PPACA-Important Update: Exchange Notification Delayed

The Affordable Care Act requires employers to notify their employees of the existence of health benefits exchanges. That notification requirement was to be fulfilled by March 1, 2013.

The notification date has been postponed.   A new date most likely in late summer or early fall will be announced.  The goal is to coincide with open enrollment on the Exchanges, which begins Oct. 1, 2013 (for a Jan. 1, 2014 effective date.)

Two reasons were cited for this delay:

1.  To coordinate with educational efforts and guidance on minimum value (the rule that employer-sponsored coverage must be affordable and cover at least 60% of services).

2.  To provide employers with sufficient time to comply.

When published, the notification must inform the employee of the existence of the Exchanges, including a description of the services provided by the Exchanges and the manner in which the employee may contact the Exchanges to request assistance.  In addition, the notification must convey the availability of premium tax credit to the employee if the employer’s plan doesn’t cover 60% of services and the employee purchases coverage through the Exchanges.  The employee may lose the employer contribution (if any) toward the cost of health benefits if the employee purchases coverage through the Exchanges.

BCN will work with you on Department of Labor and HHS requirements and provide the necessary notices needed for your Plans.  Please contact us at 1-800-891-9911 or or contact us by clicking here.

 

SueKester_6669

 

Sue Kester, HR Manager

Determining Independent Contractor status must include a review of the whole

Independent Contractors (employees who receive 1099s) are a topic that much is written about, but still there is a great deal of confusion in the workplace.

Part of the problem is that everyone would like a simple question or checklist that clearly states “this is an employee” or “this is an independent contractor.”  In fact, the Internal Revenue Service had such a test, commonly known as the “20-Factor Test” and most Human Resource departments and companies referred to this test to help make their decision of choosing employee or 1099 independent.

After years of arguments about use of the test, the Supreme Court has ruled that there is no definition that solves all problems relating to the employer-employee relationship under the Fair Labor Standards Act (FLSA).  The Court also said that determination of the relationship cannot be based upon isolated factors or a single characteristic, but depends upon the circumstances of the whole situation.

This didn’t make things any clearer, so under pressure from Congress and representatives of labor and business, the IRS has attempted to clarify and simplify the test.  The result is guidance based upon 11 main tests that are organized into three groups:  Behavioral Control, Financial Control, and the Type of Relationship between the parties.

Along with these guidelines, we have seen an increase in both investigation and enforcement of companies using Independent Contractors.

Below are brief summaries of the three groups and questions you should ask;

  • Behavioral Control –This includes instructions the business gives the worker.  Do you provide instructions about when, where or how to do the work?
  • Financial Control – How do you pay the worker?  Who sets the pay?  Are they reimbursed for expenses?  What is the extent of the worker’s investment?
  • Type of Relationship – What is the permanency of the relationship?  What is the extent to which services performed by the worker are a key aspect of the regular business of the company?  Are there contracts created by both parties?

A word of warning:  while researching this topic I have seen the following mentioned several times in IRS publications: “Do not underestimate the difficulty of applying these standards to specific individuals performing services.”

For more detail, including the complete tests with all questions, or if you have concerns about your use of Independent Contractors, contact BCN Services for an in-depth review and discussion.  Please contact us at 1-800-891-9911 or contact us by clicking here.

 

 

Rick Dyer (200x193)

Rick Dyer, Vice President of Sales

Considerable benefit: Employers weigh how much to contribute to 401(k) plans

At this time of year, many employers are considering non-discretionary profit-sharing contributions to employee 401(k) accounts.

These are defined contribution plans allowing additional compensation to all eligible employees in the form of an employer 401(k) contribution.  An employer may decide each year whether there will be a contribution and, if so, how much will be contributed (out of company profits or other assests).

An employer’s contributions to the profit-sharing plan are generally tax deductible on a business’- federal income tax return for the year in which they are made.

Once a total contribution amount for the profit sharing contribution has been designated, your plan administrator (BCN uses Slavic Investments) will assist the employer in selecting a method of profit-sharing.  There are three commonly used contribution formulas:

  1. Traditional Method – Each 401(k) participant receives a proportional allocation based on eligible compensation.
  2. Age-Weighted Allocation Method – Allows the employer to allocate a contribution based on the compensation and age of eligible employees.  This method greatly benefits participants that are older and closer to retirement.
  3. New Comparability Allocation Method – Allows the employer to divide the employees into specific groups and allocate the contribution differently to each group (compliance testing is required).

BCN Services has experts to help you set up a 401(k) and handle other human resources needs for your business.  If you have questions or are interested in learning more about 401(k) profit sharing, please contact us at 1-800-891-9911 or contact us by clicking here.

 

 

AliciaFreeman_6679

Alicia Jester, Manager-Benefits and Payroll

Michigan’s Workers’ Compensation Law is Changing How Injuries are Handled

The 2011 changes in Michigan’s workers’ compensation law approved by Michigan Gov. Rick Snyder began to take hold in 2012.  These updates to the law were intended to bring clarity to the statute in several areas and attract and keep business in Michigan.  Let’s highlight just four substantial revisions here.

  1. Time extended for directing injured employee’s medical care: One significant change allows employers to direct the medical care of an injured employee during the first 28 days of an injury or disease.  Previously, the employer had 10 days to direct the care.  Directing post-injury care is vital to providing quality treatment and keeping costs reasonable.  Whenever possible, occupational medical facilities are the best choice for care and treatment of employees.  These facilities understand the dynamics of a work-related disability and prompt recovery.The key to putting the treatment on solid footing is ensuring a positive experience for the employee while offering needed treatment after an injury whether your employee receives a couple of stitches or strains a shoulder.  Although they provide vital medical care, emergency rooms, urgent care clinics and family physicians are not as adept in handling worker injuries and should not be a first choice unless the severity of the injury warrants it or no other alternative is available.
  2. Pre-existing medical condition definition clarified: Prior to the 2011 changes, a pre-existing medical condition often extended the duration of a worker’s compensation claim as it was difficult to distinguish between a work-related disability and the pre-existing condition itself.  A second change in the statutory language clarifies that a pre-existing condition is not payable under workers’ compensation unless there has been a change in the pathology of the pre-existing condition caused by a work injury.
  3. Such conditions must “significantly change” or are not covered: A degenerative arthritis located in the back area can be a pre-existing condition.  When a worker having degenerative arthritis sustains a back injury, that condition can complicate and extend treatment and recovery, keeping an employee off the job if not addressed early.  A third change in the statutory language specifies that degenerative arthritis is part of the aging process and would be considered work related if the injury aggravates or accelerates the degenerative arthritis in a significant manner. If the pre-existing condition has not changed in a significant manner, it is not workers’ comp.  Physicians should be asked more often and more proactively to medically distinguish between the “pre existing condition” and the worker’s injury.  This change is expected to limit the duration of many claims, particularly as our population ages.
  4. Mental disability language strengthened:  A fourth change brings further clarity and stability to the overall system regarding mental disabilities.  These are work related if they arise out of actual events of employment, not unfounded perceptions.  The new law states that the “the employee’s perception of actual events” must be “reasonably grounded in fact or reality.”

These are but a few of the statutory changes intended to modernize and provide greater efficiency in the workers’ compensation system in Michigan.  While the Dec.19, 2011 law signed by Gov. Snyder is barely one year old, the system is already experiencing greater discipline and proactive management when it comes to claims handling.

At BCN Services, we manage day-to-day items such as Workers’ Compensation claims and offer employers up-to-date advice about changes in the law.  Contact us for solutions to your human resources management needs toll-free at 1-800-891-9911 or in southeast Michigan at 1-734-994-4100 or contact us by clicking here.  Let BCN handle that!

 

PatrickBoeheim_6705

 

Patrick Boeheim, Risk Manager