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Rule Permits Associations Based on Industry or Geography

The U.S. Department of Labor (DOL) has issued a new rule that allows employers to join together as a single group to offer group health insurance coverage to employees, working owners (including those without other employees), and their spouses and dependents as part of an "association health plan." The rule allows association health plans to be formed on the basis of industry or geography, such as by state, city, county, or multi-state metropolitan area.

The new rule subjects association informs association health plans to the nondiscrimination rules currently applicable to large group coverage under the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act (ACA). These rules prohibit discrimination based on a health factor or within groups of similarly situated individuals, but do generally permit plans to impose different eligibility provisions and costs based on bona-fide employment-based classifications, such as full-time versus part-time status.

Click here for more information from the DOL.

For more on the nondiscrimination rules applicable to group health plans, check out our Health Insurance Nondiscrimination Rules page.

Overview of Employer Responsibilities for Handling Rebates

The Affordable Care Act's medical loss ratio (MLR) rules require group health insurance issuers to provide rebates if their MLR—the amount of health insurance premiums spent on health care and activities to improve health care quality—falls short of the applicable standard during a reporting year. Each year's rebates must be issued to plan sponsors by September 30 of the following year. As a result, plan sponsors should be looking for these rebates to arrive in the coming weeks.

Employer Distribution

The MLR rules provide that issuers must pay any rebates owed to persons covered under a group health plan to the policyholder, who is then responsible for distributing the rebate to eligible plan enrollees. In general, there are several ways rebates may be distributed by plan sponsors to plan enrollees, including:

  • A rebate check in the mail;
  • A lump-sum reimbursement to the same account that was used to pay the premium if it was paid by credit card or debit card; or
  • A direct reduction in future premiums.

In addition to the above methods, employers may also apply the rebate in a way that benefits employees. However, decisions on how to apply or expend the plan's portion of a rebate are subject to the general standards of fiduciary conduct under the federal Employee Retirement Income Security Act (ERISA).

Check out our section on Medical Loss Ratio (MLR) Rebates & Employer Responsibilities to learn more.

Employers May Apply a Reasonable, Good Faith Interpretation of the Term 'Seasonal Worker'

Employers looking to hire seasonal workers this summer are reminded that there is an exception when measuring workforce size to determine whether they are an applicable large employer (ALE) subject to the Affordable Care Act's employer shared responsibility ("pay or play") provisions.

What Is 'Pay or Play'?

The pay or play provisions require ALEs—generally those with at least 50 full-time employees, including full-time equivalent employees (FTEs)—to offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents) or pay a penalty tax if any full-time employee is certified to receive a premium tax credit for purchasing individual coverage on the Health Insurance Marketplace (Exchange).

Seasonal Worker Exception

If an employer's workforce exceeds 50 full-time employees (including FTEs) for 120 days or less (or 4 calendar months) during the preceding calendar year, and the employees in excess of 50 who were employed during that period were seasonal workers, the employer is not considered an ALE for the current calendar year. A seasonal worker for this purpose is an employee who performs labor or services on a seasonal basis (e.g., retail workers employed exclusively during holiday seasons are seasonal workers).

Seasonal Worker Versus Seasonal Employee

While the terms "seasonal worker" and "seasonal employee" are both used in the pay or play provisions, only the term "seasonal worker" is relevant for determining whether an employer is considered an ALE. For this purpose, employers may apply a reasonable, good faith interpretation of the term "seasonal worker." For more information on the difference between a seasonal worker and a seasonal employee under pay or play, please refer to IRS Pay or Play Q&A #26.

Contact us with your payroll questions, or if you need help with payroll tasks at your company.

Employers looking to hire seasonal workers this summer are reminded that there is an exception when measuring workforce size to determine whether they are an applicable large employer (ALE) subject to the Affordable Care Act's employer shared responsibility ("pay or play") provisions.

What Is 'Pay or Play'?

The pay or play provisions require ALEs—generally those with at least 50 full-time employees, including full-time equivalent employees (FTEs)—to offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents) or pay a penalty tax if any full-time employee is certified to receive a premium tax credit for purchasing individual coverage on the Health Insurance Marketplace (Exchange).

Seasonal Worker Exception

If an employer's workforce exceeds 50 full-time employees (including FTEs) for 120 days or less (or 4 calendar months) during the preceding calendar year, and the employees in excess of 50 who were employed during that period were seasonal workers, the employer is not considered an ALE for the current calendar year. A seasonal worker for this purpose is an employee who performs labor or services on a seasonal basis (e.g., retail workers employed exclusively during holiday seasons are seasonal workers).

Seasonal Worker Versus Seasonal Employee

While the terms "seasonal worker" and "seasonal employee" are both used in the pay or play provisions, only the term "seasonal worker" is relevant for determining whether an employer is considered an ALE. For this purpose, employers may apply a reasonable, good faith interpretation of the term "seasonal worker." For more information on the difference between a seasonal worker and a seasonal employee under pay or play, please refer to IRS Pay or Play Q&A #26.

Get an Early Tax “Refund” by Adjusting Your Withholding  Each year, millions of taxpayers claim an income tax refund. To be sure, receiving a payment from the IRS for a few thousand dollars can be a pleasant influx of cash. But it means you were essentially giving the government an interest-free loan for close to a year, which isn’t the best use of your money.

Fortunately, there’s a way to begin collecting your 2018 refund now: You can review the amounts you’re having withheld and/or what estimated tax payments you’re making, and adjust them to keep more money in your pocket during the year.

Choosing to adjust

It’s particularly important to check your withholding and/or estimated tax payments if:

  • You received an especially large 2017 refund,
  • You’ve gotten married or divorced or added a dependent,
  • You’ve bought a home,
  • You’ve started or lost a job, or
  • Your investment income has changed significantly.

Even if you haven’t encountered any major life changes during the past year, changes in the tax law may affect withholding levels, making it worthwhile to double-check your withholding or estimated tax payments.

Making a change

You can modify your withholding at any time during the year, or even more than once within a year. To do so, you simply submit a new Form W-4 to your employer. Changes typically will go into effect several weeks after the new Form W-4 is submitted. For estimated tax payments, you can make adjustments each time quarterly payments are due.

While reducing withholdings or estimated tax payments will, indeed, put more money in your pocket now, you also need to be careful that you don’t reduce them too much. If you don’t pay enough tax throughout the year on a timely basis, you could end up owing interest and penalties when you file your return, even if you pay your outstanding tax liability by the April 2019 deadline.

Getting help

One timely reason to consider adjusting your withholding is the passage of the Tax Cuts and Jobs Act late last year. In fact, the IRS had to revise its withholding tables to account for the increase to the standard deduction, suspension of personal exemptions, and changes in tax rates and brackets. If you’d like help determining what your withholding or estimated tax payments should be for the rest of the year, please contact us.

RBSK Payroll
RBSK Payroll Partners