Labor and Employment Law – Setnor Byer Insurance & Risk

COVID-19 Update: FFCRA’s Mandatory Paid Leave Provisions Expiring December 31st; Tax Credits Extended Until March 31, 2021

Setnor Byer Insurance & Risk

On December 27, 2020, the second major coronavirus stimulus package was signed into law. The COVID-Related Tax Relief Act of 2020 includes a number of relief measures to address the health and economic impacts of the COVID-19 pandemic. But, what about the Families First Coronavirus Response Act’s mandatory paid leave requirements? Have they been extended or will they expire on the last day of the year? Congress, it seems, agreed to compromise. Although the final bill did not extend the FFCRA’s mandatory paid leave requirements, it did extend the payroll tax credit for employers opting to voluntarily provide paid COVID-19 leave until March 31, 2021.

The FFCRA’s two paid sick leave laws—the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act–generally require employers with fewer than 500 employees to provide paid leave to employees who are unable to work for qualifying reasons related to COVID-19. Eligible employees may receive up to 80 hours of paid sick leave and up to 10 weeks of paid family and medical leave. To offset the cost of providing paid COVID-19 leave, the FFCRA includes a payroll tax credit equal to 100 percent of the qualifying wages paid by employers to eligible employees.

As of January 1, 2021, the FFCRA’s paid leave provisions will be voluntary, not mandatory. Employers, however, have been given an incentive in the form of dollar-for-dollar payroll tax credits to continue providing paid leave pursuant to the FFCRA until March 31, 2021.

Employers considering this option must note that the extended tax credits are only available for paid leave that meets all the requirements of the FFCRA. Employers, for example, cannot claim tax credits for paid leave that is given for reasons other than those allowed under the FFCRA or that exceeds the limits set forth in the FFCRA (amount, duration, etc.). Additionally, the final bill does not refresh or replenish the amount of paid leave an employee can take under the FFCRA, so employers cannot claim tax credits for wages paid to an employee in excess of 80 hours or 10 weeks.

It’s unclear whether interpretive regulations will be issued in the near future. Nevertheless, employers must now decide whether to continue providing paid COVID-19 leave under the FFCRA beyond December 31, 2020. As always, employers should proceed cautiously to avoid harmful and costly errors. Employers should also have Employment Practices Liability Insurance to protect against various employment-related claims. Please contact us to learn more about EPLI coverage.

An Ounce of Prevention: What Employers Can Do to Keep Workers’ Compensation Costs Down

As a firm specializing in Workers’ Compensation defense, General Liability defense, and Employment and Labor Law defense, we have a bird’s eye view of the successful (and sometimes unsuccessful) practices of our clients. In this article, we offer preventative measures that can be utilized to minimize or mitigate workplace accidents and their associated monetary exposures.

As a general rule, any policy or procedure should be uniformly applied to all Employees, regardless of race, religion, gender, age, or any other protected factor. Failure to apply these provisions uniformly could result in violation of State, Federal, or Local law. As such, if you choose to adopt any of the following suggestions, it is imperative that they be applied without variation.

Perhaps the least expensive and most beneficial practice that a company can utilize is to conduct routine safety workshops. A safety workshop is an inexpensive method aimed at avoiding accidents. We recommend that you conduct safety workshops frequently, perhaps monthly, at which time you can review techniques for safe lifting, ergonomic workplace solutions, and applicable safety rules. To assist your supervisors and HR personnel, Setnor Byer Insurance & Risk, along with Kelley Kronenberg, can facilitate workers’ compensation workshops at your workplace that will specifically address your unique needs and will guide you toward implementing more aggressive and cost-effective practices that can prevent workplace accidents.

Often, injured workers are more apt to stay home if they perceive that the rewards for being out of work are potentially greater than for returning to work. In light of this trend, a useful suggestion for an employer is to establish a safety program. As a company, you may consider offering an incentive to Employees who are accident-free for a specified time period. This practice may also be used for Employees who have a perfect attendance record, thereby reducing frivolous time off for “sick days.” Feel free to contact Setnor Byer Insurance & Risk for additional support. Please note: To avoid disparate treatment or the appearance of impropriety, absences for workers’ compensation purposes, FMLA leave time, or leave provided to an Employee for accommodation of an ADA disability should not count against one’s attendance record in this incentive program.

Obtaining information (post-hiring) about an Employee’s medical history can also be quite useful. The names and contact information for a worker’s physicians can be obtained on your standard employment documents “to be used in the event of a medical emergency.” This information often provides valuable assistance should a workers’ compensation claim later be filed, as it is more likely that a pre-existing condition would have been revealed to a doctor prior to a work accident than after the work accident.

In this regard, we also encourage gathering information from Employees regarding pre-existing medical conditions. This information will be invaluable and may aid in the defense of a workers’ compensation claim, if provided on a timely basis, to the treating physician after an accident. Please be advised that the use of medical questionnaires is strictly governed by the Americans with Disability Act (ADA), and the failure to comply with the requirements of this law could create additional legal exposure for you as an employer.

Under the ADA, the types of questions asked of the Employee depends on the stage of the hiring process.

Stage One: Before a Conditional Job Offer is Made. The ADA permits you to show the prospective Employee a job description that describes the physical demands of the job, or to demonstrate the job and inquire whether the prospective Employee is physically able to perform the job function with or without an accommodation.
Stage Two: After the Job Offer but Before Employment Begins. The ADA permits the Employer to ask a prospective Employee to respond to a detailed medical questionnaire and to submit to a medical examination, if practical, as long as these are required of all Employees entering the job force within a particular job category.
Stage Three: After the Employee Has Begun Working. Among other things, the ADA allows employers to require a fitness-for-duty examination in situations in which the examination is job-related and consistent with business necessity.

The ADA is a complex set of laws-please seek legal advice prior to instituting procedures.

Obtaining information regarding the Employee’s physicians and prior medical care may prove beneficial should the Employee later have an accident. Thus, it is also imperative to know whether the Employee has sustained prior accidents and/or whether a prior workers’ compensation claim or lawsuit has been filed. To answer these questions, we recommend that an index search, background check, or a simple online search be conducted at the post-offer stage.

An index search typically will list any known accidents that the Claimant has had, including workers’ compensation claims and automobile/personal injury claims. The reports typically list parties with additional information regarding the claim, i.e. an Insurance Carrier, an Employer, or an insured individual. Often, we are able to subpoena records based upon the index search that greatly assist in limiting exposure. In fact, for some clients, we seek this information once an injured worker has an accident but before litigation has commenced. At an Employer’s request, we can open a “ghost file” and guide our clients from the sidelines in an effort to avoid unnecessary and costly litigation.

Consider the value of many of the public record search options that exist. A person’s name can be looked up on local civil and criminal case dockets, and much information can be garnered by looking at personal web pages such as flickr, myspace, and similar social networking sites. Small and seemingly insignificant details found today could save thousands of dollars should the Employee later file a claim seeking medical or indemnity benefits. In fact, in one case in which we served as defense counsel, the adjuster obtained pictures of a claimant riding and performing stunts on his motorcycle. The pictures were posted on the claimant’s myspace page and were taken after his alleged accident.

It is also useful to institute a daily or a weekly checkout system. You may wish to have Employees sign out on a daily basis and indicate whether they were in an accident, whether they witnessed an accident, or whether they were in need of medical treatment prior to or upon leaving. This is an excellent tool for defending against workers’ compensation claims that are reported late. It must be noted, however, that if an Employee feels coerced or threatened to document an accident, any defenses available will be undermined.

It is important to note that, in conjunction with a checkout system, you must designate an Employee to be responsible for reviewing these reports. If an Employee indicates an accident or injury on the report, such documentation will likely suffice as notice under the requirements of Florida Statute Section 440, even if the document has not been actually reviewed by a supervisor or another Employee of your company. In this regard, upon learning of an accident or injury, you must report this information to your Workers’ Compensation Carrier to avoid penalties for late reporting or exposure related to late provision of benefits.

It is strongly recommended that every employer establish a zero tolerance policy for violence, safety violations, and fraud. To complement this policy, we recommend that each Employee sign a form acknowledging that violence, safety violations, and fraud are grounds for immediate termination. Your safety documents should explain that a safety violation is considered a failure to comply with any company safety rules, established standards of safety for the industry, OSHA rules, or any rules promulgated by an applicable regulatory agency. For your protection, safety rules should also be set forth in your Employee Handbook, which should be adhered to and distributed uniformly.

It is also recommended that the Zero Tolerance Policy be posted in a place frequented by all Employees, such as a lunchroom or near the time clock. The policy may also be reiterated at staff meetings or in Company bulletins and newsletters.

Established in 1980, Kelley Kronenberg is one of the largest Insurance & Employer defense firms in the State of Florida. They have been a leader in Florida law since they began their practice and have maintained a strong presence in the legal profession since then. Kelley Kronenberg believes that their experience and stability serve as the basis for their firm’s success. In addition, they know that their high standards are constantly complemented by their long-standing philosophy that every attorney is trained with an eye toward cost-effectiveness on behalf of their clients, along with exemplary customer service.

® 2008, Kelley Kronenberg. Reprinted with permission.

Finding the Right Manager for Your Condominium Association

Condominium boards often hire community association managers to help manage and oversee their association’s affairs. However, since community association managers often handle critical and complex matters, it’s important to choose the right one. The first step to confirming the qualifications and experience of a community association manager is to make sure they are properly licensed.

In Florida, community association managers must be licensed to perform specific functions for condominium associations with more than 10 units or with an annual budget of over $100,000. Importantly, a 2014 statutory amendment expanded the types of functions that can only be provided by a licensed community association manager. In addition to controlling or disbursing association funds, preparing financial documents and assisting in the meeting process, a license is required if a community association manager:

Determines the number of days required for statutory notices
Determines and collects amounts due to the association before the filing of a lawsuit
Calculates the votes required for a quorum or to approve a proposition or amendment
Completes forms that have been created by statute or by a state agency
Drafts meeting notices and agendas
Calculates, prepares and responds to requests for assessment and estoppel certificates
Negotiates contracts
Drafts pre-arbitration demands
Coordinates or performs maintenance and other related routine association services
Oversees compliance with the association’s governing documents and the requirements of law

New professional standards were placed upon Florida community association managers in 2014. For example, community association managers cannot charge unreasonable or excessive fees and must account for all funds. Community association managers, acting as an agent on behalf of the association, must also discharge their duties:

Loyally
Skillfully
Diligently
Honestly
Fairly
In good faith
With care and full disclosure to the association.

To satisfy their fiduciary obligation, condominium boards must make an effort to hire a qualified community association manager. Beyond confirming that a community association manager is properly licensed, board members must make sure that the individual has a thorough command of all the administrative and financial tasks associated with the job, strong communication skills and absolute integrity. Multiple candidates should be interviewed and references should be checked.

Setnor Byer Insurance & Risk’s Condominium Program provides clients with access to various risk management services, such as Setnor Byer’s Risk Management Group and Unit Owners’ Report Line, as well as our affiliate’s online Board Member Education, which has been approved by the Division of Florida Condominiums, Timeshares, and Mobile Homes to satisfy Florida’s new board member education training.

If you would like to discuss how Setnor Byer Insurance & Risk can serve you and your condominium association, please contact us.

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.

Is a Resident Manager Ideal for Your Self Storage Facility?

Resident managers are not as common as they used to be in the self storage industry. For some self storage facilities, however, a manager living on the premises may be the key to running a successful operation. Though cost is an important factor when deciding whether a self storage facility could benefit from a resident manager, other factors should be considered as well, such as:

Service: Automated facilities may not be enough to create an advantage over the competition. Depending on a self storage facility’s location or specialty, clients may want more than just an access code after signing a contract. Facilities with a resident manager can service clients in ways that others cannot. This is why the existence of a resident manager is often mentioned in promotional and marketing materials.

Security: Even with surveillance cameras and 24-hour monitoring services, it is difficult to deny that resident managers can make a self storage facility even more secure. Their presence alone will likely deter most criminals, and their response time will be quicker than even the fastest police departments.

Operations: Things can and often do go wrong after business hours. Leaking pipes and short-circuits are just two things that can cause significant damage if they are not discovered and fixed quickly. A resident manager can find and fix those problems that cannot wait.

Qualified Candidates: It’s not always easy to find and retain the right people. Providing prospective managers with a place to live may be just the perk required to hire and keep quality talent.

After evaluating all the pros and cons in the context of each facility’s own particular situation, an informed decision can be made about whether a resident manager could improve operations. However, before making a final decision, it is important to understand the ramifications of hiring a resident manager, particularly how doing so may create an unexpected relationship.

In addition to creating an employer-employee relationship, hiring a resident manager can also create a landlord-tenant relationship. While employers can often terminate employees at-will and without advance notice, the same cannot usually be done with tenants. Depending on applicable law, a self storage facility will generally be required to provide advance written notice to terminate the landlord-tenant relationship. As a result, a resident manager may be legally entitled to continue renting the property for a period of time after his or her employment has been terminated.

There are steps that can be taken to minimize the scope and impact of the landlord-tenant aspects of a resident manager’s employment relationship. For example, a self storage facility can address landlord-tenant issues in a written employment agreement or in a separate lease agreement. However, since specific legal requirements must be met, it is advisable to seek the advice of a locally licensed attorney.

As is often the case, it is necessary to understand the risks in order to control them. Since self storage facilities face unique risks, it helps to have an insurance program that is specifically designed for the self storage industry. If you would like more information about Setnor Byer Insurance & Risk’s Self Storage Insurance Program, please 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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Calculating Workers Compensation Insurance Premiums

Workers’ Compensation (WC) provides medical, disability, rehabilitation or death benefits to employees who have suffered a job-related injury or illness. Employers are generally required by their state’s law to provide WC coverage to employees. Since most employers purchase insurance to satisfy this statutory obligation, it is important to understand how WC insurance premiums are calculated.

The formula for calculating the starting WC premium is (Payroll / 100) x (Premium Rate). To understand this formula we need to discuss three elements that play a big part in calculating the premium.

Payroll

The premium for WC insurance is based on an employer’s payroll, which is generally defined to include the total remuneration paid by an employer. Payroll typically includes wages, salaries, commissions, bonuses and paid time off, and typically excludes tips, severance, active military duty pay and employee discounts. Employers should check state-specific requirements, including the treatment of executive officers, when calculating payroll for WC insurance purposes.

Classification (Class) Code

Insurance companies use class codes to assign premium rates to specific workplaces based on the risks associated with a particular kind of work. Most states use the classification codes developed by the National Council on Compensation Insurance (NCCI). There are approximately 550 different class codes and they can be very specific. For example, the correct code for Janitorial Services by Contractors may depend on whether the services include window cleaning above ground level.

Though a single employer can be assigned more than one class code, it is important to note that classification codes are designed to categorize employers with common exposures rather than the specific occupations of each employee within an organization. Since class codes are specific and appear to be somewhat conflicting, choosing the appropriate class code is not always easy and mistakes are common.

Premium Rate

Each class code is assigned a premium rate that corresponds to the risks associated with that particular kind of work. These rates, which are evaluated regularly, are applied to every $100 of payroll. Higher risk jobs are given higher premium rates. NCCI provides premium rates for each of its class codes, and many states rely on them when setting their own rates.

Now, let’s assume an employer has a payroll of $187,500 and that the premium rate for its classification code is $1.07. Divide the payroll by 100 [187,500 / 100 = 1,875], and multiply the quotient by the premium rate [1,875 x 1.07] to get a premium of $2,006.25. Note that if the applicable premium rate is $6.05, then the premium would be $11,343.75.

Remember that this is only the starting premium. Additional pricing factors may be applied to the starting premium to arrive at the final premium, such as:

Minimum premium requirements
Experience modification based on prior loss history
Discounts based on the size of the premium
Credits for qualifying safety and drug-free programs
Dividend plans tied to loss experience
Audits adjusting premiums to reflect actual (rather than estimated) payroll

Since the starting premium can be significantly affected by these additional pricing factors, a reputable insurance agent with substantial experience in evaluating and placing WC insurance should be consulted. For those employers with a statutory obligation to provide WC coverage, mistakes can be very costly.

If you would like more information about obtaining workers’ compensation insurance for your organization, please contact us.

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Finding Safe Harbor from the Employer Mandate

Under the Affordable Care Act’s Employer Shared Responsibility provisions, “large” employers with at least 50 full-time equivalent employees may be subject to an annual $2,000 or $3,000 penalty (tax) per qualifying employee. An employer may avoid the penalty by offering health coverage to at least 95% of its full-time employees (and dependents) under an “affordable” plan that provides “minimum value.”

A plan will generally satisfy the “minimum value” requirement if it covers at least 60% of health care costs. To be considered “affordable,” the employee’s required contribution for employee-only coverage cannot be more than 9.5% of the employee’s household income for the taxable year.

In the context of determining whether a plan satisfies the affordability requirement, the Internal Revenue Service recognized the likely inability of employers to ascertain the household income for each of its employees. As a result, the proposed regulations recently published by the IRS allow employers to take advantage of three safe harbor provisions.

Form W-2 Safe Harbor

Application of the Form W-2 Safe Harbor, which is determined after the calendar year on an employee-by-employee basis, takes into account the employee’s Form W-2 wages and the employee contribution.

An employer will not be assessed a penalty for an employee if the required annual contribution for the employer’s cheapest employee-only coverage plan is not more than 9.5% of that employee’s Form W-2 wages from the employer. If an employee is not offered coverage for an entire calendar year, the Form W-2 wages can be adjusted to reflect the period for which coverage was offered.

To avoid manipulation, the proposed regulations provide that the employee’s required contribution must remain consistent during the calendar year and that an employer cannot make discretionary adjustments to the required employee contribution for a pay period.

Rate of Pay Safe Harbor

Under the Rate of Pay Safe Harbor, an employer:

takes the rate of pay for each hourly employee who is eligible for coverage under the plan as of the beginning of the plan year; and
multiplies that rate by 130 hours (the benchmark for monthly full-time status) to compute the employee’s monthly wages.

If the employee’s monthly contribution amount for the cheapest employee-only coverage plan is not more than 9.5 percent of the computed monthly wages, then the coverage is considered affordable. For salaried employees, the monthly salary would be used to determine affordability.

The Rate of Pay Safe Harbor allows employers to prospectively determine affordability without having to analyze every employee’s wages and hours. However, it may only be used for those employees who did not have their hourly wages or monthly salaries reduced by the employer during the year.

Federal Poverty Line Safe Harbor

Under the Federal Poverty Line (FPL) Safe Harbor, coverage is considered affordable if the employee’s cost for the cheapest employee-only coverage plan is not more than 9.5% of the FPL for a single individual. Under the regulations, employers may use the most recently published poverty guidelines for the first day of the plan year.

These safe harbors are optional. Large employers may use one or more of these for all employees or for any reasonable category of employees, provided they are used uniformly and consistently for all employees in a category.

The IRS will be accepting comments on these proposed regulations until March 18, 2013.

At Setnor Byer Insurance & Risk, we are committed to guiding you through what is sure to be a bumpy ride. 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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Health Care Reform by the Numbers

As Health Care Reform makes its way through the health insurance landscape, many employers are finding it difficult to keep up. Unfortunately, the size and complexity of the Affordable Care Act (Act) doesn’t help. Nevertheless, a general understanding of the Act’s more significant provisions can help employers adjust to past changes and prepare for future ones.

Since numbers play a big part in determining how the Act will impact a particular employer, here are some figures that employers can use to see where they fit in the big picture.

0 Number of employers explicitly required by the Act to offer employee health care coverage

50 Number of full-time equivalent employees required to trigger the Act’s tax on employers

$2,000 Annual tax large employers must pay for each full-time employee (in excess of 30) if the employer does not offer health benefits to its employees

$3,000 Annual tax that large employers must pay for each full-time employee receiving a credit for purchasing health insurance from an Exchange if the employer offers health benefits to its employees

30 Average number of hours an employee must work to be considered a full time employee for purposes of determining large employer status

$0 Annual tax that large employers must pay for each part-time employee, regardless of whether the employer offers health coverage to employees

85% Minimum percentage of premium revenue that a large group health insurance issuer must spend on health care claims and quality improvement to avoid issuing a rebate to enrollees

80% Minimum percentage of premium revenue that a small group or individual market health insurance issuer must spend on health care claims and quality improvement to avoid issuing a rebate to enrollees

200 Maximum number of full-time employees that an employer may have before the Act’s automatic enrollment requirement is triggered

9.5% Maximum percentage of employee’s household income that the employee’s self-only health plan contribution may be to qualify as affordable under the Act

60% Minimum percentage of costs that must be covered by an employer’s health plan to be considered adequate under the Act

249 Maximum number of W-2 Forms an employer may file during the previous calendar year to avoid reporting the cost of coverage under an employer-sponsored group health plan on Form W-2

35% Maximum tax credit available to eligible small employers through 2013

24 Maximum number of full-time equivalent employees an employer may have to be eligible for the Act’s small employer tax credits

$49,999 Maximum average annual wages an employer may pay to be eligible for the Act’s small employer tax credits

50% Minimum percentage of employees’ premium cost for single (not family) health care coverage an employer must pay to be eligible for the Act’s small employer tax credits

100 Maximum number of employees an employer may have to be eligible to purchase insurance through Small Business Health Options Program (SHOP) Exchanges

TBD Number of newly insured Americans

TBD Affordability of health insurance under the Act

TBD Effect of Act’s provisions on employers and employees

At Setnor Byer Insurance & Risk, we are committed to guiding you through what is sure to be a bumpy ride. Check back with us periodically for future informational updates. 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.

New Health Insurance Notice Requirements for Employers

Thanks to the Affordable Care Act, the Fair Labor Standards Act (FLSA) is moving beyond its traditional role as the nation’s principal wage and hour law. In addition to establishing minimum wage, overtime pay, recordkeeping and youth employment standards, the FLSA now deals with health insurance.

Under the amended FLSA, employers must notify employees that:

Affordable Insurance Exchanges exist, along with a description of the services provided by Exchanges and how to request assistance from an Exchange
If their employer’s health plan pays less than 60% of allowed costs the employee may be eligible for a premium tax credit and a cost sharing reduction if the employee purchases a qualified health plan through an Exchange
If the employee purchases a qualified health plan through the Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer

Employers must distribute this notice to every current employee by March 1, 2013. Employees hired after this date must receive their notice upon being hired.

The precise form and content of the notice, as well as acceptable means for providing the notice, are not yet certain. The law states that employers must provide notice “in accordance with regulations promulgated by the Secretary.” Presumably, these regulations will clarify what should be included in the notice and how it can be provided to employees.

Despite the current lack of regulations, it is reasonable to assume that the FLSA’s broad definition of “employer” means that most employers will need to comply with the new notice requirement. Similarly, the FLSA’s broad definition of “employee” means that every employee, regardless of status, will likely be entitled to receive this notice.

Consequently, employers need to be ready to comply with the notice requirement by March 1, 2013, especially since the penalty for violating this requirement is unknown.

At Setnor Byer Insurance & Risk, we are committed to guiding you through what is sure to be a bumpy ride. Check back with us periodically for future informational updates about health care reform. 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.