Aisling University Employee Benefits Newsletters
The IRS has announced several inflation adjustments that affect tax-related items for employers and employees. Items that may be of particular interest for tax year 2016 include:
- Limit on Health Flexible Spending Arrangement (FSA) Contributions. The annual dollar limit on employee contributions to employer-sponsored health FSAs remains unchanged at $2,550.
- Small Business Health Care Tax Credit. The maximum amount of the small business health care tax credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 (unchanged) and the employer’s average annual wages in excess of $25,900 (up from $25,800 for 2015).
- Qualified Transportation Fringe Benefits. The monthly limit on the value of the fringe benefit exclusion for transportation in a commuter highway vehicle and any transit pass remains unchanged at $130. The monthly limit for qualified parking increases to $255 (up from $250 for 2015).
- Earned Income Credit. The maximum Earned Income Credit amount is $6,269 for taxpayers filing jointly who have 3 or more qualifying children (up from a total of $6,242 for tax year 2015).
Separately, the agency released cost-of-living adjustments affecting dollar limitations for retirement plans and related items for tax year 2016. Highlights include:
The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans remains unchanged at $18,000.
- The catch-up contribution limit for those aged 50 and over also remains unchanged at $6,000.
- The limit on annual contributions to an individual retirement arrangement (IRA) remains unchanged at $5,500.
Visit our employee benefits section within the Client Resource Center Library to learn more about retirement planning and the tax consequences of various employer-provided fringe benefits.
New proposed rules provide that a marriage of two individuals–whether of the same sex or the opposite sex–will be recognized for federal tax purposes if that marriage is recognized by any state, possession, or territory of the United States. The proposed rules implement the U.S. Supreme Court decision issued in June to reflect that same-sex couples can now marry in all states and that all states will recognize these marriages.
The proposed rules will apply to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit. However, registered domestic partnerships, civil unions, or similar relationships not denominated as marriage under state law would not be treated as marriage for federal tax purposes.
Employers with questions on how to proceed regarding the administration of employee benefits for same-sex couples (or other applicable employment laws) are advised to review the proposed rules in their entirety and contact a knowledgeable employment law attorney.
For more information on same-sex marriage laws specific to your state, go to our state laws section within the Client Resource Center Library, click on your state, and select “Same-Sex Relationships” from the left-hand navigation menu.
The end of the year is a traditional time for recognizing employees’ contributions to your business. Whether you choose to give your employees a raise, a bonus, or a non-monetary reward, it’s important to let your employees know that you appreciate their hard work.
Choosing a Reward
While bonuses and pay raises are popular choices, there are plenty of other ways to show your appreciation. Be creative and consider other types of rewards such as a catered appreciation lunch, offering a paid shorter workday of the employee’s choosing, or throwing a holiday or end-of-year party. Even a gesture of personally thanking employees for a job well done can go a long way towards keeping your team engaged and motivated.
Guidelines for Giving Rewards
Remember that even the best intentions can subject a company to liability if the employer is not careful. Consider the following tips to help you stay on track when rewarding your employees:
- Be careful. Employers can generally decide whether or not to give employees a bonus or raise, but be careful about making any verbal or written commitments–even a casual mention of a bonus or raise could be construed as binding. And remember to check with your accountant or a financial professional about the tax implications of any rewards you plan to give.
- Be clear. Communicate your company’s reward policy to employees by including it in your new hire orientation materials or benefits package, and remind them of your policy when it’s time to conduct performance reviews.
- Be objective. When it comes to assessing eligibility for a pay increase or other benefits, ensure fairness and consistency by using a standard grading system to measure employee performance. Remember to document your reasons for offering a particular reward, including specific examples of performance.
Also keep in mind that federal nondiscrimination laws require that bonuses be provided on a nondiscriminatory basis. This means the eligibility criteria for bonuses must be applied in a nondiscriminatory way, and eligible employees must receive bonuses in nondiscriminatory amounts. (States may have their own requirements, so be sure to review your state’s nondiscrimination laws.)
Check out our section on motivating employees within the Client Resource Center Library for more ideas on rewarding your team members.
The IRS has issued guidance which increases the applicable dollar amount used to determine the Patient-Centered Outcomes Research Institute (PCORI) fee. For plan years ending on or after October 1, 2015 and before October 1, 2016, the fee is $2.17 (multiplied by the average number of lives covered under the plan).
PCORI fees are imposed on plan sponsors of applicable self-insured health plans for each plan year ending on or after October 1, 2012 and before October 1, 2019. The fees support research to evaluate and compare health outcomes and the clinical effectiveness of certain medical treatments, services, procedures, and drugs. For plan years ending on or after October 1, 2014 and before October 1, 2015, the fee for an employer sponsoring an applicable self-insured plan is $2.08 multiplied by the average number of lives covered under the plan. Details on how to determine the average number of lives covered under a plan, as well as various examples, are included in final regulations.
Pursuant to IRS Notice 2015-60, for plan years ending on or after October 1, 2015 and before October 1, 2016, the fee is $2.17 (multiplied by the average number of lives covered under the plan). For plan years ending on or after October 1, 2016 and before October 1, 2019, the fee will be further adjusted to reflect inflation in National Health Expenditures (which will be published in future IRS guidance).
Our PCORI fees for self-insured plans section within the Client Resource Center Library features additional information on calculating and paying the fee.
The Social Security Administration has announced that monthly Social Security and Supplemental Security Income (SSI) benefits will remain the same in 2016.
The Social Security Act provides for an automatic increase in Social Security and SSI benefits if there is an increase in inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As determined by the Bureau of Labor Statistics, there was no increase in the CPI-W from the third quarter of 2014 to the third quarter of 2015. Therefore, under existing law, there can be no cost-of-living adjustment (COLA) in 2016.
Other adjustments that would normally take effect based on changes in the national average wage index also will not take effect in January 2016. Since there is no COLA, the maximum amount of earnings subject to the Social Security tax remains at $118,500 for 2016.
A fact sheet is available with more information on 2016 Social Security and SSI rates. Additional information regarding how the COLA is calculated is also available.
To learn more about Social Security benefits, please visit our section on social security within the Client Resource Center Library.
Offers of coverage, employee cost-sharing, and employer responses to Health Care Reform are among the topics analyzed in the annual 2015 Employer Health Benefits Survey, conducted by the Kaiser Family Foundation and the Health Research & Educational Trust.
Key findings from the survey include:
97% of firms with 100 or more employees offered health benefits to at least some employees in 2015, compared to 89% of firms with 50 to 99 employees.
- Of those firms with 100 or more full-time equivalent employees, 96% reported offering a plan that meets the “pay or play” affordability and minimum value requirements.
Among smaller companies, the percentages of those offering health insurance coverage are:
- 82% of firms with 25 to 49 employees;
- 63% of firms with 10 to 24 employees; and
- 47% of firms with 3 to 9 employees.
- The percentage of covered employees enrolled in high deductible plans with a savings option–e.g., health savings accounts (HSAs) and health reimbursement arrangements (HRAs)–increased to 24% in 2015, up from 13% in 2010.
A wide range of industries is represented in the survey, including service, health care, manufacturing, retail, and finance. Survey data was collected between January and June of 2015. More details and survey results are available from the Kaiser Family Foundation.
The IRS has released finalized forms and instructions for 2015 to help employers prepare for compliance with the new information reporting provisions under the Affordable Care Act (ACA). Covered employers are required to report for the first time in early 2016 for calendar year 2015.
Who is Required to Report
As a reminder, Forms 1094-B and 1095-B (with related instructions) will be used by insurers, self-insuring employers, and other parties that provide minimum essential health coverage–regardless of size, except for large self-insuring employers–to report information on this coverage to the IRS and to covered individuals.
Large employers–generally those with 50 or more full-time employees, including full-time equivalents or FTEs–will use Forms 1094-C and 1095-C (with related instructions) to report information to the IRS and to their employees about their compliance with the employer shared responsibility provisions (“pay or play”) and the health care coverage they have offered.
Note: Employers subject to both reporting provisions–generally self-insured employers with 50 or more full-time employees, including FTEs–will satisfy their reporting obligations using Forms 1094-C and 1095-C. Form 1095-C includes separate sections for reporting under each provision.
For More Information
Additional details on the information reporting requirements for providers of minimum essential coverage, including self-insuring employers, are available in IRS Questions and Answers. More details about the information reporting requirements for large employers subject to “pay or play” are available in separate IRS Questions and Answers.
New employee orientation, also known as onboarding, is essential to familiarizing newly hired employees with your workplace. But even if your company doesn’t conduct a formal orientation or onboarding program, there is good reason for employers to connect with new hires after they’ve had a chance to settle in.
Benefits of Checking In
Hiring a new employee is a big investment, so it’s important to ensure that the dollars your company spends on recruitment, compensation, training, and education are being put to good use. New employees are also unencumbered with a long history at your organization, and as such can often offer fresh perspectives and insights. Finally, sitting down with a recent hire will build goodwill. Showing the employee that you are eager for feedback and committed to his or her success will go a long way.
How To Follow Up With New Employees
How can you ensure that a new employee’s integration into the workplace has been a success? Consider the following guidelines:
- Hold an informal meeting to assess the employee’s performance. Unless specifically mandated by company policy, this is not a formal review, and, in the absence of specific concerns, you can treat the meeting as a progress update rather than an evaluation.
- Invite feedback.Ask the employee how he or she is doing, what he or she likes best, and what challenges are present. Get specific by asking whether the employee understands his or her responsibilities, and whether he or she feels that adequate time, support, and resources are provided to complete the job. And don’t forget to ask if the employee has any concerns or unanswered questions.
- Confirm a plan for moving forward. This could encompass specific job duties, areas of increased responsibility, training, or education. Discuss your individual and mutual goals with the employee, and reiterate your commitment to helping him or her achieve them.
Finally, remind your employee that your door is open, and that you are willing to hear feedback or help correct course at any time. It is always easier to deal with situations or concerns as they arise throughout the year, rather than waiting for a formal review.
In preparation for the Medicare fall open enrollment period, employers sponsoring group health plans that include prescription drug coverage are required to notify all Medicare-eligible individuals whether such coverage is creditable. Creditable coverage means that the coverage is expected to pay, on average, as much as the standard Medicare prescription drug coverage.
This written disclosure notice must be provided annually prior to October 15th, and at various other times as required under the law, to the following individuals:
- Medicare-eligible active working individuals and their dependents (including a Medicare-eligible individual when he or she joins the plan);
- Medicare-eligible COBRA individuals and their dependents;
- Medicare-eligible disabled individuals covered under an employer’s prescription drug plan; and
- Any retirees and their dependents.
Model notices are available from the Centers for Medicare & Medicaid Services (CMS). Additionally, employers are required to complete an online disclosure to CMS to report the creditable coverage status of their prescription drug plans. This disclosure is also required annually, no later than 60 days from the beginning of a plan year, and at certain other times.
Did you know that motor vehicle crashes are the leading cause of worker fatalities each year? Drive Safely Work Week, observed during the first week of October, calls attention to the importance of preventing distracted driving on the job.
What is Distracted Driving?
Distracted driving is any activity that could divert attention away from the primary task of driving, such as using a cell phone or smartphone, eating or drinking, and reading maps or using a navigation system. Because text messaging requires visual, manual, and cognitive attention from the driver, it is by far the most alarming distraction.
As a business owner or manager, it’s your legal responsibility under the federal Occupational Safety and Health Act to safeguard workers who drive as part of their jobs. Companies are in violation of the law (and many state laws) if, by policy or practice, they:
Require texting while driving;
Create incentives that encourage or condone texting and driving; or
Structure work so that texting while driving is a practical necessity for workers to carry out their jobs.
How To Discourage Distracted Driving
The federal Occupational Safety and Health Administration (OSHA) advises employers to send a clear message to workers and supervisors that the company neither requires nor condones texting while driving. Specifically, employers should:
- Enact a company policy on distracted driving that prohibits texting while driving (this model policy can help you get started).
- Establish work procedures and rules that do not make it necessary for workers to text while driving in order to carry out their duties.
- Set up clear procedures, times, and places for drivers’ safe use of texting and other technologies for communicating with managers, customers, and others.
- Incorporate safe communications practices into worker orientation and training.
- Eliminate financial and other incentive systems that encourage workers to text while driving.
Check out OSHA’s Distracted Driving Page for more guidance on work-related driving distractions.