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ACA and Entrepreneurial Independence

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On the eve of Independence Day, I want to take a moment to look at a unique comparison between our country’s founding fathers and the people who have helped create jobs for you and me: the American entrepreneur.

Although separated by time, the two have something in common in the Affordable Care Act (ACA). The federal government’s controversial legislation has our founding principles and entrepreneurial spirit on the proverbial pins and needles.

Once independent in nature, entrepreneurs have helped lower the country’s unemployment rate; according to the U.S. Bureau of Labor Statistics, start-ups in their first year of existence currently create around 2.5 million new jobs annually. These entrepreneurs have to think like our country’s founders, in that they establish positive cultures that support their employees; otherwise, those employees might look to leave … and start their own independent company. Sound familiar?

Employers value those workers who exude entrepreneurial spirit, because outside-the-box thinking can yield unique solutions to drive revenue. On the other hand, if that spirit grows untamed, employers stand to lose that top talent to the allure of going solo. An entrepreneurial exodus is what employers may face due to feelings of independence and ACA’s influence.

According to Forbes, four stipulations exist within the ACA that prove “a boon to entrepreneurs,” potentially encouraging these workers to leave full-time employment behind for a shot at independence and opening their own shop. The first and foremost is simple enough: They can afford to.

While a Gallup-Healthways poll found that 25 percent of entrepreneurs went without health insurance two years ago, the ACA makes coverage affordable, especially with extending the deadline of young people remaining on their parents’ plan from age 19 to age 26.

With those extra seven years of security, Forbes reported, young entrepreneurs were more than twice as likely to set up shop for themselves. In 1776, life expectancy was right around 35 years, so the idea of today’s 26-year-olds still being dependent upon their parents would be as alien as putting man on the moon.

How many budding entrepreneurs do you have in your organization? And how many of those top performers already may be plotting an exit strategy to lead the charge for independence?

Obviously, America’s founders had the foresight to develop a business plan in the U.S. Constitution, a document that has evolved for more than 225 years. While a lot has changed in the business landscape across those two centuries, a lot has changed in the four years that the ACA became effective, too. Either example stands as a solid reminder that business plans aren’t set in stone. It is smart to revisit your goals constantly and consistently, several times a year.

As it was with the Constitution and is with the ACA, things change. In order to thrive and remain relevant, don’t be afraid to amend your business plans.

The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only.  It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.


Rod Lott

by Rod Lott


Author Bio: As Paycom’s Creative Services Manager, Rod Lott brings more than two decades of experience in marketing, advertising, branding and journalism. A published author and a graduate of the University of Oklahoma, he has worked with such brands as Blue Cross Blue Shield, Sonic Drive-In and OU.

ACA Awaits Repeal or Repair

ACA Awaits Repeal or Repair

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ACA Awaits Repeal or Repair

After his electoral win in November, President Donald Trump, buoyed by Republican majorities in the House and the Senate, vowed to act quickly to repeal and replace the Affordable Care Act (ACA). Pres. Trump has now been in office for a month, and Republicans have not yet voted to repeal the ACA, and have not agreed upon a potential replacement, leaving the date of “repeal and replace” somewhere in the uncertain future. stethoscope

Early strategies

When the current Congress convened in January, it moved quickly to begin the “repeal” portion of “repeal and replace” by passing a budget resolution. Because the GOP does not have a filibuster-proof majority in the Senate and cannot count on votes from Democrats to repeal the ACA, Republicans have decided to utilize a procedure known as budget reconciliation to dismantle it.

By using this procedure, Congress can pass a bill to repeal the ACA with a simple majority in the Senate. The reconciliation instructions in the budget resolution directed various committees to come up with proposals to repeal the ACA and submit them to the budget committees of the House and Senate. The reconciliation proposals would then be crafted into a bill by the budget committees, and the reconciliation bill would then need to pass both the House and the Senate before being signed by the President.

Potential outcomes

However, the provisions of the bill passed this way must target elements of the ACA that have a federal budgetary effect. Therefore, the ACA provisions that allow children to stay on their parents’ insurance through age 26 and the requirement that insurers cover preexisting conditions could not be eliminated using this procedure. Nor could the individual and employer mandates be eliminated in this way, but the amounts of the penalties could be reduced to zero, eliminating them in all but name.

Repeal or repair?

Republicans originally called for reconciliation proposals to be submitted to the budget committees by January 27, but that date has come and gone. Congressional Republicans continue to work on “repeal and replace,” but many of them have begun talking about “repair” of the ACA, rather than repeal, as they recognize the difficulty of legislating in this area.

In an interview with Fox News’ Bill O’Reilly on February 5, President Trump said that replacement could take until 2018.

O’Reilly asked “Can Americans in 2017 expect a new health care plan rolled out by the Trump administration this year?”

Trump responded, “We’re going to be putting it [the new healthcare plan] in fairly soon, I think that … by the end of the year at least the rudiments but we should have something within the year and the following year.”

Employer mandates remain in place

One thing that has become clear during the first month of the Trump presidency is that repealing the ACA is a much tougher prospect than many had thought. Despite the uncertainty with regard to the long-term future of the ACA, the current reality is that the ACA and the employer mandate remain the law of the land, and employers should continue to comply with the law’s requirements. Applicable Large Employers should file IRS Forms 1094 and 1095 no later than the March 31 if filing electronically, or February 28, if filing paper forms. Forms 1095-C must be furnished to employees no later than March 2. Large employers should continue to comply with the employer mandate, measure their full-time employees, and offer minimum essential coverage providing minimum value to those employees and their dependents.

Paycom will continue to monitor executive and Congressional action regarding the ACA closely and stands ready to help our clients maintain compliance.

 

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Posted in ACA, Blog, Compliance, Featured

Erin Maxwell

by Erin Maxwell


Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

6 Compliance Changes to Check in 2017

6 Compliance Changes to Check in 2017

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Compliance Deadlines and Issues to Watch in 2017

Employers can expect developments  in 2017 related to the Fair Labor Standards Act (FLSA), the Affordable Care Act (ACA), Equal Employment Opportunity Commission (EEOC) requirements and several other workplace regulations concerning compliance. Here’s a closer look.

 

  1. Fair Labor Standards Act

On Nov. 22, 2016, Judge Amos L. Mazzant III of the U.S. District Court for the Eastern District of Texas issued an injunction delaying the effective date of the new overtime rule. The rule would have raised the minimum salary threshold for exempt executive, administrative and professional employees to $913 per week, from $455 per week and the minimum annual salary threshold for highly compensated employees to $134,004, from $100,000.

How long the injunction will remain in place – and the fate of the rule – is anyone’s guess. Meanwhile, employers should adhere to current FLSA requirements and keep an eye out for the outcome of the Department of Labor’s current appeal.

 

  1. Affordable Care Act

Although the leadership in the House of Representatives currently is attempting to repeal ACA, for now, employers still remain responsible for all ACA tracking and reporting requirements. The deadline for issuing ACA forms 1095-B and -C to employees has been extended from Jan. 31, 2017 to March 2, 2017. However, the due date for filing ACA forms with the Internal Revenue Service (IRS) is unchanged. For 2016 tax year, applicable large employers must:

  • Submit paper forms 1094-B and -C and 1095-B and -C by Feb. 28, 2017

 

  • Submit electronic forms 1094-B and -C and 1095-B and -C by March 31, 2017

 

The IRS has extended the “good faith effort” penalty waiver to 2017. Employers who submit inaccurate or incomplete reporting information may be relieved from penalties, as long as they can show they made a “good faith effort” to comply with the ACA’s requirements.

Note that although the 40-percent “Cadillac” tax on high-cost employer health plans has been delayed until 2020, employers should consider assessing the impact of the tax on future business goals now. Once the impact is understood, a feasible strategy can be put in place.

 

  1. Equal Employment Opportunity Reporting

The EEOC has revised the Employer Information Report (EEO-1) to include collecting pay data from employers, including federal contractors, with over 100 employees.

Under the original proposal, employers would submit their annual EEO-1 report – which would include W-2 pay data and hours worked – to the Joint Reporting Committee by September 30 of each year. However, the EEOC has issued an updated proposal that would move the due date for the 2017 report from Sept. 30, 2017 to March 31, 2018. In subsequent years, the deadline will be March 31.

Be sure to monitor the revisions to the EEO-1 report, and prepare a strategy for implementation in case the changes are enacted.

 

  1. Citizenship and Immigration Services Reporting

U.S. Citizenship and Immigration Services recently updated Form I-9. After Jan. 21, 2017, employers must start using the new form.

 

  1. Minimum Wage and Paid Sick Leave

Many states, cities and counties have approved minimum wage increases and mandatory paid sick leave, some of which will take effect in 2017.

 

  1. Federal Contract Workers

The minimum wage for federal contract workers increases to $10.20 per hour Jan. 1, 2017. Certain federal contractors also must provide their employees with up to seven days of paid sick leave per year.

Staying ahead of potential and actual regulatory changes is easy with an HR and payroll system that generates the necessary forms and enables electronic filing to simplify reporting. It’s also important to partner with an HR technology provider who stays abreast of tentative regulatory matters and quickly updates their system accordingly, so that you have the right tools for any changes.

 

DISCLAIMER: The information provided in this blog is for general informational purposes only. Accordingly, Paycom and the writer of the above content do not warrant the completeness or accuracy of the above information. It does not constitute the provision of legal advice, tax advice, accounting services, or professional consulting. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other professional services.

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Posted in ACA, Blog, Compliance, Featured, FLSA

Heidi Lively

by Heidi Lively


Author Bio: Heidi Lively serves as Paycom’s Additional Business Manager, where she focuses on the compliance and service of additional business products. Previously, she served customers in the Paycom Service Department where she quickly rose through the ranks to earn a team leader position. Having performed in a leadership position for a number of years, Heidi has been able to cultivate and influence others through Paycom’s leadership initiatives. Heidi earned her bachelor’s degree from the University of Central Oklahoma.

Reimbursement: Small businesses can now reimburse employees who purchase their own health insurance

Small Businesses Can Now Compensate Employees Who Purchase Their Own Health Insurance

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Small Businesses Can Now Compensate Employees Who Purchase Their Own Health Insurance

New, small employer ACA requirements effective for plans beginning after Dec. 31, 2016

President Barack Obama recently announced a small gift for small businesses as it relates to insurance. Title 18 of the new 21st Century Cures Act, signed by President Obama on Dec. 13, 2016, allows small employers the use of Health Reimbursement Arrangements (HRAs) to compensate employees who buy their own health insurance for themselves and their families.

Reimbursement Amounts

Maximum annual benefits for the individual are $4,950 or $10,000 a year for families. Employers are to report the total amount of benefits received on their employees’ W-2 forms, beginning with the 2017 calendar year. After 2016, the above dollar amounts are subject to annual cost-of-living increases.

Reimbursement Details

The reimbursements are for the cost of employee health insurance plans purchased through the Affordable Care Act (ACA) marketplace or on the individual market, effective after Dec. 31, 2016. Reimbursements only can be funded by the employer, and cannot include employee salary reduction contributions. The employee’s out-of-pocket plan must provide for the payment or reimbursement of medical care expenses that are incurred by the employee or the employee’s family members and the employee must provide proof of health coverage to their employer. HRAs must be offered on the same terms to all eligible employees, but employers may exclude from eligibility employees who have not completed 90 days of service, have not reached age 25, part-time or seasonal employees, employees included in a collective bargaining agreement and employees who are non-resident aliens who have no earned income derived from sources within the U.S.

Notice Requirements

Small employers must give an annual notice to eligible employees:

  • at least 90 days before the start of the year, or,
  • at least 90 days before the employee’s initial eligibility date, or
  • no more than 90 days after the legislative enactment of the 21st Century Cures Act; whichever is later.

 

The annual HRA notice must:

  1. state the amount of the employee’s permitted benefits
  2. educate the employee on how to disclose the reimbursement amount to any health insurance exchange if an employee chooses to apply for the premium assistance tax credit
  3. warn about taxes that may be charged if the employee does not have minimum essential coverage each month
  4. remind the employee that the HRA may be included in Gross income

 

If the business fails to follow the above requirements, it will be subject to a $50 per-employee per-incident penalty, up to $2,500 per calendar year, unless the failures were due to reasonable cause and not willful neglect.

This HRA Isn’t for Every Employer

The 21st Century Cures Act created a new type of HRA called the “qualified small employer HRA” (SEHRA). The IRS code does not consider SEHRAs as group health plans, therefore making them unqualified for the excise tax levied on group health plans that don’t meet the ACA market reform requirements. If your company is considered an applicable large employer and/or has at least 50 full-time or full-time equivalent employees then you are not eligible to provide a SEHRA.  Additionally, you cannot provide an SEHRA if you offer a group health plan to any of your employees.

DISCLAIMER: The information provided in this blog is for general informational purposes only. Accordingly, Paycom and the writer of the above content do not warrant the completeness or accuracy of the above information. It does not constitute the provision of legal advice, tax advice, accounting services, or professional consulting. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other professional services.

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Posted in ACA, Blog, Featured, Tax Credits

Heidi Lively

by Heidi Lively


Author Bio: Heidi Lively serves as Paycom’s Additional Business Manager, where she focuses on the compliance and service of additional business products. Previously, she served customers in the Paycom Service Department where she quickly rose through the ranks to earn a team leader position. Having performed in a leadership position for a number of years, Heidi has been able to cultivate and influence others through Paycom’s leadership initiatives. Heidi earned her bachelor’s degree from the University of Central Oklahoma.

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