News

12 Ways to Count Employees for Health Plan Purposes

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By: Dan Bond

Published: June 07 2016, 12:13pm EDT

Original article: http://www.benefitnews.com/opinion/12-ways-to-count-employees-for-health-plan-purposes

Employee counts are used to determine what laws, rules, fees, and penalties apply to a health plan and/or the employer sponsor. But the methods for counting employees are as varied as the laws that affect them. This creates confusion and frustration among employers and can significantly hinder their compliance efforts.

[Dan Bond]
[Dan Bond]

To make sense out of all this, here’s a synopsis of 12 counting methods that employers must use to properly administer their health plans.

Counting method 1: Employers with at least 15 employees

Laws or compliance requirements applied: Title VII of the Civil Rights Act, as Amended by the Pregnancy Discrimination Act (PDA)

Employers may not consider a person’s race, color, sex (including sexual orientation), national origin, religion or pregnancy in determining eligibility for, amount of, or charges for employee benefits. Denying coverage for a condition or treatment that disproportionately affects members of a protected group is also considered a violation of Title VII.

Americans with Disabilities Act (ADA)

An employer may not deny an individual with a disability equal access to insurance, or require such an individual to have terms and conditions of insurance different than those of employees without disabilities. The ADA also applies to wellness and disease management programs.

Who to count: Employees in the current or preceding calendar year, including employees of affiliated employers that are part of an “integrated enterprise.” Exclude individuals who are partners, officers, members of boards of directors, or major shareholders unless they are under the employer’s control. For example, a CEO who has no supervisor would not be counted; a senior vice president who reports to the CEO probably would be.

How to count: Count each full-time and part-time employee on the payroll in each week as 1. If an employer has 15 or more employees in 20 or more weeks in the current or preceding calendar year, it is covered.

Consequences of Noncompliance: The EEOC may bring an action in court, and individuals may file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).

Counting method 2: Employers with at least 20 employees

Laws or compliance requirements applied: Genetic Information Nondisclosure Act (GINA)

Group health plans may not discriminate against individuals based on genetic information and may not use this information in underwriting or determining premiums or contributions. It also restricts questions that can be asked on a health risk assessment (HRA) if an incentive is offered for its completion.

Age Discrimination in Employment Act (ADEA)

Benefits provided to older workers (40 years and older) must be the same as those provided to younger workers in all respects, including payment options, types of benefits and amount of benefits (although certain exceptions may apply).

Who to count: Employees in the current or preceding calendar year, including employees of affiliated employers that are part of an “integrated enterprise.” Exclude individuals who are partners, officers, members of boards of directors, or major shareholders unless they are under the employer’s control. For example, a CEO who has no supervisor would not be counted; a senior vice-president who reports to the CEO probably would be counted.

How to count: Count each full-time and part-time employee on the payroll in each week as 1. If an employer has 15 or more employees in 20 or more weeks in the current or preceding calendar year, the law applies.

Consequences of noncompliance: The DOL may assess special penalties and the EEOC may bring an action in court against a plan sponsor for violations. Individuals may file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).

Counting method 3: Employers with at least 20 employees

Laws or compliance requirements applied: COBRA

COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates.

Who to count: Employees in the previous calendar year, including full and part-time common-law employees of all employers in a controlled group. This may include leased employees. Exclude individuals who are partners, members of boards of directors, or major shareholders unless they are under the employer’s control.

How to count: Count each full-time employee as 1. Each part-time employee counts as a fraction, with the numerator equal to the number of hours worked by that employee and the denominator equal to the number of hours that must be worked on a typical business day in order to be considered full-time (but not more than 40 hours per week.) If an employer does not wish to count a salaried worker as full-time, it must keep records to demonstrate actual hours worked. If the number of employees is 20 on more than 50% of the employers working days, the law applies.

Consequences of noncompliance: COBRA compliance failures can result in excise taxes and statutory penalties. Qualified beneficiaries may also file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).

Counting method 4: Employers with 20 or more employees

Law or Compliance Requirement Applied: Medicare Secondary Payer (MSP) Rules Based on Age

A group health plan is the primary payer and Medicare is the secondary payer for individuals age 65 or over if their group health coverage is by virtue of the individual’s (or his/her spouse’s) current employment status.

Who to count: Employees in the current or preceding calendar year, including individuals who, although not actually working for an employer, are receiving from an employer payments that are subject to FICA taxes.

How to count: Count each full-time and part-time employee as 1. MSP rules apply if an employer has 20 or more full-time and/or part-time employees for each working day in each of 20 or more calendar weeks in the current or preceding year. An employer is considered to have 20 or more employees for each working day of a particular week if the employer has at least 20 full-time or part-time employees on its employment rolls each working day of that week.

Consequences of noncompliance: Medicare can collect any incorrect claim payments directly from the employer, regardless of whether the employer’s plan is fully insured or self-insured.

Counting method 5: Employers with at least 50 employees

Laws or compliance requirements applied: Family and Medical Leave Act (FMLA)

FMLA requires employers that sponsor group health plans to provide group health plan benefits to employees on an FMLA leave. Please note that public agencies and public and private schools are covered regardless of the number of employees.

Who to count: Employees working in the current or preceding calendar year, including employees of related employers that meet an “integrated employer” test.

How to count: Count each full-time and part-time employee who appears on the employer’s payroll on each day of a calendar week as 1. An employer is covered if it maintained 50 or more employees on the payroll during 20 or more calendar workweeks (not necessarily consecutive workweeks) in either the current or the preceding calendar year.

Consequences of noncompliance: The EEOC may bring an action in court and individuals may file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).

Counting method 6: Applicable arge employers (ALEs)

Laws or compliance requirements applied: Shared Responsibility Provisions of the Affordable Care Act (ACA)

ALEs must offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees, must report to the IRS information about the health care coverage, if any, they offered to full-time employees, and must provide a statement to employees.

Who to count: Full-time and part-time employees in the preceding calendar year, including full and part-time common-law employees of all employers in a controlled group. This may include leased employees.

How to count: For each month of the preceding calendar year:

Determine the number of full-time equivalent employees (FTEs) by calculating the aggregate number of hours of service for that calendar month for employees who were not full-time employees (but not more than 120 hours of service for any employee) and dividing that number by 120.

Add the number of full-time employees (i.e., those working more than 30 hours per week employed during that month.

Add the results of each monthly calculation and divide by 12.

The result, if not a whole number, is then rounded to the next lowest whole number.

If the result of this calculation is 50 or more, the employer is an ALE for the current calendar year, unless the seasonal worker exception applies.

Consequences of noncompliance: ALEs are subject to a penalty if one or more full-time employees are certified to the employer as having received an applicable premium tax credit or cost-sharing reduction, and either: 1) the employer fails to offer to its full-time employees (and their dependents) minimum essential coverage; or, 2) the employer’s coverage is deemed to be unaffordable or does not provide minimum value (as defined by the ACA). Failure to file a return with the IRS or furnish a statement to employees can result in penalties up to $250 per return/statement, with a maximum penalty of $3 million.

Counting method 7: Private employers with an average of at least 51 employees and nonfederal governmental employers with an average of at least 101 employees

Law or compliance requirement applied: Mental Health Parity and Addiction Equity Act (MHPAEA)

Group health plans that provide mental health coverage must provide parity between medical/surgical benefits and mental health/substance use disorder benefits.

Who to count: Employees during the preceding calendar year, including full and part-time common-law employees of all employers in a controlled group.

How to count: Count each full-time and part-time employee as 1. An employer who employed an average of more than 50 employees (or 100 employees in the case of nonfederal governmental employers) on business days during the preceding calendar year is subject to the law. The government has not provided guidance on how to calculate this “average”.

Consequences of noncompliance: Individuals and the DOL may use ERISA’s civil enforcement provisions to file lawsuits to enforce the MHPAEA’s requirements. In addition, noncompliance with the MHPAEA can trigger an IRS excise tax.

Counting method 8: Employers with 100 or more employees

Law or compliance requirement applied: Medicare Secondary Payer (MSP) Rules Based on Disability

A group health plan is the primary payer, and Medicare is the secondary payer for individuals under age 65 entitled to Medicare on the basis of a disability, if their group health coverage is by virtue of the individual’s (or his/her spouse’s) current employment status.

Who to count: Full-time and part-time employees6, including individuals who, although not actually working for an employer, are receiving from an employer payments that are subject to FICA taxes.

How to count: Count each full-time and part-time employee as 1.

Consequences of noncompliance: Medicare can collect any incorrect claim payments directly from the employer, regardless of whether the employer’s plan is fully insured or self-insured.

Counting method 9: Welfare plans that cover at least 100 employees

Law or compliance requirement applied: Form 5500

Employee benefit plans must file the Form 5500 reporting and disclosure document on an annual basis with the Department of Labor (DOL). Please note that the Form 5500 requirement applies to ERISA plans only.

Who to count: Employees enrolled in the plan at the beginning of the plan year.

How to count: Count each full-time and part-time employee as 1.

Consequences of noncompliance: The penalty for failing to file a Form 5500 is $1,100 per day, which is cumulative from the filing deadline. Lesser penalties may be assessed for incomplete or otherwise deficient Form 5500s.

Counting method 10: Employers that filed 250 or more W-2s

Law or compliance requirement applied: Reporting the cost of health benefits on Form W-2

The Affordable Care Act requires employers to report the total cost of employer-provided health coverage on Form W-2.

What to count: W-2s filed with the IRS in the preceding calendar year.

How to count: W-2s for full-time and part-time employees count as 1.

Consequences of noncompliance: Penalties for compliance failures range from $30 to $250 per form.

Counting method 11: All self-insured medical plans

Law or compliance requirement applied: Transitional Reinsurance Program Fee

The ACA requires self-insured group health plans to make contributions to help stabilize premiums for coverage in the individual market during the years 2014 through 2016.

Who to count: Covered lives, which includes both employee and dependent lives.

How to count: The fee is calculated based on the average number of covered lives, which can be determined using one of the following four methods:

Actual count: Add the total number of lives covered for each day of the first nine months of the calendar year and divide that total by the number of days in the first nine months.

Snapshot count: Add the total number of lives covered on any date during the same corresponding month in each of the first three quarters of the calendar year, and divide that total by the number of dates on which a count was made.

Snapshot factor: Use the Snapshot Count method, except the number of lives covered on a given date is calculated by adding the number of participants with self-only coverage to the product of the number of participants with coverage other than self-only coverage and a factor of 2.35. This method can be used to estimate the number of total lives included in coverage that is not self-only coverage.

Form 5500 method: The number of participants as of the beginning and end of the plan year as reported on Form 5500 for the last applicable time period.

Consequences of noncompliance:

As with any amount owed to the federal government, an unpaid/underpaid Reinsurance Program Fee will be subject to federal debt collection rules.

Counting Method 12: All self-insured medical plans

Law or compliance requirement applied: Patient-Centered Outcomes Research Institute Fee

The PCORI fee supports the Patient-Centered Outcomes Research Trust Fund and will be imposed for each policy year ending on or after October 1, 2012 and before October 1, 2019.

Who to count: Covered lives, which includes both employee and dependent lives.

How to count: The fee is calculated based on the average number of covered lives, which can be determined using one of the following three methods:

Actual count method: Add the total lives covered for each day of the plan year and divide that total by the total number of days in the plan year.

Snapshot method: Add the total number of lives covered on one date during the first, second or third month of each quarter, and divide that total by the number of dates on which a count was made.

Form 5500 method: The number of participants as of the beginning and end of the plan year as reported on Form 5500 for the last applicable time period.

Consequences of noncompliance: As with any amount owed to the federal government, an unpaid/underpaid PCORI Fee will be subject to federal debt collection rules.

For a pdf of these counting methods in a chart, with additional details and footnotes, click here.

Impact of Single Payer Healthcare: Vote NO on Amendment 69

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What is Amendment 69? Amendment 69, also known as ColoradoCare, is a measure that will appear on the 2016 General Election ballot in November. It is a single-payer healthcare initiative whereby large tax increases would fund a government-run healthcare system. Amendment 69 would limit access to care and Coloradans would be paying the highest tax rate in the country. The effects on Colorado and its citizens would be detrimental. It would amend the Colorado Constitution, eliminating private health insurance and most provision of the Affordable Care Act.

Impact of Amendment 69
To help defeat this risky and costly experiment, visit ColoradansForColoradans.com.
•It will cost Colorado taxpayers $25 billion in its first year of operation.
•This one program would nearly double Colorado’s state spending.
•Colorado would have the highest tax rate in the country.
•Will tax employers, employees and retirees.
Expensive
•A premium tax of 6.67% of total payroll income will be imposed on employers.
•A premium tax of 3.33% of total payroll income will be imposed on workers.
•Wages, salaries and tips would be subject to the premium tax.
•Taxes can be increased annually by any amount without voter approval.
•Anyone who has non-payroll income would be taxed at 10%. Non-payroll income includes business owners’ income, capital gains, pensions, annuities, and social security benefits.
Higher Taxes
•Businesses may reduce workforce or wages to help pay for the premium tax increase.
•Business owners may relocate to other states with lower taxes rather than pay the new 10% payroll tax.
•It may attract people to Colorado who do not work but would benefit from receiving free healthcare.
Job Losses
•It would be governed by an elected, 21-member board of trustees not subject to oversight by the legislature, and not subject to direction or control by any State Government entity.
•Taxes and benefits can be increased by ColoradoCare each year to ensure financial stability.Providers and beneficiaries would be subject to unilateral actions by ColoradoCare.
No Accountability
•Colorado would become less attractive to physicians, causing many to close or move their practice.
•It could lead to limiting of health care based on the amount of money collected.
•It would absorb allState and Federal health-care programs, including workers’ comp and Medicaid, without any guarantee that federal funding would be replaced.
Accessibilitly Issues

Join us for a FREE Lunch & Learn – Aspen Square Hotel – June 9

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LunchandLearn_6.9.16_AspenSquareYou are cordially invited to the FREE Lunch & Learn presented by Desktop Consulting Inc. & Glenwood Insurance Agency

Aspen Square HotelWhat: Lunch & Learn – RSVP NOW!

When: June 9th from 11:30 a.m. – 1p.m.

Where: Aspen Square Hotel | 617 East Cooper Street |Aspen, CO

Click here for more information and to reserve a seat.

 

Learn about…

  • What cloud computing is and why thousands of companies are trading in their traditional computer networks for this new and more flexible alternative.
  • How cloud computing and the current hacking environment affects your business risk.
  • How to reduce business risk with a combination of technology best practices and business insurance.
  • Important information about security, where your data is stored and internet connectivity.
  • Critical facts every business owner must know before switching to a cloud based network.

Resources to help SECURA customers during storm season

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SECURA coverage and resources to help your customers weather the storm

Storm season is here, and that means potential damage to your customers’ homes, cars, farms, and businesses. We provide resources to help policyholders limit the damage during storm season, plus coverages in case they have a loss:

Preventing storm damage
Share these posts with your customers:

Storm-related coverage information
If your customers experience damage, remind them of the coverage and policy provisions they have with SECURA. Here are just a few highlights:

Siding match endorsement
We added an endorsement for MILE-STONE® and monoline homeowners policies. In the event a homeowner needs a portion of siding repaired or replaced after a loss, the endorsement will provide for a siding match when the damaged siding is no longer available. Coverage is not provided for color differences due to fading.

Water back-up
We’ll cover damage from water back-up if water or waterborne materials back up into the home through sewers, drains, a sump pump, or related equipment.

Reporting a claim
If a home or building is insured for replacement cost, policyholders need to submit the claim within 180 days of the loss to qualify for replacement cost coverage. This applies for all lines of business.

Introducing Pinnacol’s New Health Risk Calculator

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Screen Shot 2016-03-01 at 10.11.45 AMIntroducing Pinnacol’s Health Risk Calculator 

We’re excited to announce Pinnacol’s Health Risk Calculator, a new online educational tool designed to help policyholders understand the connection between the health of their employees and their workers’ compensation costs. Part of our increased focus on overall health and wellness, it’s intended to illustrate the value of participating in our free worksite wellness program and accessing our safety resources.

The calculator was developed in partnership with the Colorado School of Public Health, using data collected during studies of Pinnacol’s free worksite wellness program for policyholders between 2010 and 2014.

How it works 

The Health Risk Calculator analyzes information entered into the calculator against industry data to estimate workers’ compensation costs. Policyholders can access the calculator on Pinnacol’s Policyholder Portal.

• Policyholders estimate the health status of their workforce in 10 key areas: diabetes, arthritis, heart disease, poor sleep, stress at work, migraines, depression, high cholesterol, tobacco use and abnormal BMI (body mass index).

• To see the benefit of improving employee health, policyholders can adjust the entered values for each health risk, and the associated workers’ compensation costs will adjust in real time.

• Based on the information entered, the calculator will generate a summary of the expected number of claims and their costs in the coming year, along with an industry comparison.

• The results represent the average workers’ compensation claim costs that a business with similar characteristics may have in the next year.

How you can help your customers 

Share the attached sales flyer with your customers.

Promote and direct policyholders to the calculator on Pinnacol’s Policyholder Portal.

Note, to gain access to the Policyholder Portal, new and current customers must register. They will need:

o Policy number

o Federal Tax ID Number (FEIN) or Social Security Number (SSN)

o Next Renewal Date (For example, if your current policy period is 6/1/2016, your next renewal date will likely be 6/1/2017)

If you have any questions, please contact your Pinnacol agency relationship manager.

Thank you for your continued partnership with Pinnacol, and for supporting our initiatives to find new and innovative ways to serve and bring enhanced value to our policyholders.

DTCI / Glenwood Insurance Host FREE Cybersecurity Lunch and Learn – Apr. 7

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Cyber SecurityYou are cordially invited to the DTCI / Glenwood Insurance FREE Cybersecurity Lunch and Learn event.  If you have an interest in learning how to retain more of your hard earned profits, reduce business risk with technology and increase your understanding of business insurance read on.

On April 7, 2016, DTCI and Glenwood Insurance will present how cyber technology can affect your business security and risk. We’d like for you to attend as our guest.


During this seminar you’ll discover…

  • What cloud computing is and why thousands of companies are trading in their traditional computer networks for this new and more flexible alternative.
  • How cloud computing and the current hacking environment affects your business risk.
  • How to reduce business risk with a combination of technology best practices and business insurance.
  • Important information about security, where your data is stored and internet connectivity.
  • Critical facts every business owner must know before switching to a cloud based network.

Seating Is Limited – Register Today

Seating will be confirmed on a first-come, first served basis. Register now for this event! Click here.

Date:     April 7th 2016
Time: 11:30 am – 1:00 pm
Location: Basalt Library, 14 Midland Avenue, Basalt, CO

We look forward to seeing you there!

 

Ian Exelbert & Bob McNutt

Revisiting Winter Driving Risk Management

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Screen Shot 2015-12-22 at 7.28.44 AMWinter driving affects every employee in your organization. Whether you manage a fleet of vehicles, oversee a mobile sales force or employ commuters, you can greatly reduce the risks your employees and their families face by helping them learn and use best practices for driving during the snowy months ahead.

Winter is the most hazardous season on the roads, accounting for 24 percent of weather-related car accidents, according to the U.S. Department of Transportation. And with the National Safety Council reporting an average total cost per motor vehicle accident claim of more than $65,000, the human and financial toll on employers is significant.

Winter Driving Risk Management

Although employers cannot control roadway conditions, you can promote safe driving by ensuring your workers know the hazards of driving on snow- or ice-covered roads, properly train to drive in winter conditions and carry licenses for the vehicles they operate. For information about driving safely during the winter, visit OSHA’s Safe Winter Driving page.

Employers should set and enforce driver safety policies. Also, now’s the time to beef up your maintenance program for the company vehicles and mechanized equipment operated by your workers. Learn more at: Motor Vehicle Safety (OSHA Safety and Health Topic’s Page).

Vehicle Systems Working Properly?

Employers should ensure that trained workers inspect the following systems to make sure company vehicles (and private vehicles used for company business) perform properly during the winter season:

Brakes: Brakes should provide even and balanced braking. Also check the brake fluid level.

Cooling System: Ensure a proper mixture of 50/50 antifreeze and water in the cooling system at the proper level.

Electrical System: Check the ignition system and make sure that the battery is fully charged and that the connections

are clean. Check that the alternator belt is in good condition, with proper tension.

Engine: Inspect all engine systems.

Exhaust System: Check exhaust for leaks and ensure all clamps and hangers are snug.

Tires: Check for proper tread depth and for signs of damage or uneven wear. Ensure tires are properly inflated.

Oil: Check the oil level, and change the oil and oil filter if necessary.

Visibility Systems: Inspect all exterior lights, defrosters (windshield and rear

window) and wipers. Install winter windshield wipers.

Outfit Vehicles with Emergency Essentials

Vehicles should be outfitted with emergency kits that include the following items:

 Cellphone or two-way radio

 Windshield ice scraper

 Extra windshield wiper fluid

 Snow brush

 Flashlight with extra batteries

 Shovel

 Tow chain

 Traction aids (bag of sand or granular cat litter)

 Emergency flares

 Jumper cables

 Snacks

 Water

 Road maps

 Blankets, change of warm clothes

Pinnacol Resources

For more information on shoring up winter driving safety at your organization, visit the Resources web page at Pinnacol.com. Additional resources are available on the website pages of the Occupational Safety & Health Administration, National Highway Traffic Safety Administration and National Safety Council. Or call Pinnacol’s Safety On Call hotline at 303-361-4700 or 888-501-4752. Our safety services team stands ready to answer questions and help keep your workforce safe behind the wheel this winter.

LUNAFEST Benefits Advocate Safehouse Project

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LUNAFEST – 2015/2016 Season Trailer from Clif Bar & Company on Vimeo.

Attend LUNAFEST and enjoy great short films while supporting an important community cause. You’ll have fun and make a difference. Advocate Safehouse Project works to promote healthy relationships free from violence through education, advocacy, empowerment, and safehousing in Garfield County.

January 23, 2016
5:00 & 7:30 p.m. at the Hotel Colorado
526 Pine Street, Glenwood Springs, CO

Advance tickets are $20 and tickets at the door are $25.

FOR MORE INFORMATION: julie@advocatesafehouse.org or 970.945.2632

DTCI / Glenwood Insurance Host FREE Cybersecurity Lunch and Learn – Jan. 28

Posted by | News | No Comments

Cyber SecurityYou are cordially invited to the DTCI / Glenwood Insurance FREE Cybersecurity Lunch and Learn event.  If you have an interest in learning how to retain more of your hard earned profits, reduce business risk with technology and increase your understanding of business insurance read on.

On Thursday, January 28, 2016, DTCI and Glenwood Insurance will present how cyber technology can affect your business security and risk. We’d like for you to attend as our guest.


During this seminar you’ll discover…

  • What cloud computing is and why thousands of companies are trading in their traditional computer networks for this new and more flexible alternative.
  • How cloud computing and the current hacking environment affects your business risk.
  • How to reduce business risk with a combination of technology best practices and business insurance.
  • Important information about security, where your data is stored and internet connectivity.
  • Critical facts every business owner must know before switching to a cloud based network.

Seating Is Limited – Register Today

Seating will be confirmed on a first-come, first served basis. Register now for this event! click here.

When:     Thursday, January 28, 2016, 11:30 am – 1:00 pm

Where:   Carbondale Library

320 Sopris Avenue in Carbondale, CO 81601

RSVP:     January 26, 2016
Looking forward to seeing you there,

Ian Exelbert & Bob McNutt

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