For those who need to enroll in a new healthcare plan, or change from one plan to another, Open Enrollment is the time to complete those tasks. More to the point, unless special circumstances apply, you can only enroll in a plan or make changes during this time. Therefore it is extremely important to anticipate your Open Enrollment period, and be ready to complete the process during that window of time.
But wait! You might have noticed that there is more than one Open Enrollment period for health insurance. You will need to understand which enrollment window applies to your situation, and then complete the correct steps to select a health insurance plan.
Individual Open Enrollment. This enrollment period applies to the general health insurance marketplace for individuals – that is, people who are not covered by health insurance through their employers. In California you will complete your enrollment through Covered California, either online, over the phone, or with assistance from an independent health insurance broker.
This year, Open Enrollment for individuals runs from November 1 to December 15, 2019. Coverage under your new plan will begin on January 1, 2020.
Group Open Enrollment. Your initial enrollment period for group health insurance will occur at the time you become employed and eligible for that company’s healthcare plan. From that point on, Group Open Enrollment occurs annually upon the anniversary of the company’s enrollment in the plan. So, for example, if an employer originally enrolled in a group policy on October 1, 2015, their Open Enrollment period will occur on the first of October every year thereafter.
When you experience a change in your circumstances, allowing for a change to your plan (you get married or have a baby, for example), you can make that alteration to your plan at the time it occurs.
Contact your human resources department for more information on your group health insurance plan, or to make necessary changes to that policy.
Special Open Enrollment for Small Groups. The Affordable Care Act acknowledged that many smaller employers might want to offer a group health insurance plan, but do not meet standard employer contribution or employee participation ratios. For those cases, the Special Open Enrollment for Small Groups window exists, and will run from November 15 to December 15. Eligible small groups will receive coverage beginning January 1.
In the context of small group health insurance, an employer cannot require employees to enroll unless they cover 100 percent of the employee’s premiums.
Have more questions about Open Enrollment? Give us a call, and we will help you determine what you need to do next.
In the event that one of your employees is no longer employed by you, federal law might require that they are allowed to temporarily continue their health insurance plan. The Consolidated Omnibus Budget Reconciliation Act, or COBRA, asserts that former workers and their dependents are entitled to maintain group health insurance coverage for a period of time after their eligibility ends, if one of the following conditions apply:
- Job loss, whether voluntary or involuntary (except in cases of gross misconduct)
- Work hours are reduced and the employee otherwise loses eligibility for benefits
- A dependent is divorced or legally separated from an employee
- The employee becomes eligible for Medicare
- An employee’s child loses their dependent status
- An employee dies (in this case COBRA applies to their dependents)
Are you required to provide COBRA health insurance coverage? COBRA applies to private-sector employers, with twenty or more full-time employees (or full-time equivalents) in 50 percent of the calendar year, who provide group health insurance benefits.
However, COBRA coverage might not apply to all of your employees. You don’t have to provide COBRA to:
- Employees who haven’t worked for you long enough to be eligible for group health insurance benefits
- Those who declined to participate in a group benefits plan
- Those who are enrolled in Medicare
Even smaller employers should be aware of COBRA requirements. Your company could grow in the near future. Even if you employ just under 20 workers, become familiar with COBRA so that you can comply with the law when the time comes.
Employees must be notified. COBRA also requires that you notify workers of their COBRA rights within 90 days of their eligibility for your group plan. You must also notify them of COBRA eligibility within 14 days of a qualifying event (as listed above). The former employee, or dependent, has 60 days to opt into COBRA coverage.
COBRA applies to all health plans. If a former employee (or dependent) elects COBRA coverage, it must apply to all plans in which they were formally enrolled. Examples include medical flexible spending accounts, dental plans, vision plans, or drug plans.
COBRA is subject to certain time limits. For employees, COBRA coverage lasts up to 18 months. For dependents, coverage under COBRA can extend to 36 months after the qualifying event. Other rules apply in cases of disability.
Who pays for COBRA? The employer can require that the former employee or dependent pays 100 percent of the cost of coverage under the group plan. Premiums cannot exceed the full cost of coverage plus two percent for administrative expenses.
Noncompliance can cost you. Failure to comply with COBRA requirements can result in IRS fines, private lawsuits, and audit or enforcement actions by the Department of Labor.
If you have more questions about COBRA coverage, please don’t hesitate to call us. We can assess your responsibilities and help you maintain compliance with the law.
Now that the federal Individual Mandate requirement for health insurance has loosened – since setting the penalty at 0 dollars, the law is effectively nullified – individual states are now passing their own mandate laws. With passage of the Minimum Essential Coverage Individual Mandate, California is poised to join those ranks.
Effective January 1, 2020, the mandate requires all Californian residents (along with spouses and dependents) to enroll in a qualified insurance plan for each month of the year. Those who fail to maintain health insurance coverage will be subject to a Shared Responsibility Penalty , to be determined and collected by the Franchise Tax Board. Some exceptions to the law do apply, according to financial hardship and religious belief as dictated by Covered California.
Currently, 93 percent of the state’s population is covered by a health insurance plan. New affordability provisions within the law aim to close that gap, so that the state can achieve 100 percent coverage.
Currently, individuals and families with incomes between 100 and 400 percent of the federal poverty level can obtain government subsidies to make health insurance premiums more affordable. The new law will expand that bracket up to 600 percent, so that more Californians can obtain coverage.
The new legislation also raised Medi-Cal’s age cut-off for undocumented residents, from 18 to 26.
In the wake of the new law, we can expect to see a ripple effect upon other policies regarding health insurance. For example, the legislation also calls for additional reporting requirements under Internal Revenue Code 6055. “Applicable entities”,such as health insurance companies and companies which provide health insurance coverage, will be required to provide proof of coverage to the Franchise Tax Board each year. Penalties will be imposed upon companies that fail to complete their filings.
We will keep you updated on these changes as they occur. In the meantime, please don’t hesitate to contact us if you have questions about the new health insurance mandate law. We can assist both individuals and employers to ensure that you’re in compliance with the law.
We tend to think of Medicare as “healthcare for retirees”, due to the fact that we become eligible for coverage when we turn 65. But in reality, plenty of people are still working at age 65, and the trend toward later retirement is expected to continue (and even become more common).
So, if you’re still working and are covered by a group healthcare plan when you reach your 65’th birthday, you might be wondering what you’re supposed to do about Medicare.
Yes, you still need to enroll. When you turn 65, enroll in Medicare regardless of your employment situation. Assuming that you or your spouse have worked at least ten years, and paid taxes into Medicare, you are eligible for premium-free coverage under Medicare Part A. You might also want to enroll in Medicare Part B, or in Part D (prescription drug coverage).
Yes, you can have Medicare along with your other health insurance plan. If you already have health insurance coverage, you can still enroll in Medicare at 65. If your employer is a smaller company, Medicare will become your primary coverage and your group health plan will be secondary. In this case you definitely want Medicare Parts A and B, because it will be your primary coverage.
If you work for a large employer, that health insurance plan will remain primary, with Medicare serving as secondary coverage.
Either way, having group health insurance along with your Medicare could mean lower out-of-pocket costs for you.
You can delay Part B and Part D enrollment, if you prefer. Normally, failing to promptly enroll in Part B or D coverage at age 65 can result in paying a penalty when you finally do enroll. However, if you’re still working and are covered by your employer’s plan, you can delay this enrollment with a confirmation of creditable coverage from your employer. This way you can avoid the late enrollment penalties when you do enroll in those plans later.
You are responsible for remembering the deadline. You can enroll in Medicare beginning three months before your birth month, or for three months afterward. This is called your Initial Enrollment Period (IEP). Medicare will not remind you of your IEP unless you’re receiving Social Security or Railroad Retirement Board benefits, so mark this date on your calendar.
If you have questions about Medicare plans, or how enrollment works when you’re not yet retired, please give us a call. We can offer more detailed advice once we discuss your situation.
A quality group health insurance plan is the backbone of your employee benefit package. But even the most comprehensive plans have their limits, and therefore your employees might experience some gaps between the coverage they need and the coverage they have. In particular, health insurance plans rarely cover vision exams, glasses, or contact lenses.
The good news is that you can offer your employees a vision insurance plan as an added, voluntary benefit. They can opt in at no added cost to you (if you set it up that way), but will appreciate the opportunity to obtain quality vision care at group rates.
Why Do Employees Choose Vision Insurance? For most of your employees, their benefits package isn’t just about their needs. Their families depend upon these insurance options, too. Vision insurance can cover the entire family, allowing for annual vision checks, and glasses or contact lenses when needed. While health insurance plans generally cover eye exams for children under age 19, spouses are not included, nor are children over 19 who are still utilizing a parent’s policy. Children under age 19 typically have an exam and glasses covered, but you can’t go to just any eye doctor, you must stick to a specific list of providers.
Also, considering the amount of “screen time” most of us are getting these days, we all stand a greater chance of needing vision assistance at some point. Even those who have always enjoyed 20/20 vision might find that as they get older, reading glasses become necessary.
A Complement to Health Insurance. Eye exams can detect more than just vision problems. Often, the first signs of many health problems are noticed by an optometrist or opthamologist. These can include diabetes, brain tumors, high blood pressure, high cholesterol, and more. And of course, certain degenerative eye disorders like glaucoma and macular degeneration are first detected by a vision screening. When caught early, treatment can save the patient’s sight or at least slow the progression of the disease.
Increased Workplace Safety. Vision impacts job performance, too. As an employer, you are likely aware of the various liability issues that can exist in the workplace. Regular vision screenings not only keep employees healthy and happy; they could increase productivity and reduce the risk of accidents as well.
Vision insurance offers a valuable voluntary benefit at a comparatively low price. Give us a call to learn more about adding vision insurance to your menu of options.
Many employers have discovered the benefits of offering their workers premium-only plans (POP), which allow employees to pay their health insurance premiums with “before tax” dollars. This means the premiums are deducted from paychecks on a pre-tax basis, saving them money.
Of course, as with any other tax code provision, employers are subject to strict regulations when opting for POPs. In particular, the law states that the plan must be non-discriminatory, meaning the plans cannot discriminate in favor of key or highly-compensated employees with regard to eligibility, contributions, or benefits.
If the plan’s design benefits a reasonable cross-section of employees, and enrollment is available to all, the plan will most likely pass eligibility and benefits standards. Keeping the plan simple and uniformly available will cut down on the number of tests that the employer must pass. Therefore, in these cases employers only need to worry about the Concentration Test and Dependent Care Test.
The Concentration Test states that the non-taxable benefits received by “key employees” must not exceed 25 percent of benefits received by all employees in total. First, we must define key employees, according to IRC 416 (i):
- Officers of employer who earn more than $160,000 annually
- Those with at least one percent ownership in the company who earn more than $150,000 annually
- Those with more than five percent ownership in the company
Then, the test formula simply divides the total benefits of Key Employees by the total benefits received by all employees. If the resulting percentage is greater than 25 percent, the plan fails the Concentration Test.
The remedy is fairly simple: Key employees must simply pay more of the cost of benefits on an after-tax basis, in order to keep their percentage of benefits below 25 percent. Employers should run the Concentration Test regularly to ensure continuous compliance with the law.
Certain special rules do apply, regarding ownership percentages with regard to spouses or family members of key employees. In these cases, professional guidance is essential. For more information on non-discrimination testing and POP plans, please contact us and we’ll be happy to help.
It’s April, and that means tax refund season has arrived once again. Yes, a vacation or new furniture sounds tempting, but you might be wondering about ways to put your tax refund to its best use. We have a few suggestions that can help secure your financial future.
Consider Life Insurance
Whether you already have a life insurance policy, or you’ve been considering this important coverage, you know that the point is to offer long-term security to your family in the event that something happens to you. But many people face obstacles in securing a life insurance policy, such as:
- Fitting the monthly premiums into their budgets
- Remembering to pay premiums (and if you forget, your coverage could lapse)
- Wondering if they really have enough life insurance, especially when situations changeBy enrolling in a life insurance policy now and using your tax refund to cover the next year’s premiums, you can address all of these issues.
Contribute to a Health Savings Account (HSA)
If you have out-of-pocket medical costs, you can start or contribute to an existing HSA and use that money for future medical bills.
One nice benefit of an HSA is that the money you contribute is tax exempt. So not only do you save for expenses, but you also cut your tax liability. We can answer questions for you regarding HSAs and also help you to start one.
Contribute to a Roth IRA
You can contribute up to $5500 per year to a Roth IRA and this money will grow tax free. If you are married, both you and your spouse can contribute $5500 to a Roth IRA.
When you retire, the funds in your Roth IRA can be withdrawn without any tax liability, making a Roth IRA an advantageous retirement income source.
For more information on any of these solutions, please give us a call. We can help you decide what makes the best sense for you and your family and can answer any questions that you might have.
You might already know that Open Enrollment, offered each fall, provides us all with the chance to review our healthcare plans and make any necessary changes. Then, the decisions you have made during Open Enrollment will apply to the following year’s coverage. But what if your needs change outside of the Open Enrollment period? Is it ever possible to change your healthcare coverage?
Actually, yes. If you experience what is called a Qualifying Life Event, you will be eligible for a Special Enrollment Period. During this time, you can indeed alter your healthcare plan or enroll in a new one.
So, what are these Qualifying Life Events?
- You lose your healthcare coverage – from job loss, expiration of a student plan, or lost eligibility for Medi-Cal
- You turn 26 and “age out” of your parent’s plan
- You get married or divorced
- Adding a new child to the family (through birth or adoption)
- A death in the family
- You move to a different zip code, and your plan does not offer service there
- You’re a student, and move to or from the location of your school
- You’re a migrant worker, and move to or from your place of work
- Moving into, or out of, a shelter or some other type of transitional housing
- Release from jail or prison
- Changes in your income, that change the type of coverage for which you are eligible
- You become a US citizen
- You gain membership in a recognized Native American tribe
- Starting or ending your Americorps service
What do you do next?
If you believe you have experienced a Qualifying Life Event, and you wish to change your healthcare coverage, give us a call. We can review the details with you and help you determine the health insurance coverage options that are available to you. But don’t delay; your Special Enrollment Period only lasts 60 days from the date of the Qualifying Life Event. Get started right away, so that you have time to evaluate your options and choose the right plan for your needs.
When it comes to federal income taxes, nothing ever seems uncomplicated. But we do strive to bring you the latest news about changes in our tax code, so that you can avoid errors and plan appropriately. With that idea in mind, here are eleven new changes in various areas, that will affect both you and your employees in 2019.
These new figures took effect January 1, so make sure you’ve updated your records.
- 401(k) pre-tax contribution limit for 2019 has been increased from $18,500 to $19,000 this year. This limit also applies to 457, 403(b), and Thrift Savings Plans.
- The catch-up contribution limit for the same qualified retirement plans will remain at $6,000 for 2019. This type of contribution is available to those age 50 and over only.
- The IRA contribution limit has been increased from $5,500 to $6,000. The catch-up contribution limit for IRAs remains at $1,000.
- The new health savings account (HSA) contribution limit for individual coverage will be $3,500 in 2019.
- For those with family plans, HSA contribution limit will be $7,000.
- The HSA catch-up contribution limit for those age 55 and older will remain at $1,000 this year.
- The flexible spending account (FSA) contribution limit is increased to $2,700.
- The minimum deductible for high deductible health plans (HDHP) remains the same this year, at $1,350 for individual plans.
- The minimum deductible for HDHP family plans remains at $2,700.
- The maximum out-of-pocket expenditure for individual HDHPs will be $6,750 in 2019. This maximum applies to expenses other than premiums, such as deductibles and co-pays.
- The out-of-pocket maximum for family HDHPs will be $13,500.
If you have any questions about these items, please call our office to clarify. We’ll be happy to help you determine how these changes apply to you and your employees.
Owners of small and mid-sized businesses often face tough choices with regard to their operating budgets. This dilemma might lead you to concentrating too many tasks into one department, or even attempting to juggle it all yourself. While this pioneering mindset is admirable, setting aside your HR needs could be a costly mistake in the long run.
Let’s break down the two primary ways that a solid HR program will benefit your business, and help you to grow.
HR saves you money.
An experienced human resources department can help you detangle the web of costs and penalties associated with having employees. For example….
- The potential cost of lost productivity, rehiring, onboarding and training expenses from one bad hire: $50,000
- The potential penalty for wage and hour violation under the Fair Labor Standards Act: $10,000
- The potential cost of each Occupational Safety and Health (OSHA) violation: $7,000
And these are just a few examples of the liabilities faced by business owners. That’s why each dollar invested in HR saves 10 dollars in long-term investigation and litigation costs.
A good HR program can even make you money.
A key goal of an effective HR program is to successfully engage employees and boost productivity. But how do those goals translate to your bottom line? According to researchers at Cornell University, a review of several hundred companies found that those who invested in key HR practices saw…
- A 22 percent boost in sales growth
- 23 percent faster profit growth
- Turnover decreased by 67 percent
They also found that these companies enjoyed…
- Greater customer retention
- Higher productivity
- More operating income
- Increase in referrals
- Lower employee absenteeism
- Fewer safety incidents
Contact us to learn more about establishing an effective human resources program. It’s not as difficult as you might believe, and the benefits speak for themselves.
Sources for stats:
St Cloud University