Health Care Reform Articles and Updates

When employees become disabled and unable to work, their jobs might be protected, but they’re often left with no replacement income. To help individuals in this situation, five states provide, or require that employers provide, short-term disability insurance to eligible workers. This benefit pays a percentage of an eligible employee’s income in the event that the employee becomes disabled as a result of an off-the-job injury or illness, including disability due to pregnancy. As this temporary disability insurance covers non-work related injuries, illnesses, or disabilities, it is different than workers’ compensation.

In this article, we’ll look at each of these state’s requirements for eligibility, coverage, and filing for benefits.

California
In order to be eligible for benefits, individuals in California must be employed or actively looking for work at the time they become disabled, and they must be unable to do their regular or customary work for at least eight consecutive days. If employed, they must have lost wages because of the disability and have earned at least $300 from which deductions were withheld during a previous period.

To receive benefits, individuals must complete and submit a claim form within 49 days of the date they became disabled. Filing can be done online or by mail. Medical certification by a physician or accredited practitioner is required.

Those who qualify for benefits will receive weekly compensation of about 55% of their previous weekly earnings in the highest quarter of the base period. They may collect up to 52 weeks of benefits, generally.

The withholding rate for 2016 is 0.9 percent per pay period, and the maximum to withhold for each employee is $960.68 per year. California allows employers to have a private plan in place of the state plan, but either way employers in the state are required to display specific informational posters about the program.

More information on California’s disability insurance program is available on the state website here.

Hawaii
To be eligible in Hawaii, individuals must be currently employed and have worked at least 14 weeks at 20 hours or more during each of those weeks, earning not less than $400 in the 52 weeks preceding the disability. The 14 weeks need not be consecutive or with the same employer.

To file for benefits, employees must immediately notify their employer of the disability and request Form TDI-45. Within 90 days from becoming disabled, the employee must fill out Part A, take the form to their physician or practitioner for medical certification, have the employer fill out Part B, and mail the completed form to the insurance company.

Eligible employees receive a partial wage replacement of up to 58% of their average weekly wages, with a maximum of $570.00 per week. Benefits begin the eighth day of the disability and may be paid for up to 26 weeks.

Employers in Hawaii must purchase the insuring plan from a carrier, adopt a self-insured plan, or have an equally favorable collectively bargained sick leave plan. Employers may pay all of the cost of the plan or share the cost with employees. The cost to employees for the insurance cannot be more than 0.5% of their weekly earnings, with a maximum weekly wage base of $982.36 in 2016; this means the maximum deduction for any employee will be $4.91 per week.

More information on Hawaii’s disability insurance program is available on the state website here.

New Jersey
To be eligible for benefits in New Jersey, employees must have been unable to work for seven days and have 1) worked at least 20 weeks, earning $168 or more in each of those weeks unless there was a declared state of emergency preventing work or 2) earned $8,400 or more in the 52 calendar weeks preceding the week the disability began.

Employees should apply for benefits within 30 days. The application must be completed by the employee, their physician, and their employers from the last six months. Eligible employees can receive benefits for up to 26 weeks with a maximum weekly payment of $615. Employees contribute 0.20% on the first $32,600 they earn, up to a maximum of $65.20 per year.

Eligible employees can receive benefits for up to 26 weeks with a maximum weekly payment of $615. Employees contribute 0.20% on the first $32,600 they earn, up to a maximum of $65.20 per year.

The cost for employers varies from 0.10% to 0.75%. In 2016 employers will contribute between $32.60 and $244.50 on the first $32,600 each employee earns. Employers may use the state plan or a private plan.

More information on New Jersey’s disability insurance program is available on the state website here.

New York
To be eligible in New York, an individual must have worked for a covered employer for at least four weeks and be unable to work due to disability for at least seven days. Benefit rights begin the eighth consecutive day of disability and last for up to 26 weeks during a 52-week period.

The insurance pays up to 50% of an employee’s average weekly wages, but no more than $170 per week. To receive benefits, eligible employees need to apply within 30 days. Certification from a physician or practitioner is required.

Employers can pay for all or some of the plan, or self-insure, but employees can be charged no more than 0.5% of their income each week, up to a maximum of 60 cents per week.

More information on New York’s disability insurance program is available on the state website here.

Rhode Island
Rhode Island was the first state to provide state disability leave—in 1942.

To be eligible for temporary disability benefits in Rhode Island, employees must have earned wages in the state and paid into the insurance fund. They must also have been paid at least $11,520 in one of the year-long base periods the state uses to determine eligibility. Alternatively, workers will be eligible if they earned $1,920 in one of the base period quarters and total base period wages of at least 1.5 times the highest quarter earnings, with total base period earnings of at least $3,840 . Employees must be unemployed for at least seven days due to non-job related illness or injury to qualify for benefits.

The program pays 4.62% of wages paid in the highest quarter of the base period, but not more than $795 total, for a maximum of 30 weeks. Employees can receive disability benefits even if they are still being paid through their employment. However, employees cannot receive disability benefits if they are performing any services for their employer.

The cost to employees is 1.2% of first $66,300 on earnings. Employees should apply online or by mail within 30 days of the start of the disability.

More information on Rhode Island’s disability insurance program is available on the state website here

Content is courtesy of Transcend Technologies Group, Inc.

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Large Employers May Soon Have to Report Pay Data

Late last week the Equal Employment Opportunity Commission (EEOC) announced a proposed change to the annual Employer Information Report, or EEO-1, which would require that employers with more than 100 employees report pay data in addition to the information they currently provide on race, ethnicity, sex, and job category. The proposed rule was published in the Federal Register on February 1. The comment period is now open, and will close on April 1, 2016.

If the proposed revision is adopted, private employers and federal contractors with over 100 employees would be required to submit data on employees’ W-2 earnings and hours worked. Federal contractors with 50-99 employees would continue to report on race, ethnicity, and sex by job category, but would not report earnings data; private employers with fewer than 100 employees would continue to be exempt from EEO-1 reporting.

If implemented, employers would be required to submit pay data as of the September 30, 2017 EEO-1 filing deadline. We will keep you updated on any developments as we learn of them.
Content is courtesy of Transcend Technologies Group, Inc.

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New legislation (referred to as the “PACE Act”) amends the Affordable Care Act (ACA) to include employers with 51 to 100 employees as large employers for purposes of the health insurance markets. (Note: The definition of applicable large employer under the ACA’s “pay or play” and information reporting provisions has not been changed.)

Under the ACA, health insurance offered in the “small group market” must meet certain market reform requirements that do not apply to the “large group market,” including the requirement to cover essential health benefits. The ACA as originally enacted defines employers with 1 to 100 employees as small employers, but allowed states to treat those with 51 to 100 employees as large employers before January 1, 2016.

The PACE Act generally defines small employers as those with an average of at least 1 but not more than 50 employees on business days during the preceding calendar year, and large employers as those with an average of at least 51 employees on business days during the preceding calendar year. The new law gives states the option to extend the definition of small employer to those who employ an average of at least 1 but not more than 100 employees on business days during the preceding calendar year (and who employ at least 1 employee on the first day of the plan year).

Employers that are affected by the revised definition are advised to contact knowledgeable benefits counsel to determine their specific obligations under the ACA.

Visit our ACA by Year & Company Size section for an overview of the requirements applicable to employers of various sizes.

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Certain Provisions Apply Based on Workforce Size & Structure

The IRS is reminding employers that the size and structure of their workforce will help determine which parts of the Affordable Care Act (ACA) may apply to them. Calculating the number of employees is especially important for employers that have close to 50 employees or whose workforce fluctuates during the year.

Employers With Fewer Than 50 Employees

The following ACA provisions are relevant for employers with fewer than 50 employees:

  • SHOP Marketplace Eligibility – Qualified employers with fewer than 50 full-time equivalent employees can purchase insurance through the Small Business Health Options Program (SHOP) Marketplace.
  • Information Reporting for Self-Insured Employers – All employers (regardless of size) that provide self-insured health coverage must file an annual return for individuals they cover, and provide a statement to responsible individuals. Such employers are required to report for the first time in early 2016 for calendar year 2015.
  • Small Business Tax Credits – In general, employers may be eligible for the small business health care tax credit if they:
    • Have fewer than 25 full-time equivalent employees with average annual wages of less than $50,800 for tax year 2014 and $51,600 for tax year 2015;
    • Cover at least 50% of employees’ premium costs; and
    • Purchase their coverage through the SHOP Marketplace (for tax years beginning in 2014 or later).
  • Employers with fewer than 50 full-time employees (including full-time equivalents) are not subject to the employer shared responsibility (“pay or play”) provisions.

Employers With 50 or More Employees

The following ACA provisions are relevant for employers with 50 or more employees:

  • SHOP Marketplace Eligibility – Employers with exactly 50 full-time equivalent employees can also purchase insurance through the SHOP Marketplace.
  • Information Reporting for Applicable Large Employers – Separate from the information reporting requirements applicable to self-insured employers of all sizes, “applicable large employers” (generally those with 50 or more full-time employees, including full-time equivalents) must file an annual return and provide a statement to each full-time employee about their compliance with pay or play. Such employers are required to report for the first time in early 2016 for calendar year 2015.
  • Pay or Play Penalties – In general, an applicable large employer will be subject to a penalty if the employer does not offer affordable coverage that provides “minimum value” to its full-time employees and their dependents, and one or more full-time employees receives a premium tax credit.
    • Various forms of transition relief are available for 2015, including for applicable large employers with fewer than 100 full-time employees (including full-time equivalents). Details on this relief are available in IRS Q&A #34.

For more information on these and other ACA tax provisions, visit IRS.gov/aca.

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Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2015 deadline for paying fees that fund the Patient-Centered Outcomes Research Institute (“PCORI”). As background, PCORI was established as part of health care reform to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury. PCORI fees were first due by sponsors of self-insured group health plans and insurers last July for plan and policy years that ended on or after October 1, 2012. Under health care reform, most employer sponsors and insurers will be required to pay PCORI fees until 2019.

Determining the Amount of your PCORI Fees

The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the applicable plan or policy year.

  • For plan years that ended between January 1, 2014 and September 30, 2014, the fee is $2.00 per covered life and is due by July 31, 2015.
  • For plan years that ended between October 1, 2014 and December 31, 2014, the fee is $2.08 per covered life and is due by July 31, 2015.
  • The fee will be paid by July 31, 2016 for any plan years ending in 2015.

NOTE: The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan. The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA.

Historical information for prior years:

  • For plan years that ended between October 1, 2012 and December 31, 2012, the fee was $1 per covered life and was due by July 31, 2013.
  • For plan years that ended between January 1, 2013 and September 30, 2013, the fee was $1 per covered life and was due by July 31, 2014.
  • For plan years that ended between October 1, 2013 and December 31, 2013, the fee was $2 per covered life and was due by July 31, 2014.

The fee-amount per covered life generally increases each year based upon health expenditure data released by the Department of Health and Human Services annually. Employers that sponsor self-insured group health plans should report and pay PCORI fees using IRS Form 720, Quarterly Federal Excise Tax Return.

Final regulations issued by the Internal Revenue Service contain special rules regarding the types of plans and policies for which fees are due and also include several different methods that may be used by employers to determine the number of covered lives under each plan. There are additional rules for counting the number of covered lives under an HRA (in general, the fee applies on a per-covered employee basis for HRAs). Employers that sponsor self-insured plans should review these rules closely to ensure that the correct PCORI fees are paid.

Note that because the PCORI fee is assessed on the plan sponsor of a self-insured plan, it should not be included in the premium equivalent rate that is developed for self-insured plans if the plan includes employee contributions. However, an employer’s payment of PCORI fees should be tax deductible as an ordinary and necessary business expense.

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