Category: Compliance & Regulation

DOL’s New Overtime Rules

On May 18th the Department of Labor announced the much anticipated changes to regulations within the Fair Labor Standards Act (FLSA), which essentially governs rules surrounding compensation, including when employees are eligible for overtime. The new changes that will impact all businesses as of December 1st of this year relate to the salary threshold for employees to keep their exempt (salary) status.

Department of Labor doubled the salary threshold for employees to qualify as exempt (not entitled to overtime) from $23,000 to more than $47,000 a year. All employers must comply by December 1, 2016.  Here’s a great resource. Guidance for Employers FLSA OT Rule Changes

And one of our HR consultant colleagues Heidi Johnson @ Investment HR wrote a great article on the new rules. Here’s the article. Contact your HR expert today to have them help you be prepared.



1095/1094 Upcoming Employer Reporting.

What is it?

It’s a requirement of the ACA (Affordable Care Act). Starting in January 2016, certain companies offering health insurance coverage during 2015 are required to provide this statement to their employees and file the reports with the IRS.

Who is effected?  Who must comply?

Small employers with fewer than 50 employees offering a self-insured health plan. (IRS Section 6055)  Also, employers with 50+ full time employees (FTEs) offering any kind of group health insurance plan must also file a more complex report. (IRS Section 6056)


It’s on a similar schedule as issuing a W-2 to each employee. This filing is due by January 31, 2016. Therefore, this 4th quarter of 2015 is the time to get prepared. There are several options…

***Please note: This whole process is new and sounds worse than it really is. For example, your current health insurance carrier (i.e. All Savers, Cigna, Humana, etc.) will send you an Employee Enrollment Summary at the end of 2015. This report will list most of the information needed to populate the 1095-B form for each enrolled employee.

What are your options to take action? 

  • Do nothing and bury your head in the sand. (Not recommended. IRS fines of $250/$500 per employee)
  • Self-Service. You can fill in the employer information section of the 1095-B form and have each employee fill out their own 1095 form similar to a W-4, I-9, etc. Then you fill out the employer 1094-B transmittal & submit to the IRS by the end of February or March, depending on if filing electronically.
  • Interview your current payroll service or CPA as they may have a suggestion to populate these forms and can possibly help you electronically file with the IRS.
  • Outsource to a full-service solution capable of handling the 1095 reporting requirements. Such as Mosaic Employer Solutions, EaseCentral, BASIC, TASC, Payroll Vault or Benefit Comply.

Here’s the bottom line to ask yourself:

How are we going to populate & file the required 1094/1095 forms this January?

Remember, we’re here to help too.


Health Coverage: New IRS Guidance on Forms 1094 and 1095

The IRS has provided both new and updated Q&A guidance on the reporting requirements for applicable large employers under the federal tax code. As background, beginning in 2016, applicable large employers must file Forms 1094 and 1095 to provide information to the IRS and plan participants about health coverage provided in the prior year.

The forms are used by the IRS to enforce employer penalties according to the federal tax code, as well as individual mandate and tax credit eligibility rules. The latest guidance consists of an updated Q&A document covering basic reporting requirements and a new Q&A document addressing more specific issues that may arise while completing Forms 1094 and 1095.

Here are some highlights:

  • Clarifications on who must report. The guidance clarifies that an applicable large employer with no full-time employees for any month of the year is not obligated to report unless the employer sponsors a self-insured health plan in which any employee, spouse, or dependent is actually enrolled. In that case, it must still file Forms 1094-C and 1095-C even if it has no full-time employees. The guidance also confirms that an applicable large employer must file and provide Form 1095-C to all full-time employees regardless of whether they were offered coverage during the year.
  • Controlled groups. Examples show how reporting differs where an applicable large employer reports for separate divisions and where applicable large employers are part of a controlled group. In the former situation, employees working for multiple divisions must receive aggregated information on a single Form 1095-C. In the latter situation, employees will receive a separate Form 1095-C for full-time employment with each applicable large employer in the controlled group.
  • Qualifying offer method of reporting. The updated Q&As now address reporting under the qualifying offer method, which allows applicable large employers to furnish a simplified employee statement to employees receiving qualifying offers for all 12 months of the year. The Q&As emphasize that use of simplified statements is not available for employees who actually enroll in an applicable large employer’s self-insured health plan.
  • Note: No mention is made of the qualifying offer method transition relief available in 2015, which allows an applicable large employer to use a different simplified statement provided that it makes qualifying offers to at least 95% of its full-time employees.
    Delivery to employees. The guidance confirms that a Form 1095-C may be delivered to employees in any manner permitted for delivery of Form W-2, including hand-delivery. However, unlike Form W-2, employers need not furnish a midyear Form 1095-C upon an employee’s request following termination of employment.
  • New hires and terminating employees. When reporting offers of coverage on Part II of Form 1095-C, applicable large employers may indicate that an offer of coverage was made for a month only if the offer would have provided coverage for every day of the month. Therefore, applicable large employers should report on Form 1095-C that no coverage was offered in the month an employee was hired (unless an offer of coverage extended to every day of that month). Similarly, if a terminating employee’s coverage ends before the end of the month of termination, the applicable large employer must report that no coverage was offered for the month. (In each case, the applicable large employer may be able to avoid liability for employer penalties under the federal code, even though coverage was not offered for the full month.) In contrast, when reporting coverage information under Part III of Form 1095-C, an employee should be reported as having coverage if the employee is enrolled on any day of the month.
  • Note: The disparate treatment of partial months of coverage highlights the multiple purposes of Form 1095-C. Under the federal tax code, applicable large employers generally get credit for offering coverage for a month only if the offer applies to the full month — but an individual avoids the individual mandate penalty for a month by having coverage on any day of the month.
  • Third-party reporting. The guidance verifies that applicable large employers may designate third parties to perform reporting on their behalf. The new Q&As confirm that a governmental applicable large employer may designate another governmental entity to accept reporting responsibility on its behalf; they also explain the allocation of responsibilities under various combinations of self-insured and fully insured coverage options.
  • Reporting offers of COBRA coverage. New Q&As illustrate reporting under various COBRA scenarios. The guidance explains how sponsors of self-insured plans should report enrollment information for non-employee COBRA beneficiaries, such as former spouses. Qualified beneficiaries electing COBRA independently from the employee must receive separate forms, while those who have COBRA due to an employee’s election should be included on the same form that is provided to the employee. (As previously noted in the instructions to the final forms, reporting may be made on either Form 1095-B or 1095-C for individuals who were not employees at any time during the year.)
  • Several examples illustrate how an applicable large employer should complete Form 1095-C for full-time employees who receive a COBRA offer due to termination of employment or a reduction of hours. In general, a COBRA offer made due to termination of employment is reported as an offer of coverage only if the former employee enrolls in COBRA coverage and the employee’s cost of coverage reflects the COBRA premium for the lowest-cost, self-only coverage providing minimum value. In contrast, a COBRA offer made to an active employee due to a reduction of hours would be reported as an offer of coverage on Form 1095-C even if the employee declines COBRA coverage.
  • Note: Unfortunately, the example used to illustrate this final point does not extend more than 60 days after the loss of eligibility, so it is unclear whether the applicable large employer would still report that coverage is offered after the employee’s COBRA election period has ended.

With mandatory reporting starting in early 2016 (for 2015 coverage), understanding the complexities of the reporting requirements is critical. While some of the Q&As contained in this IRS guidance were previously addressed in the instructions to Forms 1094 and 1095, others provide helpful clarifications and new information. Employers subject to the reporting requirements should give careful attention to this and future guidance as the reporting deadline draws nearer.

BASIC ACA Elevate service options helps employers navigate three critical aspects of the Affordable Care Act (ACA). Our two solutions help you to determine your ACA classification status, manage employee hours for “Full-Time Equivalent” classification and complete the reporting requirements under section 6056. We provide two different service options to fit your company’s needs. ACA Elevate- Option 1 (Year-end Filing) provides year-end filing for those employers with simpler ACA reporting needs. Such as medical offices, banks, law firms and more. ACA Elevate- Option 2 (Monthly Tracking & Filing) is geared towards businesses that require monthly tracking along with year-end filing. Making it ideal for employers with multiple variable hour employees, such as restaurants, casinos, staffing agencies, and other companies with difficult measurement periods.


Self-Funding, Stop-Loss and Balanced Funding Offer Employers More Options

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If you employ a healthy workforce, your company has the chance to see lower health care costs thanks to self-funding and stop-loss insurance options. Previously only for larger employers, self-insurance now includes financial levers (called level-funding or balanced-funding plans) that help smaller companies translate low heath-claim risks into low health insurance costs.

Self-Funded Plans Grow in Popularity

Self-insurance plans were once reserved for the biggest companies, which were best suited to afford and manage the administrative responsibilities that come with self-insurance. In the traditional self-funding model, the employer paid all health care costs directly as the claims came in. Generally, these traditional plans included a stop-loss contingency in case one employee has a sudden and dramatic increase in care costs because of an expensive illness or accident.

Lately, however, companies of all sizes are joining the self-insured trend, according to Kaiser Family Foundation data. It’s more common now to see employers banding together to create a larger pool of employees for a self-insured health plan. For example, a chamber of commerce will often offer all its members a self-funded plan. It’s important to note, though, that not all employers will meet the criteria to gain access to these insurance options. Your employees will likely first go through a health evaluation, and if the risk of health claims is low enough, your entire workforce will become part of a plan that services a group of companies.

Managing the Risk

Stop-loss insurance is an integral part of self-insurance. Without it, the employer or employee group is fully liable for catastrophic, or high dollar, claims. One person could drive up health costs enough to strain the budget of the employer paying directly for the health claims. Stop-loss insurance acts as a means of putting a cap on that risk, ensuring you won’t go bankrupt from paying the claims for an unexpected health event. The general trend with stop-loss premium costs is the lower the cap, the higher the premium.

Balanced Funding Allows for Budgeting

Balanced funding, or level-funded, plans are a form of self-insurance specifically created for smaller employers. With the traditional self-funding plan, the employer couldn’t budget consistently — except for the stop-loss limit, there was no way for employers to predict the cost of health care each month. For small employers working with tight budgets, self-funding was too financially uncertain.

Level funding solves those budgetary concerns. With a set dollar amount each month (based on the number of employees), level-funding plans keep an ongoing tab of credits and debits for health care bills. If claims are less than the amount, a credit is issued at the end of the year, and if claims go over the amount, the stop-loss policy is implemented. Level funding therefore offers the risk prevention from stop-loss coverage while providing a stable, consistent payment throughout the year.

Level-funded plans, along with stop-loss insurance, offer a way for you to take control of health options and cut down on costs. Whether solely through your business or as part of a group of employers that implement a self-funded plan (with level funding, if desired), self-insurance is a viable business option that provides flexibility, potential savings and a low level of risk.

Written by Dylan Murray  |  April 7, 2015.  Published at Anthem’s “Making Healthcare Reform Work” blog.

Five myths about the ACA’s impact on small businesses

Owners of small and midsized businesses are striving to understand and comply with the broad set of new rules and changes required under the Affordable Care Act (ACA or health care reform law). This article dispels five common myths about the ACA for businesses with 51 to 100 employees. The Anthem blog is a very helpful resource for businesses of all sizes. Learning is good, right?

We wanted to share this particular blog article with you, the consummate professional wanting to stay updated.  The blog dispels many misconceptions employers may have about the ACA. We’ll also share this information with employers in our employer newsletter. But here are five common myths* some of your midsize group clients (51 to 100 employees) may need your help with to understand:

  • Myth #1: Our business is exempt from the Affordable Care Act’s employer mandate
    Companies with more than 100 full-time employees must provide health insurance to full-time workers starting this year. In 2016, your employer clients with 51 to 100 full-time workers also will have to provide coverage.
  • Myth #2: Most businesses of our size don’t provide health insurance today
    The ACA requires your midsize employer groups to change their existing coverage. But only a small percentage will be offering coverage for the first time. Read the blog for some statistics that prove this.
  • Myth #3: Even if we are penalized for not providing coverage, we can deduct the penalty on our income taxes
    Companies that fail to comply with the employer mandate are subject to a penalty. But the mandate is set up as ashared responsibility fee. This makes the penalty a tax that cannot be deducted for federal income tax purposes.
  • Myth #4: We can continue to offer a limited benefit or mini-med plan
    Limited benefit plans do not meet ACA rules, so any midsize group clients currently offering these types of plans will need to upgrade their coverage to meet the employer mandate.
  • Myth #5: We will have to buy our insurance from a government website
    The Small Business Health Options Program (SHOP) is the online health insurance marketplace, or exchange, for businesses. But let your clients know that using the exchange is optional. Employers can come to you at no extra cost and buy directly from an insurance company.

This article is excerpted from the Anthem Blue Cross Blue Shield blog for companies in Colorado. It’s a great resource and I would like to recommend you check out their site for more details about these common myths and more.


Updates for 2015…

Important HSA Info…
Are you enrolled on an HSA-qualified medical plan? Find out your contribution limits for 2015 here. When used properly, it’s a tremendous tax savings and a smart way to fund any eligible medical expenses. Check out the Top 20 Reasons to Open an HSA in 2015.

Qualifying Event questions…
What is a Qualifying “Life Change” Event related to employee benefit plans? It’s “simple”….just about anytime someone losses access to coverage or has one of these “Life Change” events from this list happen. In that scenario, the individual has generally 30 days to take action and enroll during that window of time. Here’s a great article from United Healthcare on qualifying life events.

Compliance Corner…
Is your health & wellness plan ready for a DOL audit? Department of Labor audits of employee benefit plans are on the rise and experts all recommend employers to get their compliance house in order prior to that impending knock on the door. Very exciting, right? Is that something you might want guidance with?

Are you familiar with the new IRS Employer Reporting forms for 2015 & 2016?

More importantly, is your CPA (IRS Sections 6056/6055), payroll provider and/or benefit broker up-to-date and informed on these requirements?

Feel free to give us a call and we can walk you through the details. Here’s the Reader’s Digest version:

  • If less than 50 employees & offering a “fully insured” group plan, then your carrier will issue the required 1095 form to your employees and there’s very little you’ll need to do.
  • 50 or more full-time equivalent employees will need to file an annual information return reporting. In addition, Applicable Large Employers (ALE) are subject to the Employer Shared Responsibility provisions.
  • Regardless of size, all employers that provide self-insured health coverage to their employees must file an annual return reporting certain information for each employee they cover.

Here’s an article from the Wall Street Journal & Anthem on the matter. The good news is there’s plenty of time and the CPA community will now have time to get updated with the 2014 tax season mostly in the books.