Over the past several months, dozens of new employment laws and legislative bills were signed into law that went into effect on January 1, 2012. These changes will directly impact the way employers conduct business, including areas such as payroll tax limits, new employment guidelines, and changing insurance markets.

Ari Rosenstein, CPEhr’s Director of Marketing, explains:

“Not only are employers throughout the country burdened by the weak economy, but they are confused and troubled by the seemingly unending flow of employment regulations. Many small employers recognize it is virtually impossible to stay up to date on a regular basis, especially at the turn of a new year when many new laws go into effect. It is for this reason we publish our annual HR Updates report.”

The report draws from CPEhr’s human resources experience on a wide range of employment, payroll, tax and insurance areas. Topics covered in the report include:

• New employment laws effective in 2012
• The IRS Voluntary Worker Reclassification Program
• Understanding the importance of correct employee/1099 classifications
• New 2012 Tax and 401(k) limits
• The value of employee training and development
• Rising Workers’ Compensation costs and how to mitigate them
• Creative approaches to reduce increasing health care premiums

“Our hope is that employers will read the report and, at the least, become aware of the important changes coming in 2012. At best, we hope they will take the time to investigate the new laws and adjust their business activities accordingly,” said Rosenstein.

Morgan Stanley Smith Barney is recognized as a global leader in wealth management services.  This new partnership provides CPEhr and its clients access to a wide range of products and services including investment advisory services, financial and wealth planning, credit and lending, cash management, annuities and insurance and retirement and trust services.

“One key element of the partnership is Morgan Stanley Smith Barney’s unique expertise and experience in corporate retirement/401k plans as well as managing personal wealth management,” says Harry Ogan, CPEhr’s Retirement Plan Analyst.  “As advisors to our retirement plans, they will work to ensure that we continue to offer the most comprehensive, cost effective solutions available to our clients and their employees.”

As fiduciary advisors, Morgan Stanley Smith Barney will lend its expertise to make certain that CPEhr’s plans remain competitive and provide employees the best investment options.

Furthermore, CPEhr’s clients and their employees now have access to a team of professional financial advisors to help them navigate through these difficult markets and advise with 401k investments to enhance the overall financial and retirement planning experience.  Employees can also obtain guidance with 401k plans from previous employers as well as other outside investments.   They will have full access to all of Morgan Stanley Smith Barney’s products and services.

For more information, please contact Harry Ogan, CPEhr’s Retirement Plan Analyst at (310) 270-9839.

As part of our broad Professional Employer Organization (PEO) services, we offers top tier small business medical insurance plans to our clients and currently provide insurance coverage to thousands of employees throughout California. Our Benefits Manager, Haig Hagopian, conducted a detailed analysis of health insurance plans offered by carriers in the Southern California region. The analysis revealed that the average premium across comparable HMO plans was 10.3 percent lower than HMOs offered by the other carriers. More than half of California employees who take insurance access their health care through an HMO.

“CPEhr applies solid health risk management techniques to keep the overall premiums down as much as possible,” explains Hagopian. “This includes working with carriers to help those with chronic conditions manage their illnesses more effectively. Furthermore, Anthem Blue Cross has done an exceptional job with providing our groups with a strong network, rich plan features and lower out of pocket costs.”

In addition to offering HMO plans, we provide our clients a range of PPOs and qualified high-deductible health plans (HDHP), alongside a wide range of voluntary benefits and perks including Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), dental, vision, life, disability and limited medical policies. Hagopian and the rest of our Benefits Department review plan options with our clients and generate creative solutions to mitigate increasing health insurance costs. They also administer the plans and negotiate renewals directly with the carriers to further contain the rates.

“We analyze the types of benefit features that are most helpful to our groups and make sure that our plan designs are a good fit for their employees,” says Hagopian. “To obtain the right to offer Anthem, CPEhr established a sophisticated underwriting and health management infrastructure, which no other PEO has managed to do at this time. As a result, we are the only PEO that has been approved by Anthem Blue Cross.”

We feel that our clients clearly see the value in our insurance programs, since enrollment has increased seven percent over the past two years, despite state-wide increases.

Contact us today for a quote for your small business medical insurance plan!

Question #1: What is required of small employers with less than 10 who do not offer health insurance?

A: There are no specific requirements of employers with less than 10 employees – they are not required to offer coverage. Employers with greater than 50 employees are subject to penalties if they do not offer coverage, $2,000 per full time employee over 30 employees.

Question #2: What about illegal immigrants? The government wouldn’t be able to regulate their coverage so they would still be uninsured, right? Would hospitals still have to treat them?

A: Correct. Health Care Reform does not apply to illegal immigrants. Yes, hospitals would still be required to treat and the cost of uninsured would be passed to those that are insured through higher charges by hospitals. This is exactly what is happening today.

Question #3: Is Health Care Reform counting employees as Full Time Employee status, or by total head count? Many smaller employers are gaming the system to classify staff as part-time employees and paying overtime versus providing health benefits.

A: The calculation to determine full time “equivalent” employees will be based on total hours worked by “all employees” divided by 30 hours. Part time employees are included in the calculation.

Question #4: What is the benefit of a health plan being grandfathered in versus those that are not?

A: Grandfathered plan do not have to provide 100% preventive coverage, treat emergency care the same in and out of network, comply with new internal and external appeal requirements and apply broader definition of “primary care physicians”

Question #5: The Cadillac Tax proposal seems to ignore traditional practice of charging higher premiums on older employees. What may look like a Cadillac plan for a 30 year old is likely a very ordinary plan for a 56 year employee.

A: Correct. Health Care Reform includes a requirement that health care premiums can not vary by more than a 3:1 ratio for age. Still many health plan premium for larger groups is based on claim experience and older workers have higher health care utilization that will be reflected in their premiums. It is expected that these inequities will be worked out before the tax goes into effect in 2018.

Question #6: With insurance companies, like Blue Shield, asking for a 59% increase, how do the employees see a benefit before the main provisions kick in by 2014?

A: There is very little in the Health Care Reform law that addresses costs. It is expected that health care costs will continue to increase at 12% to 15% annual health care inflation. Health Care Reform requires insurers to submit premium increases to state department of insurance for review and must meet new health care ratios, i.e. 80 % to 85% of premium must be spent on health care.

As more and more details of health care reform are clarified, the administration and details relating to medical insurance for small employers is likely to become less cloudy and more defined. Continue to watch the news as the story unfolds.

On Thursday, January 27, Peter Duncan from Sidles Duncan and Associates presented a webinar taking a cursory look at health care reform, and a year-by-year snapshot of changes to come.

The Act contains five key provisions:

1. The requirement for all US citizens and legal residents to have health insurance;
2. Penalties for employers who do not offer health insurance for their employees;
3. State Based Health Exchanges created to offer cost effective insurance options;
4. Premium credits for low income individuals;
5. Eliminates pre-existing conditions and annual/lifetime benefit limits

A Year by Year Look at Health Care Reform

Some changes went into effect in 2010, such as coverage for adult dependents (dependents until age 26), and several more will happen in 2011. The most significant changes, however, will not go into effect until 2014. Below is a snapshot of key changes that will be going into effect in the coming years:

2011

• No pre-tax reimbursements from “health accounts” for non-prescribed, over the counter medications,
• 20% tax on nonqualified HSA withdrawals,
• Reporting the value of employer sponsored coverage on w-2’s (delayed),
• Automatic enrollment in long term care program, employer may opt out (delayed),
• Drug company fees: $2.5 billion in 2011, $4.2 billion in 2018

2012

• Uniform explanation of coverage,
• Pre-enrollment document sent explaining benefits and exclusions,
• 60 day notice for material modifications, if not provided in uniform explanation of coverage,

2013

• FSA contributions limited to $2,500,
• New federal employer tax, $2.00 per covered individual per plan year
• Medicare payroll tax increase from 1.45% to 2.35%,
• Employer notice to employees of exchanges, premium subsidies, and free choice vouchers,

2014

• Individual mandate – every citizen must have coverage,
• Individual penalties for not purchasing coverage,
• Guaranteed issue,
• State health exchanges effective
• Standard benefit plans, (bronze, silver, gold, platinum),
• Waiting period not more than 90 days,
• Employer penalties for not offering coverage or at least one FTE receives a tax credit,
• Health insurance company fees: $8 billion 2014, $14.3 billion 2018, 2019 prior year amount increased by premium growth rate.

2018

• Cadillac Tax. 40% tax on plans value in excess of $10,200 single, $27,500 family.

Penalties for Non-Coverage

As stated, most of the act’s important provisions will become effective in 2014. The most relevant laws for employers are the penalties they will face for non-coverage of employees. The exact penalties are complicated to calculate, base on numerous factors. Some of the basic guidelines are outlined below:

Employers with more than 50 employees:

• If coverage is not offered by the employer and even one full-time employee (FTE) receives a premium tax credit, the employer will pay a fee of $2,000 per FTE, excluding the first 30 ee’s.
• If “affordable” coverage is not offered and one FTE receives a premium tax credit, the employer will pay the lesser of $3,000 for each employee receiving a tax credit, or $2,000 for each FTE. Affordable coverage is defined as an employee cost of health insurance, less than 9.5% of household income and the actuarial value of plan is at least 60%.
• A Voucher will be required if the employee contribution exceeds 8% of household income.

All Employers:

• Employers that offer coverage are required to provide a free choice voucher to employees with incomes less than 400% of the Family Poverty Level (FPL), whose share of premium exceeds 8% but less than 9.8% of their income and who chose to enroll in a plan in the Exchange.
• A Voucher equals to what the employer would have paid to provide coverage under the employer’s plan. Employers providing free choice vouchers are not subject to penalties.

Employers with 200 or more employees

• Required to automatically enroll employees into health plans offered by employer. Employees may opt out.

If the provisions of the health care reform act sound complex, they are! We highly recommend you consult with a specialist who is an expert on small business medical insurance plans and is familiar with the Act. Feel free to contact CPEhr’s benefits specialist with any health care reform questions.

Health Care Reform legislation passed in March of 2010 and is back in the headlines as the new Congress revisits the Act. In this timely webinar, Mr. Duncan will review:

• The key provisions and overview of Health Care Reform (Patient Protection and Affordable Care Act (PPACA))
• 2011 and Beyond: Its multi-year implementation time-line.
• Understanding the “grandfather” clauses.
• What is likely to happen as Congress re-visits Health Care?
• What should employers know to be prepared for implementation of the existing legislation?

Please join us THIS coming Thursday!

On the employment front, many employers hold no hard feelings letting 2010 go. It was one of the most active legislative years on recent record, and while 2011 has many new regulations in store, in won’t compare to the previous year. However, while many business owners may be suffering from “governmental overload”, there are still some significant changes in store of which they should still be aware.

2011 Human Resources Updates

We are proud to announce the availability of our newly published report, 2011 Human Resources Updates. This important report takes a snapshot-view of many timely issues facing employers in 2011. Topics include:

• New 2011 Employment Laws
• Staying up to date with Health Care Reform
• 2011 Payroll and Tax Updates
• Employee and Management Training
• Recruiting – what lies in store in 2011
• Creating a safe work environment
• Managing in the age of social media.

While most employers would rather look towards new sales revenues and improving financials, it is extremely important to remain aware of legislation that could impact their business in 2011.

Download your free copy of CPEhr’s 2011 Human Resources Update Report today. No registration required!

For employers, this means that employees enrolled in heath care plans can get coverage for their young adult children up to 26 years old. Several federal agencies issued regulations to put this into action, and key elements of those regulations include:

• Coverage Extended to More Children: The goal of this new policy is to cover as many young adults under the age of 26 as possible with the least burden. Plans and issuers that offer dependent coverage must offer coverage to enrollees’ adult children until age 26, even if the young adult no longer lives with his or her parents, is not a dependent on a parent’s tax return, or is no longer a student. There is a transition for certain existing group plans that generally do not have to provide dependent coverage until 2014 if the adult child has another offer of employer-based coverage aside from coverage through the parent.  The new policy providing access for young adults applies to both married and unmarried children, although their own spouses and children do not qualify.
• Special Enrollment Opportunity for All Eligible Young Adults: For plan or policy years beginning on or after September 23, 2010, plans and issuers must give children who qualify an opportunity to enroll that continues for at least 30 days regardless of whether the plan or coverage offers an open enrollment period.  This enrollment opportunity and a written notice must be provided not later than the first day of the first plan or policy year beginning on or after September 23, 2010.  The new policy does not otherwise change the enrollment period or start of the plan or policy year.

What Employees Might Ask You About

• Immediate Options: Private health insurance companies that cover the majority of Americans volunteered to provide coverage earlier than the implementation deadline for young adults losing coverage as a result of graduating from college or aging out of dependent coverage on a family policy. This stop-gap coverage, in many cases, is available now. Employees might ask their employers and insurers about this option.
• Open Enrollment: If early coverage is not an option with an employer or insurance company, then young adults will qualify for an open enrollment period to join an employee’s family plan or policy beginning on or after September 23, 2010. Insurers and employers must provide notice for this special open enrollment period. Parents will probably watch for it or ask you about it.
• Offer of Continued Enrollment: Insurers and employers that sponsor health plans will inform young adults of continued eligibility for coverage until the age of 26. To get the coverage, employees with young adult children need not do anything but sign up and pay for this option.

Source: U.S. Department of Health and Human Services, via the California Chamber of Commerce

Case Study #1

Joe applies for a job in a robot factory and must take a pre-hire drug test. Before taking the test, he signs a HIPAA authorization allowing the drug test results to be given to the factory. While taking the test, one of the technicians notices that Joe is exhibiting symptoms of another medical problem. When she tells Joe about her observations, Joe decides to take another test. Unfortunately, this second test reveals that Joe has a serious illness. Under HIPAA, what else might the technician do in this situation?

Answer: Although the technician may release Joe’s drug test results to the factory, no other PHI may be disclosed unless Joe signs another authorization. Joe’s authorization only permitted the disclosure of his drug test results to the factory. Authorizations must be carefully examined to determine if disclosures are restricted, and all limits must be carefully adhered to.

Case Study #2

To comply with HIPAA’s Security Rule, organizations should identify each staff member’s individual need to access E-PHI, permit access only for appropriate purposes, and prevent all other access. Basically, different levels of access to E-PHI should be provided to different staff and work stations, based on their job responsibilities and needs. Organizations must also be able to modify staff access rights, for example when someone’s duties change, or their job ends. For example, suppose Bob resigns from his job, which had given him online access to E-PHI of his employer’s patients. In this situation, what must Bob’s employer do to comply with HIPAA?

Answer: Organizations must be able to detect unauthorized access to E-PHI, modify ( and terminate) the access rights of staff, and implement policies and procedures to safeguard the facility and equipment from unauthorized physical access, tampering, and theft.

If you are unsure of if your are currently in HIPAA compliance, please contact one of our Human Resources Consultants who will be able to guide you through the process.

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