A Win-Win: Add Value to Your Employee Benefits With Life and Disability

From ChamberChoice and Smart Business Pittsburgh

Accident and tragedy are two things no employer wants to see for employees.

“Disability products and life insurance give employees peace of mind, knowing they have financial support in the event of unforeseen circumstances,” says Chuck Whitford, consultant at JRG Advisors. “They also give employers peace of mind in knowing that they help protect their employees. Ancillary benefits can even help businesses recruit and retain the best employees.”

Smart Business spoke with Whitford about how life insurance and disability coverage benefits employers and their employees.

Why should employers consider getting a disability plan?
According to the Council for Disability Awareness, every 7 seconds someone in the U.S. suffers an illness, injury or accident that will keep them out of work for more than one month. For individuals out of work for three months or more, the average time off of work due to a disability averages 2.6 years. That’s 136 weeks without a paycheck.

The cost of implementing a long-term disability plan is relatively small. For most business owners, the problem escalates as the owner tries to satisfy the current work demand and take care of the disabled employee. Providing long-term disability coverage is also valuable to employees — buying coverage on their own can cost as much as an entire group account because of stringent underwriting. Plus, the program can be structured so that the premiums are deducted as a business expense, but benefits can be received on an income tax-free basis.

What’s the difference between short-term and long-term disability?
Short-term disability fills the gap between day one of disability and when the long-term benefits kick in. Typically, a short-term disability contract covers the first 13 or 26 weeks of disability. Unfortunately, many people live paycheck to paycheck. Short-term disability can benefit those lacking sufficient savings.

Long-term disability is usually fully insured, with the exception of extremely large employers that self-fund the benefit. For most employers, the cost is determined by employee demographics and industry classification. Claims experience isn’t a significant factor. Long-term disability pays a portion of the disabled employee’s income after he or she runs out of both sick leave and short-term disability benefits, typically after 90 to 180 days. Depending on the plan design and how the policy defines disability, it may pay a monthly benefit for a specific number of years, such as two years or until normal retirement age under Social Security.

However, an employer shouldn’t administer its short-term disability program. Most employers aren’t equipped to assess when an employee is unable to perform his or her own job or when he or she is able to return, and employers are estimated to pay out 30 percent more in benefits than if the plan was managed by a claims professional. It is possible to outsource the claim adjudication process to a qualified third party, often referred to as ‘advise to pay.’

How has life insurance changed and why is this coverage important?
A recent study found nearly 70 percent of U.S. workers, across all generations, believe having a life insurance benefit available at work is important. This importance has grown over the past five years, an increase of 22 percent. For many, it is the only life insurance they own. Group life insurance can fill gaps in coverage and the purchasing power of a large group helps keep the coverage affordable for the employer.

Sixty-five percent of employees with group life coverage believe they need more life insurance beyond what their employer provides. Depending on the plan design and type and amount of coverage elected, employees may be able to buy additional life insurance without answering health questions. Some plans allow employees to purchase coverage on a spouse and/or dependent children. Buying life insurance at work is convenient because premiums can be paid through payroll deduction. When they leave the employer, people typically can choose to maintain coverage, paying premiums to the insurance company.

Employers that don’t have group life or group disability should meet with their insurance consultant. They most likely will be surprised by the relative low cost involved in establishing a program that can provide additional value to their employees.

Susquehanna Nuclear Power Plant Continues Focus on Safety and Efficiency

Tim Rausch, Senior Vice President and Chief Nuclear Officer of Talen Energy

The Susquehanna Nuclear Power Plant located in Salem Township is on track to generate more power in 2017 than in any other year in its 35-year history, according to Tim Rausch, Senior Vice President and Chief Nuclear Officer of Talen Energy. While nuclear plants across the country have been shutting down in recent years due to low energy pricing, the Susquehanna station has been improving operational efficiencies to remain competitive. Rausch’s comments were made to local elected officials and representatives of the business community at a recent meeting.

In late September, Energy Secretary Rick Perry directed the Federal Energy Regulatory Commission (FERC) to “issue a final rule requiring its organized markets to develop and implement market rules that accurately price generation resources necessary to maintain the reliability and resiliency of our nation’s power system.” The construction of natural gas power plants combined with federal subsidies for the development of wind and solar power generation has resulted in lower energy prices that threaten the viability of traditional fossil fuel and nuclear power plants. Shuttering these plants could put the nation’s base power supply at risk. Mr. Rausch noted that Talen Energy is interested in a level playing field to ensure fair competition. He does not expect to see any changes in the immediate future.

When Talen Energy became a privately-held corporation in December of 2016, Rausch noted that Team Susquehanna remained committed to the safety and health of the community. In addition to dozens of emergency preparedness drills conducted in 2017, the annual refueling was completed last on time and on budget with no injuries .

House State Government Committee Advances Paycheck Protection Legislation

From PA Chamber of Business & Industry

In late November, the House State Government Committee held a voting meeting where two bills were advanced to the House floor that would bar public employers from using taxpayer-funded public systems to automatically deduct from employees’ paychecks campaign contributions or any portion of union dues intended for political activity.

House Bill 1174 and Senate Bill 166 (which passed the Senate earlier this year) both cleared the committee on a party-line vote, with Democrats voting in the negative. Commonly referred to as “paycheck protection” legislation, such measures have been introduced and hotly debated in previous sessions. The organized labor community has strongly opposed any change to the status quo while other groups have advocated ensuring that government resources aren’t being used for political purposes.

The PA Chamber supports paycheck protection bills as good government measures; and previously observed that arrests and convictions of several lawmakers and staffers in recent years have shown that a clear line must be maintained to avoid any use of taxpayer resources for political activity.

Both bills now await further consideration by the full House.

Tax Reform Plan Expected to Save Middle Class Taxpayers

Congressman Lou Barletta speaks to members of the Columbia Montour Chamber at a breakfast in October.

The average person in Pennsylvania will save over $2,000 annually on their taxes with the passage of a tax reform plan being ironed out between the House and the Senate, according to Congressman Lou Barletta. When Barletta spoke to Chamber members in October, he pledged that any tax reform plan would have to benefit the middle class. Following the passage of a House plan in mid-November, the Senate plan passed along party lines in the early morning of Saturday, Dec. 2. The bill now goes to a conference committee to work out the differences between the plans with a goal of having a final version to President Trump by Christmas.

Here is a full article on the passage of the Senate bill and the path forward from the Harrisburg Patriot News.

IRS Releases Final 2017 Forms for 1094 and 1095 Reporting

From ChamberChoice

Employers are continually being reminded that the Affordable Care Act (ACA) is still intact and remains the law of the land. Final 2017 forms and instructions for reporting information to the IRS to assist with the enforcement of the individual and employer mandates under the ACA have been released by the IRS. This release serves as another reminder that employers should continue to comply with the ACA based on current guidance.

As a summary, Internal Revenue Code (IRC) section 6056 requires applicable large employer members to report to the IRS about offers of, and enrollment in, health coverage for their full-time employees. The 1095-C form assists the IRS in determining an ALE’s compliance with the employer mandate and the eligibility of employees for the premium tax credit.

Under IRC section 6055 employers and insurers providing minimum essential coverage (MEC) are subject to reporting requirements which assist the IRS with enforcement of the individual mandate.

Reporting Deadline

The deadline for furnishing the reports to employees/covered individuals is Jan. 31, 2018. The transmitting of information to the IRS is Feb. 28, 2018 for those filing paper copies of the reports. Electronic filers (those filing 250 or more forms, or electing to file electronically) must meet the reporting deadline by April 2, 2018, since the regular filing date of March 31 falls on a Saturday. These are the deadlines regardless of whether an employer’s plan is a fiscal or calendar plan year.

Minimal Form Changes

The 2017 final forms and instructions show minimal modifications and include the following:

• As transition relief is no longer available for ALEs in 2017, relief reference has been removed from Form 1094-C. 
• Provided a safe harbor for de minimis errors when reporting the amount of an employee’s required contribution. If the amount reported is off by $100 or less, a corrected 1095-C is not required to avoid penalties, if the employer qualifies for use of the safe harbor.
• Noted that for 2017 reporting the “Plan Start Month” on Form 1095-C remains optional.
• Confirmed that a Series 2 code is not available for reporting an employee’s non-enrollment in health care coverage or waiving offered coverage on line 16 of Form 1095-C.
• Noted that there is no “good-faith compliance relief” in the instructions and provided the 2017 adjusted penalty amounts unless a waiver for reasonable cause is granted.
• Reminded that paper returns must be provided in landscape format.

The final forms and instructions can be found at the following links:
Final 2017 1095-C Form
Final 2017 1094-C Form
Final instructions for both forms

Final 2017 Form 1094-B
Final 2017 Form 1095-B
Final instructions for both forms

Employers should familiarize themselves with the final forms as they being to plan for any 2017 reporting requirements. If using a vendor to assist with the forms, conversations should be conducted to see if any system requirements have changed and any responsibilities the employer may have for gathering and clarifying information. If an employer anticipates not being able to meet its requirement to provide the forms to full-time employees by Jan. 31, then it should consider filing for an extension which is not automatically granted.