Page 1 of 26
The new federal tax law, signed by President Trump in December, contains a number of provisions that will impact the workplace and employers. One specific change has to do with the Family and Medical Leave Act (FMLA). As many are aware, FMLA requires employers to provide certain employees with up to 12 weeks of job-protected leave annually for specified family and medical reasons. The leave may be paid or unpaid.
To encourage employers to provide eligible employees with paid leave under FMLA, the new tax law provides eligible employers with a new business credit equal to 12.5% of the amount of wages paid to “qualifying employees” during any period in which such employees are on family and medical leave as long as the rate of payment under the program is at least 50% of the employee’s normal wages. The credit increases from 12.5% by 0.25 percentage points (but not above 25% of wages) for each percentage point by which the rate of payment exceeds 50%. The credit can be used to lower an employer’s taxable income, subject to limitations, and applicable alternative minimum tax. The amount of paid family and medical leave used to determine the tax credit for an employee may not exceed 12 weeks.
To be eligible for the credit, an employer must have a written policy that provides all qualifying full-time employees with at least two weeks of annual paid family and medical leave. Part-time employees are also to be allowed a commensurate amount of leave on a pro rata basis. Qualifying employees are those who have worked for the company for at least one year and were paid no more than 60% of the compensation threshold for highly compensated employees in the previous year. (For 2018, 60% of the compensation threshold is equal to 60% x $120,000 = $72,000.)
For purposes of the credit, any leave paid for by a State or local government or required by State or local law shall not be taken into account in determining the amount of paid family and medical leave provided by the employer. For example, if a jurisdiction, such as Chicago has an ordinance that provides paid sick leave for FMLA-permitted purposes, an employer will not qualify for the business tax credit if the paid leave is provided to be in compliance with the ordinance. As a result, it is important that the employer have a clear policy in place.
The Secretary of Treasury will determine whether an employer or an employee satisfies applicable requirements for the employer to be eligible for the tax credit based on information provided by the employer as the Secretary determines to be necessary or appropriate.
If the employee takes a paid leave for other reasons, such as vacation leave, personal leave, or other medical or sick leave, this paid leave will not be considered to be family and medical leave for purposes of the credit.
The credit is effective for wages paid in taxable years starting on January 1, 2018. It is set to expire for wages paid in taxable years beginning after December 31, 2019.
President Donald Trump signed the Federal Register Printing Savings Act of 2017 (the Act) on January 22 to end the two-day government shutdown. In addition to funding the government for two-and-a-half weeks, the Act delays the onset of the Affordable Care Act’s (ACA’s) “Cadillac Tax” by two more years. The Cadillac Tax was originally intended to go into effect in 2018, but President Obama delayed the effective date until 2020. The Act now delays the Cadillac Tax until 2022.
The Act also extended the Children’s Health Insurance Program (CHIP) funding for six years.
The Cadillac Tax is a 40% tax on the value of employer-sponsored health coverage that exceeds certain benefit thresholds. It is widely unpopular with employer groups and, as we have previously reported, Congress has expressed a strong bipartisan desire to repeal the Cadillac Tax entirely.
In the meantime, the US Department of the Treasury has not issued guidance on the Cadillac Tax since before the initial delay, and therefore, it is likely that the Act will further delay any additional Cadillac Tax guidance.
Many Applicable Large Employers (ALE’s) have already started received Letter 226J from the IRS that indicates their proposed assessment of a penalty under the Employer Shared Responsibility provision of the Patient Protection and Affordable Care Act (ACA).
Letter 226J outlines several things for the ALE receiving it. The letter will tell the ALE what the proposed penalty assessment could be and will also state whether the assessment is based on an “A” or “B” Penalty. An “A” Penalty is assessed when at least one full-time employee is provided a premium tax credit when the employee obtains coverage in the healthcare marketplace exchange. An ALE may be subject to a “B” Penalty if employees decline substandard coverage (aka coverage offered is not affordable) offered by the ALE and then receive a tax credit when obtaining coverage from the marketplace exchange. The letter also provides a list to the ALE of the full-time employees that received a premium tax credit and therefore created the potential for a penalty under the ACA.
It is very important for ALE’s to respond to Letter 226J and do so in a timely manner. The IRS provides 30 days, from the date of issuance, for ALE’s to respond, and if no response is made by the ALE, the IRS will conclude the employer does not disagree with the proposed assessment. ALE’s should not assume that because they received a letter that they will owe a penalty or that the amount outlined in the letter is the amount they will ultimately pay to the IRS for non-compliance with the ACA. Additionally, if no response is made to the IRS, the IRS will demand payment by issuing notice CP 220J. Only once the notice and demand for payment is received is the ALE required to make the penalty payment. Letter 226J is not requesting any payment but is giving ALE’s the chance to respond/disagree with the decision initially made by the IRS & Marketplace.
Letter 226J clearly outlines instructions on how to respond to the letter if the ALE feels that it is not liable for the proposed penalty. ALE’s will complete Form 14764 responding to the IRS that it does not agree with the penalty determination. The ALE will provide the IRS with a signed statement explaining why it does not agree with the determination. Any supporting documentation should be provided to the IRS (for example, records indicating dates of termination of employees, proof that the ALE offered coverage to full-time employees) and any other information requested in Letter 226J. The ALE should also make any changes to the Employee Premium Tax Credit (PTC) Listing that was enclosed with Letter 226J. The Employee PTC Listing (Form 14765) will be included with Letter 226J and Form 14764 (ESRP Response). The Employee PTC Listing identifies each employee who received a PTC by month and also the line 14 and line 16 indicator codes that were provided on the employee’s 1095-C form. If the ALE provided the incorrect indicator codes on form 1095-C, the Employee PTC Listing provides a line for the ALE to correct the codes used.
Once the IRS receives the response to Letter 226J, it will acknowledge that it has received the response by sending the ALE a version of Letter 227. There are 5 versions of Letter 227, and the ALE will receive the appropriate version, acknowledging receipt of their response and an outline of any further action that may be required.
As tax season begins, the IRS is urging employers to educate their HR and payroll staff about a Form W-2 phishing scam that victimized hundreds of organizations and thousands of employees last year.
“The Form W-2 scam has emerged as one of the most dangerous phishing e-mails in the tax community,” the IRS said in a January 2018 alert. During the last two tax seasons, “cybercriminals tricked payroll personnel or people with access to payroll information into disclosing sensitive information for entire workforces,” the alert noted.
Reports about this scam jumped to approximately 900 in 2017, compared to slightly over 100 in 2016, the IRS said. As a result, hundreds of thousands of employees had their identities compromised.
The IRS described the scam as follows:
The IRS gave these examples of what appear to be e-mails from top executives at the organization:
The scam affected all types of employers last year, from small and large businesses to public schools and universities, hospitals, tribal governments and charities, the IRS said.
On Dec. 22, 2017, President Trump signed into law Congress’s tax reform legislation. The summary below addresses some of the changes that relate to compensation and employee benefits.
Individual shared responsibility – With respect to health care and employee benefits, the most important feature of the tax act is the elimination of the penalty on individual taxpayers who do not maintain minimum essential coverage. However, please note that this elimination of the penalty is prospective and only applies for months beginning after Dec. 31, 2018. Thus, the penalty remains fully in effect for 2018.
With the reduction in the penalty, some employers may see fewer employees enroll in health care coverage during their 2019 healthcare benefit open enrollment period. However, most employees will continue to view employers that offer health insurance coverage more favorably than those who do not. Therefore, offering health insurance will remain a valuable and tax-efficient recruiting and retention tool.
This may also reduce the number of individuals who enroll in healthcare through either the federal or various state specific healthcare marketplaces. However, premium tax credits will still be available for those individuals that purchase health insurance through these marketplaces. If enough healthy individuals drop their coverage, both the individual and employer group health market will likely see some cost increases to pay for the adverse selection impact of this change.
It is also important to remember that this change applies to the individual penalties only. The potential employer penalties for failing to offer coverage or offering inadequate coverage will remain, as well as the current law’s information reporting requirement.
All OSHA 300A logs must be posted by February 1st in a visible location for employees to read. The logs need to remain posted through April 30th.
Please note the 300 logs must be completed for your records only as well. Be sure to not post the 300 log as it contains employee details. The 300A log is a summary of all workplace injuries and does not contain employee specific details. The 300A log is the only log that should be posted for employee viewing.
Please contact our office if you need a copy of either the OSHA 300 or 300A logs.
It is 7pm at night and you burn your hand while cooking dinner. Your doctor’s office is closed but you are pretty certain that your burn needs to receive some sort of medical attention soon. Should you go to the Emergency Room that is close to your house and most convenient or should you try to go to a Convenience Care Clinic at your neighborhood grocery store or go to the Urgent Care Clinic about 15 minutes away? Maybe you can just wait until the morning and try to get an appointment to be seen by your doctor.
It is generally known that a visit to the Emergency Room costs more than a trip to a Physician’s office for the same ailment/treatment, but most employees and employers do not realize just how different the costs between the various care options really are. Choosing the most appropriate option can save employees from paying higher copays and deductibles and it helps to keep the employer’s annual claims costs down as well. Since lower claims can positively influence the renewal rates for the next policy period, it is vital that everyone understand the available options for care so they can make an educated decision about what is best for their particulate sickness/injury.
Below is an example of what an average visit at various care options could cost for someone without health insurance:
Some Emergency Room trips are certainly needed & warranted based on the severity of the issue, however in the US, every year a substantial number of visits that occur at the ER are for situations which are not life threatening and where alternative treatments could have been provided for a far lower cost.
For example, a medium size business could see their claims reduced by almost $25,000 just by encouraging employees to utilize Urgency Care over an Emergency Room when appropriate. Collectively employees could also save up to $5000 a year in copays or more for plans that have deductibles for ER visits (based on 20 trips a year).
These are facilities operated out of a hospital and other primary care centers that are typically open 24 hours a day. They are capable of handling severe and life threatening injury or illness. While the ER can handle virtually any problem, trips in general should be reserves for issues such as heavy bleeding, difficulty breathing, major burns, severe head injuries, internal injuries, convulsions/ seizures, severe chest or abdominal pain, pregnancy complications, sudden changes in vision or severe eye injuries, large open wounds, loss of conciseness, poisoning, spinal injuries, severe infections, severe allergic reactions, high fever or major broken bones.
Any case where an individual’s life could be reasonably at risk or the severity of the situation is not known, it is always best to err on the side of caution and visit the ER over other care options.
Emergency Rooms under a medical plan are usually subject to either copays ranging from $250 – $450 per visit or to the plan Deductible plus 20%-50% Coinsurance.
Urgent Care Centers
A level below an ER is an Urgent Care Center. These will typically have a medical doctor on site at all times during operational hours and commonly utilize Nurse Practitioners (NPs) or Physician Assistants (PAs) to assist patients. These facilities usually have extended hours, are open 7 days a week, and do not require appointments.
Instances where an Urgent Care trip would be appropriate include: Sprains & strains, minor burns, urinary tract infections, minor allergic reactions, fevers and/or flu, back pain, seasonal allergies, minor infections, vomiting and/or diarrhea, minor cuts requiring stitches, moderate asthma/ breathing discomfort, and minor broken bones.
Urgent Care Centers under a medical plan are usually subject to either copays ranging from $75-$100 per visit or to the plan Deductible plus 20%-50% Coinsurance.
Primary Care Physician Office
This would be either an individual’s Primary Care Physician or a physician’s office that handles general care on an as needed basis. This could be an independent office, or part of a larger group network. A doctor is usually onsite, but it is also common for PA’s or NP’s to treat patients as well. Many offices are open regular business hours (9-5), 5 days a week. These offices can generally handle everything that can be done at an Urgent Care Center, but at a lower cost. Most offices do require an appointment, so they are best when the matter does not require immediate attention.
Reasons to visit a Physician’s office are the same as an Urgent Care with the addition of a basic annual check up and/or preventative care. Preventative care (such as an annual wellness checks/exams) are covered under most medical plans at 100%.
Physician Offices under a medical plan are usually subject to either copays ranging from $20-$70 per visit or to the plan Deductible plus a copay of $25-$50.
Convenience Care / Retail Clinics
These are typically found inside of stores like Walmart, Target, CVS & Walgreens, but are also becoming more common in grocery stores as well. They are usually staffed by a PA or NP without a doctor on site. These clinics have similar, or slightly reduced hours than the retails stores they are in, and may or may not be open 7 days a week. They do not require an appointment and are better for minor issues that need attention.
Common reasons to visit a Convenience Clinic include sore throat, earache, sinus infection, flu shot, common cold, upset stomach, bug bites, minor fever, minor rash, coughing, & congestion.
Convenience Clinics under a medical plan are usually subject to either copays ranging from $40-$60 per visit or to the plan Deductible plus a copay of $20-$40.
This is becoming more common as a care option for employees covered under medical plans. Telemedicine, also commonly called Virtual Visits, is when you speak to a healthcare professional through a computer, phone, or tablet. This is an alternative to an in person trip when a diagnosis rather than a physical treatment is needed. Virtual visits may occur with a doctor, NP, or PA and are often available 24 hours, 7 days a week. Telemedicine can be used for many of the same ailments that Urgent & Convenience Care can handle. It is also good as an initial option for those in rural areas who don’t have quick access to other facility options.
Common reasons to use telemedicine include minor allergies, fever, pinkeye, sinus infection. Cough/cold, diarrhea, rash, sore throat, congestion, urinary tract infections, flu or stomach ache.
Telemedicine / Virtual Visits under a medical plan are usually subject to a lower copay than a regular Physician office visit ranging from $10-$20 per visit.
It is important to educate employees on their options and stress that choosing the most appropriate option for care will not only save them money on copays and deductibles, but can also help to keep the group premiums from significant increases at the end of the policy period. It is suggested to compile a list of several Urgent and Convenience Care facilities in the area, along with their hours of operation and recommended services they can handle for employees to use as a general reference. Distributing information about the availability of telemedicine and how to access it will also help to encourage employees to use lower cost options for care for minor issues.
In IRS Notice 2018-06, the IRS announced a 30-day automatic extension for the furnishing of 2017 IRS Forms 1095-B (Health Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage), from January 31, 2018 to March 2, 2018. This extension was made in response to requests by employers, insurers, and other providers of health insurance coverage that additional time be provided to gather and analyze the information required to complete the Forms and is virtually identical to the extension the IRS provided for furnishing the 2016 Forms 1094-C and 1095-C. Notwithstanding the extension, the IRS encourages employers and other coverage providers to furnish the Forms as soon as possible.
Notice 2018-06 does not extend the due date for employers, insurers, and other providers of minimum essential coverage to file 2017 Forms 1094-B, 1095-B, 1094-C and 1095-C with the IRS. The filing due date for these forms as it stands today remains February 28, 2018 (April 2, 2018, if filing electronically).
The IRS also indicates that, while failure to furnish and file the Forms on a timely basis may subject employers and other coverage providers to penalties, such entities should still attempt to furnish and file even after the applicable due date as the IRS will take such action into consideration when determining whether to abate penalties.
Additionally, the Notice provides that good faith reporting standards will apply once again for 2017 reporting. This means that reporting entities will not be subject to reporting penalties for incorrect or incomplete information if they can show that they have made good faith efforts to comply with the 2017 Form 1094 and 1095 information-reporting requirements. This relief applies to missing and incorrect taxpayer identification numbers and dates of birth, and other required return information. However, no relief is provided where there has not been a good faith effort to comply with the reporting requirements or where there has been a failure to file an information return or furnish a statement by the applicable due date (as extended).
Finally, an individual taxpayer who files his or her tax return before receiving a 2017 Form 1095-B or 1095-C, as applicable, may rely on other information received from his or her employer or coverage provider for purposes of filing his or her return.
Florida is raising its minimum wage to $8.25 an hour beginning Jan. 1, up 15 cents from $8.10 in 2017. For tipped employees, the minimum wage will be at least $5.23 an hour.
The minimum wage rate is recalculated each year on Sept. 30, based on the Consumer Price Index.
Employer found liable for intentionally violating minimum wage requirements are subject to a fine of $1000 per violation, payable to the state in addition to potential civil action law suit.
Be sure to update your required Florida Minimum Wage Posting to reflect this change. You can download a copy of the new poster here.