Compliance

Contributor:
Jenn Hargiss, Client Coordinator and Consultant
Hill, Chesson & Woody

Did you know that if you provide more than $50,000 of employer-paid life insurance to your employees, that you must also tax the employees for the value over the $50,000?

I know, I know. They didn’t receive cash, so why should they be taxed?

IRC Code 79 provides an "exclusion for the first $50,000 of group term life insurance coverage provided under a policy carried directly or indirectly by an employer. There are no tax consequences if the total amounts of such policies do not exceed $50,000. The imputed cost of coverage in excess of $50,000 must be included as taxable income, using the IRS Premium Table, and is subject to social security and Medicare taxes."

There are 4 requirements that must be met in order for a policy to be subject to imputed income:

Contributor:
Zach Nichols, Triad Regional Manager
Hill, Chesson & Woody

Are you tired and ready for the holidays?  Almost 65% of you have recently completed your benefit renewals and hope to move forward in 2012 with a few less gray hairs.  Once things get going in the first quarter, who’s in charge of filing your Form 5500s?  “Form 5500 what?” you might ask.  “I heard you say something about 5500. Is that a new Holiday bonus I’m getting this year?”

Well, for those of you who are compliant, this isn’t a big deal. You already know what it is and who is responsible for filing it.  Shockingly, according to the Department of Labor, almost 47% of employers in the United States are non-compliant when it comes to filing their 5500s.  Since almost half of employers have never heard of Form 5500 or don’t understand its importance, here’s a quick rundown of what it is and how it pertains to your organization.

Plan sponsors who maintain qualified employee benefit programs such as pension plans, 401k plans or Health & Welfare plans generally must file an annual report with the Employee Benefits Security Administration/Department of Labor. This annual report, known as a Form 5500, is due within seven (7) months after the end of a plan year. 

Contributor:
Laura Bibb, JD, GBA, Compliance Officer
Hill, Chesson & Woody

In a September 2011 decision, a judge in the U.S. District Court for the Southern District of Kansas ruled that an employee covered under his employer’s health plan who was terminated about a year after his wife’s end-stage renal disease diagnosis could continue to pursue his claims under ADA and ERISA. 

The ADA contains a provision prohibiting discrimination based on association with a disabled person.  The employee in this case claimed discrimination under this provision and alleged he was terminated due to his wife’s disability and its cost to his employer.  The employee also claimed his employer violated ERISA Section 510 (which prohibits termination of a plan participant for exercising rights under ERISA or under an ERISA plan) by terminating him because of his wife’s medical claims.

The employer claimed the employee was terminated for poor job performance and there was evidence of complaints from co-workers and customers.

Contributor:
Mike Beck, Consultant
Hill, Chesson & Woody

Preparing for compliance issues is a crucial component of any healthcare reform plan. This is not just a human resources issue. Meeting the new regulations will involve every facet of your organization — finance, tax, compliance, operations, compensation and human resources.

For employers, the stakes are high. Abiding by the new reform compliance regulations could eliminate penalties that would be incurred otherwise. Whether it is the proper W-2 reporting of the value of employee health benefits, the requirements surrounding the “Play or Pay” mandate or the implications of the Cadillac Tax, employers need to plan now, or they may risk incurring large fees and fines.

Why This is Important for Employers

Originally slated to begin January 1, 2011, the IRS delayed the W-2 reporting requirements under Reform until 2012. Next year, employers will be required to report (based on COBRA premiums):

Contributor:
Laura Bibb, JD, Compliance Officer
Hill, Chesson & Woody 

Yesterday, in a lawsuit brought by the Virginia attorney general, a federal judge in Virginia ruled the reform law individual mandate was unconstitutional. U.S. District Judge Henry E. Hudson is the first federal judge to strike down the law. Other lawsuits in Virginia and Michigan have upheld the constitutionality, while a lawsuit on behalf of 20 state attorneys general is still pending in Florida. Arguments are scheduled for December 16, 2010 in the Florida lawsuit.