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Monthly Archives: October, 2016

  • DOL Issues Guidance for Private Employers on Final Overtime Rule

    The U.S. Department of Labor (DOL) has issued new guidance on its final overtime rule to help private sector employers evaluate current practices and transition to the rule’s requirements.

    Final Overtime Rule
    The DOL’s final overtime ruleeffective December 1, 2016, updates the salary and compensation levels required for executive, administrative, and professional workers to be exempt from the minimum wage and overtime pay protections of the federal Fair Labor Standards Act (FLSA). In particular, the final rule:

    • Raises the salary threshold from $455 a week to $913 per week (or $47,476 annually) for a full-year worker;
    • Sets the highly-compensated employee (HCE) total annual compensation level equal to $134,004 annually; and
    • Amends the regulations to allow employers to use nondiscretionary bonuses, incentives, and commissions to satisfy up to 10% of the new standard salary level, so long as employers pay those amounts on a quarterly or more frequent basis.

    Note: When both the FLSA and a state law apply, the employee is entitled to the most favorable provisions of each law.

    New DOL Guidance
    Among other things, the DOL’s new guidance details some of the options employers may exercise in determining how to comply with the final rule. Employers have certain options for responding to the changes to the salary level, and the DOL does not dictate or recommend any method. Such options include:

    • Providing pay raises that increase workers’ salaries to the new threshold;
    • Spreading employment by reducing or eliminating work hours of individual employees working over 40 hours per week for which no overtime is being paid; or
    • Paying overtime.

    Note: The rule does not require employers to convert a salaried worker making less than the new salary threshold to hourly status; employers can pay non-exempt employees on a salary basis and pay overtime for hours worked beyond 40 in a week.

    Our section on the Fair Labor Standards Act features additional information on DOL’s final overtime rule.

    Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

    The information provided herein is intended solely for the use of our clients and members. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher. Kindly read our Terms of Use and respect our Copyright.

    © 2016 HR 360, Inc. – All rights reserved

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  • ‘Employer Payment Plans’ Violate Market Reforms, Give Rise to Significant Penalties

    An employer payment plan is an arrangement under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy or uses its funds to directly pay the premium for an individual health insurance policy covering the employee. As part of the implementation of the Affordable Care Act (ACA), new rules apply to employer payment plans. The summary below is intended to help employers understand these new rules and remain compliant with the ACA.

    ACA Market Reforms
    The ACA contains certain “market reforms” that apply to group health plans, including the:

    • Annual Dollar Limit Prohibition: A prohibition on any annual limit on the dollar amount of benefits for any individual; and
    • Preventive Services Requirement: A requirement that non-grandfathered plans provide certain preventive services without imposing any cost-sharing requirements for these services.

    Application of the ACA Market Reforms to Employer Payment Plans
    An arrangement under which an employer provides reimbursements or payments that are dedicated to providing medical care, such as cash reimbursements for the purchase of an individual market policy, is itself a group health plan under the ACA. Accordingly, the arrangement is subject to the ACA market reforms without regard to whether the employer treats the money as pre-tax or post-tax to the employee.

    If a group health plan does not itself comply with the market reforms, the plan must be integrated with a group health plan that is in compliance. However, the Internal Revenue Service (IRS) has stated that an employer payment plan cannot be integrated with an individual market policy to satisfy the market reforms. Consequently, employer payment plans may be subject to an excise tax penalty of $100 per day per applicable employee ($36,500 per year, per employee) under the Internal Revenue Code.

    Alternative to Employer Payment Plans
    According to IRS Notice 2015-17, if an employer increases an employee’s compensation, but does not condition the payment of the additional compensation on the purchase of health coverage (or otherwise endorse a particular policy, form, or issuer of health insurance), this arrangement is not an employer payment plan.

    Check out our Cash for Premium Payments & Other Employer Payment Plans section for additional information.

    Need advice on your Employer Employment Plans? We can help! Contact us at 800-653-6129, or email us here: https://www.nashinsurance.com/contact/

    Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

    The information provided herein is intended solely for the use of our clients and members. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher. Kindly read our Terms of Use and respect our Copyright.

    © 2016 HR 360, Inc. – All rights reserved

    Read more
  • Understanding the Rules on ‘Employer Payment Plans’ Under the Affordable Care Act

    ‘Employer Payment Plans’ Violate Market Reforms, Give Rise to Significant Penalties

    An employer payment plan is an arrangement under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy or uses its funds to directly pay the premium for an individual health insurance policy covering the employee. As part of the implementation of the Affordable Care Act (ACA), new rules apply to employer payment plans. The summary below is intended to help employers understand these new rules and remain compliant with the ACA.

    ACA Market Reforms
    The ACA contains certain “market reforms” that apply to group health plans, including the:

    • Annual Dollar Limit Prohibition: A prohibition on any annual limit on the dollar amount of benefits for any individual; and
    • Preventive Services Requirement: A requirement that non-grandfathered plans provide certain preventive services without imposing any cost-sharing requirements for these services.

    Application of the ACA Market Reforms to Employer Payment Plans
    An arrangement under which an employer provides reimbursements or payments that are dedicated to providing medical care, such as cash reimbursements for the purchase of an individual market policy, is itself a group health plan under the ACA. Accordingly, the arrangement is subject to the ACA market reforms without regard to whether the employer treats the money as pre-tax or post-tax to the employee.

    If a group health plan does not itself comply with the market reforms, the plan must be integrated with a group health plan that is in compliance. However, the Internal Revenue Service (IRS) has stated that an employer payment plan cannot be integrated with an individual market policy to satisfy the market reforms. Consequently, employer payment plans may be subject to an excise tax penalty of $100 per day per applicable employee ($36,500 per year, per employee) under the Internal Revenue Code.

    Alternative to Employer Payment Plans
    According to IRS Notice 2015-17, if an employer increases an employee’s compensation, but does not condition the payment of the additional compensation on the purchase of health coverage (or otherwise endorse a particular policy, form, or issuer of health insurance), this arrangement is not an employer payment plan.

    Check out our Cash for Premium Payments & Other Employer Payment Plans section for additional information.

    Health Care Reform Updates provided by:

    Team Nash
    2005 E 2700 St, Suite 140, Salt Lake City, UT, 84109
    385-234-6754

    Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

    The information provided herein is intended solely for the use of our clients and members. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher. Kindly read our Terms of Use and respect our Copyright.

    © 2016 HR 360, Inc. – All rights reserved

    Read more