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April 2010 | Volume 1 | Issue 4 |
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A Message From the Director of HR: Suzi Alligood |
Since the enactment of the new health care law (Patient Protection and Affordable Care Act signed by President Obama on March 23, 2010 and the Reconciliation Bill, Health Care and Education Affordability
Act signed on March 30, 2010), many questions have been raised by employers about how and when the various provisions will become effective; and, more importantly, how the decisions they will need to make concerning their benefit programs
will impact their people and the financial health of their business.
This is what we know at this point. While many of the provisions of the new law take effect over the next ten years, there are a few important provisions that take effect this year. For example, six months from enactment of the law,
insurance companies will be prohibited from excluding pre-existing conditions for children under the age of 19, dropping coverage due to an illness and having lifetime maximums. Carriers will have to cover young people under their parents'
plans to the age of 26 before or by the plans' renewal date. In addition, many small businesses that provide health insurance for their employees will be eligible for tax credits (small business is defined as 25 or fewer employees). The
law also includes changes pertaining to Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs); but these will not occur for several years.
Xenium is working closely with our PEO, insurance and employment law partners to continually monitor the process and keep you informed of important developments, including compliance requirements and available tax benefits under the new
law. As always, your Xenium service team will help answer any questions you or your employees may have.
Join us for a complimentary session on Health Reform hosted by Xenium and presented by Jeff Robertson from Barran Liebman. Seats are limited. Registration details below.
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Upcoming Trainings |
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Highlights of the Health Reform Legislation |
The law will extend health insurance coverage to approximately 32 million Americans who are currently uninsured, making insurance available to an estimated 95 percent of non-elderly citizens by 2019.
Starting in 2014 and by 2016, citizens must purchase insurance or pay a penalty. The penalty will be $95 in 2014, $325 in 2015 and in 2016 the greater of $695 or 2.5 percent of income. Families will pay half the amount for children, up to
a cap of $2,250 per family. After 2016, penalties are indexed to the Consumer Price Index. Subsidies to purchase insurance in the form of tax credits are provided to individuals making up to $43,000 and to families of four making up to
$88,000, or 400 percent of the federal poverty level. There is a hardship exemption for poorer Americans.
Health insurance exchanges will be created to make it easier for the self-employed, the unemployed and small businesses to purchase less expensive coverage. The law would establish 50 insurance marketplaces, administered by the states,
with insurance coverage that meets new federal standards. Small businesses with 25 employees or less and average wages of less than $50,000 will qualify for tax credits of up to 50% of the costs of providing health insurance.
Employers are not required to provide health insurance coverage, but the law penalizes companies that do not provide coverage if they have 50 or more employees (full-time equivalents). The penalty is a tax of $2,000 per employee. However,
assistance is provided for mid-size businesses by exempting the first 30 employees when calculating the tax. For example, a business with 51 employees would pay the $2,000 penalty on only 21 (51-30) employees for a total of $42,000 instead
of $102,000. Waiting periods before insurance takes effect will be limited to 90 days.
Insurance companies will be prevented from denying coverage for pre-existing conditions, cancelling coverage for sick people, having unlimited out-of-pocket expenses and charging higher premiums based on a person's medical history or
gender.
Medicaid would be expanded to cover everyone with income less than 133 percent of the federal poverty level--$29,327 for a family of four.
Medicare prescription drug coverage: Under current law, Medicare stops covering drug costs after more than $2,830 is spent, but starts paying again after an individual's out-of-pocket expenses exceed $4,550. Under the new law, seniors who
hit the gap (so-called "donut hole") this year would get $250 to help cover the costs of their medications. Starting in 2011, they would receive a 50-percent discount on brand-name drugs, with the cost borne by the drug industry. In
subsequent years, the discounts would expand and begin covering generic drugs, with the expense picked up by the government. By 2010, the discounts would reach 75 percent.
Over the next 10 years, the cost of the plan is projected to be $940 billion and to decrease the federal deficit by $143 billion. To pay for the plan, Medicare outlays will be reduced by eliminating waste, fraud and abuse. Starting in
2013, single taxpayers making $200,000 or more and couples earning $250,000 or more will see a 0.9-percent increase in Medicare payroll taxes and a 3.8-percent Medicare tax on unearned income. Starting in 2018, a 40-percent tax will be
imposed on insurance companies providing high-level (so-called "Cadillac") plans valued at more than $10,200 for individuals and $27,500 for families. The thresholds are higher for retirees and employees in high-risk professions ($11,850
for individuals and $30,950 for families).
Source: SHRM, March 2010
For more information, visit
http://www.healthreform.gov/,
http://www.whitehouse.gov/Issues/health-Care, or
http://www.kff.org/healthreform/upload/finalhcr.pdf
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HIRE Act and What It Means for Employers |
On March 18, 2010 the HIRE (Hiring Incentives to Restore Employment Act) was signed into law. The primary focus is on job creation and accelerating the hiring of unemployed workers. It offers incentives to employers who hire workers in
new jobs who had been previously unemployed.
Replacements for laid-off employees are not 'qualified individuals.' Employees who are hired to replace employees who were involuntarily terminated (unless they were terminated for cause) are not qualified individuals under the HIRE Act
even if they meet the other criteria. The Act is designed to encourage employers to create and fill new positions, not replace or hire back employees who were laid off during the recession.
What the HIRE act does:
Eliminates the current 6.2% employer Social Security tax for eligible new hires immediately
Requires a new hire to certify his/her previous employment status by a signed affidavit
Offers companies a significant business credit of up to $1,000 if the employee is employed for at least 52 consecutive weeks on their 2011 business income tax return
To qualify, the new hire must meet the following criteria:
Has not been an employee for more than 40 hours during the 60 days before their start date
Starts work after February 3, 2010 and before January 1, 2011
Does not replace a current employee (unless the employee was separated from employment voluntarily or for cause)
Is not related to the employer or directly or indirectly own more than 50% of the business
Rehired employees who were previously laid off and then rehired by the same or related employer after a 60-day period can be a qualified employee if they meet the other qualifications listed above. Also, if an employer lays off employees
because of lack of work and later hires new employees when work picks up again, the new employees can be qualified individuals if they meet the other qualifications listed above.
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Xenium Client Spotlight: Stagecraft of Portland marks 50th year creating theater venues for schools, arenas |
Oregonian, March 27, 2010
Stagecraft Industries, one of the nation's top manufacturers of theater equipment, turns 50 this year. In its North Portland sewing shop, Khanh Luong and Ngoc Huong T. Luu assemble sections of enormous
curtains headed to the Prescott Valley Library in Arizona. Industrial Swan Island is about as far as you can get from the glitz and glamour of the theater world.
But here in a gritty manufacturing plant is where Stagecraft Industries Inc. creates the mechanical systems that make the magic happen.
The $13 million business, one of the nation's biggest manufacturers of theater equipment, is celebrating its 50th anniversary this year. And despite the recession, Stagecraft anticipates another strong year.
The Portland-based company has survived through good and bad economic times by focusing on its core business -- school auditoriums -- and taking on projects of all sizes from Camas, Wash., to Qatar, said CEO Mark Walter, whose father was
one of four original owners.
"We've found that to have a variety and mix of project sizes keeps the work flow more even," he said.
The company takes on hundreds of projects at a time, ranging from small elementary-school stages to large arenas and performing arts centers. It has weathered the recession thanks largely to bonds for public projects that passed before the
downturn and to some federal stimulus projects, Walter said...
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Oregon Supreme Court Rejects Requirement to Accommodate Medical Marijuana |
(From Barran Liebman eAlerts Volume 13, Issue 12
April 15, 2010)
The Supreme Court has just released its long-awaited opinion in In re Emerald Steel. The opinion reverses the decision of the Bureau of Labor, which had required employers to accommodate medical marijuana users. The lead opinion
contains this helpful summary:
Given the number of the issues discussed in this opinion, we summarize the grounds for our decision briefly. First, employer preserved its challenge that, as a result of the Controlled Substances Act, the use of medical marijuana is an
illegal use of drugs within the meaning of... |
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Health Reform Poll |
Do you have an understanding of the current Health Reform legislation?
Answer the question here
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Continuation Coverage Premium Subsidy Extended |
(From Bullard eAlerts April 19, 2010)
On April 15, 2010, President Obama signed the Continuing Extension Act of 2010. Among other extensions, it extended the date within which an involuntary termination of employment may lead to a federal subsidy for continuation coverage
under either federal COBRA or state continuation-coverage rules... |
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