Compliance Memos: May 2017

DMEC Staff@Work

Compliance Memos_May 2017By John C. Garner, CEBS, CLU, CFCI, CMC

Chief Compliance Officer
Bolton & Co.

State and Local Law Updates

California. A new Fair Employment and Housing Act (FEHA) resource explains the FEHA standards for the interactive process of reasonable accommodation. To learn more, visit https://www.dfeh.ca.gov/reasonableDistrict of Columbia. This generous PFL law requires private-sector employers (including nonprofits) to pay a payroll tax of 0.62% of wages to fund the Universal Paid Leave Fund beginning Mar. 1, 2019. Employees can use up to six weeks of family medical leave, eight weeks of parental leave, and two weeks of qualifying personal medical leave in a 52-work-week period beginning July 1, 2020.

Illinois. Employees now can use leave under the Employee Sick Leave Act to care for stepchildren and domestic partners also. Another amendment limits an employer’s ability to request written verification from a healthcare professional for an employee’s absence. Several suburban municipalities are opting out of Cook County’s Earned Sick Leave Ordinance, which takes effect on July 1, 2017. The new law requires virtually all private employers to pay 100% of usual wage during leaves. New York. The state has issued proposed rules for its paid family leave (PFL) law, which takes effect on Jan. 1, 2018. All private employers must purchase a PFL insurance policy or elect to self-fund. Employers paying full salary during PFL can seek reimbursement from the carrier based on workers’ compensation pay rates. To learn more about any of these state and local laws, visit http://dmec.org/2017/04/10/april-2017-state-and-local-law-update/.

ACA Projections and Employer Health Plan Impact

If the Trump administration falls short in its effort to repeal and replace the Affordable Care Act, the ACA will continue in force. Major policy disputes and regulatory adjustments will force companies to stay up to date and in compliance. Average trend increases for large group plans are projected to be in the 5% to 8% range, with increased focus on reducing costs through network alignment, large buying pools, and a renewed focus on consumer engagement and shopping for value in health care. Basic plan designs will be the same, with a continued shift to high deductible plans. As regulatory regimes become more predictable, emphasis will shift away from compliance and back to the basics of controlling costs.

Federal Contractor Privacy Compliance

A new final ruling now requires specific privacy training and annual re-training for federal contractors or subcontractor personnel dealing with personally identifiable information (PII). Contractors must prepare and maintain documentation of covered personnel completing the training. Training must be “role-based” or tailored to the contractor employees’ assigned duties, and must offer both foundational and advanced levels of training. For a summary, visit http://dmec.org/2017/04/05/new-privacy-training-requirements-federal-contractors/. For more details, visit https://www.federalregister.gov/documents/2016/12/20/2016-30213/federal.

IRS Memo: Fixed Indemnity Health Plans

The Internal Revenue Service (IRS) has released a memorandum clarifying the tax treatment of benefits paid by Fixed Indemnity Health Plans. Certain vendors market wellness programs that ultimately lead to the employee paying for a supplemental policy with pre-tax dollars. The IRS memo confirms that in such programs, the amount of reward or incentive given must be included in the employee’s income — a red flag for employers. To learn more, visit http://dmec.org/2017/03/01/irs-memo-tax-treatment-fixed-indemnity-health-plans/.