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Choosing the Right HCM Software Provider Is Essential to ACA Compliance

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The complex nature of the Affordable Care Act (ACA) is well documented, and for good reason. The criteria for applicable large employers (ALEs) contain a sea of intricacies, which are tough to keep up with. It’s no wonder, then, that so many employers rely on payroll providers to assist them with their ACA duties.

But not all human capital management (HCM) providers are equipped to handle ACA challenges, and it’s no consolation that the ACA does not hold third parties accountable for mistakes.

So what’s an employer to do?

Consider choosing an HCM provider that offers the educational, monitoring, evaluation and reporting tools needed for compliance.

Teach You the Ropes

As an ALE, you’re subject to the ACA’s employer shared responsibility (ESR) provisions. Your HCM provider should help you understand your responsibilities, which include:

  • identifying all full-time employees, including full-time equivalents, as defined by federal law;
  • providing the IRS with detailed information on full-time employees;
  • determining the type of coverage offered to full-time workers;
  • monitoring employment changes that may cause you to have 50 or more full-time employees, which would subject you to the ESR; and
  • evaluating your group coverage to ensure it meets ACA standards.

Your provider should explain key aspects of the ACA in plain language and provide you with ongoing legislative updates.

Alert You of Critical Occurrences

Chances are, you’ve got a full schedule, which makes monitoring the issues affecting compliance a burden. Still, it’s a necessary task, which can be simplified by an ACA dashboard that:

  • tells you when you’re reaching ALE status;
  • alerts you when full-time and part-time employees are nearing full-time status; and
  • notifies you when employees’ look-back measurement periods are ending.

Above all, alerts and notifications give you timely information and the ability to better manage hours of service for your employees.

Assess Historical and Current Data

At the heart of ACA noncompliance, you’ll likely find errors that could have been avoided through careful data analysis.

For example, employees must be properly categorized as full-time, part-time or seasonal. In addition, accuracy of hours worked is important to determining ALE status, which employees are full-time, and the end-of-year reporting process. Mistakes in these areas can be caught and corrected beforehand through periodic data reviews.

An enhanced evaluation tool lets you access audit trails of historical data, plus review current ACA information. These reports are crucial to regulatory compliance and can help you fulfill your reporting requirements. Evaluation also gives you actionable insights into your responsibilities as an employer.

Reporting That Satisfies IRS Criteria

ALEs must report the total annual cost of their employer-sponsored group health coverage on employees’ W-2, provide employees with a statement of coverage, and report to the IRS through Forms 1094/1095 –B or –C.

The information provided on these forms needs to be correct because the IRS uses it to determine whether:

  • an employee qualifies for premium tax credits;
  • you’re complying with the “pay or play” mandate; and
  • individuals have the minimum essential coverage.

Considering the extensive scope of ACA reporting, a payroll system that facilitates the following is of paramount importance:

  • employment status changes,
  • coverage affordability and other qualifying factors,
  • trends in employee hours and ALE status, and
  • minimum value and “pay or play” calculations.

In the end, the right payroll provider has a simple goal: to relieve you of your worries by mitigating compliance risks, including those associated with the ACA.



Author Bio: Barclay has over 20 years of experience working as a consultant. He has worked in the consulting practices of accounting firms Ernst & Young and Causey Demgen & Moore. Barclay joined Paycom in 2011 and is currently a Tax Research Analyst. Robbie is a graduate of Rhodes College in Memphis, Tenn.

Addressing Employer Confusion With Pregnancy Related Laws: What to Expect When Your Employees Are Expecting

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The best way to prevent pregnancy discrimination is to understand the laws which can be implicated.  Such laws include the Family and Medical Leave Act, Pregnancy Discrimination Act, the Americans with Disabilities Act Amendments Act and the Affordable Care Act. Unfortunately, understanding the intricacies of each of these laws can be difficult and confusing, so let’s review each in an effort to provide clarity.

1. Family and Medical Leave Act (FMLA)

Not all employers are required to provide FMLA benefits, and not all employees will be entitled to such benefits.

  • Only “covered employers” must provide FMLA benefits. A “covered employer” may be private-sector employers with 50 or more employees, public agencies and public or private elementary or secondary schools.
  • Eligible employees are those who have worked for the employer, for at least 12 months and for at least 1,250 hours in the past 12 months.

Employees are entitled to FMLA leave for the birth of a son or daughter and also for serious health conditions that make the employee unable to perform the essential functions of his or her job.

  • This includes leave for the birth of a child, prenatal care, incapacity related to pregnancy (such as morning sickness) and any serious health conditions that the mother might have following childbirth.

When an employee takes FMLA leave, the employer must maintain the employee’s health benefits.

When an employee returns from FMLA leave, the employer generally is required to restore the employee to the same job that was held when the leave began, or to an equivalent job.

FMLA regulations allow employers to run paid leave concurrently with FMLA leave.

  • This means that employers can require employees to substitute accrued paid leave for unpaid FMLA leave. This, however, will not increase the total amount of leave allowed.
  • This also applies to short-term disability benefits.

The amount of leave allowed under FMLA does not have to be used all at once and can be used during pregnancy, after birth or spread across both time periods.

  • An employee may take leave by reducing normal daily or weekly hours.

Employers must provide notice of FMLA eligibility either orally or in writing within five days of the employee’s request for leave or when the employer becomes aware that the employee’s leave may be for FMLA-qualifying reasons.

Some states may have broader maternity-leave laws that override the FMLA. These state laws will be discussed in a later post.

2. Pregnancy Discrimination Act (PDA)

The PDA states that discrimination based on pregnancy, childbirth or related medical conditions will constitute unlawful sex discrimination under Title VII of the Civil Rights Act.

The PDA does not require employers to provide any leave to pregnant workers, except to the extent the employer provides leave to other individuals suffering from temporary disabilities.

Lactation is a pregnancy-related condition protected under the PDA and denial of an appropriate location to express breast milk could amount to pregnancy discrimination.

The PDA has been interpreted as not requiring reasonable accommodations to pregnant women, unless the employer also provides such accommodation to nonpregnant employees with temporary conditions (accommodations may, however, be required under the American’s with Disabilities Act Amendments Act.

3. American’s with Disabilities Act Amendments Act (ADAAA)

The ADAAA applies to employers with 15 or more employees, and does not set any minimum service requirements for employees to qualify and the ADAAA is implicated only when a person is discriminated against because he or she is disabled.

  • A “disability” is a physical or mental impairment which substantially limits a major life activity. This can include short-term impairments, which are substantially limiting.

A normal pregnancy will not constitute a disability, but pregnancy-related medical conditions may rise to the level of a disability under the ADAAA. (See our previous post, “EEOC Cracks Down on Pregnancy Discrimination,” for examples of pregnancy-related medical conditions that have been considered a disability.)

A pregnant employee may be entitled to an accommodation under the ADAAA for pregnancy-related medical conditions. This may include things such as altered break and work schedules, or elimination of marginal job functions.

  • Employers may not reduce the employee’s pay because she needs an accommodation to do her regular job.

There is no specific time limit on the amount of leave that may be taken by the employee or the length of accommodations if no undue hardship exists for the employer. The length of an accommodation or the period of time off must only be reasonable.

  • Courts have held that anywhere from six months to a year can be considered a reasonable period of time off from work.

Employers will not be required to hold the employee’s job open while the disabled employee is on leave, if doing so would create a hardship for the employer.

4. Affordable Care Act (ACA)

Generally, the ACA requires employers with at least 50 full-time employees to offer employees minimum essential health coverage that is affordable, or to make an employer shared-responsibility payment to the IRS. Please note that employers will face hefty fines for not providing coverage that meets the minimum requirements.

Employees cannot be denied health coverage or charged more because they are pregnant. This applies whether employees get their insurance through their employer or if they buy it on their own.

The ACA explicitly identifies pregnancy, maternity and newborn care as part of the essential benefits package that must be offered by plans.

  • Most plans must cover preventative services for pregnant women or women who may become pregnant, without charging a copayment or coinsurance.
    • This includes things such as anemia screening, gestational diabetes screening or folic acid supplements.
  • Employers’ health insurance plans also must provide breastfeeding support and counseling, and equipment for the duration of breastfeeding.

The ACA also requires that employers provide time and space for new mothers to express breast milk until the child turns 1 year old.

  • This provision overlaps with the PDA, which requires employees to be compensated for time that is used to pump or breastfeed if other employees are compensated for their break times.

 

Conclusion

Many laws are implicated when it comes to pregnant employees and most charges of pregnancy discrimination today result from seemingly neutral policies that adversely impact pregnant workers. It is important to understand that:

  • pregnancy discrimination can happen in all aspects of employment
  • some pregnant employees may be entitled to certain accommodations or specified leave
  • an employer’s policies pertaining to nonpregnant employees can impact how pregnant employees are treated
  • all pregnant employees may not be treated in the same manner

 

These laws, while all very different, overlap in many areas, and understanding the various parts of each is vital for employers.

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Posted in ACA, Blog, Compliance, Employment Law, Featured

Kristin Fisher

by Kristin Fisher


Author Bio: As a compliance attorney for Paycom, Kristin Fisher monitors legal and regulatory changes at the state and federal level, with a focus on labor and employment laws, to ensure the Paycom system is updated accordingly. Previously, she served as an attorney at the Oklahoma City law firm Derryberry & Naifeh LLP. Fisher earned a bachelor’s degree and MBA from the University of Central Missouri, and her Juris Doctor from the Oklahoma City University School of Law. Outside of work, she enjoys cooking, hiking, going to the movies and spending time with her fiancé.

IRS Continues to Enforce Affordable Care Act

IRS Continues to Enforce Affordable Care Act

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The IRS recently released an information letter indicating that the IRS continues to enforce the Affordable Care Act (ACA).

Dated June 30, Letter 2017-0010 was sent to a member of Congress who reached out to the IRS at the request of a constituent, a tax-exempt entity concerned it may owe an employer shared responsibility payment (ESRP) because it did not comply with the ACA rules on offering health insurance to its employees, for both financial and religious reasons.

The letter first provides a brief summary of the circumstances that might lead to a large employer owing an ESRP, and notes that there is no provision in the ACA that provides for the waiver of an ESRP.

The letter then addresses the effect of the president’s Jan. 20 executive order on the enforcement of the ACA. Titled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal,” the order directed federal agencies to exercise discretion permitted to them by law to reduce potential burdens imposed by the ACA.

However, it did not change the health care law. The legislative provisions of the ACA are still in force until changed by Congress; therefore, taxpayers remain required to follow the law and pay what they may owe.

For more information on the executive order and the current tax filing season, visit https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals.

What This Means for Employers

Since Congress has not yet passed a bill that would repeal the ACA, and Republicans have struggled to draft a bill that would receive majority support, employers should use caution and plan to comply with the law’s requirements unless and until the ACA is repealed and any new law’s provisions actually go into effect. Continued compliance may be required for a transition period, following passage of an ACA repeal bill, depending on the language of that legislation.

 

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Posted in ACA, Blog, Featured

Erin Maxwell

by Erin Maxwell


Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

ACA Awaits Repeal or Repair

ACA Awaits Repeal or Repair

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ACA Awaits Repeal or Repair

After his electoral win in November, President Donald Trump, buoyed by Republican majorities in the House and the Senate, vowed to act quickly to repeal and replace the Affordable Care Act (ACA). Pres. Trump has now been in office for a month, and Republicans have not yet voted to repeal the ACA, and have not agreed upon a potential replacement, leaving the date of “repeal and replace” somewhere in the uncertain future. stethoscope

Early strategies

When the current Congress convened in January, it moved quickly to begin the “repeal” portion of “repeal and replace” by passing a budget resolution. Because the GOP does not have a filibuster-proof majority in the Senate and cannot count on votes from Democrats to repeal the ACA, Republicans have decided to utilize a procedure known as budget reconciliation to dismantle it.

By using this procedure, Congress can pass a bill to repeal the ACA with a simple majority in the Senate. The reconciliation instructions in the budget resolution directed various committees to come up with proposals to repeal the ACA and submit them to the budget committees of the House and Senate. The reconciliation proposals would then be crafted into a bill by the budget committees, and the reconciliation bill would then need to pass both the House and the Senate before being signed by the President.

Potential outcomes

However, the provisions of the bill passed this way must target elements of the ACA that have a federal budgetary effect. Therefore, the ACA provisions that allow children to stay on their parents’ insurance through age 26 and the requirement that insurers cover preexisting conditions could not be eliminated using this procedure. Nor could the individual and employer mandates be eliminated in this way, but the amounts of the penalties could be reduced to zero, eliminating them in all but name.

Repeal or repair?

Republicans originally called for reconciliation proposals to be submitted to the budget committees by January 27, but that date has come and gone. Congressional Republicans continue to work on “repeal and replace,” but many of them have begun talking about “repair” of the ACA, rather than repeal, as they recognize the difficulty of legislating in this area.

In an interview with Fox News’ Bill O’Reilly on February 5, President Trump said that replacement could take until 2018.

O’Reilly asked “Can Americans in 2017 expect a new health care plan rolled out by the Trump administration this year?”

Trump responded, “We’re going to be putting it [the new healthcare plan] in fairly soon, I think that … by the end of the year at least the rudiments but we should have something within the year and the following year.”

Employer mandates remain in place

One thing that has become clear during the first month of the Trump presidency is that repealing the ACA is a much tougher prospect than many had thought. Despite the uncertainty with regard to the long-term future of the ACA, the current reality is that the ACA and the employer mandate remain the law of the land, and employers should continue to comply with the law’s requirements. Applicable Large Employers should file IRS Forms 1094 and 1095 no later than the March 31 if filing electronically, or February 28, if filing paper forms. Forms 1095-C must be furnished to employees no later than March 2. Large employers should continue to comply with the employer mandate, measure their full-time employees, and offer minimum essential coverage providing minimum value to those employees and their dependents.

Paycom will continue to monitor executive and Congressional action regarding the ACA closely and stands ready to help our clients maintain compliance.

 

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Posted in ACA, Blog, Compliance, Featured

Erin Maxwell

by Erin Maxwell


Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

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