Archive for the ‘Legal’ Category

Preparing for a DOL Audit with a Mock Interview | Employee Benefits Panama City

June 26th, 2015 by Clemons

By Bill Olson, Chief Marketing Officer at United Benefit Advisors

As the likelihood of an audit from the U.S. Department of Labor increases, every organization should be prepared so that this potential disaster can be handled with confidence. Conducting a mock audit can be key part of your DOL Auditprevention and preparation strategy.

As with any major issue of government compliance, it’s often necessary to meet with the appropriate management and staff of a company and familiarize them with the entire audit process. Those who will meet with the auditor should be coached
 to understand that they need to answer any question truthfully, but don’t go any further. Sometimes when people are nervous, they have a tendency to ramble or a need to explain their answer. This should be avoided at all costs. Michael J. Cramer, JD, Compliance Officer at Beneflex Insurance Services (a UBA Partner Firm), says that a great way to help reduce the potential anxiety during an interview by a DOL auditor is to hold a mock interview and that the employer’s attorney and advisor go through this with you. This will help most personnel to feel confident and comfortable during the process. Also, if the auditor asks a question, or requests information that does not pertain to your organization, never hesitate to say that it’s “not applicable.” This is better than trying to make an answer fit or worse, not answering the question at all. Deanna Johnson, Director of Compliance at Benefit Insurance Marketing (a UBA Partner Firm), stresses that if the staff doesn’t understand a question on the audit, or is not sure what the question is truly asking, then they should ask the auditor before they arrive to clarify what they need rather than make an assumption.

Similar to just answering the question and only the question, Josie Martinez, Senior Partner and General Counsel at EBS Capstone (a UBA Partner Firm), notes to never provide more documentation than what is requested. She adds that once you have all the documentation in place, identify the specific document(s) that responds to the request and then highlight the exact location on that document. After all, what good is giving them a box of documents and telling the auditor, “good luck, it’s in there.” The goal is to get the auditor out of your office as quickly as possible.

Whether it’s your company’s legal department, senior staff, or any other group of employees, make sure to empathize with their concern during a DOL audit. No matter how well prepared you and your company may be, there is bound to be some trepidation. Assuming you are indeed prepared for a DOL audit, remember that confidence breeds confidence. Show your employees that the situation is well in hand and they have nothing to fear.

To further prep your team and minimize resource drain, UBA is offering new white paper that can help employers:

  • Learn how to audit-proof your company
  • Avoid the worst mistake you can make
  • Conduct a mock audit
  • Get an auditor out of your office as quickly as possible

After downloading the new UBA white paper “Don’t Roll the Dice on Department of Labor Audits”, be sure to also request UBA’s audit checklist and sample interview questions!

Topics: DOL, Department of Labor, white papers, Josie Martinez, Michael Cramer, Audit, Don’t Roll the Dice on Department of Labor Audits, Deanna Johnson, Beneflex Insurance Services, EBS Capstone, mock audit

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So you’re being audited by the DOL. Are you ready? | Florida Employee Benefits Broker

June 15th, 2015 by Clemons

By Bill Olson, Chief Marketing Officer at United Benefit Advisors

As our recent press release addressed, DOL audits are on the rise. Not many things incite more fear than receiving a notice that you’re about to have an audit, especially from the DOL. The Department of Labor (DOL) is a cabinet-level department of the U.S. federal government responsible for occupational safety, wage and hour standards, readyunemployment insurance benefits, re-employment services, and some economic statistics. It is headed by the U.S. Secretary of Labor.

Regardless of how sound your company’s business practices may be, a DOL audit needs to be dealt with professionally and expediently. Every organization should be prepared so that this potential disaster can be handled with confidence. Our recent blog covered the first three things to do when you receive an audit notice (hint: the worst thing you can do is ignore it!).

According to Jeff Hadden, Partner at LHD Benefit Advisors (a UBA Partner Firm), it takes approximately one to two weeks, depending on the size of the business and how well they are organized, to properly prepare for a DOL audit. Part of that preparation is building an audit binder with known documents. You won’t just hand over the binder, but it will be an excellent repository.

Michael J. Cramer, JD, Compliance Officer at Beneflex Insurance Services (a UBA Partner Firm), says that ideally, the employer should keep these documents as hard copies in addition to any electronic copies. That way, if the employer maintains its own document files, then it is not at the mercy of their vendors should they need a certain document in a hurry.

Deanna Johnson, Director of Compliance at Benefit Insurance Marketing (a UBA Partner Firm), says not to forget that if you have a grandfathered plan, make sure you have year-over-year documentation to support that. The document request can be very burdensome on the employer, depending on whether they’ve prepared in advance for the audit or if they have the personnel and financial resources to comply with it. Cramer says that compiling the necessary documents isn’t just a drain on both those resources, it also takes a significant amount of time.

To prep your team and minimize resource drain, UBA is offering new white paper that can help employers:

  • Learn how to audit-proof your company
  • Avoid the worst mistake you can make
  • Conduct a mock audit
  • Get an auditor out of your office as quickly as possible

After downloading the new UBA white paper “Don’t Roll the Dice on Department of Labor Audits,” be sure to also request UBA’s audit checklist and sample interview questions!

Topics: Department of Labor, white papers, LHD Benefit Advisors, Jeff Hadden, Michael Cramer, Audit, Don’t Roll the Dice on Department of Labor Audits, Deanna Johnson, Beneflex Insurance Services, Benefit Insurance Marketing

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It’s Not a Matter of “If,” But “When” You Get Audited By the U.S. Department of Labor | Employee Benefits Florida

June 4th, 2015 by Clemons

By Bill Olson, Chief Marketing Officer at United Benefit Advisors

As the saying goes, an ounce of prevention is worth a pound of cure, and that’s definitely the case when it comes to a health plan audit by the U.S. Department of Labor (DOL). And prevention is certainly warranted, according to Jeff Hadden, Partner at LHD Benefit Advisors (a UBA Partner Firm), because it’s not a matter of “if” you’re getting auditaudited, but “when” you get a letter from the DOL that your company is being audited. Hadden said that 12 of their clients received DOL audits of their group health plans in the past 20 years. However, out of those 12 audits, nine of those clients went through the audit process in just the previous two years. That’s a significant increase and a harbinger that more audits are likely to come from the DOL.

So what exactly is a DOL audit? According to the DOL, the purpose of an audit is not to rehash past mistakes but to look at past events with a view toward improving future performance. Findings from an audit can be used as a basis for adjusting policies, priorities, structure or procedures in order to make operations as efficient, economical and effective as possible.

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. Regarding the former, any audit is not limited in scope to the area of the complaint. The audit may cover all aspects of plan administration, often going back several years. Michael J. Cramer, JD, Compliance Officer at Beneflex Insurance Services (a UBA Partner Firm) emphasizes that you should try to audit-proof your company as best as possible in order to minimize any issues when and if an audit does happen.

Whenever you do get that letter from the DOL informing you that you’ve been selected to be audited, the following steps should be taken:

  1. Call the DOL phone number. Call the DOL phone number listed on the letter and request an extension. If granted, this additional time is vital and should be used to your advantage to help prepare.
  2. Get specific information about the audit. Contact the auditor to ascertain specific information about the audit 
he or she is going to perform. An important question to ask is what the focus of the investigation will be.
  3. Call your attorney and your broker.

As the likelihood of an audit from the U.S. Department of Labor increases, UBA is offering new white paper that can help employers prepare:

  • Learn how to audit-proof your company
  • Avoid the worst mistake you can make
  • Conduct a mock audit
  • Get an auditor out of your office as quickly as possible

Download “Don’t Roll the Dice on Department of Labor Audits” today.

Topics: DOL, Department of Labor, white papers, Jeff Hadden, Michael Cramer, Audit

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Two PPACA Taxes Might Get the Ax | Employee Benefits Panama City

May 14th, 2015 by Clemons

By Jennifer Kupper, In-house Counsel for iaCONSULTING, a UBA Partner Firm

Section 9010 of the Patient Protection and Affordable Care Act (PPACA) imposes a fee on each covered entity engaged in the business of providing health insurance for United States health risks. This is known as the Health Insurance Providers (HIP) fee or the Health Insurers Tax (HIT) tax. The first filings were due from covered entities taxby April 15, 2014, and the first fees were due September 30, 2014. Self-insured plans are not covered entities for the purpose of the HIP Fee. The HIP fee is an important revenue source for PPACA, amounting to $8 billion in 2014 and rising to $14.3 billion by 2018. While fully insured plans are not directly responsible for the HIP fee, the Congressional Budget Office was correct when it indicated that it would be “largely passed through to consumers in the form of higher premiums.” Some premiums have increased as much as 4.5%.

Introduced in the House by Rep. Charles Boustany, Jr. (R-La.) and Rep. Kyrsten Sinema (D-Ariz.) on February 12, 2015, for the third time in as many years, H.R. 928 is titled To repeal the annual fee on health insurance providers enacted by the Patient Protection and Affordable Care Act. The bill has one provision: “The Patient Protection and Affordable Care Act is amended by striking section 9010.” There are currently 225 co-sponsors. A similar measure was introduced in the Senate. S. 183, the Jobs and Premium Protection Act, was referred to the Senate Finance Committee and currently has 31 co-sponsors.

Cadillac Tax

Internal Revenue Code Section 4980I imposes an excise tax on “high cost plans” effective 2018. This tax is commonly known as the “Cadillac Tax,” dubbed for its fee on “richer” benefits.

Generally, and one must speak generally because regulations have not been issued, if a group health plan’s cost for applicable coverage goes beyond the statutory thresholds, then a 40% excise tax will be assessed on the excess amounts. The annual thresholds are $10,200 ($850per month) for individual coverage and $27,500 ($2,291.67 per month) for coverage other than individual coverage. The Cadillac Tax applies to fully insured and self-funded plans.

It is reported that nearly half of employer-sponsored health plans could trigger the tax. One reason for this is that larger groups must sponsor a base plan that meets minimum value in order to avoid a potential PPACA Employer Shared Responsibility tax (IRC Section 4980H(b)). Another reason is that “applicable coverage” includes major medical coverage, including prescription drug costs; contributions to medical flexible spending accounts (FSAs), health savings accounts (HSAs), health reimbursement arrangements (HRAs), and Archer medical savings accounts (MSAs), if certain conditions are met; coverage for on-site medical clinics; retiree coverage; coverage only for a specified disease or illness; and hospital indemnity or other fixed indemnity insurance.

On February 11, 2015, Rep. Frank Guinta (R-N.H.) introduced H.R. 879, Ax the Tax on Middle Class Americans’ Health Plans Act. The bill has 31 co-sponsors and was referred to the House Ways and Means Committee.

For the answers to the top 5 questions about the Cadillac Tax, read our recent blog.

For more information about Cadillac Tax inclusions and exclusions, cost of coverage calculations, changes in coverage and more, download UBA’s PPACA Advisor: Highlights of the Excise Tax on High-Cost Plans (the “Cadillac Tax”).

Topics: PPACA Affordable Care Act, Jennifer Kupper, excise tax, Cadillac Tax, Health Insurers Tax, Health Insurance Providers fee

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Potential Employer Penalties under the Patient Protection and Affordable Care Act |Employee Benefits Panama City

May 11th, 2015 by Clemons

By Danielle Capilla, Chief Compliance Officer at United Benefit Advisors

Employers that do not meet the requirements of the Patient Protection and Affordable Care Act (PPACA) need to be concerned about several potential penalties. Two significant penalties include the excise tax, which can be as much tax lawas $100 per affected individual per day, and the penalties that larger employers must pay if they do not meet their employer-shared responsibility/play or pay obligations.

Excise Tax Penalties

The excise tax penalties apply to all plans, regardless of size. Since 2010, the IRS has said that employers and plan administrators should self-report any failure to comply with various group health plan requirements, including requirements related to COBRA, HIPAA, Mental Health Parity, and the comparable contribution requirement for health savings accounts (HSAs), using IRS Form 8928. With the passage of PPACA, numerous additional compliance responsibilities apply. Employers and plan administrators are now expected to self-report these compliance failures, too, using Form 8928. Historically enforcement of the filing requirement and collection of the excise tax has been light, but the IRS is now indicating that it expects employers to report failures and pay fines as applicable.

For a complete list of the potential COBRA, HIPAA and PPACA violations that may result in an excise tax (plus information on how they can be avoided), view UBA”s PPACA Advisor, “Potential Employer Penalties under the Patient protection and Affordable Care Act”.

Employer-Shared Responsibility/Play or Pay Penalties

Large employers will owe penalties if they do not meet the employer-shared responsibility/play or pay requirements. The IRS has recently issued a helpful Q and A that answers many questions about the potential play or pay penalties.

To avoid penalties, beginning in 2015 large employers (generally those with 100 or more full-time or full-time-equivalent employees in their controlled group) must offer health benefits to employees who work an average of 30 or more hours per week, or 130 hours per month. If an employer has a non-calendar year plan and can meet certain transitional rules, it can delay offering health benefits until the start date of its 2015 plan year.

Mid-size employers (those with 50 to 99 full-time or full-time equivalent employees in their controlled group) do not have to meet the play or pay requirements until 2016 as long as they keep their headcount, eligibility requirements, benefit levels, and employer contribution amount or percentage at essentially the same level it was on February 9, 2014. Employers taking advantage of this delay must certify to the IRS that they have met these requirements. Provided they meet certain transitional rules, if an employer has a non-calendar year plan, it may delay meeting the play or pay requirements until the start of its 2016 plan year.

For comprehensive information on how large employers can avoid penalties, plus the difference between the “A” and the “B” penalties, view UBA”s PPACA Advisor, “Potential Employer Penalties under the Patient protection and Affordable Care Act”.

Topics: PPACA Affordable Care Act, Play or Pay, excise tax, employer shared responsibility, IRS Form 8928

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Independent Contractor vs Employee | Bay County Benefits Broker

November 20th, 2014 by Clemons

By K. Michael Ward
The Wilson Agency
A UBA Partner Firm

whichAs a business professional who is trying to classify a worker, it is important to remain compliant with the IRS regulations that determine whether an individual providing services to your organization should be classified as an independent contractor or an employee.

Furthermore, the “employer mandate” section of the Patient Protection and Affordable Care Act (PPACA) requires companies with 50 or more employees to either provide adequate and affordable coverage to their workers or pay tax penalties.  United Benefit Advisors (UBA) has developed a guide to help employers determine how many employees they have for several purposes under PPACA. Those who think they are exempt need to make sure they are counting employees correctly so they’re not surprised with penalties.

The guide provides the definitions of full-time employees, how to count part-time employees on a pro-rata basis, how to treat seasonal employees, who the law considers an “employee,” counting hours correctly, determining average hours worked, penalties that result if a “large employer” doesn’t offer coverage, applying the requirement to offer coverage, paying the penalty, and eligibility for the Small Business Health Options Program (SHOP).

Your UBA Partner Firm can help you find the compliance solutions specific to the issues your company is facing.  Visit the UBA website to learn more.

Why does it matter?

Not correctly classifying an individual as an employee can lead to an employer being required to pay taxes, such as unemployment tax, that would have been required of the employer if the individual had been correctly classified. The organization may also be held liable for overtime pay, resulting in a costly expense for the organization. In certain situations, the issue can escalate leading to civil lawsuits against the employer.

How do I know how to classify individuals?

Generally, an individual is an independent contractor if the employer controls only the final result of the work and not when, where and how it will be done. Therefore, employers cannot demand that independent contractors work a “9-5” schedule in their office. If the person is an independent contractor, they are free to perform the work on a beach at 4 a.m., as long as they produce the services for which they were hired.

An individual may also be classified as an employee if the company provides the majority of the equipment used to perform the services. Independent contractors will generally work with their own equipment and are unlikely to be reimbursed for any equipment purchases required to perform the job.

Some others factors to take into consideration are the time period of hire and whether the individual provides services that are integral to the business. If an individual has been hired on an indefinite basis, versus for a specific project or time period, and/or provides key services, then the employee may be classified as an employee.

There are a variety of other nuances that can determine whether an individual is an independent contractor or an employee. Therefore, it is advised that you speak with a professional before taking action that could have an adverse effect on your business.

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

November 17th, 2014 by Clemons

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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