Tag Archives: Business hiring strategies

IRS Fact Sheet: Determining Large Employer Status

Fact Sheet Includes Examples and Additional Resources

A fact sheet from the IRS helps employers determine, based on their size, whether the ACA’s employer shared responsibility (“pay or play”) and information reporting provisions apply to their company.

The fact sheet includes basic information on determining large employer status, along with information on:

  • Determining the number of full-time and full-time equivalent employees
  • Large employer determination examples
  • Employer aggregation rules
  • The exception for seasonal workers
  • New employers
  • 2015 transition relief for determining workforce size

More information about determining large employer status can be found here.

Visit our Pay or Play section for additional details.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Insurance Companies at The Capital to Lobby

Health insurance companies will descend on the state capital today for two days of lobbying—and might need both of them to explain the bill at the top of their agenda.

The measure would allow businesses with 51 to 100 employees to continue purchasing stop-loss insurance next year. It’s sure to trigger a lot of quizzical looks from lawmakers, and the following questions:

Who’s taking away midsize companies’ ability to buy stop-loss policies? And why?

For that matter, what is stop-loss insurance?

For the answers, the Insider turned to Patrick Gillespie, director of state government affairs for Cigna, one of the insurers that sells stop-loss policies in New York. He could probably talk about stop-loss for weeks, were anyone inclined to listen that long. Fear not—the Insider boiled the explanations he gave during a 40-minute phone interview into a ready-to-eat meal.

The big picture: Stop-loss insurance protects employers who self-fund—that is, pay their workers’ health-care bills directly, rather than cover them through a traditional insurance policy. Self-funding can save companies money, but can destroy them if one or more employees racks up extraordinarily high medical bills. A stop-loss policy kicks in if that happens, limiting what they’ll have to pay in any given year.

If the legislature doesn’t pass (and Gov. Andrew Cuomo doesn’t sign) S.2366 and A.1154 this year, on Jan. 1, about 1,700 businesses with nearly 130,000 employees will stop self-funding because they—along with about 9,300 other midsize firms—will lose their legal right to buy stop-loss policies.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary


Wellness Programs at Work Clarified

Federal regulators Thursday proposed limits on how employers use financial penalties and rewards to nudge staff to participate in fast-growing workplace wellness programs.

The Equal Employment Opportunity Commission — which enforces laws against discrimination — said Thursday that employers can use financial incentives up to 30 percent of the cost of premiums for single coverage, provided certain other safeguards are met.

Business groups and advocates for people with disabilities are closely watching the issue. Workplace programs that encourage workers to lose weight, quit smoking, get active and better manage stress are spreading throughout American businesses. Employers look for ways to cut costs associated with chronic illnesses, which are often tied to lifestyle.

The 30-percent standard was set in President Barack Obama’s health care overhaul law.

For example, if the total premium paid by the employer and employee for single coverage is $5,000, rewards or penalties for participating in a wellness program under that plan cannot exceed $1,500.

After the health care overhaul passed in 2010, questions arose about potential conflicts with the Americans with Disabilities Act, or ADA, which dates back to 1990 and protects people with chronic conditions against workplace discrimination. That law says wellness programs have to be voluntary.

The employment commission is trying to balance how the two laws can work together.

The proposed regulation says that wellness programs are permitted under the ADA, but employers cannot use them to discriminate based on a worker’s disability. Many wellness programs require employees to complete a health risk assessment questionnaire, and talk the results over with a counselor. Some require employees to take specific actions, such as losing weight or getting blood pressure down to recommended levels.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Shopping Limited Networks to Save Money

In all the turmoil in health care, one surprising truth is emerging: Consumers seem increasingly comfortable trading a greater choice of hospitals or doctors for a health plan that costs significantly less money.

“Are they willing to trade choice and access for price? There’s no question about that,” said Mark Newton, the chief executive of Swedish Covenant Hospital, a Chicago hospital that recently teamed with an Illinois insurer, Land of Lincoln Health, to offer a health plan.

This year, nearly half of the plans offered on public health care exchanges are so-called narrow network options, which sharply limit the medical providers whose services will be covered, new data shows. Furthermore, nearly a fifth are considered “ultranarrow networks,” which offer even fewer choices. At the same time, more employers are also embracing the plans for their workers, largely as a way to lower health care costs.

The data, gathered by the McKinsey Center for U.S. Health System Reform, is significant, given early criticism from some providers and patients who reacted to these plans last year by arguing they were like the overly restrictive health maintenance organizations, or H.M.O.s, of the 1990s, which were ultimately rejected by consumers.

The financial strategy is relatively simple. Insurers say one way to lower the price of a plan is to limit the number of hospitals and doctors in their networks. They can then ask providers to discount their prices in return for a potentially higher volume of patients; some also say they are trying to pick a select group that provides better care.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

FMLA Definition of ‘Spouse’ Under Final Rule

Effective March 27, 2015, a final rule from the U.S. Department of Labor will extend the protections of the federal Family and Medical Leave Act (FMLA) to all eligible employees in legal same-sex marriages, regardless of where they live.

Under the FMLA, an eligible employee of a covered employer (50 or more employees in at least 20 workweeks in the current or preceding calendar year) is entitled to take unpaid, job-protected leave for specified family and medical reasons, including to care for the employee’s spouse who has a serious health condition.

The U.S. Supreme Court’s decision in United States v. Windsor struck down the federal Defense of Marriage Act provision that interpreted “marriage” and “spouse” to be limited to opposite-sex marriage for purposes of federal law. In response, the DOL revised its agency guidance, effective as of June 26, 2013, to clarify the definition of “spouse,” for purposes of the FMLA, to mean a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including “common law” marriage and same-sex marriage.

Final Rule
Consistent with previously issued proposed rules, the final rule includes the following major features:

  • The FMLA regulatory definition of “spouse” is based on the law of the place where the marriage was entered into, sometimes referred to as the “place of celebration” (currently, the regulatory definition of “spouse” only applies to same-sex spouses who reside in a state that recognizes same-sex marriage, referred to as the “state of residence” rule).
  • The final rule’s definition of “spouse” expressly includes individuals in lawfully recognized same-sex and common law marriages, as well as same-sex marriages entered into abroad that could have been entered into in at least one state.

This definitional change means that eligible employees, regardless of where they live, will be able to:

  • Take FMLA leave to care for their lawfully married same-sex spouse with a serious health condition;
  • Take qualifying exigency leave due to their lawfully married same-sex spouse’s covered military service;
  • Take military caregiver leave for their lawfully married same-sex spouse; or
  • Take FMLA leave to care for their stepchild (child of the employee’s same-sex spouse) or stepparent who is a same-sex spouse of the employee’s parent, even if certain in loco parent is requirements are not met.

More information is available on the DOL’s FMLA Final Rule Website, which includes links to the DOL’s fact sheet and frequently asked questions.

For additional information about the eligibility requirements and qualifying reasons for FMLA leave, visit our section on the Family and Medical Leave Act.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

2015: The Year of Voluntary Benefits

Sales of voluntary products across the board will likely see a nice bump in 2015, as employers finalize their health care decisions and the War on Talent begins to heat back up.

“Employers have had time to recover from the recession, and they’ve analyzed how the [Patient Protection and Affordable Care Act] is going to impact them, so now they’re more willing to look at their overall benefit package,” says Bonnie Brazzell, vice president of Eastbridge Consulting Group Inc. in Avon, Connecticut.

Indeed, according to a recent Eastbridge survey, 14 percent of respondents said they were thinking about adding a new voluntary benefit. Moreover, 17 percent said they were thinking about moving some existing benefits to voluntary, and 12 percent said they were thinking of adding new partially employer-funded benefits.

“That’s exciting for brokers, as the doors are opening a little bit,” Brazzell says.

LIMRA experts “cautiously” see a lot of opportunity in the voluntary benefits marketplace, says Ron Neyer, assistant research director at LIMRA in Windsor, Connecticut. Approximately 15 percent of employers in a recent LIMRA study said they are either “very” or “extremely likely” to add a new voluntary benefit over next couple of years, and about 25 percent are “somewhat likely.” The percentage of employers who plan to replace an employer-paid or contributory benefit with a voluntary arrangement is lower — approximately 5 percent were “very” or “extremely likely” to, compared to 12 percent in 2010.

“We see that as a good thing, as employers seem a little less focused on cost-shifting than they did several years ago,” Neyer says. “As the job market becomes more competitive, employers become more mindful about how voluntary benefits can improve their ability to attract and retain employees and boost worker morale and job satisfaction.”

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Business Owners See Respite in Health Insurance Costs

A steady rise in health insurance costs appears to be slowing down for business owners. But with several important changes still looming under the health care law, it’s unclear whether that will continue in the years ahead.

Health costs for employers increased only 3 percent last year, according to the Kaiser Family Foundation’s recently released employer health benefits survey, matching the lowest annual growth rate since the group started tracking the numbers in 1999. Owners, especially those running small businesses, had historically been prone to double-digit increases from one year to the next.

It’s the second straight year that the annual growth rate has slowed, according to Kaiser, mirroring several other reports of health costs rising more modestly for private businesses — a pattern that Kaiser CEO Drew Altman called “good news for employers and workers.”

On one hand, the slowdown comes as a bit of a surprise, given that enrollment in new government-run insurance exchanges for small businesses — generally considered one of the health care law’s primary means of lowering rates for employers and the only way to secure some of the law’s new tax credits — has been very slow across the country. The Kaiser survey, which is based on responses from more than 3,000 firms, showed that only a tiny fraction of firms purchased plans through the new exchanges last year.

In addition, a new rule requiring many companies to provide comprehensive health plans were expected to increase costs for those that previously offered minimal or no insurance plans to their workers.

However, early renewal of existing health plans and a string of delays to that so-called “employer mandate” have allowed many firms to continue offering plans that do not comply with new minimum coverage requirements in the law. That has likely muted some of the rise in premiums we would otherwise see as employers shift to more robust, and thus more expensive, plans.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary


HSAs Popular Among Employers

Health savings accounts are gaining in popularity with small to mid-size employers at the same time the appeal of health reimbursement accounts is waning.

A recent United Benefit Advisors survey finds HSAs are outpacing HRAs in both adoption and participation rates. The number of employers offering HSAs increased from 14.7% to 15.1% in 2013, and employee participation in these plans rose from 7.1% to 8.8% in the same period. By contrast, the percentage of U.S. employers offering plans with HRAs in 2013 was only 8.6% and employee participation in these plans dropped from 8.8% in 2012 to 8.6% in 2013.

Now that metal tier plans under the Affordable Care Act are allowed higher deductibles, employers are increasingly looking at HSA-qualified plans for their upcoming plan year, UBA says. Benefit advisers are already fielding questions from employers about what HSA funding levels will keep their plan competitive, whether to consider a consumer-driven health plan wrapped with a partially or fully funded HSA account, and whether an employer should consider partially self-funding a plan to lower premiums and deductibles, UBA says.

The ACA originally capped deductibles at $2,000 for individuals and $4,000 for families, forcing employers to buy plans with lower deductibles, explains Elizabeth Kay, compliance and retention analyst for the San Mateo-based benefit adviser group AEIS, a UBA partner firm.

“As a result, we saw premiums go up dramatically in 2014 — for some as much as 250% to 400%,” she says.

In 2014, as part of the Protecting Access to Medicare Act, ACA legislation was amended to allow metal tier plans [e.g., platinum, gold, silver, etc.] to have higher deductibles.

“I think carriers will be more creative with their plan designs next year, and we may see a comeback of higher deductible and HSA qualified plans,” Kay adds.

HSAs have “proven themselves to be better at driving consumer behavior and cost containment while maintaining compliance with the maximum allowable out-of-pocket costs under the ACA of $6,350 for individual and $12,700 for family coverage,” UBA says in its report.

The survey finds that on average, funding levels for plans with HSAs have remained constant for individuals at approximately $574 for both 2012 and 2013, while average funding for families increased from $928 in 2012 to $958 in 2013

By contrast, funding levels of plans with HRAs increased significantly for individuals from $1,605 in 2012 to $1,766 in 2013, and for families from $3,075 in 2012 to $3,506 in 2013.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Human Resource Professionals State Health Benefits Key to Attracting Workers

Employers have offered employees a greater variety of health and wellness benefits in the past five years, including coverage for mental health care and contraception, according to a report by the Society for Human Resource Management.

The 2014 SHRM Employee Benefits report showed that 87% of employers offer mental health coverage in 2014, down from 89% in 2013, but up from 82% in 2010. About 84% of employers reported covering prescription contraceptives for their employees in 2014, up from 82% in 2013 and 68% in 2010.

Under the health care reform law, most group health insurance plans are required to provide contraceptives without charge to the employee. Excepted are nonprofit religious organizations and, due to last week’s Supreme Court ruling, closely held for-profit companies with religious objections.

Mental health benefits also are governed by federal law. Under the 2008 Mental Health Parity and Addiction Equity Act, companies with more than 50 employees that offer mental health benefits must ensure that copayments, deductibles and limits on treatment are no more restrictive than medical or surgical benefits.

Alexandria, Virginia-based SHRM interviewed more than 500 human resource professionals for its annual survey, which was released in late June during the organization’s Annual Conference & Exposition in Orlando, Florida. Twenty-eight percent said benefits offered by their companies increased in the past 12 months, while 63% said their benefit levels remained the same.

“Offering health benefits is critical to employee recruitment and retention,” Bruce Elliott, SHRM’s manager of compensation and benefits, said in a statement. “However, the rising cost of health benefits, especially health insurance, has made it challenging for some employers to continue offering it. Because of that, employers are evaluating all their benefits and making adjustments.”

During the conference, Michael Cohen, a partner at Duane Morris L.L.P. in Philadelphia, said firms should create equal employment and anti-discrimination policies that include protections for employees based on sexual orientation and gender identity to help prevent discrimination complaints.

Employers also should address inappropriate behavior by employees that can be perceived as discriminatory against lesbian, gay, bisexual and transgender people, and can offer benefits to same-sex spouses, civil union partners and domestic partners of employees after checking with their insurer, he said.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Careful How You Label Your Contractors and Employees

Like many startups in the city, online fitness community BuiltLean relies on a collection of contractors to tackle projects from video production to Web development. “I think they enjoy the flexibility of freelancing,” said founder and Chief Executive Marc Perry, who turns to sites like oDesk for the talent he needs to keep his traffic at 1.2 million page views a month.

Someday, the former hedge-fund investment analyst hopes to “scale” the company enough to rely on regular, full-time employees. Meanwhile, Mr. Perry finds that working with freelancers brings savings, such as lower office-space costs.

There’s no doubt it’s cheaper and easier in some ways to employ a “contingent” workforce made up of freelancers, contractors and temps. The trend picked up during the recession, when hiring budgets were tight.
But for employers who don’t handle the paperwork carefully, there are big risks. Officials at the state Department of Labor and other agencies have been cracking down more frequently on misclassification. That is when companies treat workers whom officials say should technically be employees as contractors—or don’t pay them on the books at all.

“At the state and federal levels, there has been increased enforcement with respect to misclassification of employees as independent contractors,” said attorney David Fisher, a member of the labor and employment group at Davis & Gilbert in Manhattan.

Mr. Perry consults with legal counsel regularly about how to handle the hiring paperwork and work assignments for his contractors. When new freelancers join his 12- to 15-person crew, he asks them to sign an independent-contractor agreement to make sure they understand their role. But he may be unusual.

In 2013 alone, the state’s Joint Enforcement Task Force on Employee Misclassification–made up of the Department of Labor and a posse of other government agencies–identified nearly 24,000 instances of employee misclassification by employers statewide, an increase over 2012, according to its recently released annual report. The Department of Labor responded to an initial inquiry but did not provide a representative to answer questions from Crain’s by press time.

The task force said it discovered $333.4 million in unreported wages and assessed nearly $12.2 million in unemployment insurance contributions. The cost for employers found to be violating the rules—and required to pay back wages and unpaid unemployment insurance contributions—can be hefty.

Mr. Perry consults with legal counsel regularly about how to handle the hiring paperwork and work assignments for his contractors. When new freelancers join his 12- to 15-person crew, he asks them to sign an independent-contractor agreement to make sure they understand their role. But he may be unusual.

To read more, click here.

Jeffrey R. Ungvary


Jeffrey R. Ungvary