J&D Benefits Perspective

IRS 2011 Tax Filing Publications

Jody Lee, Compliance Manager, Johnson & Dugan

The IRS has released Publication 502 - Medical and Dental Expenses for the 2011 tax filing year. This publication is specific to tax filing, but can be used for general guidance to determine covered expenses under a Healthcare Flexible Spending Account plan. The Plan Administrator should be contacted to determine flex plan rules and benefits.

New information in the 2011 publication: Standard Mileage Rate for expenses allowed when using a car for medical reasons; the IRS Publication 502 web page now includes a section on Future Developments affecting the publication; and details on the decrease to the Health Coverage Tax Credit.

Also released is Publication 503 - Child and Dependent Care Expenses for the 2011 tax filing year. The IRS Publication 503 web page now includes a section on Future Developments affecting the publication.

Contact your Johnson & Dugan team for additional information on Flexible Benefit Plans.

 

Wage Theft Protection Act of 2011

Jody Lee, Compliance Manager, Johnson & Dugan

The Wage Theft Protection Act of 2011 (AB469) took effect January 1, 2012. All California employers are impacted by this legislation, enforced by the Division of Labor Standards Enforcement (DLSE). The intent of the law is to provide employees with accurate pay information and additional wage law protections.

Each newly hired non-exempt employee must be furnished with an information statement that details rate and basis of pay, including rate for overtime, if applicable. The statement must also include other details, such as the regular payday, name of the employer and the employer’s physical location, as defined in Labor Code Section 2810.5. The DLSE has issued a template statement which is available on the website, along with a Frequently Asked Questions page: http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html

The law also toughens penalties for employers who violate wage laws. For the full text of the law:

http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0451-0500/ab_469_bill_20111009_chaptered.pdf

 

Pregnancy Disability Leave Benefits (SB299)

Jody Lee, Compliance Manager, Johnson & Dugan

Effective January 1, 2012, businesses with 5 or more employees must begin providing benefits to eligible female employees on pregnancy disability leave. Benefits must be maintained and paid for at the same level as if the employee remained actively at work. Benefits must be continued for up to four months in any 12-month period, or as long as the employee is disabled by pregnancy, childbirth or related condition.

An employee who does not return from leave can be required to reimburse any benefits costs, as long as specific requirements are met, as defined in the law. To review the text of the law:

http://www.leginfo.ca.gov/pub/11-12/bill/sen/sb_0251-0300/sb_299_bill_20111006_chaptered.pdf

 

Who Decides If You Are Disabled? - The Key Question in Your LTD Policy

Doug Hessel, Partner, Johnson & Dugan

Whether offered as an employee benefit through a group plan or purchased as an individual policy to help create a family safety net, long-term disability (LTD) insurance provides income when a policyholder suffers an injury or illness and can’t work. While most of us don’t believe, and can’t imagine, that we will ever need it, the value of such coverage is self-evident. Knowing it’s there certainly provides reassurance to policyholders and their families.

Like most things that seem self-evident, however, real life circumstances are often less than simple. If you’re in a coma, no one would suggest that you should come in to work anyway, but if you’re in pain, who decides if you’re in too much pain to work? Should your insurer take your word for it? Does it serve an insurance company to believe you, and if it disagrees, who is the final arbiter?

2012 Indexed Limits for Qualified Retirement Plans

Virginia Krieger Sutton, Pension Account Executive, Johnson & Dugan

Qualified Retirement Plans must take various dollar limits, set by the IRS, into consideration.  Some of these limits are indexed for inflation and can therefore change on occasion. The IRS has just announced the 2012 limits. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged.

LIMITS	2011	2012
401(k) Employee Deferral Contribution Limit	$16,500	$17,000
401(k) Catch-up Contribution Limit (over age 50) (Unchanged for 2012)	$5,500	$5,500
401(k) Annual Defined Contribution Limit (employee + employer contributions)	$49,000	$50,000
Plan Compensation Limit	$245,000	$250,000
Social Security Wage Base	$106,800	$110,000
Definition of Highly Compensated Employee	$110,000	$115,000

Determination of Highly Compensated Employees:                      

1. Employees owning more than 5% of a company, as well as an employee who is a spouse, child, parent or grandparent of an employee owning more than 5% of a company will always be considered highly compensated.
2. Employees who earned more than $110,000 in 2010 will be considered highly compensated employees for 2011 non-discrimination testing.
3. Employees who earned more than $115,000 in 2011 will be considered highly compensated employees for 2012 non-discrimination testing.

2012 Maximum 401(k) Contributions:

• The maximum salary deferral contribution an employee can make is $17,000.
• If the employee is age 50 or older, the maximum is $22,500.
• If you have an employer match or other employer contribution to your plan, the maximum total contribution is $50,000 for employees under age 50 and $55,500 for employees over the age of 50.

If you have any questions about how these limits will affect your 401(k) plan or employees, please contact the Johnson & Dugan Retirement Services Team at 650-266-9700.

NLRA Employee Rights Notice Poster

~Deadline Postponed~

The NLRB has delayed the posting deadline to January 31, 2012 to allow employers time to comply with the requirement.

Jody Lee, Compliance Manager, Johnson & Dugan

Most employers will be impacted by a recent National Labor Relations Board (NLRB) ruling which requires employee notification of their rights under the National Labor Relations Act (NLRA). The notice, which applies to union and non-union workplaces, includes rights to organize, form, join or assist a union; to bargain collectively with their employer; and to discuss their wages, benefits, and other terms and conditions of employment with their co-workers or a union. 

The notice is available for download from the NLRA website, and instructions for posting are included. A significant requirement is the poster size - it must by 11 x 17. Downloads are available in the full 11 x 17 size (requiring special printer settings) or two 8 1/2 x 11 documents. November 14, 2011 is the deadline to post the notice. 

A Frequently Asked Questions page is available on the NLRA website, specific to the poster requirement.

Federal Contractors who currently post the required Employee Rights Under the NLRA notice are in compliance and will not need the new poster.

Contact your Johnson & Dugan team for more information.

 

SF Health Care Security Ordinance - Update for 2012

Jody Lee, Compliance Manager, Johnson & Dugan

Since January of 2008, the San Francisco Health Care Security Ordinance (SFHCSO) has been in effect for medium and large-sized San Francisco employers. This employer health care spending requirement does not apply to small employers or to non-profit employers with less than 50 employees. The expenditure rate is used to determine the minimum amount an employer must spend to provide health care coverage for each employee working in San Francisco.

The table below illustrates the Health Care Expenditure rates each year, including newly released rates for 2012.

SFHCSO Health Care Expenditures
Business Size	2008	2009	2010	2011	2012
Large (100+ employees)	$1.76/hr	$1.85/hr	$1.96/hr	$2.06/hr	$2.20/hr
Medium (20-99 employees)	$1.17/hr	$1.23/hr	$1.31/hr	$1.37/hr	$1.46/hr
Small (1-19 employees)	Not applicable - exempt
Non-profits with fewer than 50 employees are exempt

All employees, regardless of work location, are counted to determine business size and expenditure rate. To satisfy the requirement, the following options are available:

• Purchase health insurance for San Francisco employees
• Make payments to the City Option
• Provide a qualified Medical Spending Account
• Reimburse employees for their health expenses.

More detailed information about the requirements can be found on the San Francisco Labor Standards Enforcement Health Care Security Ordinance website.

Contact your Johnson & Dugan team with questions regarding coverage options for San Francisco employees.

 

 

2012 HSA Annual Limits

As illustrated below, contribution limits for Health Savings Accounts (HSAs) and out-of-pocket expense limits for HSA-qualified High Deductible Health Plans (HDHPs) will increase in 2012. Maximum deductible amounts for a plan to be considered a HDHP will remain the same.

Annual Dollar Limit	2011	2012
Maximum HSA Contribution - Individual	$3,050	$3,100
Maximum HSA Contribution - Family	$6,150	$6,250
Maximum HDHP Deductible - Individual	$1,200	$1,200
Maximum HDHP Deductible - Family	$2,400	$2,400
Maximum HDHP Out-of-Pocket Expense - Individual	$5,950	$6,050
Maximum HDHP Out-of-Pocket Expense - Family	$11,900	$12,100

Contact your Johnson & Dugan Account Executive for details about HSA plans. For additional information about Health Savings Accounts, including answers to frequently asked questions, related IRS forms and publications, technical guidance, and links to other helpful web sites, see the Treasury Department Health Savings Accounts Resource Center.

Medicare D Notices - Earlier Distribution Deadline

Medicare Prescription Drug legislation (Medicare Part D) includes a notice requirement to Medicare-eligible employees. This includes employees on group health plans (including COBRA participants and individuals on leave of absence). These individuals must be advised whether or not the prescription coverage through their employer-sponsored health plan is “creditable”, which means the actuarial value meets or exceeds the actuarial value of standard prescription drug coverage under Medicare Part D.

Communication to employees in the form of a notice must be completed prior to the start of Medicare Open Enrollment. In 2011, the Open Enrollment period starts on October 15, 2011, one month earlier than in previous years. The Centers for Medicare and Medicaid Services (CMS) has published new model notices for use on or after April 1, 2011.

Your Johnson & Dugan team monitors the creditable status of your prescription drug plan(s) and will provide the appropriate updated communication pieces for distribution prior to the deadline.

Please contact your Johnson & Dugan team with any questions.

 

Health Care Reform Resources

It has been over a year since the Patient Protection and Affordable Care Act (PPACA) was signed into law – a comprehensive and complicated package that impacts employer-provided benefit plans. Initial provisions of the law took effect beginning last year, and additional provisions will continue to take effect over the next several years.

Modifications to the Act have also begun, and various laws to postpone or repeal sections of PPACA have recently been passed. At Johnson & Dugan, we understand how overwhelming the law can seem to employers. There is no single rule that will apply from one company to the next; therefore, we work with our clients to determine how and when provisions of health care reform will impact them.

There are many resources available to help individuals and employers navigate through information that can often become confusing. On the Johnson & Dugan website, we have gathered a selection of resources that focus on reform: http://www.johnsondugan.com/how/healthcarereform.htm.

This news website, the J&D Benefits Perspective, will continue to publish updates on health care reform, along with other news that impacts employers. Our clients will also receive timely compliance alerts on subjects that affect their benefit plans.

Contact your Johnson & Dugan team with any questions.