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The Family and Medical Leave Act (FMLA) forms expire June 30—not on their original expiration date of May 31—but experts believe they aren’t likely to change when they’re replaced with new forms.
Employers who customize their own forms aren’t too concerned with the imminent replacement of the current forms, but employment law attorneys disagree on how much the DOL forms might be tweaked.
The FMLA forms are used to certify that an employee is eligible to take FMLA leave and to notify him or her of leave rights under the law. The forms expire under the Paperwork Reduction Act of 1995, which requires the Department of Labor (DOL) to submit its forms at least every three years to the Office of Management and Budget (OMB) for approval, so the OMB can ensure processes aren’t too bureaucratic.
The DOL is renewing the current FMLA forms on a month-to-month basis until it replaces them with new forms. But the new forms may be virtually identical to the current ones with just a different expiration date.
In 2015, the DOL made a few minor tweaks to the FMLA forms so they would conform with the Genetic Information Nondiscrimination Act.
There have not been substantive changes to FMLA or its regulations in the past three years that would require changing any of the information provided or sought on the current forms, noted Tina Bengs, an attorney with Ogletree Deakins. So it is likely that the new forms, once issued, will be approved for the maximum three-year period.
Customization of Forms
Some employers customize the DOL-recommended forms for their own use, observed Steven Bernstein, an attorney with Fisher Phillips. For example, some employers are covered by state and federal FMLAs and adjust the federal forms to reflect state law requirements. Others make minor changes, such as referring to workers as “associates” rather than “employees.”
On occasion, employers incorporate reference to their accrued leave policies, while others adopt robust language disclaiming liability under the FMLA, he said.
He cautioned, however, that an employer can be held liable for using a form that harms the employee by misleading him or her about FMLA rights, and recommended that any changes be reviewed by an outside expert to ensure that added language does not inadvertently conflict with the FMLA.
Monica Velazquez, an attorney with Clark Hill, prefers customized forms so that employers aren’t handing workers documents with the DOL logo. The logo makes the forms look more official than they are, she said, and emphasizes that their use is optional.
It is recommended if you are going to create customized FMLA forms to copy and paste the information from the DOL form into the employer’s own form. If the employer plans to use its own language, use plain English and bullet points, she said. Keep things as direct as possible.
For example, instead of an open-ended question about the employee’s treatment schedule, a customized FMLA form might ask the doctor to choose a frequency of treatment—every week, month or year—and circle the response. This would reduce the challenge of reading doctors’ often illegible handwriting. Less space for handwritten information also would reduce the chances of doctors’ filling certification forms with confusing medical lingo.
Many employers put the information about health conditions at the top of the medical certification forms, as it’s the first piece of information the employer wants—what ails the employee or family member—so the employer has a better sense of whether the employee is covered by the FMLA.
The current DOL forms are:
The Affordable Care Act (ACA) created PCORI to help patients, clinicians, payers and the public make informed health decisions by advancing comparative effectiveness research. PCORI’s research is to be funded, in part, by fees paid by either health insurers or sponsors of self-insured health plans. These fees are widely known as PCORI fees. Health insurers and self-insured plan sponsors are required to report and pay PCORI fees annually using IRS Form 720 (Quarterly Federal Excise Tax Return). The report and fees are due on July 31st with respect to the plan year that ended during the preceding calendar year. For instance, for calendar year plans, the fee that is due July 31, 2018 applies to the plan year that ended December 31, 2017.
Reporting PCORI fees on Form 720
Form 720 and completion instructions are posted on the IRS’ website. Insurers and self-insured plan sponsors must report the average number of lives covered under the plan. For fully insured plans, the carrier is responsible for reporting and paying the fee on the employers behalf. For a self-insured plan, the plan sponsor (employer) enters information for “self-insured health plans.” The number of covered lives is then multiplied by the applicable rate based on the plan year end date. Form 720 that is due July 31, 2018, will reflect payment for plan years ending in 2017. The applicable rate depends on the plan year end date:
The applicable rate may increase for inflation in future years. However, the program ends in 2019 and PCORI fees will not apply for plan years ending after September 30, 2019. Insurers or self-insured plan sponsors that file Form 720 only for the purpose of reporting PCORI fees do not need to file Form 720 for the first, third or fourth quarter of the year. Insurers or self-insured plan sponsors that file Form 720 to report quarterly excise tax liability (for example, to report the foreign insurance tax) should enter a PCORI fee amount only on the second quarter filing. See below for more information about affected plans and methods for calculating the number of participants and amount of the required PCORI fee.
The IRS has created a webpage on understanding Letter 227, which certain applicable large employers (ALEs) may receive in connection with the assessment of employer shared responsibility penalties (aka Pay or Play penalties). As background, the IRS uses Letter 226J to notify an ALE of a proposed penalty assessment. ALEs have 30 days to respond, using Form 14764 to indicate their agreement or disagreement with the proposed penalty amount. Letter 227 acknowledges the ALE’s response to Letter 226J and explains the outcome of the IRS’s review and the next steps to fully resolve the penalty assessment. There are five different versions of the letter (samples are provided of each version on the IRS website):
Only Letters 227-L and 227-M call for a response, which must be provided by the date stated in the letter. The IRS stresses that the Letter 227 is not a bill. Notice CP 220J is used to collect the employer shared responsibility penalty payment.
Late last week, the IRS released Rev. Proc. 2018-34 which, among other items, set the affordability threshold for employers in 2019. In order to avoid a potential section 4980H(b) penalty (aka Pay or Play penalty), an employer must make sure one of its plans provides minimum value and is offered at an affordable price. An actuary will determine whether the minimum value threshold has been satisfied and this is generally not an issue for employers. However, an employer is in control as to whether the plan it is offering meets the affordability threshold.
A plan is considered affordable under the ACA if the employee’s contribution level for self-only coverage does not exceed 9.5 percent of the employee’s household income. This 9.5 percent threshold is indexed for years after 2014. In 2018 the affordability threshold decreased from 9.69 percent to 9.56 percent. However, similar to every other year, the affordability threshold is scheduled to increase in 2019. In 2019 the affordability threshold will be 9.86 percent. The significant increase compared to 2018 provides an employer who is toeing the line of the affordability threshold an opportunity to increase the price of its health insurance while continuing to provide affordable coverage.
An employer wishing to use one of the affordability safe harbors will use the 2019 affordability threshold of 9.86 percent when determining if the safe harbor has been satisfied. The first affordability safe harbor an employer may utilize is referred to as the form w-2 safe harbor. Under the form w-2 safe harbor, an employer’s offer will be deemed affordable if the employee’s required contribution for the employer’s lowest cost self-only coverage that provides minimum value does not exceed 9.86 percent of that employee’s form w-2 wages (box 1 of the form w-2) from the employer for the calendar year.
The second affordability safe harbor is the rate of pay safe harbor. The rate of pay safe harbor can be broken into two tests, one test for hourly employees and another test for salaried employees. For hourly employee, an employer’s offer will be deemed affordable if the employee’s required contribution for the month for the employer’s lowest cost self-only coverage that provides minimum value does not exceed 9.86 percent of the product of the employee’s hourly rate of pay and 130 hours. For salaried employees, an employer’s offer will be deemed affordable if the employee’s required contribution for the month for the employer’s lowest cost self-only coverage that provides minimum value does not exceed 9.86 percent of the employee’s monthly salary.
The final affordability safe harbor is the federal poverty line safe harbor. Under the federal poverty line safe harbor, an employer’s offer will be deemed affordable if the employee’s required contribution for the employer’s lowest cost self-only coverage that provides minimum value does not exceed 9.86 percent of the monthly Federal Poverty Line (FPL) for a single individual. The annual federal poverty line amount to use for the United States mainland in 2019 is $12,140. Therefore, an employee’s monthly cost for self-only coverage cannot exceed $99.75 in order to satisfy the federal poverty line safe harbor.
When planning for the 2019 plan year, every employer should check to make sure at least one of its plans that provides minimum value meets one of the affordability safe harbors discussed above for each of its full-time employees. Should you have any questions on determining the affordability of a plan or any other questions related to the Forms 1094-C and 1095-C, please don’t hesitate to contact us.
In the last Regulatory Agenda, OSHA indicated that it was undergoing rulemaking to revise the Improve Tracking of Workplace Injuries and Illnesses regulation promulgated under the Obama administration. Specifically, OSHA noted it was considering deleting the requirement for employers with 250 or more employees at an establishment to electronically submit its 300 Log, 301 Forms along with the 300A Form. What was not clear at the time was what OSHA was going to require for submission in July since the agency has not yet issued a Notice of Proposed Rulemaking revising the standard.
Recently, OSHA made clear that it will not collect or require employers with 250 or more employees per establishment to submit the 300 Log or the 301 Forms. OSHA will require all employers covered by the regulation to only submit the 2017 300A Form by July 1, 2018. Beginning in 2019 and every year thereafter, the 300A Forms must be submitted by March 2.
Covered establishments with 250 or more employees are only required to provide their 2017 Form 300A summary data. OSHA is not accepting Form 300 and 301 information at this time. OSHA announced that it will issue a notice of proposed rulemaking (NPRM) to reconsider, revise, or remove provisions of the “Improve Tracking of Workplace Injuries and Illnesses” final rule, including the collection of the Forms 300/301 data. The Agency is currently drafting that NPRM and will seek comment on those provisions.
Also, last week we blogged about OSHA’s reversal in position regarding the electronic filing of 300A Forms by employers in state plans that have not adopted the Improve Tracking of Workplace Injuries and Illnesses requirements. OSHA is now requiring those employers to submit their 300A Forms using the Injury Tracking Application on OSHA’s website by July 1, 2018. However, an agency official recently clarified that since OSHA does not have jurisdiction in those states with state plans, it is prohibited from enforcing the regulation and can not issue citations to employers for failing to electronically submit the 2017 300A, and since those certain state plans have yet to adopt the regulation they are equally prohibited from enforcing the requirement and can not issue citations to employers. So while OSHA is requiring employers in state plans that have not yet adopted the regulation to submit their 2017 300A it has acknowledged that it has no enforcement authority for those employers who fail to do so.
Article courtesy of Jackson Lewis
Last week, the Internal Revenue Service (IRS) issued FAQ guidance regarding the employer tax credit for paid family and medical leave. As a reminder, the Tax Cuts and Jobs Act of 2017 (the Act) provides a tax credit to employers that voluntarily offer paid family and/or medical leave to employees. The FAQs clarify some of the requirements in Section 45S of the Act that an employer’s paid family and/or medical leave policy must include. The FAQs also clarify other details, such as the basis for the credit and the tax credit’s impact on an employer’s deduction for wages paid to an employee who is on a qualifying leave.
For information on how to determine if your company can take advantage of the paid family and medical leave tax credit, read this earlier article from Jackson Lewis on this topic. You can also estimate your company’s potential annual tax savings using the Jackson Lewis Paid Family Leave Tax Credit Calculator.
Recipients of these letters may disagree with all or part of the proposed assessment amount. In many cases, there is good reason to disagree, since the IRS is evaluating compliance based on ACA reporting Forms 1094-C and 1095-C from 2015 — the first year for these filings, when confusion was common. Therefore, providing the IRS with updated information or correcting filing errors is likely to reduce or even eliminate the assessment.
It appears that 2015 proposed assessment letters will continue during 2018, and that employers will be notified of 2016 proposed assessments either later in 2018 or in 2019 (absent legislative relief or a legal challenge to the employer mandate).
ALEs started reporting compliance information from 2015 to the IRS on Forms 1094-C and 1095-C in early 2016. An ALE may receive an IRS assessment letter for the following reasons:
Letter 226-J states the proposed penalty (with accompanying calculations) and a list of employees who received a premium tax credit by month. The letter also indicates whether the proposed assessment is for an “a” or “b” penalty (so far, most are “a” penalties). The “a” penalty relates to whether the employer offered health coverage to substantially all (70% in 2015, 95% after that) full-time employees (and dependents), while the “b” penalty relates to whether the coverage offered met the minimum value requirements and was affordable. Recent 226-J letters have proposed penalties in the following situations:
First, any company that consists of more than one ALE will want to direct the Letter 226-J to the correct ALE so it can respond promptly. The most likely cause of incorrect assessments is errors in Forms 1094-C and 1095-C, as these are the forms the IRS uses to determine compliance with the employer mandate. The following are some suggestions for responding to these letters and avoiding assessments, now and in the future:
ALEs that discover an error after receiving Letter 226-J should not re-file the forms and should respond to the letter in one of two ways: pay the proposed penalty or disagree with all or part of the proposed assessment following IRS procedures.
ALEs that respond to the IRS will receive Letter 227, which acknowledges receipt of the ESRP Response form and describes any next steps for the ALE. An ALE that disagrees with the IRS’s proposed or revised assessment may request a pre-assessment conference with the IRS Office of Appeals by the response date on Letter 227 (generally 30 days from the date of the letter).
Failing to respond to Letter 226-J within 30 days will trigger a Notice and Demand for Payment (Notice CP 220J). After that, the penalty amount will be subject to IRS lien and levy enforcement actions, and interest will start to accrue.
ALEs (or their ACA reporting vendors) need to be careful in filing Forms 1094-C and 1095-C in the future. Assuming the employer mandate requirements are met, completing the forms correctly the first time should ensure that ALEs do not receive Letter 226-J. ALEs that receive a proposed assessment letter should consult with qualified legal counsel to evaluate the assessment and respond appropriately. Additional information is available at the IRS’s Letter 226-J Website.
ALEs that discover filing errors in their 2016 or 2017 filings of Forms 1094-C and 1095-C should obtain copies of the erroneous forms and re-file corrected forms as soon as possible (re-filing is generally permissible before a Letter 226-J is received). Self-correction is the best way to stay ahead of these issues before the IRS gets involved.