2017 – State Disability Insurance (SDI) Schedules

Does Your State Provide SDI?

 In the United States, there are several states and one commonwealth that provide statutory disability programs, commonly known as “disability insurance”. They are funded by mandatory contributions of employees (optionally covered by employers). Employees’ contributions are federal tax-deductible.

Those States are California, Hawaii, New Jersey, New York, and Rhode Island.  Puerto Rico is the commonwealth that also provides disability insurance. Below is a brief description of what each of the 5 states and commonwealth must provide in the form of disability coverage.

California (SDI)

State administered State Disability Insurance (SDI) Plan or Self Insured Plan, which must exceed State Plan benefits in at least one provision. Weekly statutory benefit rate is 55% of average weekly earnings in highest quarter of Base Period.

  • Minimum: $50.00
    Maximum: $1,173.00

Benefits would begin on the 8th consecutive day of disability and are payable 52 weeks for disability leaves and 6 weeks in a 12-month period for paid family leaves.

Hawaii

Hawaii does not administer a State Plan, but requires a minimum Temporary Disability Insurance (TDI) Plan which may be; Insured, Self-Insured, or an approved collective bargaining agreement that provides sick leave & disability benefits.  Weekly statutory benefit rate is 58% of average weekly earnings.

  • Minimum: $14.00
  • Maximum: $594.00

Benefits would begin on the 8th consecutive day of disability and are payable 26 weeks.

New Jersey

State administered State Temporary Disability (TDI) Plan, an Insured Plan, or a Self-Insured Plan which must at least equal the provision of the State Plan.  Weekly statutory benefit rate is 66 2/3% of average weekly wage.

  • Minimum: N/A
  • Maximum: $633.00

Benefits would begin on the 8th consecutive day of disability or the 1st day if disability lasts longer than 21 days.  Benefits are payable 26 weeks for disability leave and 6 weeks for paid family leave.

New York

State Disability Benefits Law (DBL) from State Insurance Fund, Insured or Self-Insured Plan meeting minimum state requirements.  Weekly statutory benefit rate is 50% of average weekly wage base on previous 8 weeks earnings.

  • Minimum: $20.00
  • Maximum: $170.00

Benefits would begin on the 8th consecutive day of disability and payable not more than 26 weeks during any Disability Period or during any consecutive period of 52 weeks.

Puerto Rico

Public Temporary Disability Insurance (TDI) Plan or a “private” Insured or Self-Insured Plan with benefits equal to at least the public plan benefits.  Weekly statutory benefit rate is 65% of weekly earnings. Paid from schedule based on total wages received in Base Year.

  • Minimum: $12.00
  • Maximum: $113.00 ($55 max for agricultural workers)

Benefits would begin on the 8th consecutive day of disability or 1st day of hospitalization.  Benefits are payable not more than 26 weeks during any Disability Period or during any consecutive period of 52 weeks.

Rhode Island

State administered State Temporary Disability Insurance (TDI) ONLY.  Weekly statutory benefit rate is 4.62% of total highest quarter wage in base period.

  • Minimum: $89.00
  • Maximum: $817.00

NO WAITING PERIOD must be employed for at least 7 days due to non-job related illness or injury.  Benefits are payable 30 weeks in any Benefit Year.

State Disability Insurance Brochure – 2017

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ACA Repeal Bill Fails

The Affordable Care Act Remains

 House Speaker Paul Ryan on Friday, March 24, 2017, cancelled a voted on the GOP bill to replace the current Affordable Care Act due to a lack of votes from Republicans in order to pass the legislation.

The Republican bill would have replaced the Affordable Care Act, known informally as Obamacare, which mandated that almost everyone have health insurance, with a system of age-based tax credits to purchase health insurance plans.

The defeat is a major blow to the campaign promise made by Trump and efforts to show what Republicans can accomplish when they control both Congress and the White House, according to USA Today.

House Speaker Paul D. Ryan conceded, “We’re going to be living with Obamacare for the foreseeable future.”

In the end, Republican leaders doomed the bill by agreeing to eliminate federal standards for the minimum benefits that must be provided by certain health insurance policies.

As it stands right now the current provisions and legislation of the Affordable Care Act stands as is with no changes.

CBIS will keep you posted as the GOP leaders move on from health care to tax reform.

ADDITIONAL INFORMATION

Information contained in this Important Update is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at service@cbis-lc.com.

ACA “Repeal and Replace” Update

PROPOSED BILL

On March 6, 2017, House Republicans announced a bill to partially repeal and replace the Affordable Care Act (ACA). As of now nothing has yet been passed by Congress or signed into law by President Trump.

 

WHAT THE PROPOSED BILL MEANS

Employer Shared Responsibility

The current proposed bill would reduce any penalties to $0 for Applicable Large Employers (ALEs) who don’t offer adequate and affordable health insurance to full-time employees and their dependents. This reduction could take place retroactive to January 2016.

However, what the proposed bill fails to address is the requirement for Applicable Large Groups (ALE) to furnish and file Forms 1094-C and 1095-C. As the bill currently stands, ALEs would continue to be required to file these forms each year or be subject to significant penalties for filing incorrect returns, late returns, or not filing at all.

Cadillac Tax Delay

The current effective date of the 40% excise tax on high-cost employer-sponsored health coverage (referred to as the “Cadillac Tax”) would be delayed from January 1, 2020, to January 1, 2025.

Elimination of Additional Medicare Taxes

Effective January 2018, the proposed bill would repeal the additional Medicare tax that imposes an additional tax on income of $200,000 or more for individuals, $250,000 or more for joint returns, and $125,000 or more for married taxpayers filing separate returns. This would have payroll implications as employers have been required to withhold an additional 0.9% on Medicare subject wages over $200,000 to support the additional tax.

Affordability and Individual Market Stability Impact

Individual Mandate Not Repealed, but Penalty Reduced to $0.

While the individual mandate would not be repealed under this proposed bill, it would reduce the mandate penalty to $0 for individuals who do not have health insurance coverage for themselves and their dependents, retroactive to January 1, 2016. The proposed bill doesn’t address reporting requirements for individuals.

Premium Tax Credits and Subsidies Repealed

The proposed bill would eliminate premium tax credits for individuals who obtain health insurance through a federal or state health insurance marketplace (exchange) as of January 1, 2020. It would also repeal cost-sharing reductions (and payments to issuers for such reductions) for plan years beginning after December 31, 2019.

Health Insurance Tax Credit

Under the new proposed bill, there would be an advanceable, refundable tax credit for health insurance coverage offered in the individual health insurance market or through unsubsidized COBRA. The amount of the credit ranges from $2,000 to $4,000 based on age.  This amount would be reduced by 10 percent of any excess of the taxpayer’s modified adjusted gross income (MAGI) over $75,000 for individuals and $150,000 in case of a joint return. (These thresholds would be adjusted for inflation.) The maximum credit amount would be $14,000 per family with the five oldest individuals in the family counted in the calculation.

Age Rating Band

For plan years beginning on or after January 1, 2018, the Secretary of Health and Human Services, would be permitted to authorize a variance of 5 to 1 (up from 3 to 1) in premium rates charged by a health insurance issuer for coverage for adults. States would have the flexibility to establish another ratio. This would allow insurers to charge older individuals higher premiums for plans.

Continuous Coverage

To encourage people to buy and keep coverage, insurers would be permitted beginning with the 2019 plan year (or 2018 for special enrollments) to charge a 30 percent penalty to people who let their insurance lapse and then try to buy a new policy.

Elimination of Other ACA Taxes

The proposed bill addresses a list of other ACA related taxes including repealing the tax on prescription and over-the-counter medications, the health insurance tax, and the medical device tax. It would also reduce the level of medical expenses that must be incurred to claim a tax deduction from 10 percent back to the pre- ACA 7.5 percent.

Flexible Spending Accounts and Health Savings Accounts

This proposed bill would modify or repeal many of the current restrictions on health flexible spending accounts (FSAs) and health savings accounts (HSAs), including:

  • repealing the FSA contribution limit of $2,500,
  • increasing the maximum tax subsidized amounts that can be contributed to HSAs to the amount of the out-of-pocket limit,
  • repealing the ACA prohibition against paying for over-the-counter medications with tax subsidized funds from FSAs, HSAs, Archer medical savings accounts (MSAs), or health reimbursement arrangements (HRAs), and
  • repealing the penalty for the use of HSA distribution for non-eligible expenses from 20 to 10 percent.

Do not rely on this proposed bill just yet.  It’s a starting point! See: House Speaker Ryan’s Plan: A Better Way and the leaked House Republican discussion draft.  In addition, the Health Savings Act of 2017 has already been introduced in both the House and the Senate.


ADDITIONAL INFORMATION

Information contained in this BLOG is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at service@cbis-lc.com

IRS Address Taxation of Fixed Indemnity Benefits

DOL Issues Fixed Indemnity Taxation Memorandum
According to this guidance, if an employee is not taxed on the premiums for fixed indemnity health coverage (the premiums are paid by the employer or by employees on a pre-tax basis through a cafeteria plan), any payments from the coverage must be included in the employee’s gross income and wages. These same rules also apply to wellness programs that provide fixed indemnity benefits for engaging in wellness activities.

ACTION STEPS

The IRS’ memorandum does not address how employers should administer fixed indemnity payments that are taxable to employees. When employees are not taxed on the premiums for fixed indemnity coverage, employers should work with their carriers to implement a process for tax withholding and reporting.

To avoid these tax issues, employers should consider requiring that employees pay for their fixed indemnity coverage on an after-tax basis outside of their cafeteria plans.

Fixed Indemnity Health Coverage

Fixed indemnity health coverage pays a fixed dollar amount for certain health-related events (for example, $100 for each medical office visit and $200 for each day in the hospital), policies pay regardless of the amount of medical expenses that the individual actually incurs. Employers sometimes offer fixed indemnity health coverage to their employees in addition to their group medical plan.

Section 105(b) of the Internal Revenue Code (Code) states that the amounts that an employee receives through employer-provided accident or health insurance are not taxable if the amounts are paid to reimburse medical care expenses that were actually incurred. Because benefits under a fixed indemnity plan are not related to medical expenses that were actually incurred, there has been some confusion regarding the tax treatment of these payments.

According to the IRS’ memorandum, the tax status of the payments under fixed indemnity health coverage depends on how the premiums are paid.

  • The payments are not taxable if the coverage is paid by employees on an after-tax basis. For example, if a fixed indemnity plan with premiums paid on an after-tax basis paid $200 for an office visit and the covered individual’s unreimbursed medical costs for the visit were $30, the $200 would be excluded from income.
  • However, if the coverage is paid by the employer tax-free or if employees pay for the coverage on a pre-tax basis through a cafeteria plan, any payments from the plan are taxable and must be included in employees’ gross income and wages (regardless of the amount of medical expenses actually incurred).
Payment Method Premiums Taxed? Payments Taxed?
Employee paid, after tax (or employer paid and imputed as taxable income to employees) Yes No
Employee paid, pre-tax (through a Section 125 plan) No Yes
Employer paid (without imputing payment as taxable income to employees) No Yes

When payments from fixed indemnity health coverage are taxable, they are subject to income tax and employment tax withholding. This may raise administrative issues for employers because the payments under fixed indemnity coverage are usually controlled by the insurance carrier, not the employer.

Thus, when fixed indemnity payments are taxable, employers may need to work with the carriers to determine a process for tax withholding.

Wellness Programs

The IRS’ memorandum also addresses wellness programs where employees pay a pre-tax premium to participate. Because this type of wellness program design is uncommon, the IRS’ guidance appears to be targeted at fixed indemnity plans that label themselves as wellness programs. These wellness programs pay fixed indemnity benefits for participating in the program (for example, $100 for completing a health risk assessment), without regard to the amount of medical expenses incurred by the employee. The IRS concluded that these fixed indemnity benefits are taxable and should be included in employees’ gross income and wages.

Guidance: Five Scenarios

To provide guidance on this issue, the Office of Chief Counsel (OCC) considered five different scenarios in which an employee receives cash payout benefits from a fixed-indemnity plan. The Memorandum makes clear that its conclusion in each of the five scenarios derives from the fact that a fixed-indemnity plan, unlike traditional insurance, pays a benefit that bears no relationship to the amount of health care expenditures incurred by the employee. Whether the benefits are taxable ultimately depends on whether or not the premiums were paid from an amount included in the employee’s compensation. If not, then the benefits are taxable.

Scenario One – 1

Under the first scenario proposed by the OCC, an employer gives all employees the opportunity to participate in a fixed-indemnity plan. Employees pay premiums for the plan with after-tax dollars: the employer withholds the premiums from the employee’s salary, but the amount of the premiums are included in the employee’s compensation. The plan pays employees $100 per medical office visit and $200 for each day in the hospital. The OCC concludes that these payments from the plan are excludible from income because the premiums had been included in the employee’s compensation.

Scenario Two – 2

Scenario two is the same as scenario one, except that the employee’s premiums are paid by the employer at no cost to the employee. This factor changes the analysis. Under this scenario, the OCC concludes that any payments from the plan are included in the employee’s gross income.

Scenario Three – 3

Scenario three is also identical to scenario one, except that the premiums are paid through a salary reduction arrangement under a section 125 cafeteria plan (and, as a result, the premiums are excludible from the employee’s income). The OCC concludes that, as is the case with scenario two, any payments from the plan are includible in the employee’s income.

Scenarios Four and Five

Scenarios four and five address employee wellness plans. In both scenarios, as is the case with scenario three, employees who elect to participate in the plans do so by paying premiums through a salary reduction arrangement under a section 125 cafeteria plan. Under scenario four, the employee receives a cash payment of $100 for completing a health risk assessment; $100 for participating in prescribed health screenings; and $100 for participating in prescribed preventative activities. Under scenario five, the employee simply receives a cash payment each pay period for participating in the wellness plan. In both scenarios, the OCC concludes that the payment from the plans is taxable income.

The Memorandum also addresses the treatment of the payments from the indemnity plans for purposes of employment taxes: Social Security (FICA), unemployment and withholding taxes. The IRS concludes that, in scenarios two, three, four, and five, the benefits paid are subject to FICA and unemployment taxes, and are also subject to withholding.

Conclusion

While this guidance coheres with previous analysis on the status of fixed-benefit health plans and does not disturb the larger question of the exclusions from income under sections 104, 105 and 106 of the Internal Revenue Code regarding employer contributions, it is notable because for the first time, the IRS has addressed the tax treatment of payments under an indemnity plan. Employers should review the Memorandum closely as they design their benefit plans for 2018.

ADDITIONAL INFORMATION

Information contained in this Important Updates—Health-Benefits – Fixed Indemnity Benefits is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at service@cbis-lc.com.

DMC Now Out-of-Network With Humana

In the Know & How It Applies |   OCTOBER |  2016

As of October 1, 2016 all of the DMC’s doctors, hospitals, ambulatory surgery centers, urgent care centers, imaging centers, laboratories and home health centers nationwide, are now Out-of-Network for all patients with Humana.  This includes:

  • Humana Commercial
  • Humana Medicare Advantage
  • Humana Medicaid
  • Humana on the Exchange
  • Humana TRICARE

 What DMC centers are affected? 

  • DMC Children’s Hospital of Michigan
  • DMC Detroit Receiving Hospital
  • DMC Harper University Hospital
  • DMC Heart Hospital
  • DMC Huron Valley- Sinai Hospital
  • DMC Hutzel Women’s Hospital
  • DMC Rehabilitation Institute of Michigan
  • DMC Sinai-Grace Hospital

The DMC announce earlier this month that after repeated efforts to find common group, they were unable to reach an agreement on a new contract.

Are any other carrier impacted by this change?

The DMC currently participated with many major health insurance plans other than Humana such as (to name a few):

  • Aetna
  • Blue Care Network
  • Blue Cross Blue Shield of Michigan
  • Cofinity PPO
  • HAP
  • Priority Health
  • United Health Care

For a complete listing of participating insurance plans, please visit the DMC’s website or click on the link below:

DMC Participating Insurance Plans

What this means for clients/members: 

  • Emergency Care: Emergency access is NOT impacted. Clients/Members can continue to receive emergency care at the DMC Emergency Rooms, regardless of the network status with Humana
  • Continuity of Care: Certain patients may be eligible to receive “Continuity of Care” benefits with Humana for a period of time if they need ongoing treatment or already have a procedure scheduled. For questions about ongoing care or benefit coverage, less advise members insured with Humana to call the phone number on the back of their Humana Insurance Card.
  • Out-of-Network Care: Members with Humana PPO may still access the DMC health care provider and hospitals for health care services using their out-of-network benefits.

 

ADDITIONAL INFORMATION

Information contained in this Important Updates—In The Know & How It Applies is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at cbis@cbis-lc.com.

Affordable Care Act – Reinsurance Fee

The following Update addresses Section 1341 of the Affordable Care Act established a transitional reinsurance program to stabilize premiums in the individual market inside and outside of the Marketplaces. The transitional reinsurance program will collect contributions from contributing entities to fund reinsurance payments to issuers of non-grandfathered, Affordable Care Act-compliant reinsurance-eligible individual market plans, the administrative costs of operating the reinsurance program, and the General Fund of the U.S. Treasury for the 2014, 2015 and 2016 benefit years. 

How it Applies

 This fee on health plans totals $25 billion, which will be collected over the three-year period from 2014 through 2016. The majority of the money will be used to fund a reinsurance program, which is intended to lessen the impact of adverse selection in the individual market. The fee applies to both insured and self-funded commercial major medical plans effective January 1, 2014 and ends with the last fee payment on January 1, 2016.

Fully-Insured employers will have this fee included in either their monthly fixed premium rates from the carrier or included as a separate line item on their carrier invoices.  The carriers submit on behalf of their fully-insured clients.

Self-Funded employers are required to report a count of lives covered to the Health and Human Services during the fourth quarter of the respective filing year.  The ACA enrollment and contributions submission form is provided online only through www.pay.gov.

What is the fee?

For the 2014 benefit year, HHS offered contributing entities the option to pay:

  • the entire 2014 benefit year contribution in one payment no later than January 15, 2015 reflecting $63.00 per covered life; or in two separate payments for the 2014 benefit year, with the first remittance due by January 15, 2015 reflecting $52.50 per covered life, and the second remittance due by November 15, 2015 reflecting $10.50 per covered life.


For the 2015 benefit year, HHS will offer contributing entities the option to pay:

  • the entire 2015 benefit year contribution in one payment no later than January 15, 2016 reflecting $44.00 per covered life; or
  • in two separate payments for the 2015 benefit year, with the first remittance due by January 15, 2016 reflecting $33.00 per covered life, and the second remittance due by November 15, 2016 reflecting $11.00 per covered life.

 For the 2016 benefit year, HHS will offer contributing entities the option to pay:

  • the entire 2016 benefit year contribution in one payment no later than January 17, 2017 reflecting $27.00 per covered life; or
  • in two separate payments for the 2016 benefit year, with the first remittance due by January 17, 2017 reflecting $21.60 per covered life, and the second remittance due by November 15, 2017 reflecting $5.40 per covered life.

2016 is the last year self-funded employer plans will be required to submit the Reinsurance Fee in accordance to the three year benefit filing fee requiring under the Affordable Care Act.

How does CBIS assist clients?

For those Self-Funded clients that would like assistance from CBIS, as in the past year’s reporting and payments, CBIS will provide the Average Number of Covered Lives enrolled and calculate the Reinsurance Fee.

 

What are Covered Lives?

Covered lives are all covered individuals, both employees and their dependents. For example, an employee who has family coverage including a spouse and two children would be counted as four covered lives.

What is the process self-funded employers must follow to pay the reinsurance fee?

There is a streamlined membership and contribution process through http://www.pay.gov. Pay.gov is a secure, web-based application that serves as the portal where employers can report and submit the required membership data elements. Registration on pay.gov is required in order to complete the reinsurance process.

As part of the membership and contribution process, a contributing entity, e.g. the employer or insurer making the contribution, can begin to collect the data, calculate their annual enrollment count and prepare the supporting documentation.

Additionally, a reporting entity will need to complete the following steps:

  • Register on pay.gov
  • Access and complete the form on pay.gov, titled “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form.” A copy of this form has been included in the email communication for client’s reference and use.
  • Upload the supporting documentation (this would be the same .CSV format file from last year with the updated numbers).
  • Enter payment information (e.g. payment date and banking information).
  • Self-funded employers should also contact their bank to have the ALC+2 value added to allow for automatic debits

 

What if after receiving the snapshot report clients have questions?

Please feel free to contact your dedicated CBIS Account Representative and they will assist with any questions as well as provide additional guidance and clarification if needed.

ADDITIONAL INFORMATION

Information contained in this Important Updates—In The Know & How It Applies is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at cbis@cbis-lc.com.

 

 

Are you ready for Open Enrollment?

FRAUD WARNING:
When shopping for health insurance on the Marketplace (Exchange) be sure to ask for their Federal Facility or Start Partnership Marketplace Unique ID. All licensed professional are required by law to complete training including a federal background check in order to assist individuals with their health care options on the Marketplace.

CBIS Marketplace ID: CBISEXCHANGE
National Producer Number: 976408
Producer Name: Patricia A. Shall

What to Know:

The 2017 annual Open Enrollment for the Health Insurance Marketplace is vastly approaching. November 1, 2016 starts the beginning of annual open enrollment where uninsured individuals may again review available plan options and make decisions as to the best plan to meet their personal and/or family health care needs.

How CBIS can assist:

CBIS can help assist you in finding the right coverage and right budget that fits your household needs.

CBIS has the tools, technology and the access to all the major carriers participating in the Health Insurance Exchange. Let CBIS take the worry out of reviewing the fine print of each available plan design.

Whether you are looking for coverage ON the Marketplace through Healthcare.gov or OFF the Marketplace through several carriers offering Individual plan, CBIS can help.

Give us a call at (586) 992-0404 or email us at cbis@cbis-lc.com to get started TODAY!