Benefit Advisors

Ask the Experts: FSA Limits | North Carolina Employee Benefits

Question: Our company offers flexible spending accounts (FSAs) for health care and dependent daycare. Our plan limits are the maximum amounts allowed by federal law. Will the IRS increase the limits for 2019? We hold open enrollment in November for employees to make their FSA elections for the following year.

Answer: The maximum annual limits for Dependent Care FSAs and Health Care FSAs are set forth under § 129 and § 125, respectively, of the Internal Revenue Code.

The § 129 (Dependent Care) limits do not change from year to year. They are currently $5,000, or $2,500 if married and filing separately, and they apply on a calendar-year basis. To change them would require a change in law, which is unlikely in the current Congress.

On the other hand, the maximum limit for elective contributions to a Health Care FSA (HFSA) may change from year to year depending on inflation. The limit applies on a plan-year basis and the HFSA limit for a 12-month plan year beginning in 2018 is $2,650. The limit is one of over 50 different tax provisions that is subject to annual cost-of-living or inflation adjustments. Each fall, the IRS announces any changes for the following year. The announcement usually is released in mid-October, which should give employers time to prepare 2019 enrollment materials.

Based on estimated inflation, it appears the HFSA limit will increase from $2,650 for plan years beginning in 2018 to $2,700 for plan years beginning in 2019. The increase will not be official, however, until the IRS announcement is released.

Originally published by www.thinkhr.com

FSA-FMLA-1-694x240.jpg

Is Your Health Plan Affordable for 2019? | North Carolina Benefit Advisors

The Affordable Care Act’s employer shared responsibility provision — often called the employer mandate or “play or pay” — requires large employers to offer health coverage to their full-time employees or face a potential penalty. (Employers with fewer than 50 full-time and full-time-equivalent employees are exempt.) Large employers can avoid the risk of any play or pay penalties by offering all full-time employees at least one group health plan option that meets two standards: It provides minimum value and it is affordable.

Minimum value means the plan’s share of total allowed costs is at least 60 percent and the plan provides substantial coverage of physician services and inpatient hospital services.

Affordable means the employee’s required contribution (payroll deduction) for self-only coverage, if elected, does not exceed a certain percentage of the employee’s household income. The affordability percentage changes slightly each year based on the law’s indexing rule. For 2018, the percentage is 9.56 percent. For 2019, however, the percentage increases to 9.86 percent.

Although the change is minor, it means that employers may increase their plan’s employee-only contribution rate and still meet the affordability standard next year.

Determining Affordability

The first step in determining whether a group health plan option is affordable is to define the employee’s “income.” Employers do not know their workers’ total household income, so the play or pay rules offer employers three optional safe harbor methods to define income using information known to the employer. Employers may use any of the safe harbor methods. They also may use different methods for different classes (such as one method for hourly employees and another method for salaried employees), provided that the chosen method is applied uniformly to all employees in the class.

The three IRS safe harbor methods are:

1. Federal Poverty Line (FPL)

The FPL method is the easiest of the three methods. Multiply the mainland FPL amount for a single-member household by the affordability percentage, then divide by 12. As long as the self-only contribution rate does not exceed the resulting amount, the plan’s coverage is deemed affordable. For instance:

  • 2018: ($12,060 x 9.56%)/12 = $96.08 per month

  • 2019: ($12,140 x 9.86%)/12 = $99.75 per month

The FPL chart is updated every year in late January. For 2019 calendar-year health plans, the employer needs to refer to the current FPL amount ($12,140) since the new FPL amount will not be available until after the plan year starts. If the health plan year starts February 1, 2018 or later, however, the employer may refer to the new FPL amount which likely will be a little higher.

2. Rate of Pay

This is the most convenient method to define income when applied to hourly employees. Multiply the employee’s hourly rate of pay times 130 hours per month (regardless of how many hours he or she actually works), then multiply by the affordability percentage. As long as the self-only contribution rate does not exceed the resulting amount, the plan’s coverage is deemed affordable. For instance:

  • 2018: ($11* x 130) x 9.56% = $136.70 per month

  • 2019: ($11* x 130) x 9.86% = $140.99 per month

* Replace $11 with the hourly employee’s rate of pay.

For salaried employees, the rate of pay method is somewhat complicated so employers generally avoid using this method for non-hourly employees.

3. W-2

The W-2 method requires using current W-2 wages instead of looking back at the prior year. W-2 wages means the amount that will be reported in Box 1 of Form W-2. Pretax contributions, such as § 125 plan contributions and 401(k) or 403(b) plan deferrals, are not included in Box 1, so using the W-2 safe harbor method may understate the employee’s actual income. Coverage will be deemed affordable if, for each month of the plan year, the self-only contribution does not exceed the Box 1 amount multiplied by the affordability percentage.

Summary

Large employers can avoid the risk of potential penalties under the ACA’s play or pay rules by ensuring that they offer full-time employees at least one minimum value plan option that also is affordable. Affordable means the employee’s contribution to elect self-only coverage would not exceed a certain percentage of the employee’s income.

The percentage used to determine affordability changes from year to year is based on the law’s indexing formula. For 2018 plan years, the affordability percentage is 9.56 percent, but it increases to 9.86 percent for 2019 plan years. Employers and their advisors will want to keep this information in mind as they finalize their group health plan offerings and employee contribution rates for 2019.

Originally published www.thinkhr.com

health-spending-account-contribution-1-565x240.jpg

New Federal Contract Compliance Directives | North Carolina Employee Benefits

On August 24, 2018, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced the following three directives:

  • Guidance for Contractor Compensation PracticesDirective 2018-05 clarifies the OFCCP’s approach to conducting compensation evaluations, supports compliance and compensation self-analyses by contractors, and improves compensation analysis consistency and efficiency during compliance evaluations.
  • Contractor Recognition Programs: Directive 2018-06 establishes a contractor recognition program with awards that highlight best practices, a contractor mentoring program, and other initiatives that provide opportunities for contractors to collaborate or provide feedback to OFCCP.
  • Affirmative Action Program Verification Initiative: Federal contractors are legally required to take steps to ensure equal opportunity in their employment processes, including developing a written affirmative action program within 120 days of when the contract begins. Directive 2018-07 establishes a program for verifying compliance with these and other affirmative action obligations.

The OFCCP enforces federal laws that prohibit federal contractors and subcontractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran. In addition, contractors and subcontractors are prohibited from discriminating against applicants or employees because they inquire about, discuss, or disclose their compensation or that of others, subject to certain limitations.

Originally published www.thinkhr.com

GettyImages-176840599-694x240.jpg

10 Stories That Caught Our Eye in June 2018 | North Carolina Benefit Advisors

Just Don’t Ask

Job candidates are covered by the Civil Rights Act prohibiting discrimination, and most interviewers know what kinds of direct questions to avoid. But what seems like a friendly conversation-starter could be an unwitting violation of the act. Read five questions you should never ask.

Read more on Namely.

Trust in Design

Office design is known to have an impact on employee productivity and satisfaction. At the heart of this is trust – trust that staff will choose to use the facility in the most effective way rather than be chained to their desks. And when trust rises, engagement follows.

Read more on Entrepreneur.

Pride Without Pandering

June was Pride Month, and corporations everywhere joined in the celebration. Some, although well-meaning, missed the mark. Seven LGBTQ executives explain how employers can embrace inclusion and celebrate diversity without coming across as pandering.

Read more on Fast Company.

Dad Days

Reddit cofounder Alexis Ohanian was a proponent of paternity leave and planned to lead by example by using his company’s benefit. However, he didn’t fully appreciate its importance until his daughter was born and he used the time off to slow down and take stock of his priorities.

Read more on CNN.

Culture Still Eats Strategy

Strategy is essential, but if a company doesn’t have a good culture, it won’t matter. Once you understand what culture is and isn’t, you can work toward developing a strong one, starting with defining the qualities you value in your employees.

Read more on Forbes.

Buy in Bulk

A rule released by the U.S. Department of Labor on June 19 loosens restrictions on association health plans, paving the way for more small businesses to band together to buy health coverage. That is, if it stands up to legal challenges, state laws, and the realities of the insurance marketplace.

Read more on Kaiser Health News.

The Family Friendly Workplace

Work-life balance can be especially challenging for parents. Both mothers and fathers lament not having enough time for their children. Get 10 creative ways you can make your workplace better for working parents.

Read more on Employee Benefit News.

Remote Control

The remote workforce continues to grow, but 57 percent of companies still lack a remote work policy. These companies may be missing out on attracting and retaining top talent. There’s no one-size-fits-all solution, with numerous factors to consider in crafting one.

Read more on HR Dive.

What Makes a Great Workplace

Inc. magazine surveyed thousands of employees to measure what employer qualities lead to high levels of employee engagement and sentiment, taking into account elements of corporate culture. See which of 45 perks and benefits employees value most.

Read more on Inc.

Run, Hide, Fight

Law enforcement officials stress the need for employers to conduct active shooter training to protect their employees and customers in the event of a violent incident. In addition to training, find out other ways to mitigate the risk a shooter or potential shooter holds.

Read more on Business Insurance.

Originally published by www.thinkhr.com

ThinkHR 10 Stories.jpg

The Perks of Holiday Parties: How They’re Still an Asset to Your Company

The end of the year is upon us and a majority of companies celebrate with an end-of-year/holiday party.  Although the trend of holiday parties has diminished in recent years, it’s still a good idea to commemorate the year with an office perk like a fun, festive party. 

BENEFITS OF A YEAR-END CELEBRATION

  • Holiday staff parties are a perfect way to thank your employees for a great year. All employees want to feel appreciated and valued.  What better way to serve this purpose, than with an end of the year office celebration. Hosting a night out to honor your employees during a festive time of year boosts morale. And if done right, your party can jump start the new year with refreshed, productive employees.
  • End-of-year celebrations allow employees to come together outside of their own team.  The average American will spend 90,000 hours (45 years) of their life at work. Unless you have a very small office, most employees only engage in relationships within their department. When employees have a chance to mingle outside of their regular 9 to 5 day, they’ll build and cultivate relationships across different teams within the organization; creating a more loyal, cohesive and motivated culture.
  • Seasonal parties can provide employers insight on those who work for them. Spending the evening with your employees in a more casual and relaxed atmosphere may reveal talents and ideas you may not have otherwise seen during traditional work hours.

CREATING THE RIGHT FIT

Regardless of office size, if planned right, employers can make a holiday party pop, no matter your budget. Whether this is your first go at an end-of-year celebration for your employees, or you host one every year, keep a few things in mind:

  • Plan early. Establish a steering committee to generate ideas for your holiday party. Allow the committee to involve all employees early on in the process. Utilize voting tools like Survey Monkey or Outlook to compile employee votes. This engages not only your entire workforce, but serves you as well when tailoring your party to fit your culture.
  • Create set activities. Engaging employees in some type of organized activity not only eases any social anxiety for them and their guests, it cultivates memories and allows colleagues to get to know each other.  Consider a “Casino Night”, a photo booth (or two if your company can justify to size), an escape room outing—anything that will kick the night off with ease.
  • Incorporate entertainment during the dinner. Have team leads or management members come up with fun awards that emphasize character traits, strengths, and talents others may not know of. This is a great way to create cohesiveness, build relationships, and have your employees enjoy a good laugh at dinner. 
  • Offer fun door prizes every 15 minutes or so. Prizes don’t have to be expensive to have an impact on employees, just relevant to them. However, with the right planning you may be able to throw in a raffle of larger gift items as well. Just keep in the specific tax rules when it relates to gift-giving. Gift cards associated with a specific dollar amount available to use at any establishment, and larger ticket items, can be subject to your employees having to claim income on them and pay the tax.
  • Make the dress code inclusive of everyone. Employees should not feel a financial pinch to attend a holiday office party. Establish a dress code that fits your culture, not the other way around.

 TAKE AWAY TIPS FOR A SUCCESSFUL HOLIDAY PARTY

According to the Society of Human Resource Management, statistics show in recent years only 65% of employers have offered holiday parties—down from 72% five years ago. Consider the following tips when hosting your next year-end celebration.

  • Keep it light.  Eliminate itineraries and board-room like structure. Choose to separate productivity/award celebrations and upcoming year projections from your holiday party. 
  • Invite spouses and significant others to attend the party.  Employees spend a majority of their week with their colleagues. Giving employees this option is a great way to show you value who they spend their time with outside of work.
  • Allow employees to leave early on a work day to give them time to get ready and pick up who is attending the party with them. 
  • Mingle.  Show how you value your employees by chatting with them and meeting their guests.
  • Provide comfortable seating areas where employees can rest, eat and talk.  Position these in main action areas so no one feels anti-social for taking a seat somewhere.
  • Consider tying in employees that work in different locations.  Have a slideshow running throughout the night on what events other office locations have done throughout the year.
  • Create low-key conversation starters and get people to chat it up.  This is valuable especially for those that are new to the company and guests of your employees. Incorporate trivia questions into the décor and table settings. Get them to engage by tying in a prize.
  • Keep the tastes and comfort level of your employees in mind. Include a variety of menu items that fit dietary restrictions.  Not all employees drink alcohol and not all employees eat meat.
  • Limit alcohol to a 2 ticket system per guest.  Opt for a cash bar after that to reduce liability.
  • Provide access to accommodations or coordinate transportation like Uber or Lyft to get your employees somewhere safely after the party if they choose to drink.

Ultimately, holiday parties can still be a value-add for your employees if done the right way. Feel free to change it up from year to year so these parties don’t get stale and continue to fit to your company’s culture. Contemplate new venues, ideas and activities and change up your steering committee to keep these parties fresh. Employees are more likely to enjoy themselves at an event that fits with their lifestyle, so don’t be afraid to get creative!

christmas-dinner.jpg