President Obama on Thursday signed into law a measure that repeals the unpopular 1099 tax-reporting provision of the national health-care law.

The move marked the first successful effort by Congress to repeal a portion of Obama’s signature health-care legislation.

The Senate earlier this month voted 87-to-12 to repeal the 1099 provision. The House passed the measure in March on a bipartisan 314-to-112 vote.

The White House released a statement announcing the Obama had signed the measure, which it said “repeals the expansion in the Affordable Care Act of requirements for businesses to report information to the Internal Revenue Service on payments for goods of $600 or more annually to other businesses and increases the amount of overpayment subject to repayment of premium assistance tax credits for health insurance coverage purchases through the Exchanges established under the Affordable Care Act.”

Obama’s signing of the legislation into law marks the end of a nearly eight-month-long effort by lawmakers to do away with the 1099 tax-reporting provision. Sen. Mike Johanns (R-Neb.) had led the effort in the Senate, but each time repeal seemed close, the parties reached an impasse over how to pay for the repeal, which would result in the loss of an estimated $22 billion over the next decade.

The law signed by Obama on Thursday would pay for repeal by forcing greater repayment of health insurance subsidies for families whose income unexpectedly exceeds certain thresholds.

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Thirty-three states (including the Virgin Islands) have borrowed more than $48 billion from the Federal Unemployment Account, according to U.S. Department of Labor data released this week. In states with loan balances on January 1 of two consecutive years that have not repaid them by November 10 of the second year, employers are at risk of losing a portion of their state FUTA tax credits for that year. The credit is reduced by 0.30 percent for each year the loan remains outstanding beyond the second year of the loan. Twenty-four states will experience a FUTA tax credit reduction, assuming each has a loan balance on November 10, 2011.

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Speaking before a session of the Society for Human Resource Management’s Employment Law & Legislative Conference March 14, 2011, an unemployment insurance (UI) expert presented a bleak picture of UI costs across the country. The following sobering facts were revealed by Douglas Holmes, the president of UWC, a nationwide association that represents the interests of the business community on national unemployment insurance and workers’ compensation public policy issues:

1. State unemployment taxes increased as a percent of total wages on average by 34 percent from 2009 to 2010 and are expected to increase even more for 2011 and 2012.
2. Thirty-two states have outstanding federal loans of $43.6 billion. The U.S. Department of Labor (DOL) projects a peak in 2013 of up to 40 states and $65.2 billion.
3. Interest on loans is charged at the rate of just over 4 percent for 2011. Under federal law, the interest may not be repaid from the state UI taxes, so approximately $1.7 billion will have to be paid from other sources. Employers in 19 states will pay a special assessment to cover this cost (Alabama, Arkansas, Arizona, Colorado, Connecticut, Delaware, Florida, Hawaii, Indiana, Kansas, Michigan, Minnesota, Missouri, New Jersey, New York, Pennsylvania, Rhode Island, South Carolina, and Wisconsin).
4. The first interest payment from states is due Sept. 30, 2011. Interest continues as long as loans are outstanding.
5. Federal Unemployment Tax Act (FUTA) increases in borrowing states have begun in Michigan, Indiana and South Carolina, and are projected in 24 states for 2011, costing more than $2 billion in additional FUTA taxes.
6. Spending on unemployment compensation is at an all-time high, jumping from approximately $31 billion in 2008 to $120 billion in 2009 and $160 billion in 2010.

Impact on HR

Going beyond the numbers, what does this mean for HR? “Congress will focus on this only when they have to,” Holmes said, noting that state and federal UI taxes will continue to rise, which will increase the cost of hiring. In addition, the increased duration of unemployment compensation will continue to be a disincentive to individuals deciding whether to actively seek and accept work available in the labor market, he noted.

Ronald Adler, the president of Laurdan Associates, a consulting firm in Potomac, Md., stressed that HR professionals “need to understand how much UI is costing their individual companies.” In addition to an increase in the cost of hiring, UI-related risks include increased administrative costs and reduced profitability, he said. In addition, UI activity may trigger an audit by the state UI agency as well as by federal agencies, including the Department of Labor, Internal Revenue Service or Immigration and Customs Enforcement.

So what can HR do?

Adler noted that the first step for HR should be to review and verify tax rate notices. Next, ensure that your classifications of employees and independent contractors are correct and ensure that you have properly reported wages—the correct amounts to the correct states, he added.

Next, Adler recommended that HR take steps to protect the company’s experience rating, which impacts the state taxes it must pay. In order to do this, HR professionals should make sure that all UI claims forms are timely and correctly completed. All incorrect determinations and decisions should be appealed. He further recommended that HR attend UI hearings. In addition, he said, HR should notify the state UI agency of rehires and of refusals of job offers.
HR professionals should also look at the broader picture, Adler suggested, and assess hiring procedures and performance management appraisals. Increased effectiveness in performing these tasks may reduce UI claims, he noted. In addition, HR should ensure proper and effective documentation of employment actions and review disciplinary and termination procedures.

And of utmost importance is the training of supervisors and managers, Adler emphasized.
Holmes made the following additional suggestions for HR professionals concerned with the rising costs of providing UI benefits:

• Work with SHRM and business advocacy groups to explain the impact of increasing payroll taxes on decisions to hire.
• Explain the practical impact of individuals staying on unemployment compensation for long periods—loss of job skills; disincentive to accept jobs that are open while claiming unemployment compensation.
• Manage UI claims costs by paying attention to benefit charges, refusals of work, overpayment and fraud.
• Work with state workforce agencies to identify opportunities for unemployed workers for on-the-job training, internships and customized training that may serve some of your needs while reducing unemployment claims.
• State and federal unemployment taxes will continue to increase over the next three years and remain at higher rates for at least 10 years on average, Holmes predicted, so this is not a problem that is going to ease anytime soon.

For more information, visit www.shrm.org

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While an employer’s first reaction may be to try and limit March Madness related activities in the workplace, there are definitely a few things to consider before taking any action against tournament involvement. First, denial of participation could be seen by employees as overbearing and in opposition to a fun work environment. Employee morale is crucial for productivity, and would therefore seem counter intuitive for employers hoping to retain a high level of productivity to discourage participation in an activity considered somewhat of a sports holiday. Instead of discouraging involvement and risking a discontented office, consider using March Madness to your advantage. There are many different ways an employer or manager could use the NCAA tournament as a way to improve employee morale and create a stronger sense of camaraderie throughout the workplace:

1. Create an online, office-wide bracket.
Creating a bracket on a website such as ESPN.com or Yahoo! Sports would eliminate the need to create, hand out and fill in paper brackets. Encourage people to participate only if they would like, and if the employees would like to have a buy-in for competitive purposes, we suggest the money go towards a charity or non-profit organization of the winner’s choice.

2. Offer small, fun and/or personalized prizes for top placers.
An already stated prize would not only encourage friendly competition and participation, it would also help to discourage against illegal gambling in the workplace. Some example of appropriate prizes may include gift certificates, a favorite team souvenir, or perhaps a meal on a supervisor’s tab.

3. Offer flexible hours and dress code allowances when appropriate.
A possible solution to the distraction of an early evening game could be a flexible work week. Also, since Fridays are often considered a more causal day in the workplace, employees could be encouraged to wear a tie, jersey or even socks to show where their hopes and loyalties lay within the tournament.

4. Encourage watching the tournament as a group.
Many workplaces allot for short breaks throughout the day. Encourage employees to gather to the TV in the break room (or at single designated computer as to not take up too much bandwidth) during those times. One could even promote a potluck lunch, catering or group gatherings after work to watch the game together.

5. Designate times to stay involved and keep the competition alive.
A bi-weekly e-mail or short announcement at the end of an informal meeting discussing up-to-date results would help to discourage employees from constantly tracking brackets while at work and would also help the manager or supervisor to stay involved.

While this list is not at all exhaustive, these are a few simple ways to take what is consistently seen as a drag on productivity and turn it into a way to promote a healthier and more enjoyable work environment. For more information or any questions, contact Staff One at 1-800-771-7823 or visit www.staffone.com.

Founded in 1988, Staff One is a leading Human Resources Outsourcing firm with an ESAC accredited and bonded PEO service offering. Staff One operates as a full-service human resources department and delivers a comprehensive range of solutions that provides our clients with a level of support and value previously only available at much larger companies. By aggregating the buying power of hundreds of firms, we provide premium benefits, risk management, compliance management, payroll outsourcing, tax administration and strategic HR services to our customers, so they can focus on growing their core business.

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WASHINGTON ― The Internal Revenue Service today released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011.

Millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.

The new law also maintains the income-tax rates that have been in effect in recent years.

Employers should start using the new withholding tables and reducing the amount of Social Security tax withheld as soon as possible in 2011 but not later than Jan. 31, 2011. Notice 1036, released today, contains the percentage method income tax withholding tables, the lower Social Security withholding rate, and related information that most employers need to implement these changes. Publication 15, (Circular E), Employer’s Tax Guide, containing the extensive wage bracket tables that some employers use, will be available on IRS.gov in a few days.

The IRS recognizes that the late enactment of these changes makes it difficult for many employers to quickly update their withholding systems. For that reason, the agency asks employers to adjust their payroll systems as soon as possible, but not later than Jan. 31, 2011.

For any Social Security tax over withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2011.

Employers and payroll companies will handle the withholding changes, so workers typically won’t need to take any additional action, such as filling out a new W-4 withholding form.

As always, however, the IRS urges workers to review their withholding every year and, if necessary, fill out a new W-4 and give it to their employer. For example, individuals and couples with multiple jobs, people who are having children, getting married, getting divorced or buying a home, and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised W-4 forms. Publication 919, How Do I Adjust My Tax Withholding?, provides more information to workers on making changes to their tax withholding.

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Employer-paid premiums in 2010. Only premiums paid by the employer under an arrangement meeting certain requirements (a “qualifying arrangement”) are counted in calculating the credit. Under a qualifying arrangement, the employer pays premiums for each employee enrolled in health care coverage offered by the employer in an amount equal to a uniform percentage (not less than 50 percent) of the premium cost of the coverage.

For years prior to 2014, only premiums paid to a health insurance issuer, such as an insurance company or HMO, for health care coverage are counted for purposes of the credit. Premiums for health care coverage that covers a wide variety of conditions, such as a major medical plan, are counted and premiums for certain coverage that is more limited in scope, such as limited scope dental or vision coverage, are also counted.

The FAQs clarify that premiums, as described above, that were paid by the employer in 2010, but before the new health reform legislation was enacted, can be counted in calculating the credit.

Transition relief for tax years beginning in 2010. For tax years beginning in 2010, the following transition relief applies with respect to the requirements for a qualifying arrangement:

An employer that pays at least 50% of the premium for each employee enrolled in coverage offered to employees by the employer is deemed to satisfy the qualifying arrangement requirement even though the employer does not pay a uniform percentage of the premium for each such employee. Accordingly, if the employer otherwise satisfies the requirements for the credit described above, it will qualify for the credit even though the percentage of the premium it pays is not uniform for all such employees.

The requirement that the employer pay at least 50% of the premium for an employee applies to the premium for single (employee-only) coverage for the employee. Therefore, if the employee is receiving single coverage, the employer satisfies the 50% requirement with respect to the employee if it pays at least 50% of the premium for that coverage for each employee receiving single coverage.

If the employee is receiving coverage that is more expensive than single coverage, such as family or self plus- one coverage, the employer satisfies the 50% requirement with respect to the employee if the employer pays an amount of the premium for such coverage that is no less than 50% of the premium for single coverage for that employee, even if it is less than 50% of the premium for the coverage the employee is actually receiving.

For more information, visit www.irs.gov/newsroom

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The Bush-era tax cuts are set to expire at the close of 2010. While Congress could pass a partial or full extension before year-end 2010, U.S. employers must adjust their payroll deduction systems for 2011 well before the end of 2010. That could mean setting their payroll systems to anticipate no extension; then if Congress acts, they would need to readjust these systems again in 2011.

Setting payroll systems to reflect the higher tax rates that were in effect a decade ago will mean more money being withheld from workers’ paychecks, according to CCH, a provider of employment and payroll law information and software. And that will present a communications challenge for employers.

Change, and Change Again

“The tax cuts—now known as the ‘Bush tax cuts’—were signed on June 7, 2001,” noted John W. Strzelecki, senior payroll analyst at CCH, which is part of Wolters Kluwer Law & Business. “The IRS then issued new withholding tables, effective July 1, 2001, that incorporated the new tax cuts. In addition, the new tables took into account the fact that too much money was taken from paychecks that were issued in the first half of the year.”

Strzelecki foresees a similar pattern this time, with the Internal Revenue Service (IRS) issuing tax withholding tables for 2011 in November 2010 and subsequently issuing revised tables if Congress extends the Bush-era tax rates. “If the tax cuts are passed and signed, the IRS will revise the withholding tables with an effective date that allows just enough time for the payroll industry to implement the changes, just as in June 2001,” Strzelecki said. “The tables will take into account the fact that too much money was withheld from the paychecks that were issued prior to the tax cuts, also just like in 2001,” he explained.

“What it all boils down to is workers will see less take-home pay beginning in 2011 and more take-home pay later in the year, just as we saw in 2001,” said Strzelecki.

For employers, this highlights the importance of keeping employees informed of why their tax withholding will be higher, at least initially—even if Congress should act before the end of 2010.

More Information at shrm.org article

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Discrimination Claims
Under Title VII, employer practices – such as basing hiring and other employment decisions on credit history information – that weigh more heavily on individuals within protected categories could lead to discrimination claims. For instance, if an employer’s use of credit reports has the effect of excluding women or minorities from certain positions, that practice could lead to liability.

In addition, a number of states have enacted or are considering enacting laws that explicitly prohibit discrimination on the basis of credit histories. For instance, Illinois’ newly enacted Employee Credit Privacy Act, which goes into effect on January 1, 2011, prohibits employers from inquiring about an applicant’s or employee’s credit history and from ordering or otherwise obtaining an applicant’s or employee’s credit history or credit report from a consumer reporting agency. Despite the potentially broad reach of Illinois’ new Act, there are several exceptions including:

• Situations where an employer can show that a satisfactory credit history is a “bona fide occupational requirement” for a position, which is further defined in the statute;
• Employers who are banks, savings and loans, or certain other financial institutions; insurance or surety businesses; state law enforcement or investigative units; state or local government agencies that otherwise require use of the employee’s or applicant’s credit history or credit report; and entities that are defined as debt collectors under federal or state statute; and
• Background investigations that do not include a credit history or report as permitted under the Fair Credit Reporting Act.

Employers that violate the Illinois Act could face damages, injunctive relief, and liability for attorneys’ fees and costs and could also face liability for any retaliatory conduct under the Act.

Along the same lines, legislation has been introduced in, among other states, Michigan and Ohio as well. In Michigan, House Bill 4528, also known as the Job Applicant Credit Privacy Act, would prohibit an employer from failing or refusing either to hire or recruit an individual because of the individual’s credit history and from inquiring about a job applicant’s or potential job applicant’s credit history. As with the Illinois Act, certain exceptions would apply for individuals who hold positions with identified types of companies including, for instance, banks or other financial institutions.

In Ohio, House Bill 340, which was introduced on October 28, 2009, would make it an unlawful discriminatory practice for an employer to use a person’s credit rating or score or consumer credit history as a factor in making decisions regarding that person’s employment. House Bill 340would allow a person to file a charge with the Ohio Civil Rights Commission and would provide similar penalties for violations.

As these examples show, a blanket policy of requiring credit reports for all employees or applicants could lead to possible discrimination claims under state or federal law or both.

The Federal Fair Credit Reporting Act
Moreover, even when employers are permitted to obtain applicant or employee credit reports, liability can still attach if the detailed procedures set forth in the federal Fair Credit Reporting Act (FCRA) are not followed. Specifically, the FCRA requires employers to inform applicants that a credit check will be performed and to obtain the applicants’ written permission in a stand-alone document that is not part of the employment application.

In addition, if an employer decides to take an adverse employment action against an employee or applicant based on the credit check, the employer must first give that individual a “pre-adverse action disclosure” that consists of a copy of the credit report and a written summary of rights under the FCRA before taking the adverse action. Presumably, this requirement is intended to allow an employee or applicant an opportunity to attempt to correct any inaccuracies on the report. Once the adverse action has been taken, the employer must provide the applicant or employee with an “adverse action notice.” This notice must alert the recipient that the employer, not the credit reporting agency, made the adverse decision; inform the recipient that he or she has a right to a free copy of the report; and provide the name, address and phone number of the agency that provided the credit report so that the recipient can dispute any inaccurate information.

Employers that fail to comply with the FCRA may face liability for actual damages, attorneys’ fees, costs and punitive damages. Criminal penalties are also possible for any employer that obtains a credit report under false pretenses.

Minimizing The Risks
Some of the ways you can minimize the risks of obtaining employee or applicant credit reports are by:

• Determining whether state laws govern your use of applicant/employee credit reports;
• Evaluating whether the benefits of obtaining credit reports for various positions outweigh the risks of doing so;
• Developing appropriate policies and procedures to govern procurement of credit reports; and
• Ensuring compliance.

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At the first signs of a southbound economy, some companies rush into panic mode:; they slash the staff and hope for the best. Certainly, labor is the biggest expense for most businesses. That’s why many managers believe there is no faster, more efficient way to improve the bottom line than by cutting staff.

But when you add up some of the costs of layoffs, such as severance payments, continued healthcare costs for some former employees, and higher unemployment charges, you may realize you are defeating your purpose. And that’s only part of the picture. Since layoffs create uncertainty, they often prompt a drop in productivity, a decline in quality, a loss of talent as remaining staff members start looking for jobs elsewhere and increased costs to train remaining employees to take up the slack.

That’s just the short term. Once the economy picks up steam, you’ll have to spend money recruiting and training a new workforce. You might be understaffed and unable to keep up with new demand – another strain on profitability.

There are stories of companies during the Great Depression that had employees wash windows over and over again rather than lay them off. The end result: a fiercely loyal and trained staff ready to jump into action as the economy turned slowly up.

Take a clue from those companies and adopt a contrarian stance when possible. Here are eight strategies to help you adapt to changing economic circumstances with layoffs as a last result. In the end, your company will be more efficient and better prepared to tackle the competition when the economy re-engages.

Strategy #1: Get a playbook – Like a football team, you need a series of defensive plays as the game progresses quarter to quarter. Your company playbook – a combination of a business plan and strategic vision – helps you stay on track during hard times. And expect your employees to achieve the goals in the plan.

Strategy #2: Involve staff - Keep employees appraised of the challenges your company faces. Let them know layoffs are a last resort but you need their help to bring expenses into line. Set up cost-cutting teams and give them goals.

Strategy #3: Dump some perks - This can produce a host of cost cuts. Prime areas for trimming the fat are travel, executive seminars, rental cars, expense accounts and staff retreats.

Strategy #4: Opt for some rescheduling - Consider a four-day workweek, telecommuting, temporary furloughs, flextime and other means to cut payroll costs.

Strategy #5: Trim salaries - Reduce wages by, say, five percent across the board. Offer employees stock options that make up the difference and provide an incentive to work toward the company’s success. Ask senior executives to forgo annual bonuses. Review your sales commission policy for possible cuts.

Strategy #6: Streamline – Restructure your business to enhance performance. Get rid of any department, plan or operation that isn’t contributing to the company’s success. Look for duplicated efforts, obsolete production lines and non-core businesses that can be sold.

Strategy #7: Selectively downsize – Take advantage of attrition and early retirement possibilities. If layoffs are inevitable, consolidate back-office operations first and retain employees who have face-to-face contact with customers. Look to lay off employees who add little value or disrupt others’ performance.

Strategy #8: Beef up coaching – During a slowdown, your employees are likely to have more time for training than when your businesses is steaming full ahead. By adding training, you show employees that you’re committed and willing to invest in their careers. And they’ll be better prepared once the economy picks up steam.

Of course, there’s no way to know how long the economy will remain weak. But with some creative juggling, you can retain employees and give them a stronger determination to make the company succeed.

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• Extension of Successful SBA Recovery Loan Provisions: With funds provided in the bill, SBA will begin funding new Recovery loans within a few days of the President’s signature, starting with the more than 1,400 businesses that are waiting in the Recovery Loan Queue.  In total, the extension of these provisions provides the capacity to support $14 billion in loans to small businesses.
• A More Than Doubling of the Maximum Loan Size for The Largest SBA Programs:The bill also increases the maximum loan size for SBA loan programs, which in the coming weeks will allow more small businesses to access more credit to allow them to expand and create new jobs. The bill will permanently raise the maximum size for SBA’s two largest loan programs, increasing the maximum 7(a) and 504 loans from $2 million to $5 million, and the maximum 504 manufacturing related loan from $4 million to $5.5 million.  In addition, it will temporarily increase the maximum loan size for SBA Express loans from $350,000 to $1 million, providing greater access to working capital loans that small businesses use to purchase new inventory and take on their next order.
• A New $30 Billion Small Business Lending Fund:The bill would establish a new $30 billion Small Business Lending Fund which – by providing capital to small banks with incentives to increase small business lending – could support several multiples of that amount in new credit.
• An Initiative to Strengthen Innovative State Small Business Programs – Supporting Over $15 Billion in Lending:The bill will support at least $15 billion in small business lending through a new State Small Business Credit Initiative, strengthening state small business programs that leverage private-sector lenders to extend additional credit – many of which have been forced to cut back due to budget cuts.
• Eight New Small Business Tax Cuts – Effective Today, Providing Immediate Incentives to Invest:
  • Zero Taxes on Capital Gains from Key Small Business Investments:Under the Recovery Act, 75 percent of capital gains on key small business investments this year were excluded from taxes. The Small Business Jobs Act temporarily puts in place for the rest of 2010 a provision eliminating all capital gains taxes on these investments if held for five years. Over one million small businesses are eligible to receive investments this year that, if held for five years or longer, could be completely excluded from any capital gains taxation.
  • Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments: The bill increases for 2010 and 2011 the amount of investments that businesses would be eligible to immediately write off to $500,000, while raising the level of investments at which the write-off phases out to $2 million. Prior to the passage of the bill, the expensing limit would have been $250,000 this year, and only $25,000 next year.
  • Extension of 50% Bonus Depreciation:The bill extends a Recovery Act provision for 50 percent “bonus depreciation” through 2010, providing 2 million businesses, large and small, with the ability to make new investments today by accelerating the rate at which they deduct capital expenditures.
  • A New Deduction of Health Insurance Costs for Self-Employed:The bill allows 2 million self-employed to get a deduction for the cost of health insurance for themselves and their family members in calculating their self-employment taxes. This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
  • Tax Relief and Simplification for Cell Phone Deductions:The bill changes rules so that the use of cell phones can be deducted without burdensome extra documentation for virtually every small business beginning on their taxes for this year.
  • An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses:The bill temporarily increases the amount of start-up expenditures entrepreneurs can deduct from their taxes for this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures).
  • A Five-Year Carryback Of General Business Credits:The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes, while also allowing these credits to offset the Alternative Minimum Tax.
  • Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business:The bill would change, beginning this year, the penalty for failing to report certain tax transactions from a fixed dollar amount to a percentage of the tax benefits from the transaction.

As described above, both businesses and individuals are affected by the Act.  More information on the Act can be found here

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A majority of large U.S. employers are planning to change their 2011 health care benefit programs in the wake of both health care reform and expected large health care cost increases, according to a new survey by the National Business Group on Health (NBGH).NBGH, Washington, found that 53% of employers taking part in its survey were still planning to make changes to their benefit plans despite uncertainty about how to comply with the Patient Protection and Affordable Care Act (PPACA).

Another 19% are going to scale back changes they had planned to make, while an equal number are making no changes. Remaining respondents were still undecided as they continued to review the final regulations.

Among employers that said they would be making specific changes to their health benefit plans to comply with the new law, 70% said they would remove lifetime dollar limits on overall benefits, while 37% said they would change to annual or lifetime limits on specific benefits.

Also, 26% would remove annual dollar limits on overall benefits, while 13% would remove pre-existing condition exclusions for children.

The survey, covering 72 of the nation’s largest corporations with more than 3.7 million employees, was conducted in May and June.

Health care reform has forced employers to assess their health care benefit strategies and decide whether to comply with the law or lose grandfathered status, said Helen Darling, president of NGBH. But they are still mindful that controlling rising costs is among their highest priorities.

“They have to foot the bill, not the government,” Darling commented.

Surveyed employers estimated their health care benefit costs would rise an average of 8.9% next year, compared with an average increase of 7% this year. To help control those increases, 63% plan to boost the percentage employees contribute to the premium, up from 57% who did so this year, while 46% plan to raise out-of-pocket maximums next year, compared with 36% this year.

Other survey findings:

—61% will offer a consumer-directed health plan (CDHP) in 2011.

—64% will offer is a high-deductible plan combined with a health savings account.

—Among employers offering a CDHP, 20% will move to a full replacement plan in 2011, from 10% this year.

—5% plan to drop retiree health coverage in 2011, while 60% are considering doing so.

—41% offer premium discounts for completing health assessments, while 22% offer premium discounts for participating in stop-smoking programs.

—25% plan to raise the copay or coinsurance for retail pharmacy prescription drug benefits, while 21% plan to do the same for mail-order pharmacy benefits.

A copy of the survey by NBGH can be found here

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The American Recovery and Reinvestment Act (ARRA) provided a COBRA premium reduction for eligible individuals who were involuntarily terminated from employment through the end of May 2010. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience a qualifying event of involuntary termination of employment after May 31, 2010. However, individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare.

On July 6, Assistant Secretary of Labor Phyllis C. Borzi issued a statement regarding the COBRA premium reduction under the American Recovery and Reinvestment Act (ARRA): For a copy of Assistant Secretary Phyllis Borzi’s statement, click on the following link:
http://www.dol.gov/ebsa/newsroom/2010/ebsa070610.html

The Unemployment Compensation Extension Act of 2010 signed by the President on July 22, 2010, did not include an extension of the COBRA premium reduction.

A model general notice and a model election notice for individuals with a qualifying event after May 31, 2010 can be obtained from the COBRA section on the DOL’s website at:
http://www.dol.gov/ebsa/COBRA.html

These notices are virtually unchanged from the pre-ARRA models provided by the DOL in 2004.

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Although the changes in the final rule are relatively minor, they provide clarification of some ambiguities contained in the initial rule. The primary changes implemented by this rule are as follows:

• employers must complete a Form I-9 by the third business (not calendar) day after an employee started work for pay;
• employers may use paper, electronic systems, or a combination of paper and electronic systems;
• employers may change electronic storage systems as long as the systems meet the performance requirements of the regulations;
• employers need not retain audit trails of each time a Form I-9 is electronically viewed, but only when the Form I-9 is created, completed, updated, modified, altered, or corrected; and
• employers may provide or transmit a confirmation of a Form I-9 transaction, but are not required to do so unless the employee requests a copy.

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In the past few years, a growing number of employers have added automatic features, especially automatic enrollment, to their 401(k) plans.  This national telephone survey of large employers with 401(k) plans was conducted in order to better understand large employer attitudes toward and experiences with two automatic 401(k) features: automatic enrollment and automatic escalation.

The survey’s key findings include the following:

• The vast majority (94%) of employers surveyed report that they are either “very familiar” or “somewhat familiar” with automatic enrollment in 401(k) plans.   While familiarity with automatic escalation is lower than familiarity with automatic enrollment, a majority (78%) of employers also report that they are familiar with automatic escalation.
• Although nearly all large employers with 401(k) plans are at least somewhat familiar with automatic enrollment, the majority have not adopted it for their own 401(k) plan.  Specifically, less than half (42%) of respondents report that their 401(k) plan includes automatic enrollment.  Fewer (28%) report that their 401(k) plans have an automatic escalation feature.
• The majority (58%) of employers with automatic enrollment report that they automatically enrolled only new hires when they first adopted automatic enrollment.  Just over one-third (35%) automatically enrolled all non-participating employees who were eligible for the plan.
• Of those employers who automatically enrolled only new hires at adoption, only about one in ten (11%) report that they have automatically enrolled all non-participating employees at least once since adopting automatic enrollment.
• Employers were most likely to identify the following as “major reasons” that companies offer automatic features: it helps employees save more for retirement (74%), it is easier to pass nondiscrimination testing (49%), and it demonstrates that we are a socially responsible company (35%)
• When asked why they do not have automatic enrollment for their 401(k) plan, employers without automatic enrollment most frequently cited employee-related challenges such as a concern that employees would not like automatic enrollment (30%), costs (20%), contentment with the status quo (14%), and a lack of information (10%).
• When employers without automatic escalation were asked to explain their reasons for not including this feature in their 401(k) plan, the most frequent responses also related to employees and included the company thinks employees would not like it (66%) and the company thinks employees would find it confusing (52%). Additionally, one-third of employers without automatic escalation (35%) indicated that the company is concerned about matching costs.
• Employers that automatically enroll only new hires were asked why they do not automatically enroll all non-participating employees who are eligible for the plan.  As with the reasons expressed for not having automatic features, employee-related challenges were also the reasons most frequently expressed for limiting automatic enrollment to new hires.

AARP commissioned Woelfel Research, Inc. to conduct this telephone survey of 806 large employers with 401(k) plans.  Partial funding was provided by Retirement Made Simpler, a coalition formed by AARP, the Financial Industry Regulatory Authority (FINRA), and the Retirement Security Project (RSP).  For more information, visit www.RetirementMadeSimpler.org.  The survey was fielded from December 15, 2009, to February 24, 2010, and results were weighted by company size.  For more information on the survey, please contact S. Kathi Brown of AARP Research & Strategic Analysis at 202-434-6296.

More Information at http://www.aarp.org/work/retirement-planning/info-06-2010/auto401k.html

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The U.S. Department of Health and Human Services has unveiled an innovative new on-line tool that will help consumers take control of their health care by connecting them to new information and resources that will help them access quality, affordable health care coverage. Called for by the Affordable Care Act, HealthCare.gov is the first website to provide consumers with both public and private health coverage options tailored specifically for their needs in a single, easy-to-use tool.

“HealthCare.gov helps consumers take control of their health care and make the choices that are right for them, by putting the power of information at their fingertips,” said HHS Secretary Kathleen Sebelius. “For too long, the insurance market has been confusing and hard to navigate. HealthCare.gov makes it easy for consumers and small businesses to compare health insurance plans in both the public and the private sector and find other important health care information.”

HealthCare.gov is the first central database of health coverage options, combining information about public programs, from Medicare to the new Pre-Existing Conditions Insurance Plan, with information from more than 1,000 private insurance plans. Consumers can receive information about options specific to their life situation and local community.

In addition, the website will be a one-stop-shop for information about the implementation of the Affordable Care Act as well as other health care resources. The website will connect consumers to quality rankings for local health care providers as well as preventive services.

“This website is unlike any government website you have ever seen or used before,” said HHS Chief Technology Officer Todd Park. “It was developed with significant consumer input and is remarkably easy to navigate. This is despite the sheer volume of content it offers consumers: billions of health care choices through the insurance finder and more than 500 pages of new content, all of which is designed to grow with ongoing consumer feedback and as our health care system improves.”

As the health care market transforms, so will HealthCare.gov. In October, 2010, price estimates for health insurance plans will be available online. In the weeks and months ahead, new information on preventing disease and illness and improving the quality of health care for all Americans will also be posted. The website also includes a series of opportunities where users can indicate whether pages were helpful to them and we will continue to seek user feedback to grow and strengthen the site.

“People need to see what choices are offered, what options cost, and how coverage works in practice,” said Karen Pollitz, Deputy Director for Consumer Support, Office of Consumer Information and Insurance Oversight. “Today HealthCare.gov takes an important first step in that direction. In the coming months and years, we will add pricing and plan performance information so that consumers can see and understand and make meaningful choices about their health coverage.”

SOURCE: HHS press release, July 1, 2010.

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Candidates applying for jobs with the city of Bozeman, Montana, are asked to list “any and all” Web sites, chat rooms and social networking groups they use (“including but not limited to Facebook, Google, Yahoo, YouTube.com, MySpace, etc.”) – along with their usernames and passwords.

Many hiring managers Google applicants’ names or look for them on Facebook, but actually logging in to their personal profiles is something new entirely.

Why does Bozeman want that access? According to city attorney Greg Sullivan, it’s “to make sure the people that we hire have the highest moral character and are a good fit for the city,” The Consumerist reports.

Sullivan also said the city doesn’t look at “the things that the federal Constitution lists as protected things” (whatever that means).

The story drew a lot of attention and outcry from the media, potential Bozeman employees and HR pros. That’s not surprising, considering there’s a debate going on about whether hiring managers should even look at candidates’ profiles, let alone obtain log-in information.

Apparently all the press got the city rethinking that part of the application. In a recent press release, Bozeman announced it will “suspend its practice of reviewing candidates’ password protected internet information until the City conducts a more comprehensive evaluation of the practice.”

What do you think? Did the public overreact to Bozeman’s hiring practice, or was the negative response justified?

Should social networking profiles play any role in the background check process at all?

Let us know what you think in the comments section below.

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Wellness programs come in all shapes and sizes. But regardless of plan design there are five common components that set the successful programs apart from the rest.

At their core, wellness programs require constant monitoring and periodic adjustments. The programs that get mediocre results are the ones that are left to run on autopilot. That’s why it’s crucial to:

1. Know thine enemy. You have to know what’s driving your biggest claim costs on your healthcare plan – both among employees and their dependents.
2. Create realistic expectations. With wellness, what an employer gets will almost always depend on how much it spends, how well it plans and how well it sustains communications with participants and the vendor.
3. Maintain strong communications. The wellness initiatives that achieve the greatest success are those which are communicated aggressively from the get go and are sustained. Repetition is your friend when doing employee education.
4. Integrate wellness with other benefits. Real-life experience has shown that you should consider your employee assistance programs (EAPs) an extension of the wellness program. You should also consider issues like absenteeism, disability and worker’s compensation to be pieces of the wellness puzzle.
5. Practice what you preach. The key to ensuring employee buy-in is for management to lead the program by setting a positive example. If senior managers are unwilling to participate and address their own health issues, don’t expect many employees to take the program seriously.

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Although the DOL states that it is clarifying the definition of when an employee is considered to stand “in loco parentis,” this is the first time the agency has specifically stated that otherwise covered employees are entitled to take FMLA leave to care for the children of same-sex domestic partners.

Background

The FMLA allows an eligible employee to take up to 12 weeks of leave for the birth or placement of a child, to care for a newborn or newly placed child, or to care for a child with a serious health condition. The FMLA defines a “son or daughter” as a “biological, adopted or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis.”

The AI explains that Congress intended the definition of “son or daughter” to reflect the reality that many children in the Unites States today do not live in traditional “nuclear” families with their biological father and mother. Congress further stated that the definition was intended to be construed to ensure that an employee who has day-to-day responsibility for caring for a child is entitled to leave even if the employee does not have a biological or legal relationship to the child. Accordingly, Congress included the term “in loco parentis,” which is defined as “in the place of the parent” within the definition of “son or daughter.” The key in determining whether someone is “in loco parentis” is the intention of the person to assume the status of parent toward a child.

Interpretation

The DOL stated that whether an employee stands “in loco parentis” to a child is a fact issue dependent on multiple factors including:

• the age of the child;
• the degree to which the child is dependent on the person claiming to be standing “in loco parentis”;
• the amount of support, if any, provided; and
• the extent to which duties commonly associated with parenthood are exercised.

Further, the FMLA regulations define “in loco parentis” as including those with day-to- day responsibilities to care for and financially support a child. The AI interprets this regulation to require either day-to-day responsibilities for care or responsibility for financial support, but states that an employee is not required to show both factors to be considered standing “in loco parentis” for a child.

Thus, the AI states that employees with no legal or biological relationship to a child may nonetheless stand “in loco parentis” to a child and be entitled FMLA leave. Examples of persons who might fit the definition of “in loco parentis” include:

• an employee raising a child with the biological parent;
• same sex partners raising a child where the employee has no legal or biological relationship with the child;
• an employee who requests leave to bond with the adopted child of a same sex- partner; and
• a grandparent or other relative who has taken on the responsibility to raise a child but has not legally adopted the child.

It should be noted that the fact that a child has biological parents does not prevent a finding that the child is the “son or daughter” of an employee who lacks a legal relationship with the child because “neither the statute nor the regulations restrict the number of parents a child may have under the FMLA.” However, an employee who cares for a child while the child’s parents are on vacation would not be considered to be “in loco parentis” to the child. According to the Administrator, an employer who is not sure whether the employee is entitled to leave as standing “in loco parentis” should be satisfied with a simple statement asserting that the requisite family relationship exists.

Employers’ Bottom Line

Whether an employee’s relationship to a child is covered under the FMLA must be analyzed on a case by case basis. The fact that an employee provides either day-to-day care or financial support may be sufficient to establish an “in loco parentis” relationship where the employee intends to assume the responsibilities of a parent. Therefore, it is important to be aware of the broad interpretation the DOL gives this term and carefully analyze every request under the FMLA for leave to care for a child.

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Small businesses face unique challenges to providing health insurance for their employees, such as higher costs and fewer choices than those available to larger companies. Nationally, an estimated four million small companies might qualify for the tax credit, which is designed to help subsidize insurance coverage by about $40 billion over the next 10 years, according to the federal government. The tax credit can also be used to cover add-on dental, vision, and other limited insurance coverage. In Ohio, for example, an estimated 118,000 businesses that cover at least half of their employees’ health care costs would be eligible for the tax credit, according to the Ohio Department of Insurance.

According to the federal Small Business Administration, the health care bill would also benefit small companies by blocking dramatic premium increases when one employee gets sick.

The U.S. Department of the Treasury issued guidance designed to simplify eligibility information and allow companies to choose the most favorable method of determining worker hours in order to maximize the tax credit, which is available to companies with fewer than 25 employees.

Below are key elements of the program:

• Detailed Guidance. To help small businesses make employee benefit decisions with full knowledge and to provide a clear incentive to offer health insurance coverage, the new IRS Notice 2010-44 lays out detailed guidance on how a business can determine whether it is eligible and how large a credit it will receive.
• No Reduction Due to State Credits. Responding to a number of taxpayer questions about the interaction of the credit with state-level health care tax credits and subsidies, the guidance announces that the new tax credit will not be reduced by a state health care tax credit or subsidy (except in limited circumstances to prevent abuse of the credit). In particular, an employer that receives such a state tax credit or subsidy will also receive the full federal credit based on its entire contribution so long as the federal credit does not exceed the employer’s net contribution. According to lists compiled by the National Conference of State Legislatures, about 20 states offer these benefits.
• Dental and Vision Coverage Qualify. The guidance clarifies that small businesses can receive the credit not only for traditional health insurance coverage but also for add-on dental, vision, and other limited-scope coverage. The employer must meet the requirements for limited-scope coverage that are similar to those that apply for single coverage: the employer must offer to pay at least 50% of the premium.
• Employers Can Choose Most Favorable Method of Determining Hours Worked. Because the tax credit’s matching rate is highest for employers with 10 or fewer full-time equivalent employees (FTEs), the number of hours worked is an important factor in calculating the credit. The new guidance allows employers to choose among 3 different methods of determining hours to minimize their bookkeeping duties while receiving the maximum tax credit for which they are eligible. Employers can look at actual hours of service, or can use simple rules of convenience to estimate hours based on total days or weeks of service.
• Transition Relief for 2010 Formalized. Because the tax credit is effective for 2010 but was not enacted until March 23, 2010, some small businesses that are providing health insurance in 2010 may not meet all the requirements for a qualifying health insurance offer. To ensure that these businesses benefit from the credit, the Administration is providing special transition relief for tax year 2010. The transition rules simplify the requirements for what constitutes a qualifying health insurance offer while maintaining the core requirement that an employer make a significant contribution to the employee’s coverage. The transition relief was first mentioned in FAQs released on the IRS website on April 1, 2010, and has now been formalized in the new notice.

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