The Occupational Safety and Health Administration (OSHA) announced the portal for electronic recordkeeping reporting will become available on OSHA’s website beginning August 1, 2017. Currently the website is down due to a possible security breech but we will keep you posted as the December 1st deadline nears.
OSHA previously issued a notice of proposed rulemaking that delayed the initial deadline for electronic reporting from July 1 to December 1, 2017. These events have combined to create some uncertainty for employers about whether and when they may be required to electronically submit recordkeeping data.
At this time, employers should wait until the proposed rulemaking is finalized, and it is likely that electronic recordkeeping will not be required until December 1, 2017, if at all. The proposed rulemaking indicated that “OSHA also intends to issue a separate proposal to reconsider, revise, or remove other provisions of the prior final rule”.
The health reform law imposes a number of fees, taxes and other assessments on health insurance companies and sponsors of self-funded health plans to help subsidize a number of endeavors. One such fee funds the Patient-Centered Outcomes Research Institute (PCORI).
The PCORI fee for calendar year plans is $2.26 per covered life for the 2016 plan year, and must be reported on (and remitted with) IRS Form 720 by July 31, 2017. For non-calendar year plans, if the 2015-16 plan year ended on or before Sept. 30, 2016, the fee is $2.17 per covered life. If the 2015-16 plan year ended between Oct. 1 and Dec. 31, 2016, the fee is $2.26 per covered life. In either case, the filings are similarly due by July 31, 2017. (Note: The Form 720 must be filed by July 31 of the calendar year that begins after the last day of the plan year.)
For self-funded plans, the employer/plan sponsor will be responsible for submitting the fee and accompanying paperwork to the IRS. Third-party reporting and payment of the fee is not permitted for self-funded plans. The process for remitting payment by sponsors of self-funded plans is described in more detail below.
The IRS will collect the fee from the insurer or, in the case of self-funded plans, the plan sponsor/employer in the same way many other excise taxes are collected. IRS regulations provide three options for determining the average number of covered lives (actual count, snapshot and Form 5500 method).
The U.S. Department of Labor believes the fee cannot be paid from plan assets. In other words, the PCORI fee must be paid by the plan sponsor; it is not a permissible expense of a self-funded plan and cannot be paid in whole or part by participant contributions. The IRS has indicated the fee is, however, a tax-deductible business expense for employers with self-funded plans.
The filing and remittance process to the IRS is straightforward and largely unchanged from last year. On page two of Form 720, under Part II, the employer needs to designate the average number of covered lives under its “applicable self-insured plan.” The number of covered lives is multiplied by the applicable amount ($2.26 or $2.17) to determine the total fee owed to the IRS. The Payment Voucher (720-V) should indicate the tax period for the fee is “2nd Quarter.” Failure to properly designate “2nd Quarter” on the voucher will result in the IRS’s software generating a tardy filing notice, with all the incumbent aggravation on the employer to correct the matter with IRS.
With the Republicans’ failure to pass a bill to repeal and replace the Affordable Care Act (ACA), employers should plan to remain compliant with all ACA employee health coverage and annual notification and information reporting obligations.
Even so, advocates for easing the ACA’s financial and administrative burdens on employers are hopeful that at least a few of the reforms they’ve been seeking will resurface in the future, either in narrowly tailored stand-alone legislation or added to a bipartisan measure to stabilize the ACA’s public exchanges. Relief from regulatory agencies could also make life under the ACA less burdensome for employers.
“Looking ahead, lawmakers will likely pursue targeted modifications to the ACA, including some employer provisions,” said Chatrane Birbal, senior advisor for government relations at the Society for Human Resource Management (SHRM). “Stand-alone legislative proposals have been introduced in previous Congresses, and sponsors of those proposals are gearing up to reintroduce bills in the coming weeks.”
These legislative measures, Birbal explained, are most likely to address the areas noted below.
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Repeal and replacement of the Affordable Care Act (ACA) by the American Health Care Act (AHCA) may be underway in Washington D.C., but until a final version of the AHCA is signed into law, the ACA is the law of the land. In fact, the IRS is currently issuing notices to employers that require them to disclose whether they complied with ACA large employer reporting duties, or their excuse for not doing so, where applicable.
The ACA required large employers to furnish employee statements (Forms 1095-C) and file them with the IRS under transmittal Form 1094-C, and the Internal Revenue Code (“Code”) imposes separate penalty taxes for failing to timely furnish and file the required forms. Large employer reporting was required for 2015 and 2016, even if transition relief from ACA penalty taxes applied for 2015. The potential penalties can be very large – up to $500 per each 2015 Form 1095-C statement ($250 for not furnishing the form to the employee and $250 for not filing it with IRS) – up to a total annual penalty liability of $3 million. The penalty amounts and cap are periodically adjusted for inflation.
Employers that failed to furnish Form 1095-C and file copies with Form 1094-C may receive the IRS notices, called “Request for Employer Reporting of Offers of Health Insurance Coverage (Forms 1094-C and 1095-C)” and also known as Letter 5699 forms. Forms may be received regarding reporting for 2015 or 2016. Employers that receive a Letter 5699 form will have only thirty days to complete and return the form, which contains the following check boxes:
The Letter also provides: “[i]f you are required to file information returns under IRC Section 6056, failure to comply may result in the assessment of a penalty under IRC Section 6721 for a failure to file information returns.”
Employers receiving Letter 5699 forms should contact their benefit advisors immediately and plan to respond as required within the thirty-day limit; it may be necessary to request an extension for employers that are just realizing that they have reporting duties and need to prepare statements for enclosure with their response. In this regard, the IRS offers good faith relief from filing penalties for timely filed but incomplete or incorrect returns for 2015 and 2016, but relief from penalties for failures to file entirely for those years is available only upon a showing of “reasonable cause,” which is narrowly interpreted (for instance, due to fire, flood, or major illness).
Large employers should not look to coming ACA repeal/replacement process for relief from filing duties and potential penalties. The House version of the AHCA does not change large employer reporting duties and it is unlikely the Senate or final versions of the law will do so. This is largely because procedural rules limit reform/repeal provisions to those affecting tax and revenue measures, which would not include reporting rules. Thus the reporting component of the ACA will likely remain intact (though it may be merged into Form W-2 reporting duties), regardless of the ACA’s long-term fate in Washington.
This simple change in OSHA’s rulemaking requirements will improve safety for workers across the country. One important reason stems from our understanding of human behavior and motivation. Behavioral economics tells us that making injury information publicly available will “nudge” employers to focus on safety. And, as we have seen in many examples, more attention to safety will save the lives and limbs of many workers, and will ultimately help the employer’s bottom line as well. Finally, this regulation will improve the accuracy of this data by ensuring that workers will not fear retaliation for reporting injuries or illnesses.
The new rule, which takes effect Jan. 1, 2017, requires certain employers to electronically submit injury and illness data that they are already required to record on their onsite OSHA Injury and Illness forms. Analysis of this data will enable OSHA to use its enforcement and compliance assistance resources more efficiently. Some of the data will also be posted to the OSHA website. OSHA believes that public disclosure will encourage employers to improve workplace safety and provide valuable information to workers, job seekers, customers, researchers and the general public. The amount of data submitted will vary depending on the size of company and type of industry. The electronic submission requirements do not change an employer’s obligation to complete and retain the injury & illness records.
OSHA will provide a secure website that offers three options for data submission. First, users will be able to manually enter data into a webform. Second, users will be able to upload a CSV file to process single or multiple establishments at the same time. Last, users of automated recordkeeping systems will have the ability to transmit data electronically via an API (application programming interface). OSHA is not yet accepting electronic submissions at this time. Updates will be posted to the OSHA website at www.osha.gov/recordkeeping when they are available.
The rule also prohibits employers from discouraging workers from reporting an injury or illness. The final rule requires employers to inform employees of their right to report work-related injuries and illnesses free from retaliation, which can be satisfied by posting the already-required OSHA workplace poster. It also clarifies the existing implicit requirement that an employer’s procedure for reporting work-related injuries and illnesses must be reasonable and not deter or discourage employees from reporting; and incorporates the existing statutory prohibition on retaliating against employees for reporting work-related injuries or illnesses. These provisions become effective August 10, 2016, but OSHA has delayed their enforcement until Dec. 1, 2016.
The new reporting requirements will be phased in over two years:
OSHA State Plan states must adopt requirements that are substantially identical to the requirements in this final rule within 6 months after publication of this final rule.
On May 4, 2017, the IRS released Revenue Procedure 2017-37 setting dollar limitations for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018. HSAs are subject to annual aggregate contribution limits (i.e., employee and dependent contributions plus employer contributions). HSA participants age 55 or older can contribute additional catch-up contributions. Additionally, in order for an individual to contribute to an HSA, he or she must be enrolled in a HDHP meeting minimum deductible and maximum out-of-pocket thresholds. The contribution, deductible and out-of-pocket limitations for 2018 are shown in the table below (2017 limits are included for reference).
Note that the Affordable Care Act (ACA) also applies an out-of-pocket maximum on expenditures for essential health benefits. However, employers should keep in mind that the HDHP and ACA out-of-pocket maximums differ in a couple of respects. First, ACA out-of-pocket maximums are higher than the maximums for HDHPs. The ACA’s out-of-pocket maximum was identical to the HDHP maximum initially, but the Department of Health and Human Services (which sets the ACA limits) is required to use a different methodology than the IRS (which sets the HSA/HDHP limits) to determine annual inflation increases. That methodology has resulted in a higher out-of-pocket maximum under the ACA. The ACA out-of-pocket limitations for 2018 were announced are are $7350 for single and $14,700 for family.
Second, the ACA requires that the family out-of-pocket maximum include “embedded” self-only maximums on essential health benefits. For example, if an employee is enrolled in family coverage and one member of the family reaches the self-only out-of-pocket maximum on essential health benefits ($7,350 in 2018), that family member cannot incur additional cost-sharing expenses on essential health benefits, even if the family has not collectively reached the family maximum ($14,700 in 2018).
The HDHP rules do not have a similar rule, and therefore, one family member could incur expenses above the HDHP self-only out-of-pocket maximum ($6,650 in 2018). As an example, suppose that one family member incurs expenses of $10,000, $7,350 of which relate to essential health benefits, and no other family member has incurred expenses. That family member has not reached the HDHP maximum ($14,700 in 2018), which applies to all benefits, but has met the self-only embedded ACA maximum ($7,350 in 2018), which applies only to essential health benefits. Therefore, the family member cannot incur additional out-of-pocket expenses related to essential health benefits, but can incur out-of-pocket expenses on non-essential health benefits up to the HDHP family maximum (factoring in expenses incurred by other family members).
Employers should consider these limitations when planning for the 2018 benefit plan year and should review plan communications to ensure that the appropriate limits are reflected.
Yesterday (May 4, 2017) , the House of Representatives narrowly passed the American Health Care Act of 2017 (AHCA), which contains major parts that would repeal and replace the Affordable Care Act (commonly referred to as Obamacare or ACA). The next obstacle the bill faces is making it through the Senate, which proves to be a formidable challenge.
The nonpartisan Congressional Budget Office has not had time yet to analyze the current version of the bill, but this is expected next week. The bill must now pass the Senate and could get pushed back to the House if it sees changes in the upper chamber.
In the meantime, here are some highlights we know about the bill based on how it is written today and how it would work:
We will continue to keep you up to date on the bill as it progress through legislation.
Late yesterday (4/4/17), the 7th Circuit Court of Appeals became the first federal court of appeals in the nation to rule that sexual orientation claims are actionable under Title VII. Their decision opened the door for LGBT plaintiffs to use Title VII to seek relief for allegations of employment discrimination and retaliation.
The April 4th ruling is important to employers because it broadens the class of potential plaintiffs who can bring workplace claims against them, and will require employers to ensure fair and equal treatment to all applicants and workers regardless of their sexual orientation (Hively v. Ivy Tech Community College).
The initial aim of Title VII of the Civil Rights Act of 1964 was to protect employees from race discrimination in the workplace. Just before it was enacted, however, Congress added a provision prohibiting discrimination based on “sex.” Initially, federal courts took the position that “sex” should be interpreted narrowly.
However, over the years, plaintiffs have sought a much broader interpretation of what should be covered as sex discrimination. Following the landmark 2015 Supreme Court decision which made same-sex marriage legal across the country, federal courts have grappled with determining which types of claims are actionable under the “sex” provision of Title VII. Meanwhile, the Equal Employment Opportunity Commission (EEOC) issued a July 2015 administrative decision ruling that “sexual orientation is inherently a ‘sex-based consideration’ and an allegation of discrimination based on sexual orientation is necessarily an allegation of sex discrimination under Title VII” (Baldwin v. Foxx).
Although this decision involved a federal employee and was only binding on federal employers, other lower federal courts have discussed the rationale behind the EEOC’s conclusion and seemed ready to adopt the same approach. Indeed, on November 4, 2016, the U.S. District Court for the Western District of Pennsylvania agreed with the EEOC and held that sexual orientation falls within the protection of Title VII (EEOC v. Scott Medical Center). However, no federal appellate court went that far – until now.
Kimberly Hively began working as a part-time adjunct professor for Ivy Tech Community College in South Bend, Indiana in 2000. She worked there for 14 years until her part-time employment contract was not renewed in 2014. During her employment, she applied for six full-time positions but claims never to have even been offered an interview, even though she said she had all the necessary qualifications and had never even received a negative evaluation.
Hively filed a federal lawsuit alleging sexual orientation discrimination under Title VII, and in 2015, the trial court dismissed her case. She appealed to the 7th Circuit Court of Appeals (which oversees federal courts in Illinois, Indiana, and Wisconsin), which initially agreed with the lower court by upholding the dismissal of her claim in July 2016.
The three-person panel of judges indicated that it had no choice but to deny Hively’s claim after reviewing a string of cases stretching back almost 40 years from across the country. The panel concluded that no other federal appellate court had decided that sexual orientation discrimination is covered under Title VII. The judges noted that we live in “a paradoxical legal landscape in which a person can be married on Saturday and then fired on Monday for just that act,” but indicated they were all but powerless to rule otherwise absent a Supreme Court directive or a congressional amendment to Title VII.
In October 2016, the full collection of 7th Circuit judges set aside the ruling and agreed to re-hear the case en banc, which means all the judges would hear the case together. Late yesterday, the en banc panel issued a final ruling overturning its initial decision by an 8 to 3 vote and breathing new life into Hively’s case. More importantly, however, the 7th Circuit created a new cause of action under Title VII for other LGBT employees in Illinois, Indiana, and Wisconsin.
In the opinion, drafted by Chief Judge Wood, the court concluded that “discrimination on the basis of sexual orientation is a form of discrimination” and that it “would require considerable calisthenics” to remove the “sex” from “sexual orientation” when applying Title VII. In addition, the court noted that efforts to do so had led to confusing and contradictory results.
In the end, the court concluded that the practical realities of life necessitated that it reverse its prior decision. It remanded Hively’s case back to the trial court for a new hearing under this broad new standard.
Employers in Illinois and Wisconsin are already subject to state laws protecting private workers based on sexual orientation, so yesterday’s decision should simply reaffirm their commitment to ensuring fairness and equality for these employees. For private employers in Indiana, however, the time is now to take proactive steps to ensure sexual orientation is treated the same as any other protected class – this includes reviewing your written policies, handbooks, training sessions, workplace investigations, hiring methods, discipline and discharge procedures, and all other aspects of your human resources activities.
As for employers in the rest of the country, it appears likely that yesterday’s ruling will be followed by decisions in other circuit courts similarly extending Title VII rights to cover sexual orientation. In fact, the plaintiff in a prominent case recently decided by the 11th Circuit Court of Appeals (hearing cases from Florida, Georgia, Alabama) has indicated she could seek a full en banc review of her case in the hopes of extending Title VII to cover LGBT workers in that circuit. It would not be surprising for the Hively case to be the first in a series of dominoes that brings about a new day for Title VII litigation across the country.
We can expect to see further judicial rulings in the coming years fleshing out this issue in more detail. For example, one issue not addressed by the 7th Circuit is how this new theory will affect religious institutions given that different standards apply to them under federal antidiscrimination laws. These and other considerations will be debated in courts across the country in the near future.
Even if these appeals court decisions do not immediately materialize, there are two other avenues whereby employers could still face immediate liability for such claims. The first is through state law. Almost half of the states in the country have laws prohibiting sexual orientation discrimination in employment (California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont, Washington, and Wisconsin), and some additional states protect state workers from such discrimination (Alaska, Arizona, Indiana, Kentucky, Louisiana, Michigan, Missouri, Montana, North Carolina, Ohio, Pennsylvania, and Virginia).
Second, plaintiffs have successfully argued to various federal courts that Title VII sex discrimination covers claims where plaintiffs allege mistreatment based on gender non-conformity actions. This includes situations where employers are alleged to have discriminated against workers for failing to live up to stereotypical gender norms. Courts have noted that drawing a line that separates these “sex-stereotyping” claims from pure sexual orientation claims is “exceptionally difficult” because the distinction is often “elusive,” meaning that employers anywhere could face a Title VII claim akin to sexual orientation discrimination that would be accepted as valid by a federal court no matter what the federal appeals courts say. This concept was discussed in the 11th Circuit’s recent Evans v. Georgia Regional Hospital decision, and the court in fact permitted the plaintiff to proceed with her case on a stereotyping theory.
While possible that the Supreme Court or Congress will step in and reverse this trend, as a recent court stated, “it seems unlikely that our society can continue to condone a legal structure in which employees can be fired, harassed, demeaned, singled out for undesirable tasks, paid lower wages, demoted, passed over for promotions, and otherwise discriminated against solely based on who they date, love, or marry.” Employers should take heed and prepare for what appears to be an inevitable extension of workplace protection rights for LGBT workers based on their sexual orientation.