All posts tagged DOL

Recently, the Department of the Treasury, Department of Labor (DOL), and Department of Health and Human Services (HHS) (collectively, the Departments) issued FAQs About Affordable Care Act Implementation Part 34 and Mental Health and Substance Use Disorder Parity Implementation.

The Departments’ FAQs cover two primary topics: tobacco cessation coverage and mental health / substance use disorder parity.

Tobacco Cessation Coverage

The Departments seek public comment by January 3, 2017, on tobacco cessation coverage. The Departments intend to clarify the items and services that must be provided without cost sharing to comply with the United States Preventive Services Task Force’s updated tobacco cessation interventions recommendation applicable to plan years or policy years beginning on or after September 22, 2016.

Mental Health / Substance Use Disorder Parity

Generally, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) requires that the financial requirements and treatment limitations imposed on mental health and substance use disorder (MH/SUD) benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits.

A financial requirement (such as a copayment or coinsurance) or quantitative treatment limitation (such as a day or visit limit) is considered to apply to substantially all medical/surgical benefits in a classification if it applies to at least two-thirds of all medical/surgical benefits in the classification.

If it does not apply to at least two-thirds of medical/surgical benefits, it cannot be applied to MH/SUD benefits in that classification.

If it does apply to at least two-thirds of medical/surgical benefits, the level (such as 80 percent or 70 percent coinsurance) of the quantitative limit that may be applied to MH/SUD benefits in a classification may not be more restrictive than the predominant level that applies to medical/surgical benefits (defined as the level that applies to more than one-half of medical/surgical benefits subject to the limitation in the classification).

In performing these calculations, the determination of the portion of medical/surgical benefits subject to the quantitative limit is based on the dollar amount of all plan payments for medical/surgical benefits in the classification expected to be paid under the plan for the plan year. The MHPAEA regulations provide that “any reasonable method” may be used to determine the dollar amount of all plan payments for the substantially all and predominant analyses.

MHPAEA’s provisions and its regulations expressly provide that a plan or issuer must disclose the criteria for medical necessity determinations with respect to MH/SUD benefits to any current or potential participant, beneficiary, or contracting provider upon request and the reason for any denial of reimbursement or payment for services with respect to MH/SUD benefits to the participant or beneficiary.

However, the Departments recognize that additional information regarding medical/surgical benefits is necessary to perform the required MHPAEA analyses. According to the FAQs, the Department have continued to receive questions regarding disclosures related to the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation (NQTL) with respect to medical/surgical benefits and MH/SUD benefits under a plan. Also, the Departments have received requests to explore ways to encourage uniformity among state reviews of issuers’ compliance with the NQTL standards, including the use of model forms to report NQTL information.

To address these issues, the Departments seek public comment by January 3, 2017, on potential model forms that could be used by participants and their representatives to request information on various NQTLs. The Departments also seek public comment on the disclosure process for MH/SUD benefits and on steps that could improve state market conduct examinations or federal oversight of compliance by plans and issuers, or both.


By Danielle Capilla, Originally published by United Benefit Advisors – Read More

0809Your new position just got approved and, finally, that mission-critical headcount addition is green-lighted. Celebration ensues until the actual work of finding the ideal candidate begins. The first step is to get a job description. In some cases, a perfectly vetted position analysis and description may exist, one that captures the particulars and purpose of the job. For those not fortunate enough to have a compensation professional providing such information, the search to find the right words to describe the work begins. So launches the journey of a thousand words cut-and-pasted from

The recent changes to the Department of Labor (DOL) overtime rules, which will impact an estimated 4.2 million workers, put the spotlight back on job descriptions, or more specifically, the content of those documents as businesses are forced to assess whether their employees meet the duties test for exemption. This was not the first time in recent years that the DOL has focused on essential job functions. The 25th anniversary of the Americans with Disabilities Act (ADA) brought additional entitlements to individuals, including extending accommodation to pregnant workers and tagging onto Family and Medical Leave Act (FMLA) time off with allowances for extended ADA leaves. All of these changes rely on documentation of essential job functions and the conditions under which they are performed.

Since the enactment of the ADA, most employers have been incorporating physical requirements into position descriptions. If, however, the level of detail is lacking, the accommodation process can be derailed. Consider:

  • the frequency of physical requirements, not just the weight lifted, and
  • the percentage of time spent standing, sitting, bending, or moving and the level of repetition in the performance of duties.

Exempt (white collar) jobs require unique differentiators, including stamina requirements such as:

  • Longer hours and extended work weeks
  • Percentage of time spent travelling
  • Specific credentials (i.e. CPAs)

Additionally, if there are environmental or psychological requirements applicants must meet, these should be included in the job description.

The ADA views essential job duties through the lens of the ability to perform with or without accommodation, thus taking a broad view of the scope of work. Hence, it may be incumbent on an employer to reassign duties, restrict tasks or change responsibilities in order to accommodate an individual. This can create difficulties when trying to comply with the Fair Labor Standards Act (FLSA).

For example, to be considered exempt under the executive duties test within the FLSA, the employee must:

  • regularly supervise two or more other employees, and
  • have management as the primary duty of the position, and
  • have some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignments).

The regulations call out specific management duties including training, appraising productivity, monitoring work, and, in general, being “in charge.” In the event that such a manager required accommodation under the ADA, it is possible that in order to comply with the letter of the law, the removal of responsibilities might result in a situation where the individual is no longer meeting the duties requirement to be considered exempt. In this scenario, it might be advisable, for example, to include language in the job description that establishes presence at work as an essential function of management.

This is not a call to front load the descriptions with an overflow of detail. It is, however, important to ensure that the job description reflects the actual functions and outcomes needed and the conditions that impact those processes. It requires careful consideration and a comprehensive needs analysis.

Free resources for detailed information about jobs include the Bureau of Labor Statistics Occupational Outlook Handbook ( and O*Net OnLine ( Both sites are maintained by the U.S. Department of Labor and have substantial databases of job information that represents thousands of employers nationally, providing evidentiary support for the inclusion of essential job functions in a position description.

The following is a reference chart illustrating the importance of job descriptions under each employment law.

Impact of the Job Description
Fair Labor Standards
Act (FLSA)
The FLSA looks to the content of a job to as a source of information to complete a duties test to ascertain the exempt or non-exempt status of positions.

A job description is not a stand-alone validation of status, but an accurate list of essential functions can go a long way in confirming an employee’s exempt status.

Americans with Disabilities
Act and Pregnancy
Discrimination Act
Detailed job descriptions outline the requirements for a candidate to be considered “qualified.” An employer is not obligated to accommodate an applicant who cannot meet the legitimate skills, experience, education, or other requirements of a position. Pregnancy is treated the same as any other disability.

Undertaking an interactive dialog with a qualified individual depends on well-defined documentation that articulates the tasks, outcomes and the conditions under which the work is performed.

Employers may need to offer employees alternative positions as an accommodation. As new or existing jobs open, they should be reviewed to ensure the credentials needed are current and viable.

Family and Medical
Leave Act (FMLA)
In lieu of a job description, medical providers rely on employees’ characterization of their work. This can be misleading and cause the provider to miss critical information.

Employees who request intermittent leave for a serious health condition could potentially be given temporary job modifications if medical restrictions were more clearly aligned with essential job functions.

Return to work clearances may be compromised if medical providers are not given detailed information about job requirements.

Occupational Health Act Employers lower their experience rating when they are able to implement a robust light duty return to work program. This requires explicit environmental, physical and emotional details in job descriptions.

Accurate credentialing and experience requirements outlined in job descriptions can alleviate accidents and injuries from unqualified workers.

Title VII, including Age
Discrimination in
Title VII requires that consideration for hiring and compensation, be based on bona fide job requirements. Accurate, impartial recaps of work requirements can serve as a defense against allegations of bias.

Employee performance, which impacts discipline, promotion and opportunities for advancement should be measured against the road map of a comprehensive job description that is measurable and defendable.

Originally published by United Benefit Advisors – Read More

Avoid Increased Penalties by Filing Annual Benefit Plan Reports on Time | Ohio Employee Benefits

Categories: Compliance News, DOL, Industry News, Team K Blog
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0720Form 5500 is the annual report that group benefit plans use to report required information about the plan’s financial condition and operations. Most group and pension plans that are subject to ERISA are required to file a Form 5500. With the July 31 deadline for calendar year plans fast approaching, and higher penalties for not filing taking effect in August, this is a good time to review this important plan filing.

What is a Form 5500?

Generally, the Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) all require an annual benefit plan report filing, although there are many exemptions. A single annual report, known as a Form 5500 or Form 5500-SF, satisfies all three. It includes basic plan, sponsor, and administrator identifying information, the type of annual report being filed, and any related Schedules as attachments to the Form 5500.

Who must file the Form 5500?

Form 5500 is needed for both qualified retirement plans and group welfare plans. For this article, we’ll focus on group welfare plans, which include plans that provide medical, prescription drug, dental, vision, long term and short term disability, group term life insurance, health flexible spending accounts, accidental death and dismemberment benefits, long term care, formal severance policies, and telehealth. While other plans may also be considered welfare plans, these are the most common.

Group welfare plans generally must file Form 5500 if:

  • The plan is fully insured and had 100 or more participants on the first day of the plan year (dependents are not considered “participants” unless they are covered because of a Qualified Medical Child Support Order).
  • The plan is self-funded and it uses a trust, no matter how many participants it has.
  • The plan is self-funded and it relies on the Section 125 plan exemption, if it had 100 or more participants on the first day of the plan year.

Are there exemptions?

Yes, there are several exemptions to Form 5500 filing. The most notable are:

  • Church plans defined under ERISA section 3(33)
  • Government plans, including tribal government plans
  • “Top hat” plans that are unfunded or insured and benefit only a select group of management or highly compensated employees.
  • Small insured or unfunded welfare plans. This includes plans with fewer than 100 participants (including qualified former employees and COBRA beneficiaries) at the beginning of the plan year that are fully insured, entirely unfunded, or a combination of both. An unfunded plan has its benefits paid as needed directly from the general assets of the sponsoring organization.

How many Forms 5500 must be filed?

Generally, the number of Forms 5500 depends on the number of ERISA benefits the sponsor maintains, whether those ERISA benefits are combined into one plan, and whether the sponsor is part of a controlled group or is part of a multiemployer welfare arrangement (MEWA).

The plan’s governing documents and operations determine whether benefits are being provided under a single plan and can be reported on one Form 5500. The Summary Plan Description (SPD), required by ERISA, is a document which designates the ERISA plan number and can be used to bundle multiple benefit lines into a single plan for Form 5500 filing purposes.

When must Form 5500 be filed?

A plan’s Form 5500 must be filed by the last day of the seventh month after the close of the plan year. The filing date is based on the “plan year,” which is designated in the SPD or other governing document. If a plan does not have a SPD, the plan year defaults to the policy year.

For calendar year plans, the due date for the Form 5500 is July 31. Employers may obtain an automatic 2-1/2 month extension by filing Form 5558 by the due date of the Form 5500.

Can the Form 5500 be amended?

Yes, it is recommended that the plan sponsor file an amendment for any of the following situations:

  • The original filing omitted a benefit
  • The original filing created a gap in benefit reporting
  • The Schedule A forms were updated with a 10 percent or more increase in commissions or premiums than originally reported by the carrier
  • Mandatory information critical to the report was incorrect or omitted

What happens if the plan has failed to file a Form 5500?

Penalties!! Under ERISA Section 502, the Secretary of Labor may assess civil penalties of up to $1,100 per day against a plan administrator who fails or refuses to file Form 5500. The DOL is able to assess penalties in connection with Form 5500 failures reaching as far back as the 1988 plan year. Penalties are based on whether the Form 5500 was incomplete, deficient, filed untimely or never filed, and if there was willful disregard for refusing to file.

The current penalty for failure or refusal of a plan administrator to file a Form 5500 is up to $1,100 per day. In August 2016, those penalties will increase from $1,100 per day to $2,063 per day, regardless of whether the violation occurred before or after August 2016. If an annual report is rejected for failure to provide material information, it is treated as not having been filed.

In order to encourage sponsors to file, the DOL created the Delinquent Filer Voluntary Compliance Program (DFVCP). It was created as a means for sponsors to “self-report” their non-compliance, and includes a monetary incentive. If a plan sponsor qualifies for the DFVC Program, the penalties are reduced significantly to $10 per day for the first 199 days. If the plan is within a year of being late, the penalty it is capped at $2,000 per plan. If the plan is more than a year late in filing, there is a $4,000 per plan cap.

If the DOL notifies a plan sponsor of its failure to file a Form 5500 or of the assessment of penalties for failure to file, the plan sponsor is no longer eligible to participate in the DFVCP. Penalties may be assessed for the date the reports were initial due, not the date the sponsor was notified of its delinquency.

It is important to note that criminal sanctions and imprisonment are also possible for willful violations of the reporting and disclosure requirements.

As an example, Employer A and Employer B both sponsor a fully insured medical plan and group term life (GTL) plan for their employees. Each employer has the same number of participants in their medical and GTL plans: 75 participants in the medical plan, and 150 participants in the GTL plan.

The plan year for Employer A’s medical plan is December 1 through November 30. The GTL plan is on a calendar year contract. Employer A does not have an SPD wrap document combining these two plans. Employer A does not have to file a Form 5500 for the medical plan because it is fully insured and has fewer than 100 participants. However, it must file Form 5500 for the GTL plan because it has more than 100 participants. Since the GTL plan is on a calendar year (January 1 to December 31) contract, its Form 5500 is due by July 31, the end of the seventh month following the last day of the plan year.

Employer B, on the other hand, has an SPD wrap document which combines the medical and GTL plans into the same ERISA plan year and plan number. The employer chose that plan year to align with the medical plan’s December 1 – November 30 contract year. In this case, Employer B must file a single Form 5500 for both the medical and GTL benefits information because at least one of the plans has more than 100 participants. Its Form 5500 is due by June 30.

Employers should note that government agencies recently proposed significant changes to Form 5500 reporting, and should ensure they stay up to date on requirements as they change.

Originally published by United Benefit Advisors – Read More

0527From 2013 to 2015, a series of Supreme Court cases and government updates have changed the landscape of the way employers must consider same-sex spouses in relation to employee benefits.

Most recently, in June 2015, the Supreme Court ruled in Obergefell v. Hodges, that the 14th Amendment requires a state to license a marriage between two people of the same sex, and to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out of state. Prior to the Supreme Court’s decision in Obergefell v. Hodges, approximately two-thirds of states recognized same-sex marriage (whether performed within the state or another state or country that recognizes same-sex marriage).

In February 2015, the Department of Labor (DOL) issued an updated definition of “spouse” under the Family and Medical Leave Act (FMLA) to make compliance easier, and defined “spouse” as a husband or wife, which refers to a person “with whom an individual entered into marriage as defined or recognized by state law.” The governing state law is that of the celebration state, or where the marriage took place. This definition was set to go into effect across the United States on March 27, 2015, but litigation in Texas, Arkansas, Louisiana, and Nebraska prevented the new rule from going into effect in those states immediately. After the ruling in Obergefell, which severely undermined the arguments of the objecting states, the injunction was dissolved.

In June 2013, the Supreme Court ruled that the Defense of Marriage Act (DOMA), which provided that, for federal law purposes, marriage could only be between a man and a woman, was unconstitutional.

Implication for Employers

For individuals with a same-sex spouse (validly married in a state allowing same-sex marriage) who reside in a state that did not previously recognize same-sex-marriage, the ruling in Obergefell likely triggered a change in status event for Section 125 plans. That is because, as of June 26, 2015, the individual was considered married under state law, whereas they were not the day before.

As a result of these changes, employers need to review the eligibility requirements in their group life and health plans, Section 125 plans, and health reimbursement arrangements. The Employee Retirement Income and Security Act (ERISA) requires employers to administer their plans according to the terms of the plan, which means that the plan’s definition of a covered spouse is key. A plan that covers “spouses” or “lawful spouses” must offer coverage to same-sex spouses.

While most practitioners agree that fully insured plans are required to cover same-sex spouses, employers should contact their carrier to verify this approach.

Download UBA’s Compliance Advisor, “Same-Sex Marriages and Group Health Benefits” for comprehensive information on tax treatment of same-sex spouses, FMLA administration, and whether self-funded plans may exclude same-sex spouses.

The IRS has issued Frequently Asked Questions that employers and employees may also find helpful. The questions and answers that relate to benefits begin with Question 10.

Originally published by United Benefit Advisors – Read More

DOL Releases the New FLSA White Collar Overtime Exemption Rules | Ohio Employee Benefits

Categories: Compliance News, DOL, Employee Pay, Team K Blog
Comments Off on DOL Releases the New FLSA White Collar Overtime Exemption Rules | Ohio Employee Benefits

Overtime1-1024x1024On May 18, 2016, the U.S. Department of Labor (DOL) announced the publication of a final rule amending the white collar overtime exemptions to the Fair Labor Standards Act (FLSA). The final rule, which will be published in the Federal Register on May 23, 2016, increases the threshold salary for the exemption to $913 per week ($47,476 per year), the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). The new rule also increases the total annual compensation requirement needed to exempt highly-compensated employees (HCEs) to $134,004 per year and established a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

The final rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The final rule makes no changes to the duties tests for both standard and HCE positions.

When does the final rule take effect?

The final rule will be published in the Federal Register and take effect December 1, 2016. Initial increases to the standard salary level (from $455 to $913 per week) and the HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective then. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

What is the intent of the final rule?

Proponents argue that the overtime regulations haven’t been meaningfully updated in decades. An exemption from overtime eligibility originally meant only to apply to highly-compensated white-collar employees has applied to certain employees earning $455 per week or $23,660 per year since 2004. In addition to the salary threshold, exempt employees must hold a position that passes the “duties tests” within specific exempt classifications defined in the regulations. According to the DOL, 62 percent of full-time salaried workers were eligible for overtime pay in 1975, but today only 8 percent of those same types of workers are overtime pay eligible due to the low salary threshold that has not kept up with inflation and wage growth.

This final rule updates the salary level required for exemption to ensure that the FLSA’s intended overtime protections are fully implemented, and to simplify the identification of overtime-protected employees, thus making executive, administrative and professional exemption tests easier for employers and employees to understand and apply.

What are the basic applications of the FLSA?

Employees classified as nonexempt from the salary and duties tests covered by the FLSA must be paid at least one and one-half times their regular rate of pay for any hours they work beyond 40 in a workweek (or eight hours in a workday in some states). An employer who requires or permits an employee to work overtime is generally required to pay the employee premium pay for such overtime work. The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour at the federal level. Some states have higher minimum wage rate rates.

Generally, employees of enterprises that have an annual gross volume of sales made or business done of $500,000 or more are covered by the FLSA. In addition, employees of certain businesses are covered by the FLSA regardless of the amount of gross volume of sales or business done (enterprise coverage). These businesses include hospitals, businesses providing medical or nursing care for residents, schools (whether operated for profit or not for profit), and public agencies. Even when there is no enterprise coverage, employees are protected by the FLSA if their work regularly involves them in commerce between states (interstate commerce). The FLSA covers individual workers who are engaged in commerce or in the production of goods for commerce.

State and local governments are also subject to the FLSA; domestic service workers (such as housekeepers, full-time babysitters, and cooks) are also normally covered by the law.

What are the white collar exemptions to the FLSA?

The FLSA’s white collar exemptions exclude certain executive, administrative, and professional employees from federal minimum wage and overtime requirements. Certain computer professionals and outside sales employees are also excluded from these requirements. The final rule addresses changes in the salary thresholds for the executive, administrative, and professional employee and HCE categories.

Currently, to qualify for exemption, a white collar employee generally must meet all of the following tests:

  • Salary Basis Test: An employee must be salaried, meaning that he or she is paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
  • Salary Level Test: An employee must be paid at least a specific salary threshold, which is $913 per week (the equivalent of $47,476 annually for a full-year employee).
  • Duties Test: The employee must primarily perform executive, administrative, or professional duties, as provided in the DOL’s regulations.

Certain professionals are not subject to either the salary basis or salary level tests (for example, doctors, teachers, and lawyers). There is no salary level test required to qualify as an exempt outside sales employee. Finally, the current regulations also contain a relaxed duties test for HCEs who receive total annual compensation of $134,004 or more paid on a salary basis.

Keep in mind that job titles do not determine exempt status, and the fact that a white collar employee is paid on a salary basis does not alone provide sufficient grounds to exempt that employee from the FLSA’s minimum wage and overtime requirements. For an exemption to apply, an employee’s specific job duties and salary must meet all of the applicable requirements provided in the DOL’s regulations.

What is a highly-compensated employee (HCE)?

An HCE is paid total annual compensation of $134,004 or more and is deemed exempt under § 13(a)(1) of the FLSA if all of the following apply:

  • The employee earns total annual compensation of $134,004 or more, paid on a salary basis.
  • The employee’s primary duty includes performing office or non-manual work.
  • The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee.

For example, an employee may qualify as an exempt HCE if he or she earns at least $134,004 annually and customarily and regularly directs the work of two or more other employees, even though the employee does not meet all of the other requirements in the standard test for exemption as an executive.

For HCE exemption under the final rule, employees must earn a minimum of $913 per week on a salary or fee basis, while the remainder of the total annual compensation may include commissions, nondiscretionary bonuses, and other nondiscretionary compensation.

How are nondiscretionary bonuses and incentive payments included in the salary test?

For other non-HCE employees, the final rule allows nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary test requirement. This includes nondiscretionary incentive bonuses tied to productivity or profitability, such as profit-sharing, retention or production bonuses, and incentive payments, including commission payments based on pre-set formulas. Under certain conditions, catch-up payments within the quarter may be allowed.

The final rule does NOT allow discretionary bonuses that are awarded irregularly and at the employer’s sole discretion to be included as part of the standard salary test requirement, such as spot awards for performance or special projects.

Is there a small business exemption from the FLSA or the DOL’s overtime rule for white collar workers?

The FLSA does not provide an exemption for small businesses. Generally, the FLSA and the final rule apply to employees of enterprises that have an annual gross volume of sales made or business done of $500,000 or more, and certain other businesses (enterprise coverage). Even when there is no enterprise coverage, employees are protected by the FLSA if their work regularly involves them in commerce between states (interstate commerce). The DOL has published a Small Business Guide that provides additional information to assist small employers in complying with this rule.

When will annual automatic updates to the salary thresholds be made?

The automatic updates to the standard salary and HCE total annual compensation levels will be made every three years by applying the same method used to set those levels in the final rule. The DOL will update the standard salary level to maintain it at the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage Census Region, and will update the HCE total annual compensation level to maintain it at the annual equivalent of the 90th percentile of earnings of full-time salaried workers nationwide. The first update will take effect on January 1, 2020.

Where do I start when the new rule is implemented?

Although these changes do not go into effect until December 1st, start considering your options for compliance now. Options include raising pay to meet the new exemption thresholds, reducing workloads for individual employees who regularly work more than 40 hours per week and whose jobs will be reclassified as overtime eligible to reduce overtime payments, adjusting salary budgets to allow for additional overtime pay, and carefully planning your communications strategy for announcing the changes you will be making.

Begin your analysis by:

  1. Determining exempt positions where employees currently earn less than $47,476.
  2. Identifying your pay strategy and modeling scenarios where you increase the salary of these employees above the new salary level to maintain their positions as exempt, reducing salaries for newly reclassified nonexempt employees, and calculating the additional overtime the newly reclassified nonexempts may be earning.
  3. Analyzing work requirements and duties for employees who are reclassified as nonexempt, establishing overtime restrictions and hourly reporting requirements.
  4. Analyzing your benefits and paid time off structures to determine whether changes need to be made as the employee transitions from exempt to nonexempt status.
  5. Planning your communications strategy so that impacted employees will understand the changes and expectations going forward.

The DOL has prepared additional useful information to assist employers in understanding the impact of the final rule.

Originally published by ThinkHR – Read More

ubapic0421No two Department of Labor (DOL) audits are the same, yet there are typical questions asked and documents requested. See our recent blog on the Seven Common Mistakes That Could Trigger a DOL Audit. If you are audited, it’s recommended that questions received be sorted and color-coded based on what the question references (for example, third-party administrator, client answered, etc.). In addition, keep a log of each request and the document(s) provided in response to that request. A separate file folder for each request will help organize that task. Luckily, the DOL seems to be very receptive to an organization’s preparedness. It certainly makes the auditor’s job easier when a company has everything already in place and doesn’t require time to gather it all.

When a company is audited, the auditor sent by the DOL will vary in his or her experience of conducting audits. If the person is a novice, then that often means the auditor might ask for more information, whereas someone more experienced knows exactly what they want. Regardless, the audit will almost always take between two to three days of reviewing documents and conducting interviews. The auditor should be placed in a room that, while not necessarily secluded, is out of the line of traffic so that the auditor can work uninterrupted and limit staff interaction.

The human element is just part of the audit. One of the most important pieces of preparation is a putting a “wrap document” in place if one doesn’t already exist. The lack of a wrap document can indicate deeper issues with the plan. Conversely, up-to-date and complete wrap documents can indicate the employer’s due diligence in administering its plan and staying compliant. A wrap document is a legal document that basically wraps around an insurance carrier’s certificate with required ERISA language. This required language is typically not included in the insurance carrier certificate(s).

ERISA has two primary requirements, and satisfying this burden falls on the plan administrator (usually this is the employer). The first requirement is that group health plans have a written plan document and the second requirement is that a Summary Plan Description (SPD) is provided to all plan participants upon enrollment (and at other various times). A written plan document is what the plan administrator uses to operate the plan.

The SPD is what’s used to notify plan enrollees of the many plan terms, including who is eligible, how it’s funded, and what benefits are included. Some employers use a separate plan document and an SPD, while others use a combination approach.

Another item that the DOL is apt to be looking for is communications to employees. Because of this, employers should keep track of its communications. A company should keep records of who received notices along with the dates; don’t just say it was given to “everyone.” Be proactive with documents such as ERISA notices and the Summary of Benefits and Coverage (SBC) by including them in every new hire packet. In this age of technology where companies are moving communications to an Intranet, simply posting notices on an Intranet or company shared drive is not compliant unless you follow the electronic distribution rules, especially if participants may not have access to a computer as an integral part of their work day (for example, factory employees).

Audit-proof your company with UBA’s latest white paper: Don’t Roll the Dice on Department of Labor Audits. This free resource offers valuable information about how to prepare for an audit, the best way to acclimate staff to the audit process, and the most important elements of complying with requests.

Originally published by United Benefit Advisors – Read More

Seven Common Mistakes That Could Trigger a DOL Audit | Ohio Employee Benefits

Categories: Compliance News, DOL, General News, Industry News, Team K Blog, UBA News
Comments Off on Seven Common Mistakes That Could Trigger a DOL Audit | Ohio Employee Benefits

Y01VDYAX63Not many things incite more fear than receiving a notice that you’re about to have an audit, especially from the Department of Labor (DOL). The DOL is a cabinet-level department of the U.S. federal government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, re-employment services, and some economic statistics. It is headed by the U.S. Secretary of Labor.

What can trigger a DOL audit? Usually it’s one of two things — either a complaint, which leads to an investigation, or it’s totally random. While a DOL audit may or may not be triggered by the following, there are certain ways in which employers expose themselves to unnecessary risks:

  1. Not submitting Form 5500 reports on time if they have 100 or more participants
  2. Not having Summary Plan Descriptions (SPDs) for each Employee Retirement Income Security Act (ERISA) covered benefit or not using an SPD wrap document. Read more on the perils of neglecting written policies and procedures.
  3. Not completing all the various annual employee notifications such as Medicare Part D, Children’s Health Insurance Program (CHIP), Mental Health Parity Act (MHPA), Newborns’ and Mothers’ Health Protection Act (NMHPA), Women’s Health and Cancer Rights Act (WHCRA), Patient Protection and Affordable Care Act (ACA), Health Insurance Portability and Accountability Act (HIPAA), Health Exchange, etc.
  4. Not generating Summary of Material Modification (SMM) whenever there are material changes to benefits and then not saving these SMMs for future reference
  5. Not keeping Section 125 Premium Only Plan (POP) and flexible spending account (FSA) documents current and accurate
  6. Not filing Form 1095/1094 reports in a timely fashion, or if having conflicting information on these reports
  7. Not properly following the controlled group rules for owners of multiple organizations

Audit-proof your company with UBA’s latest white paper: Don’t Roll the Dice on Department of Labor Audits. This free resource offers valuable information about how to prepare for an audit, the best way to acclimate staff to the audit process, what the DOL wants, and the most important elements of complying with requests.

Originally published by United Benefit Advisors – Read More

Can Employers Assist Employees with Premiums for Individual Plans? | Ohio Employee Benefits

Categories: Employee Communication
Comments Off on Can Employers Assist Employees with Premiums for Individual Plans? | Ohio Employee Benefits

Posted by Carol Taylor

peopleOn November 6, 2014, the collective Departments of Health and Human Services (HHS), Labor (DOL) and the Treasury released three Frequently Asked Questions (FAQs) directed at employer payment plans for the purchase of individual insurance. While the departments had previously released several other pieces of guidance about these arrangements, this latest round exclaimed an emphatic no!

The other releases on the topic started well over a year ago. However, there are still agents and administrators that have insisted either Section 125 (Cafeteria Plans) or Section 105 (Reimbursement Arrangements) of the IRS code allowed employers to deduct premiums in a pretax manner or reimburse for individual premiums. Several of the administrators touting these plans even went as far as claiming they were so confident in their interpretation of the regulations, that they would pay any fines incurred because of their advice that these plans were compliant. This latest round of clarification was a resounding comply or pay fines.

Any employer payment that provides cash reimbursement for the purchase of an individual market policy is not compliant with the Patient Protection and Affordable Care Act (PPACA), whether the employer treats the money as pretax or post-tax to the employee. It is interesting to note that the latter provision has not been present in other regulatory releases, but is new with this round. While it is not clear at the moment how that would apply, a post-tax amount would put the insured in a precarious position, subject to fines and payback of subsidies on their own, since the additional income could lower the subsidy that they would otherwise qualify for, without the assistance from the employer.

Likewise, if a Section 105 reimbursement plan is set up for the purchase of individual policies, these plans are deemed noncompliant. The basis for this determination is the employer’s involvement of the plan, even though they may not have assisted the individual with their plan selection, they are still taking part by contributing cash for the policy purchase.

Another question delves into compensating employees that have a high claims risk to enroll in a Marketplace plan versus joining the group health plan offered by the employer. This scenario involves other factors that are prohibited, such as discriminating due to a health factor and eligibility rule discrimination. These plans also fail due to the employer-provided payment for purchase of an individual plan.

In all of these scenarios, since they would be deemed a group health plan, they would be subject to the market reforms such as unlimited lifetime maximum benefits, preventive care coverage at no cost share and other aspects of the law. This could also open the door for lawsuits against the employer if the individual policy failed to pay a claim for the insured.

The FAQs reference the fines that would apply in these instances under Section 4980D. In the May 2014 release from the IRS, they spelled out the excise fines as $100 per day, per employee or $36,500 annually. However, these fines are an excise tax in the amount of $100 per day with respect to each individual to whom such failure relates. So, if the employer were to contribute to dependents’ coverage, the fines would also be incurred for each dependent per day, in addition to the employee.

It is always best to get a plan into compliance as quickly as possible. With many of these having been put into place earlier this year, there is still time to correct at least part, but not all, of the issues. Speak with your tax counsel as quickly as possible to get your plans into compliance. Your local United Benefit Advisors office, with their vast compliance resources, can also assist you with these issues.

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