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In This Issue
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COBRA Subsidy Extended
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Dependent Coverage
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Stressed at Work
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Health Care Tax Credit
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HIRE Act Affidavit
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Small
Business Health Care Tax Credit
Certain
small businesses and tax-exempt organizations that provide health
insurance coverage to their employees may qualify for a special tax
credit in 2010, according to the Internal Revenue Service. Included in
the recently enacted health care reform legislation, the Patient
Protection and Affordable Care Act, is a tax credit designed to encourage
small employers to offer health insurance coverage for the first time or
maintain coverage they already have. The following are eligibility rules
and the amount of credit as explained by the IRS.
Eligibility
Rules
Providing
health care coverage. A qualifying employer must cover at
least 50 percent of the cost of health care coverage for some of its
workers based on the single rate.
Firm
size.
A qualifying employer must have less than the equivalent of 25 full-time
workers (for example, an employer with fewer than 50 half-time workers
may be eligible).
Average
annual wage. A qualifying employer must pay average annual
wages below $50,000.
Both
taxable (for profit) and tax-exempt firms qualify.
Amount of
Credit
Maximum
Amount.
The credit is worth up to 35 percent of a small business' premium costs
in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent
for tax-exempt employers).
Phase-out. The credit
phases out gradually for firms with average wages between $25,000 and
$50,000 and for firms with the equivalent of between 10 and 25 full-time
workers.
Three
Simple Steps for Employers to Qualify
If you
are a small employer (business or tax-exempt) that provides health
insurance coverage to your employees, determine if you may qualify for
the Small Business Health Care Tax Credit by following the three simple
steps featured
here.
Frequently
Asked Questions
The IRS
has issued 22 FAQs for employers on the Small Business Health Care Tax
Credit, including the following topics:
- Employer
eligibility
- Claiming
the credit
- Determining
average annual wages
- Calculating
expenses
- Tax-exempt
organizations
- Relief in
2010
To
view this detailed FAQ page from the IRS, please click
here.
Examples
The
IRS has also provided several employer scenarios for the credit,
including numbers of workers, part-time employees and non-profit groups.
To view the scenarios, please click
here.
For
additional information on the credit, please visit the IRS site
here.
To
visit the HR & Benefits Essentials 2010 Health Care Reform Section,
please click
here.
HIRE
Act Affidavit Released by IRS
The
IRS has released a new
form that will help employers claim the special payroll tax exemption
that applies to qualified newly-hired workers during 2010, created by the
Hiring Incentives to Restore Employment (HIRE) Act.
New Form W-11, Hiring
Incentives to Restore Employment (HIRE) Act Employee Affidavit, is now
posted on IRS.gov, along with answers to frequently-asked
questions about the payroll tax exemption and the related new hire
retention credit. The new law requires that employers get a statement
from each eligible new hire, certifying under penalties of perjury, that
he or she was unemployed during the 60 days before beginning work or,
alternatively, worked fewer than a total of 40 hours for anyone during
the 60-day period. Employers can use Form W-11 to meet this
requirement.
Most
eligible employers then use Form 941, Employer's Quarterly Federal Tax
Return, to claim the payroll tax exemption for eligible new hires. This
form, revised for use beginning with the second calendar quarter of 2010,
is currently available as a draft form on
IRS.gov and will be released as a final along with the form's
instructions.
For
more information on the HIRE Act affidavit and exemption, please click
here.
Updated
Forms W-2 and W-3
The
IRS has also issued the following updated Forms W-2 and W-3 to reflect
the Social Security tax exemption available to qualifying employers under
the HIRE Act.
To
view additional FAQs for employers on the HIRE Act, please click
here.
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COBRA Subsidy Extended Through
May 31, 2010
 The Continuing Extension Act of 2010 extends
the deadline for terminated employees to qualify for the COBRA premium
subsidy. Workers now terminated between September 1, 2008, and May 31,
2010 may be eligible for a 65% subsidy of their COBRA premiums. The
premium reduction applies to periods of health coverage that began on or
after February 17, 2009, and lasts for up to 15 months.
Employers
should take note that a further extension of the premium reduction,
possibly through the end of 2010, is expected. HR & Benefits
Essentials will provide updates on any extensions as they occur. The
following are updated Model Notices with explanations from the DOL.
Updated
Model Notices
ARRA, as
amended by the Continuing Extension Act of 2010 (CEA), mandates that
plans notify certain current and former participants and beneficiaries
about the COBRA premium reduction.
The
DOL created model notices to help plans and employers comply with these
requirements. Each model notice is designed for a particular group of
qualified beneficiaries and contains information to help satisfy ARRA's
notice provisions, including those amended by CEA.
Model
Updated General Notice
Plans
subject to the Federal COBRA provisions must provide the updated General
Notice to all qualified beneficiaries (not just covered employees)
who experienced a qualifying event at any time from September 1, 2008
through May 31, 2010, regardless of the type of qualifying event, and who
have not yet been provided an election notice. This model notice includes
updated information on the premium reduction, as well as information
required in a COBRA election notice.
Note: Individuals
who experienced a qualifying event that was a termination of employment
from April 1, 2010 through April 14, 2010 may not have been provided
proper notice and must get the updated General Notice and receive the
full 60 days from the date the updated notice is provided to make a COBRA
election. Those individuals who have been provided a notice that did not
include information related to the most recent extension must also be
provided this updated information. Depending on the specific
circumstances, either the Supplemental Information Notice or the Notice
of Extended Election Period may be used. See below for additional
details.
Model
Notice of New Election Period
Plans
subject to continuation coverage provisions under Federal or State law
should provide, within 60 days of the date of the termination of
employment, a Notice
of New Election Period to all individuals who:
- Experienced
a qualifying event that was a reduction in hours at any time from
September 1, 2008 through May 31, 2010;
- Subsequently
experience a termination of employment at any point from March 2,
2010 through May 31, 2010; and
- Either did
not elect continuation coverage when it was first offered or elected
but subsequently discontinued the coverage.
Generally,
individuals who have experienced a qualifying event that consists of a
reduction of hours and who, from March 2, 2010 through May 31, 2010,
experience an involuntary termination of employment must be provided this
notice within 60 days of the event. Additionally, CEA provides that for
the April 1, 2010 through April 14, 2010 period, the notice requirement
attaches to any termination of employment. The DOL strongly recommends
that notice be provided to individuals who experienced any termination of
employment because employers may be subject to civil penalties if it is
later determined that the termination was involuntary and notice was not
provided.
Model
Supplemental Information Notice
Plans
that are subject to continuation coverage provisions under Federal or
State law should provide the Supplemental
Information Notice to all individuals who elected and maintained
continuation coverage based on the following qualifying events:
- All
qualifying events related to a termination of employment that
occurred from March 1, 2010 through April 14, 2010 for which notice
of the availability of the premium reduction available under ARRA
was not given; or
- Reductions
of hours that occurred during the period from September 1, 2008
through May 31, 2010 which were followed by a termination of the
employee's employment that occurred on or after March 2, 2010 and by
May 31, 2010.
For
the first item above, plans must provide this notice to all individuals
with a qualifying event related to any termination of employment if they
have not already been provided notice of their rights under ARRA. This
notice must be provided before the end of the required time period for
providing a COBRA election notice. For the second item above, generally,
individuals who experience an involuntary termination of employment from
March 2, 2010 through May 31, 2010 after experiencing a qualifying event
that consists of a reduction of hours must be provided this notice within
60 days of the termination of employment. However, as noted above, CEA
requires plans to provide notices to all individuals with qualifying
events related to any termination of employment that occurred from April
1, 2010 through April 14, 2010. In those cases, this notice must be
provided before the end of the required time period for providing a COBRA
election notice. Because employers may be subject to civil penalties if
it is later determined that the termination was involuntary, the DOL
strongly recommends that notice be provided to individuals who
experienced any termination of employment.
Model
Notice of Extended Election Period
Plans
that are subject to continuation coverage provisions under Federal or
State law must provide, before the end of the required time period for
providing a COBRA election notice, the Notice
of Extended Election Period to all individuals who:
- Experienced
a qualifying event that was a termination of employment at some time
from April 1, 2010 through April 14, 2010;
- Were
provided notice that did not inform them of their rights under ARRA,
as amended by CEA; and
- Either
chose not to elect COBRA continuation coverage at that time or
elected COBRA but subsequently discontinued that coverage.
Model
Updated Alternative Notice
Insurance
issuers that offer group health insurance coverage that is subject to
comparable continuation coverage requirements imposed by State law must
provide the Alternative
Notice to all qualified beneficiaries, not just covered employees,
who have experienced a qualifying event through May 31, 2010. However,
because continuation coverage requirements vary among States, this notice
should be further modified to reflect the requirements of the applicable
State law. Issuers of group health insurance coverage subject to this
notice requirement should feel free to use the model Alternative Notice,
the model Notice of New Election Period, the model Supplemental
Information Notice, the model Notice of Extended Election Period, or the
model General Notice (as appropriate).
For
more information on the extension of the COBRA premium reduction, see the
updated
fact sheet. For further information, visit www.dol.gov/COBRA.
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 Spotlight
on Health Care Reform
Dependent
Coverage up to Age 26
For
new plan years starting on or after September 23, 2010, the new health
law requires group and individual health plans that cover dependents to
continue to make dependent coverage available until age 26.
Grandfathered
Plans
For plan
years beginning before Jan. 1, 2014, grandfathered group health plans
offering dependent coverage will not need to make this coverage available
if the adult child is eligible to enroll in another employer-sponsored
health plan. Grandfathered plans are those plans that were in place on
March 23, 2010. The law also expressly does not require a health plan or
a health insurance issuer to make coverage available for a child of a
child receiving dependent coverage.
Income
Tax Exclusion
As a result of changes made by the recently enacted Affordable Care Act,
health coverage provided for an employee's children under 27 years of age
is now generally tax-free to the employee, effective March 30, 2010.
The
IRS announced that these changes immediately allow employers with
cafeteria plans to permit employees to begin making pre-tax contributions
to pay for this expanded benefit. For additional information on cafeteria
plans, please click
here. These changes are explained in IRS Notice 2010-38, which
provides further guidance to employers, employees, health insurers and
others.
Employees
with children who do not turn 27 by the end of the year are eligible for
the new tax benefit from March 30, 2010, forward, if the children are
already covered by or added to the employer's plan. For this purpose, a
child includes a son, daughter, stepchild, adopted child or eligible
foster child.
The
notice also states that employers with cafeteria plans may permit employees
to immediately make pre-tax salary reduction contributions to provide
coverage for children under age 27, even if the cafeteria plan has not
yet been amended to cover these individuals. Then, plan sponsors have
until the end of 2010 to amend their cafeteria plan language to
incorporate this change. To view Notice 2010-38, please click here.
Note
that the Affordable Care Act did not amend the Internal Revenue Code's
basic definition of "dependent" in Section 152. Thus, employers
designing benefit plans will need to be mindful of at least three
different provisions relating to dependents:
- Dependent
Coverage requirement until age 26;
- Income tax
exclusion for employer-provided benefits to dependents until age 27;
and
- Qualifying
"dependent" under the Internal Revenue Code for other
purposes
State
Dependent Coverage Requirements
Although the health reform law applies in every state, several states
have more favorable dependent coverage requirements. Employers and plan
administrators should consult with their state insurance departments to
ascertain requirements of their health plans. To contact your state
insurance department, please click here.
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 Keeping Stress
at Work in Check
Stress
at work can come from significant workload, pressing deadlines and time
management issues. When workplace stress feels overwhelming, the
following are some simple steps managers and employees can take to reduce
the pressure.
How
Managers Can Help Their Teams Reduce Stress
With
so many responsibilities, projects and tasks to implement in a given day,
it's easy for employees to lose a sense of priority and simply jump from
one thing to another. Sometimes the most complex and difficult tasks are
avoided in favor of completing the smaller jobs. One helpful way to help
alleviate stress is for managers or supervisors to develop daily or
weekly to-do lists for their teams based on organizing tasks, defining
goals and setting reasonable timelines.
Step-Out
a Complicated Project
For
complex projects, managers should consider breaking them up into
sequential steps. Thus, where you can divide a project into discrete
phases, you can provide specific direction to your team, helping to
maintain a calm environment and motivating them to complete their tasks.
Start
Delegating
Truly delegating
tasks is another way that a manager can reduce his or her own stress.
Allocating an important task to one or more employees, only to end up
micromanaging his or her every move, defeats the purpose of delegating.
With solid planning and open communications, employees will be ready to
"run with the ball".
Help
Alleviate Worry about Job Security
One
of the major sources of stress for employees -- especially in today's
challenging economy -- is job security. Worrying about whether another
round of layoffs will be coming can definitely increase stress and drain
positive energy. One step to reduce stress is clearly communicating to
valued employees about their future with the company.
Your
communication with employees should also include an ongoing conversation
about their individual roles. Employees may be able to help identify new
ways that they can contribute. Even just giving employees an opportunity
to express fresh ideas and ways to improve or enhance the company can
make them feel valued and important. Similarly, showing employees
recognition for achievements can increase their confidence as well as
reduce stress related to their workload.
Tips
for Reducing Stress Everyone Can Use
Finally,
the following are some simple tips everyone can use to can lower the
stress level and increase productivity.
Make
Time for Meetings and Completing Tasks - Segment your day to allow for
meetings and the time necessary to complete tasks. It is very easy to
lapse into scheduling meeting after meeting and not allow for the time
necessary to actually complete your work. Blocking out time to complete a
task on your calendar is just as important as allocating time form
meetings.
Avoid
Setting Unrealistic Goals - When you strive to be perfect or try
to achieve unrealistic goals, you could be setting yourself up for even
greater stress and the risk of failure. Instead, set achievable goals
with reasonable timelines. Remember with each successful task you
achieve, your sense of accomplishment will grow while your stress level
will be reduced.
Schedule
Time for Exercise - Regardless of how busy your schedule is, it is
vitally important to get into an exercise routine. Whether you enjoy
aerobics, jogging, walking, biking or any type of exercise, a regular
routine will help reduce stress and recharge your batteries for the
challenges ahead.
Keep
Your Sense of Humor - Laughter can be one of the best stress relievers
of all. When things start to get too intense, it could be a time for a
little humor to lighten the load.
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