The notice informs employers they likely are not in compliance with the Employer Shared Responsibility Payment during 2015, which requires employers to provide some form of health insurance for employees who work an average of 30 hours per week.
The ACA launched in 2014, but employers with at least 50 full-time employees were not required to provide health insurance for employees until last year. In many cases, employees applied for health insurance coverage, plus a subsidy, through the market exchanges. Last year was the first full year of ACA data collected by Health and Human Services and the Internal Revenue Service.
When the two federal departments compared data, it was discovered that potentially millions of people received a government subsidy to pay monthly health insurance premiums when the same employee should have received health insurance through his or her employer. The employer could have to pay a penalty if the information in the letter is correct.
“Just because an employer received one of these letters doesn’t mean they are in violation of the law or they’ll be assessed a payment,” says Michel. The first step is to designate an individual to be responsible for responding to the notices, but the person should not have authority to make employment decisions for the employee in question.
There needs to be a review to make sure the government notice is correct because there are a few reasons why an employee would not receive health insurance from his or her employer. The employer has a right to file an appeal with Health and Human Services if there was a good reason why the employer did not provide the employee health insurance.
For example, the employee could have waived his or her rights to receive health insurance, the employee may have enrolled in minimum coverage or the employee may not have been an employed during the year in question. The employer has 30 days to file an appeal from the date of the letter.
“The employer should only file an appeal if the information on the letter is incorrect,” Michel says. If an appeal is filed, the employer needs to be very careful with the information given on the appeal form. “You only want to give them (HHS) the minimum information required. If you give them more information than needed, it could raise more questions.”
An ESOP is a qualified retirement plan that is designed to promote employee ownership of business assets. ESOPs are allowed to borrow money to purchase employee stock that is allocated to accounts for individual participants. When an employee retires, he or she can either receive cash or shares that are then sold back to the ESOP.
Selling the company to employees appears to be a win for everyone involved, such as the seller and employees. Using an ESOP system to purchase a company provides a gradual transition and preservation of the organization, possibly prevents the layoff of employees, increases wages and continues financial support in the community where the business existed.
The company will borrow the money from a financial institution that provides the funds for the ESOP to purchase the company from its owner. In most cases, the company cannot borrow the full amount it is worth, which is why the owner will take a promissory note for the balance. Since the ESOP is purchasing most, but not all the stock, the owner can still obtain partial liquidity without giving up control of the company, Wells says.
Since the owner maintains some control over the company’s operation, he or she can structure transfer of leadership to desired family members or key employees.
Congress set up a tax system to encourage more ESOPs by lowering capital gains tax rates for the seller. The ESOP loan is repaid with tax-deductible contributions from company employees. Two of the biggest benefits are the general wage increase for employees and job stability. During the last recession, while the average company laid off about 12 percent of its workforce, ESOP organizations only laid off about 2 percent, Wells says.
Other benefits include annual allocation of shares in the company to employees so they become more deeply vested in the company’s success. An ESOP gives the employee an opportunity to build capital and wealth, therefore reducing the income inequality employees face at non-ESOP organizations.
The Securities and Exchange Commission recently issued final rules on pay ratio disclosure in response to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The provision is one of a few market driven tools to address the growing disparity in pay for top leadership in a company, compared with the pay of an average worker. Public companies must adopt the final rule for their first fiscal year beginning on or after January 1, 2017.
Under the new rule, a public company must disclose the median of the annual pay of all its employees, except for principal executive officer, the annual total pay of its chief executive officer (CEO) and the ratio of the median total compensation of all employees compared with the total pay for its CEO. For example, if the median income of all employees is $50,000 and the CEO gets paid $2.5 million, then the CEO is paid 50 times more than the employer median. In other words, the ratio would be described as 50 to 1 or 50:1.
The Say-on-Pay program requires a public company to ask its stockholders if they agree, yes or no, with the CEO’s compensation package. “A company board of directors does not want to get a ‘No’ vote,” Starkey says. Since the rule went into effect about five years ago, it has generated far more communication and discussion about executive pay between company officials and stockholders.
A “No” vote can make the board members look bad, and cause stockholders to potentially vote them off the board. As a result, there have been changes in executive pay that is closely assigned with company performance over a three-year period rather than only stock performance.
Of all the public companies that have voted as of this summer, 93 percent have passed with a yes vote, however. There were 30 companies that received a no vote, which is a low number given the more than 1,800 companies that held a vote, Starkey says.
Most health plans have excluded coverage for transgender-related medical procedures or medications, but that will change in 2017 after a recent ruling by the U.S. Department of Health and Human Services (HHS).
The final HHS rules do not apply to every employer in the country, but rather employers that have health plans or programs that receive some type of financial support from the federal government. The HHS rules apply to any health insurance company that offers a health plan on the federal market exchange. Furthermore, the transgender rules apply not only to the health insurance companies on the market exchange, but also to all the private insurance plans those companies offer private employers, Wilcoxon says.
In addition, an employer health plan would be subject to the rules if the employer operates a health program and any part of that health program receives financial assistance from HHS. Examples of such employers include hospitals, health clinics, physicians, skilled nursing facilities, hospices, organ procurement centers and home
health agencies.
Federal financial assistance typically includes any grant, loan, credit, subsidy, contract or other arrangement by which HHS makes available funds, property or services of federal personnel. Since Medicare Part D, a federal retiree drug subsidy program, an employer that receives the Medicare Part D retiree drug subsidy in connection with its health plan would be required to comply with the HHS rules.
The rules require covered entities under HHS to take a number of steps to ensure that they are not discriminating against individuals on the basis of race, color, national origin, sex, age or disability. This particular rule focuses on the elimination of any exclusions or limitations on coverage of all health services relating to gender transition. For example, a health plan could not place an annual dollar limit on the gender transition services covered under the plan.
HHS rules indicate health plans are not required to cover all types of gender transition services in all cases. For example, a health plan could deny coverage for certain transition services that were not medically necessary for an individual. The plan would need to ensure the exclusions are applied in a nondiscriminatory manner.
“Section 1557 does not contain a blanket exception for religious organizations. However, the final rules provide that, if the application of any requirement in the rules would violate applicable federal statutory protections for religious freedom and conscience, such application shall not be required,” Wilcoxon says. “Generally, an organization or individual would need to show that the legal requirement substantially burdens the exercise of religion.”