The Internal Revenue Code imposes a tax penalty for failure to comply with COBRA requirements. The tax amount is $100 per day, per qualified beneficiary (those individuals entitled to COBRA continuation coverage), for each day of the noncompliance period.

COBRA Continuation Coverage
COBRA generally requires that group health plans sponsored by employers with 20 or more employees on more than 50% of typical business days in the prior year offer employees and eligible spouses and dependent children the opportunity for a temporary extension of health insurance where coverage under the group plan would otherwise end due to certain qualifying events. Group health plans must provide covered employees and dependents with specific notices explaining their COBRA rights.

New Audit Guidelines
The updated COBRA Audit Guidelines direct IRS examiners to probe specific areas for noncompliance by asking questions regarding:

• The number of qualifying events occurring in the year under examination through the current date;
• How qualified beneficiaries are notified of their COBRA rights;
• How the plan administrator is notified when a qualifying event occurs;
• The COBRA election made by qualified beneficiaries; and
• The premium paid by qualified beneficiaries for COBRA.

Additionally, IRS examiners are instructed to determine what continuation coverage procedures are in place by obtaining certain information related to the plan, including:

• A copy of the continuation coverage procedures manual;
• Copies of standard form letters sent to qualified beneficiaries;
• A copy of internal audit procedures for continuation coverage;
• Copies of all group health care plans; and
• Details pertaining to any past or pending lawsuits for failing to provide appropriate continuation coverage.

Additional Information
Employers required to comply with COBRA should review the Audit Guidelines in detail. If you have any questions regarding your responsibilities or the type of documentation you should maintain, please consult with your plan administrator or a knowledgeable employment law attorney.

A federal appeals court in Washington, D.C. temporarily blocked the National Labor Relations Board (NLRB) rule requiring most private employers to post the new 11 x 17 inch notice, which had been scheduled to take effect on April 30, 2012. The court’s decision to block the rule was prompted by two recent lower court decisions that reached conflicting conclusions about whether the NLRB had the authority to issue the notice-posting rule.

According to the NLRB, in view of the court’s order, and in light of the strong interest in the uniform implementation and administration of agency rules, its regional offices will not implement the NLRA poster rule pending the resolution of the issues before the court.

For more information about the new poster requirement, including a detailed discussion of which employers are covered, please see the NLRB’s Frequently Asked Questions.

The 24 FAQs address various issues related to the requirement that group health plans provide participants and beneficiaries with an SBC containing specific information about the plan and coverage, at certain times during the enrollment process and upon request, including clarification relating to:

• Combining certain information with respect to different coverage tiers, different cost-sharing selections (such as levels of deductibles, copayments, and co-insurance), and different add-ons to major medical coverage that could affect cost-sharing and other information in the SBC (such as FSAs, HRAs, HSAs, or wellness programs) into one SBC;
  
• The requirement to provide SBCs to individuals who are COBRA qualified beneficiaries;
  
• Circumstances under which an SBC may be provided electronically;
  
• Model language for meeting the requirement to provide an e-card or postcard in connection with evergreen website postings;
  
• The requirement to provide the SBC in a culturally and linguistically appropriate manner;
  
• The impermissibility of substituting a cross-reference to a plan’s summary plan description or other documents for any content element of the SBC;
  
• Making certain minor changes to the SBC format and language; and
  
• The option to include a statement in the SBC about whether a plan is a grandfathered health plan.

The FAQs also make clear that, during the first year of applicability for the new SBC rules, penalties will not be imposed on plans and issuers that are working diligently and in good faith to provide the required SBC content in an appearance that is consistent with the final regulations. This is consistent with the federal agencies’ basic approach to the implementation of Health Care Reform, which emphasizes assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the new law.

2013 Contribution and Out-of-Pocket Limits

HSA Contribution Limit:

• Individual – $3,250 (up $150 from 2012)
• Family – $6,450 (up $200 from 2012)

HDHP Minimum Deductible Amount:

• Individual – $1,250 (up $50 from 2012)
• Family – $2,500 (up $100 from 2012)

HDHP Maximum Out-of-Pocket* Amount:

• Individual – $6,250 (up $200 from 2012)
• Family – $12,500 (up $400 from 2012)

*Out-of-pocket expenses include deductibles, co-payments, and other amounts, but not premiums.

The questions and answers provide information and identify various approaches the federal agencies (Labor, Health and Human Services, and Treasury) are considering proposing in future regulations or other guidance. Guidance that employers may rely upon with respect to the issues addressed in the FAQs will be provided with sufficient lead time for employers to comply.

Automatic Enrollment

Under the Affordable Care Act, employers with more than 200 full-time employees will be required to automatically enroll new full-time employees in one of the employer’s health benefits plans (subject to any waiting period authorized by law), and to continue the enrollment of current employees in a health benefits plan offered through the employer. The law also requires adequate notice and the opportunity for an employee to opt out of any coverage in which the employee was automatically enrolled.

• According to the FAQs, the Department of Labor has concluded that its automatic enrollment guidance will not be ready to take effect by 2014 (as indicated in previous guidance). Employers are not required to comply with the automatic enrollment provisions until final regulations are issued and become applicable.

90-Day Limitation on Waiting Periods

In plan years beginning on or after Jan. 1, 2014, the Affordable Care Act provides that a group health plan or group health insurance issuer may not apply any waiting period that exceeds 90 days. A waiting period is the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective.

• The FAQs make clear that the limitation on waiting periods, once effective, will not require employers to offer coverage to any particular employee or class of employees, including part-time employees. The limitation merely prohibits requiring an otherwise eligible employee to wait more than 90 days before coverage is effective.
• The 90-day waiting period would begin when an employee is otherwise eligible for coverage under the terms of the group health plan.
  • Eligibility conditions based solely on the lapse of a time period would be permissible for no more than 90 days.
  • Other conditions for eligibility under the terms of a group health plan would generally be permissible, unless the condition is designed to avoid compliance with the 90-day waiting period limitation. For example, eligibility conditions such as full-time status, a bona fide job category, or receipt of a license would be permissible.

Nothing in the Affordable Care Act penalizes small employers for choosing not to offer coverage to any employee, or large employers for choosing to limit their offer of coverage to full-time employees (as defined in the employer shared responsibility provisions).

Employer Shared Responsibility

Beginning in 2014, employers with 50 or more full-time employees may be required to make a “shared responsibility payment” if any of the employer’s full-time employees is certified to receive a premium tax credit or cost-sharing reduction payment. This may happen if the employer does not offer full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan, or if the coverage offered does not provide minimum value or is unaffordable to the employee.

• According to the FAQs, proposed regulations or other guidance is expected permitting employers to use an employee’s Form W-2 wages as a safe harbor in determining the affordability of employer coverage.
• The FAQs also address the coordination of the employer shared responsibility requirements with the 90-day limitation on waiting periods. Upcoming guidance is expected to provide that, at least for the first three months following an employee’s date of hire, an employer that sponsors a group health plan will not, by reason of failing to offer coverage to the employee under its plan during that three-month period, be subject to the employer responsibility payment.
• Additional anticipated guidance regarding the method for determining the full-time status of new employees, as well as for determining whether current employees (those who are not newly-hired or transferred) are full-time employees for purposes of the employer shared responsibility requirements, is also addressed in the FAQs.

Among the recommendations from the study: Give employees time to study their benefits. The study found that workers who had at least three weeks to review their benefits were much more likely to report they were given enough time to review benefits materials, and much more likely to report that they were able to make informed decisions.

The study also found that best results were obtained by companies that reached employees using at least three forms of media including web, print materials and employee meetings and presentations.

The survey also found that communications are growing more and more important to employee relations. Your HR staff should be working hard to communicate with your employees in a variety of ways. Some contributing factors:

Workers are inundated with choices. The days of perhaps having a health plan and pension plan and not much else are over. New and popular kinds of plans, including Section 125 “cafeteria” style plans that give workers a wide menu of benefits to choose from, require that workers process more and more information about their own benefits. Now employees must learn about a wide range of benefits ranging from flexible spending arrangements to various kinds of health plans to long term care and disability insurance to pre-paid legal benefits.

Additionally, traditional defined benefit pension plans are going the way of the dodo bird, now mostly replaced by defined contribution plans such as the 401(k). This places much more burden on the employee, and requires much more education on the part of the employer. Further, medical benefits have evolved from one-size fits all plans to increasingly consumer-directed options.

These benefits are valued by employees. But only after an intensive effort by management and HR professionals to provide education and guidance to your employees. After all the time and expense you go through to create a powerful menu of benefits for your employees to choose from, all of it will go unappreciated if you don’t make an effort to brief and educate your employees on your benefits package.

Thanks to employee turnover, this is an ongoing process. Your employee benefit briefings have a half-life. This is an effort you need to renew time and time again. Fortunately, help is available. AscendUSA and your carriers have a variety of tools to help convey the benefit and value of each component in your employee benefits menu. This can help boost enrollment, cut your payroll taxes in some cases, and help ensure your best employees – the ones with the most options – stay with you.

Download the study or view the presentation slides

Qualifying Expenses for Itemized Deductions
Expenses that may qualify for an itemized deduction for employees include:

• Business travel away from home
• Business use of the employee’s car
• Business meals and entertainment
• Travel
• Use of the employee’s home
• Education
• Supplies and tools
• Miscellaneous expenses

Employees must keep records to prove the business expenses deducted. Only employee business expenses that are in excess of 2% of the employee’s adjusted gross income can be deducted.

Reimbursement of Expenses
If an employer reimburses an employee under an accountable plan, the employee does not include the payments in his or her gross income, and may not deduct any of the reimbursed amounts. In an accountable plan, an employee must meet the following three requirements:

1. The employee must have paid or incurred expenses that are deductible while performing services as an employee,
2. The employee must adequately account to the employer for these expenses within a reasonable time period, and
3. The employee must return any excess reimbursement or allowance within a reasonable time period.

If the plan under which the employee is reimbursed by an employer is non-accountable, the payments received should be included in the wages shown on Form W-2. The employee must report the income and itemize deductions to deduct these expenses.

For more information, please see IRS Publication 529, Miscellaneous Deductions.  Tax Topic 514 also discusses employee business expenses.

The Affordable Care Act included a provision that established the temporary Early Retiree Reinsurance Program, which provides reimbursement to eligible sponsors of employment-based plans for a portion of the costs of providing health coverage to early retirees (and eligible spouses, surviving spouses, and dependents of such retirees).

The Act appropriated funding of $5 billion for the temporary program, and gave the Secretary of Health and Human Services the authority to stop accepting applications for participation in the program, as well as reimbursement requests for approved applications, based on the availability of funding. Under this authority, CMS previously announced that it would stop accepting applications for participation in the program as of May 6, 2011, and set December 31, 2011 as the end date for newly incurred claims under ERRP.

Additional Information
A detailed set of Common Questions is available on the ERRP website.

The following do’s and don’ts can help you make the most of your interviews and stay in compliance with the law:

• DO create a comfortable environment for interviewing. Whether you conduct the interview in an office or conference room, make sure the area is neat and quiet. When the interview begins, be sure not to take any calls or respond to emails. Offering the candidate something to drink – water or coffee – is a small courtesy that demonstrates consideration and thoughtfulness.
• DON’T ask personal questions. Be especially careful of this at the beginning of the interview. Although it is important to have a friendly demeanor when you meet the candidate to help put him or her at ease, engaging in too much small talk may lead you to inadvertently ask a question that can border on areas that may potentially be considered discriminatory (such as questions relating to the applicant’s marital status, political beliefs, etc.).
• DON’T ask discriminatory questions. Any questions regarding race, religion, age, ethnic group, national origin or ancestry, political affiliations, military service, disability or other sensitive topics may be discriminatory and should be avoided. Also be careful not to ask any questions that could elicit such information (for example, questioning an applicant about the origin of an unusual surname). If an applicant volunteers irrelevant or inappropriate information during an interview, disregard the information and do not write it down.
• DO keep the conversation focused on job-related information. In reviewing your interview questions, ask yourself if the information you are seeking is really needed to evaluate the candidate’s qualifications, skills, and ability to meet the challenges of the job. Ask only for information you intend to use in making a hiring decision and know how you will use the information to make that decision. You should also be prepared to discuss the responsibilities and functions of the job opening and your company. Avoid asking questions that are not relevant to the performance of the essential functions and responsibilities of the position.
• DO provide the candidate with information regarding next steps. After you have finished asking all of your questions, be sure to give the candidate an opportunity to ask any final questions. To close the interview, provide a general timeframe for getting back in touch with the candidate regarding any next steps and decisions. Be sure to also thank the candidate for his or her interest in the job and your company.

If you have specific questions regarding illegal interview questions or how to conduct a lawful interview, please consult with a knowledgeable employment law attorney.

More than 18,000 U.S. employers were asked about their anticipated total employment over the next three months. Of those surveyed:

• 18% of employers expect to increase their number of employees, compared to 6% that anticipate a decrease in employment.
• 72% of employers expect no change in their workforce.
• 4% of employers responded that they are unsure of their hiring plans for the upcoming quarter.

These figures produce a net employment outlook (defined as the percentage of employers anticipating an increase in hiring activity less the percentage of employers expecting a decrease in hiring activity) of +12%, or +10% when adjusted for seasonal variations.

Employer Confidence Improves
The survey data shows slow but steady growth in employer confidence, with considerable progress since the recessionary low outlook of -2% in 2009.

• The second quarter of 2012 marks the first double-digit outlook since the last quarter of 2008, when the outlook also measured +10%.
• The rise in confidence also marks 10 straight quarters of positive overall survey results, following three quarters of pessimistic hiring plans.

The positive employment outlook extends across all industries and geographic areas.

• Employers in all 50 states, Puerto Rico and the District of Columbia reported intentions to increase hiring. The outlook for the upcoming second quarter was highest in North Dakota (+26%), followed by Alaska, Vermont, Delaware, and Oklahoma (all reporting an outlook above 20%).
• Employers in each of the 13 industry sectors surveyed reported a positive employment outlook for April through June, with the Leisure & Hospitality industry ranking the highest (+26%). Comparing the data quarter over quarter, employers in the Construction, Nondurable Goods Manufacturing, and Transportation & Utilities industries also anticipate a considerable hiring increase.

Manpower Inc. expects to release its Employment Outlook Survey for the third quarter on June 12, 2012.

If your company is among those looking to increase its hiring, be sure to check out the article above for some key do’s and don’ts of interviewing.