Mid-Year Compliance Review

From ChamberChoice

Late June begins the start of summer and thoughts turn to those lazy-hazy days of just relaxing. When it comes to the matter of compliance though, 2017 is not the time to “just kick back” and see what happens. In July, many employers will start to review their past compliance efforts and begin to look forward to the new employee benefit plan year. The following discusses some of the issues that employers should continue to monitor for the rest of the year.

 

Affordable Care Act

Under the Affordable Care Act (ACA) an Applicable Large Employer (ALE) is required to offer minimum essential coverage that is affordable and provides minimum value. Known as the employer mandate, an employer could be penalized if the employer fails to offer any coverage – whether “affordable” or not – to at least 95% of its full-time employees, (and their dependents) and at least one full-time employee enrolls in subsidized coverage on the Exchange. The penalty for 2017 is $2,260 (annualized) or $183.33 monthly multiplied for every full-time employee in the employer’s company, reduced by the first thirty full-time employees.

On the other hand, if an ALE does offer coverage to at least 95% of its full-time employees (and dependents), but the coverage is not affordable, then the employer will be subject to a penalty of $3,390 (annualized) or $282.50 monthly multiplied by just the number of those specific full-time employees to whom affordable coverage was not offered and who are receiving subsidized coverage on the Exchange during that month.

The affordability percentage is indexed and, as such, has gradually increased reaching 9.69% in 2017. However, 2018’s limit will decrease to 9.56%.

To assist with the enforcement of the employer mandate, ALEs are required to report offers of health coverage and enrollment in health coverage for their employees. Forms 1094-C and 1095-C are used by ALEs to report this information to the IRS. The “C” forms assist the IRS in determining an ALE’s compliance with the employer mandate and the eligibility of employees for the premium tax credit.

Upon the inauguration of President Trump and his signing of two Executive Orders, many employers erroneously believe that the ACA is no longer applicable. The IRS has given no indication that it is planning to not enforce the employer mandate, so an employer should proceed as if penalties for noncompliance will be issued.

The ACA is still in effect and actions need to be taken accordingly. Unless and until any legislation is finalized, stay the current course, and continue to comply with ACA employer mandate and reporting requirements as if nothing has changed.

To that end, employers should review their compliance with the Affordable Care Act:
• Determine whether the employer is or is not an Applicable Large Employer by reviewing to see if they had 50 or more full-time or full-time equivalent employees in 2016.
• If an ALE, ensure that in 2017 affordable, minimum value coverage is being offered to full-time employees and dependents (a full-time employee is one who works on average 30 hours a week).
• Continue to gather data as to what full-time employees have been offered coverage, accepted or waived it and whether coverage was affordable for the purpose of 1095-C and 1094- C reporting.

As a final note, in late June the Senate proposed its efforts to repeal and replace significant provisions of the Affordable Care Act, released a draft of the Better Care Reconciliation Act of 2017 (BCRA). Although the BCRA does not repeal the individual and employer mandate, they would be effectively eliminated by making the penalties $0 for tax years starting after December 31, 2015. But as already noted, until there is a new Act in place the ACA remains effective.

 

Equal Employment Opportunity Commission (EEOC)

EEO-1 Report
The EEOC collects workforce data from all employers with 100 or more employees through an annual EEO-1 Report. The report, in its current form, collects data about gender, race, and ethnicity of employees by 10 different job groupings. In 2016 the EEOC revised the form in order to begin requiring employers to provide employee pay data.

This new information must be provided in the 2017 form, and to give employers time to collect that data, the deadline for 2017 will be extended by six months to March 31, 2018.

The EEOC’s goal in gathering this additional data is to identify businesses that may have pay gaps, and then target those employers who are discriminating on the account of gender—and possibly race or ethnicity—through enforcement actions. The EEOC plans to publish reports using aggregated data and to train its investigators to identify potential indicators of discrimination warranting additional investigation.

Thus, it would be in the best interest of those applicable employers to take the following action steps:
• Review pay practices to address and correct any areas of pay disparity based on gender or race/ethnicity before reporting to the EEOC;
• Review and if necessary revise job descriptions in order to determine which of the EEO-1 job categories each position should be reported under;
• Consider any time requirements and costs for data collection in order to generate the necessary reports; and
• Ensure proper understanding of how employees earn overtimes, bonuses, commissions and other W-2 box 1 wages.

Wellness Programs
Generally a “wellness program” refers to a program or activity to encourage employees to improve their health, thereby reducing overall healthcare costs. Programs run the spectrum of encouraging healthier lifestyles, such as exercising daily or stop smoking to obtaining medical information through the completion of health risk assessments or screenings for health risk factors. Financial incentives generally are offered to employees who participate or achieve certain health outcomes.

In 2016, the Equal Employment Opportunity Commission (EEOC) issued final rules applicable to employer-sponsored wellness programs as they relate to the American with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). These final rules are applicable to employer plan years beginning on or after January 1, 2017.

Besides the ADA and GINA, employer-sponsored wellness programs can be subject to other federal laws, including the Employee Retirement Income Security Act (ERISA) and the Health Insurance Portability and Accountability Act (HIPAA). It should be noted that compliance with one law does not guarantee compliance with other laws.

Any wellness program that includes a disability-related inquiry and/or medical exam is subject to this rule. The ADA rule provides the extent to which an employer may use incentives to encourage participation in wellness programs that require a response to a disability related inquiry or to undergo a medical examination. These inquiries or medical examinations include medical questionnaires, health risk assessments (HRAs), and biometric screenings. The incentive limits imposed by the ADA final rule are applicable to all wellness programs regardless of whether offered only to employees enrolled in the employer sponsored health plan, all employees regardless of enrollment in the group health plan, or offered as a stand-alone benefit without any group health plan coverage.

An employer’s wellness program is required to be voluntary. Voluntary means an employer cannot:
• Require an employee to participate in the program;
• Deny coverage under the employer’s group health plan or limit coverage under the plan for employees not participating in the wellness program; and
• Take any adverse action, retaliate against, or coerce employees who choose not to participant.

The regulations provide a notice requirement to employees and guidelines on incentive limitations under both the ADA and GINA, and were effective for plan years beginning on or after January 1, 2017.

Employers should take the time to review their benefit programs and identify any wellness program it may be offering in 2017. It could be an employer is inadvertently offering a wellness program that is included as part of a benefits option offered by its insurer. Thus, employers should take the following into consideration:
• Is the wellness program reasonably designed to promote health or prevent disease?
• Are employees required to answer any disability related questions or have medical examinations to which the ADA would apply?
• Is it ensured that participation in any wellness program is voluntary?
• Has the confidentiality of any medical condition or history information been maintained?
• Do provided incentives meet the limitations imposed by the ADA, GINA and HIPAA?
• Are reasonable accommodations being offered to disabled employees as to participation in any wellness program?
• Does any smoking cessation program require testing, such that it comes within the EEOC limitations for incentives?

 

JRG Advisors, which manages the ChamberChoice program, is available on a consultative basis to help assist Chamber members with compliance related issues. For more information, call 1-800-377-3539. 

 

Montour County Readdressing Update

The first round of readdressing notifications for the Danville zip code were mailed the week of July 3, one week later than previously expected. The second round is anticipated for the week of July 24, pending final approval by the U.S. Postal Service. All properties in Montour County as well as Rush Township and Riverside Borough in Northumberland County will receive address confirmation information. Information on the process is available at montourco.org. Specific questions can be directed to the Columbia County GIS office at 570-387-4930.

Legislature Passes Budget Without Funding

From PA Chamber of Business & Industry

House and Senate lawmakers finalized the state General Appropriations bill (H.B. 218) and sent it to Gov. Tom Wolf’s desk on the constitutional deadline of June 30, just one day before the 2017-18 Fiscal Year began. House Bill 218 spends about two-tenths of one percent more than was spent in 2016-17. Notable components of the deal include a $100 million increase in basic education funding, with $8.8 million extra going to schools under the State System of Higher Education and state-related schools being flat-funded over the prior year; and a funding cut to the Department of Labor and industry of 13.3 percent (with a total spend of $10.5 million). Despite getting the General Appropriations bill completed, lawmakers will reconvene later this week after the 4th of July holiday to pass a number of bills related to the budget – including the Fiscal Code bill that will spell out how money should be appropriated across state departments.

This week (lawmakers are projected to come back on Thursday), conversations will focus on where new revenue to close a $1.5 billion shortfall in the new fiscal year and about $700 million in new money to cover new spending for 2017-18 would come from. Options include gaming expansion, borrowing against future revenue from the Tobacco Settlement Fund or a combination of both. Broad-based tax increases remained off the table, and the idea of placing another tax on the state’s natural gas industry also appeared to be a non-starter. With disagreement between the House and Senate on the gaming bill, borrowing appears to be a likely scenario. Last week, the governor referred to the state’s cash shortfall as “a onetime gap,” adding that he was open to agreeing to a borrowing plan as long as Republicans could determine new recurring revenues from other sources that would help to avoid future deficits. “For that one time, I’m comfortable,” Wolf said, though he declined to give a firm dollar amount.

Governor Wolf has until July 10 to take action on the bill.

New Addresses in Montour County Expected to Roll Out in Early July

Montour County has implemented a readdressing project for Montour County, Riverside Borough, and Rush Township, based on a consistent county-wide addressing scheme. This project is almost complete, and it has been done to allow for faster emergency response by fire, police, rescue, medical and any other emergency services and also to name streets with conflicting or duplicate names in order to provide more efficient emergency services.

New address notifications began to be rolled out on June 30. Some businesses and residents in Danville Borough will begin receiving their new address information early during the week of July 3. The second round of notifications will be sent on July 14 to the other half of Danville Borough and outlying townships. The post office will deliver to both old and new addresses for up to one year. For more, please call 570-387-4930 or visit montourco.org.

The Chamber expects to receive the updated address information once it is finalized and will be working to update member information on the website and for the 2017-18 Membership Directory. Members that already have that information are asked to provide it to the Chamber at pjones@columbiamontourchamber.com.

Thanks to the Danville Business Alliance for providing this update.

Last Week of State Fiscal Year Focuses on Gaming Discussions, Other Unknowns

From PA Chamber of Business & Industry

With only a few days left in the 2016-17 Fiscal Year, lawmakers are scheduled to be in session through June 30, the state’s constitutional budget deadline. More session days may be scheduled as necessary.

Legislative leaders remain engaged in conversations over what the next year’s budget plan will look like, and details are scarce. There continue to be questions over what the Senate’s version of H.B. 271 – the gaming expansion bill – will contain, and based on a conversation that Senate President Pro Tempore Joe Scarnati, R-Jefferson, had last week with Capitolwire, they are a long way off in reaching agreement. “My experience with gaming in the Senate Republican caucus I can boil down real simply,” Scarnati told the media outlet. “We have a third of the members of the Senate Republican caucus that are opposed to gaming because they oppose gaming. We have a third of them that have gaming interests in their district so they are somewhat not in favor of competition for casinos. We’ve got a third of the members in the caucus that, you know, could be influenced possibly one way or the other to vote for something. But there is no strong consensus. And when you start out with two-thirds of your caucus that principally are either against it or certainly economically opposed to something, it’s difficult. That’s why we’re where we are at.” Meanwhile, the House remains ready to go “all in” on gaming expansion as a way to generate up to $270 million in annual recurring revenue, with its version of the bill containing sweeping changes and allowing for video gaming terminals in bars, taverns and the like.

There are also said to be conversations about other forms of revenue to fill a $1.2 billion budget hole in the coming Fiscal Year, including borrowing and/or using money from the state’s share of the nationwide Tobacco Settlement Fund. In speaking with reporters last week, the governor didn’t outright oppose these ideas, but voiced concerns. The Associated Press has said that while Wolf is counting on an extra $250 million in money from new forms of gaming, the Department of Revenue has said doing so could lead to losses from the Pennsylvania Lottery and at casinos. “I want real revenue, and I want net revenue,'” Wolf told the press. “I don’t want anything that we do in gaming or gambling to interfere with the revenues that are already in place. If it just cannibalizes and takes from one bucket called gambling to another, the commonwealth isn’t doing anything more than it has in the past.”