AV for health insurance issuers, HHS is providing a publicly available AV Calculator. In 2014, this calculator will use a national standard population, but in 2015, HHS will accept state-specific data sets for the standard population if states choose to submit alternate data for the calculator.

According to HHS, these final rules will give consumers a consistent way to compare and enroll in health coverage in the individual and small group markets, while giving states and insurers more flexibility and freedom to implement the Act. Time will tell if these final rules will achieve their desired purpose.

At Setnor Byer Insurance & Risk, we are committed to guiding you through Health Care Reform. Check back with us periodically for informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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