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Insurers Will Pay Record Amount of Rebates to Small Group Plans

While most businesses rarely get rebate checks from their group health insurer, this year may be different as insurance companies are expected to pay back record excess premiums, as required by the Affordable Care Act.

The landmark insurance law requires that insurers spend at least 80% of their premium income on medical care and medications, but expected payouts in 2018 came in way below expectations. That means they have to pay out rebates for the overcharge.

Analysts expect that insurers will pay out $1.4 billion in rebates, $600 million of which would be paid to small and large group health plans, according to a report by the Kaiser Family Foundation.

The reason for the sizeable expected rebate is that insurers raised rates substantially for 2018, which was right after Congress had passed a law that eliminated the individual mandate penalty, as well as uncertainty about the law after the Trump administration introduced regulations to expand the use of short-term health plans and association plans.

As mentioned, plans must spend 80% of premiums they collect on medical claims or quality improvements if they are in the individual or small group market. The threshold is 85% in the large group market. The rest can be spent on claims administration, marketing and other overhead, as well as set aside for profit.

Rebates to small group plan and large group plan members have typically overshadowed rebates to those who purchase plans individually on government-run exchanges. In 2017, according to the Centers for Medicare and Medicaid Services, insurers paid out nearly $707 million in ACA rebates, as follows:

  • $132.5 million to individual market enrollees.
  • $309.4 million to small group market enrollees.
  • $264.8 million to large group market enrollees.

But this year, rebates to the individual market are expected to be $800 million, while the remaining $600 million would be paid to enrollees in group plans.

The premium increases that many insurers pushed through led to much higher rates – benchmark premiums were up 34% going into 2018 – because of market uncertainties, such as:

  • In October 2017, the Trump administration ceased payments for cost-sharing subsidies, which led some insurers to exit the market or request larger premium increases than they would have otherwise.
  • The administration reduced funding for advertising and outreach.
  • Congress repealed the individual mandate penalty, effective for 2019.
  • The administration introduced regulations extending the time people could be on short-term plans, and also introduced association health plans as an alternative for the small group market.

But the insurers’ fears didn’t materialize. Despite payments per enrollee growing 26% to $559 in 2017 on exchanges, per person claims increased only 7% to $392 year over year.

Also, the repeal of the penalties and increased premiums did not drive younger, healthier consumers out of the marketplace as had been expected.

How to disburse rebates

If you are one of the employers whose health plan gets to receive a rebate, the big question that always comes up is “how do you distribute the funds?”

ACA regulations require insurers to pay rebates directly to the group health plan policyholder, who will be responsible for ensuring that employees benefit from the rebates to the extent they contributed to the cost of coverage.  

But remember, since you as the employer also contributed to the premiums, you are entitled to your portion of the rebate. Your take should be in the same proportion as the premium you pay compared to your employees.

The way that you disburse the rebate is up to you, but whatever you do, it must be in accordance with ERISA’s general standards of fiduciary conduct.

Typically, if the rebate works out to be small for each participant, it would likely not be worth your time to cut each employee a check.

The preferred method in most cases is to provide the rebate in the form of a premium reduction or discount to all employees participating in the plan at the time the rebate is distributed.


Protecting Your Workers in the Rain

Employees working in the rain face specific hazards, such as poor visibility and wet, slippery surfaces.

When it’s wet and windy, potential hazards at a worksite can be exacerbated. Working in the rain can cause slippery surfaces and limited visibility. It’s also riskier to use heavy equipment in the rain, particularly when moving heavy loads, putting workers on the ground – and even the public – in danger.

However, steps can be taken to mitigate such hazards.

It’s imperative that you as an employer ensure your employees’ safety, especially during this heavy year for rain. When working in the rain, train your employees to:

  • Move cautiously – While workers may be tempted to move fast in the rain to avoid getting wet, this can be dangerous, especially on slippery surfaces. If anything, they should work more slowly and deliberately in all of their tasks.
  • Use the correct equipment – If workers must use electrical tools or equipment, they need to check that they are specifically rated for outdoors. Also, the tools should have textured, no-slip grips and handles.
  • Don proper footwear – Workers should wear footwear with heavy treads that can reduce the chances of slipping.
  • Remember rain gear – Proper rain gear includes rain pants and a raincoat. The best clothing is ventilated to help your workers stay comfortable. If it’s cold and rainy, they should also wear wool or synthetic materials that can stay warm even when wet.
  • Wear non-slip gloves – Workers should wear gloves that provide a sticky grip even when wet. Gloves should be snug and long enough for a jacket sleeve to prevent water from entering.
  • Keep vision clear – Workers who wear glasses (if they must wear goggles for certain jobs) should apply anti-fog spray to them. It’s also advisable to wear a hat to keep rain from their eyes. They shouldn’t use headgear that narrows their field of vision.
  • Work in proper lighting – When working at night, workers should make sure lighting is adequate and the lights used are rated for outdoor use.
  • Ensure visibility – When it’s raining, visibility decreases and it’s easy for motorists and machine operators to have trouble seeing properly. Workers should wear high-visibility clothing, especially in areas with vehicle traffic and heavy machinery. Don’t wear rain gear or vests that have become dull or are no longer reflective.

Cold stress

When it rains, it’s often cold, too – and wet clothing can exacerbate the cold.

Employees working outdoors for prolonged periods of time when it’s cold must be protected from cold stress. Cold stress can cause frostbite, hypothermia and trench foot.

OSHA advises that cold stress is not limited to freezing temperatures, but can occur in outdoor temperatures in the 50-degree Fahrenheit range when rain and wind are present.

OSHA requires addressing this hazard by using protective clothing, in particular the use of layers with an outer material that protects against wind and rain. Although OSHA generally requires employers to pay for their workers’ protective equipment, employers are not required to pay for ordinary clothing such as raincoats.

Heavy-work dangers

Rain makes operating cranes, derricks and hoists more dangerous as well, particularly when moving large and heavy objects. Heavy rain combined with wind speed can make loads difficult to control.

Also, if a rainstorm is accompanied by lightning, equipment such as a crane can become a lightning rod.

If you feel you cannot adequately protect your workers during a storm, you should not conduct operations in the rain.


DOJ Tells Court to Nullify ACA; What’s Next?

After a period of relative stability, the future of the Affordable Care Act has once again been thrown into uncertainty.

In a surprise move, the Department of Justice announced that it would not further pursue an appeal of a ruling by U.S. District Court Judge Reed O’Connor, and instead asked the 5th U.S. Circuit Court of Appeals to affirm the decision he made in December 2018.

O’Connor had ruled that Congress eliminating the penalty for not complying with the law’s individual mandate had in fact made the entire law invalid.

But, even though the DOJ won’t be pursuing defense of the law and challenging the ruling on appeal, a number of states’ attorneys general have stepped up to fight the ruling.

What this means for the future of the employer mandate is unclear, as the court process still has a long way to go. The ruling could be overturned on appeal and invariably whatever the 5th Circuit decides, the case will likely be appealed to the U.S. Supreme Court.

Already there has been fallout in the private health insurance market since the individual mandate penalty was eliminated, but the employer mandate, which requires that organizations with 50 or more full-time or full-time-equivalent workers offer health coverage to their employees, remains intact.

As the case winds on, it will be some time before anything changes. The 5th Circuit has not yet scheduled arguments. The DOJ has asked for a hearing date for July 8, and Democratic states’ attorneys general agreed.

Despite the DOJ’s announcement, the law stands and applicable large employers must continue complying with its requirements.

Analysis

The move was surprising because in the past President Trump had signaled that he wanted to keep parts of the ACA, particularly the barring of insurers from denying coverage based on pre-existing conditions. If the entire law is scrapped, so will that facet – as well as other popular provisions, like allowing adult children to stay on their parents’ policy until the age of 26.

Trump said his administration has a plan for something much better to replace the ACA.

Democrats have introduced some legislation to try to stabilize markets and improve on some ACA shortfalls. Their legislation aims to cut premiums for individuals buying on exchanges by expanding premium tax credits. Another bill would reaffirm the pre-existing condition protections, and restore enrollment outreach resources, which have been cut back under the Trump administration.

But with a divided Congress, the likelihood of anything reaching Trump’s desk are slim to none.

Meanwhile, the success of the ACA has been spotty. In some parts of the country, usually in areas with high population density, competition among plans ensures lower prices for people shopping on exchanges. But in smaller regions, cost increases are rampant.

A new analysis by the Urban Institute, a liberal-leaning think-tank, finds that more than half (271) of the country’s 498 rating regions have only one or two insurers participating in the ACA marketplace. Those regions are disproportionately in sparsely populated areas.

Regions with little competition tend to have much higher premiums. In a region with only one insurer, the median benchmark plan for a 40-year-old nonsmoker is $592 a month. That compares to $376 for the same consumer in a region with at least five plans.


Protect Your Firm from Hacking by Disgruntled Former Employees

While hacking by outsiders is posing a larger and more significant threat to companies of all sizes, the threat of insider jobs – particularly by disgruntled former employees – is often an even bigger one.

These attacks, carried out with malicious intent to hamstring a company’s operations, can cause serious problems. Take, for example, the following recent events:

  • A former employee of Spellman High Voltage Electronics Corp. is facing charges after strange things started happening to the company’s systems after he resigned, due to allegedly being passed over for a promotion.

Shortly after he left, employees at Spellman began reporting that they were unable to process routine transactions and were receiving error messages. An applicant for his old position received an e-mail from an anonymous address, warning him, “Don’t accept any position.” And the company’s business calendar was changed by a month, throwing production and finance operations into disorder.

The mayhem cost his former employer more than $90,000, and he was arrested. “The defendant engaged in a 21st-century campaign of cyber-vandalism and high-tech revenge,” said Loretta Lynch, the United States attorney for the Eastern District.

  • A former employee of McLane Advanced Technologies was sentenced to 27 months in prison and ordered to pay $35,816 in restitution after pleading guilty to hacking into McLane’s systems and deleting payroll files to the point that staff could not clock in and the company could not issue payroll checks.

He was upset after the company had fired him and then refused to help him obtain unemployment benefits.

  • A network engineer, who was fired by the American branch of Gucci, stands accused of breaking into the computer systems of the Italian luxury goods organization, shutting down servers and deleting data.

The New York County District Attorney’s office accuses the former employee of using an account that he had secretly created while employed by Gucci to access the network after his employment was terminated.

He has been charged with computer tampering, identity theft, falsifying business records, computer trespass, criminal possession of computer-related material, unlawful duplication of computer-related material, and unauthorized use of a computer. The intrusion is said to have cost the company some $200,000.

What you can do

With these cases in mind, there are internal steps you can take to avoid this sort of thing happening at your company.

Route all offsite access through a VPN – This can typically prevent someone from entering your system altogether. But, once you have such a system in place, all outside connections need to be logged and monitored for suspicious activity.

Test your disaster recovery plan – You need to have a disaster recovery plan in place that includes backing up data every day, just in case someone deletes it from your servers. That way, if data is deleted you can immediately switch to a back-up IT environment.

A lot of times, organizations do disaster recovery, but unless they practice the actual recovery, they don’t know if it will work, and it doesn’t matter whether they have a physical or a virtual environment. So, don’t forget to test any plans you have.

Block unapproved software – Sometimes your employee hackers will install extra software that makes it easier for them to root through your system and create havoc. You should have systems in place that do not allow anybody to install unapproved software.

Disable ex-employee accounts and passwords – Whenever an employee or contractor ceases to work at your business – or in the case of layoffs, beforehand – you must disable their network access, accounts and passwords. You should regularly review which users have access to your systems, and know that changing passwords and resetting access rights is essential when a member of your staff leaves your employment.

Think like a malicious insider – IT managers must think like an inside attacker, and identify the weak points of their infrastructure that they themselves would exploit were they so inclined. As a senior manager, you should ask your IT managers just what they are doing to thwart any possible insider attacks.

Make suspect behavior cause for concern – Watch for human-behavior warning signs, such as complaining to others about the company and a more than usual amount of time spent accessing company data on your network. Develop a response plan for when such signs get spotted.

Beware resignations, terminations – Most insider attacks occur within a narrow window. Most people who steal intellectual property or destroy systems do so within 30 days of resignation. Accordingly, keep a close eye on departing or departed employees, and what they viewed.

If someone resigns who has had access to your most sensitive company information, including trade secrets, you need to pay special attention to ensure it’s not compromised.

Marshal forces – Businesses that prepare for attacks in advance tend to better manage the aftermath. When it comes to combating cases of suspected insider threat, include human resources, management, upper management, security, legal and software engineering.


Commercial Auto Rates Face New Headwinds

More accidents attributed to smartphone use while driving, coupled with much higher costs of repairs, have led to double-digit increases in commercial auto insurance rates over the past few years.

Distracted driving is just one of many factors that have converged on commercial auto insurance claims, resulting in sustained premium increases. Now there are new factors that are coming into play that will ensure that rates continue climbing, at least in the near term.

Commercial auto rates are increasing for companies with large fleets as well as for businesses with just a few vehicles and drivers. Here’s what’s at play and what you need to be aware of in the future.

Continuing factors

Distracted driving – This is the biggie. Starting a few years after the advent of smartphones in 2009, the steady decline in vehicle accidents and claims costs started to reverse when vehicular deaths started increasing for the first time in decades. The culprit, say many transportation safety experts, is distracted driving.

Repair costs – The cost of repairing vehicles has skyrocketed as cars have become more technologically advanced. A 2018 research paper by AAA found that vehicles equipped with advanced driver-assistance systems (ADAS) can cost twice as much to repair following a collision, due to expensive sensors and calibration requirements.

AAA cited the cost of repairing a car with windshield damage if it has an ADAS. The system uses cameras that are installed behind the windshield. These cameras need to be recalibrated after a windshield is replaced. This has increased the cost replacing such windshields to about $1,500, compared to $500 for a standard windshield.

Medical costs – Health insurance premiums and medical costs have been rising at a steady clip. Those increases carry over into the costs auto insurance companies incur when drivers and passengers are injured in an accident.

More miles driven – According to AAA, Americans are spending more time on the road. Driving more miles increases motorists’ likelihood of having an accident.

New and future risks

Weather-related property claims – A recent report in the insurance publication National Underwriter noted that commercial auto insurers say that the increasing frequency of large hurricanes, floods, hailstorms and wildfires are leading to higher auto physical damage claims. The number of property claims has been steadily increasing in the past decade as both the frequency and severity of major weather events grow.

Lack of experienced drivers – As the economy expands, it’s become more difficult to find experienced drivers. Many experienced commercial drivers are retiring, and there are not enough job candidates with the skills and expertise needed to drive commercial vehicles.
The American Trucking Associations estimates that the industry is understaffed by more than 50,000 drivers, and this could increase more than threefold within eight years if current trends continue.

Security with onboard systems – As more vehicle functions become automated, new risks could surface from system failures that may result in accidents. There are number of technologies that come into play in new vehicles and a highly automated vehicle will rely on array of devices, including radar, light detection and ranging, cameras, graphics-processing units and central processing units.


Employers Say Pharmacy Benefit Manager Contracts too Complex, Opaque

Three in five employers think their contracts with pharmacy benefit managers are overly complex and not transparent, according to a new study.

The study, which found that employers would prefer that PBMs are more transparent with their pricing and would like them to focus less on rebates and value-based designs, comes as PBMs are under increased scrutiny for their opaque pricing practices.

The survey of 88 very large employers, “Toward Better Value: Employer Perspectives on What’s Wrong with the Management of Prescription Drug Benefits and How to Fix It,” was conducted by Benfield and commission by the National Pharmaceutical Council.

The findings drive home some of the common complaints about PBMs:

Poor transparency – Employers said that current pharmacy benefit management models lack transparency:

  • 30% said they understand the details of their PBM contracts.
  • 40% said they fully understand their PBMs’ performance guarantees.
  • 63% said PBMs are not transparent about how they make money.

Complex contracts – Nearly three in five employers surveyed said PBM contracts are overly complicated, ambiguously worded, and often benefit the PBM at the expense of the employer. Tops on employer’s wish list: clearer definitions and simpler contracts.

Focusing less on rebates – Seventy percent of employers said they thought PBMs should offer other ways besides rebates to reduce prices.

Employers also said rebates detract their attention from more important factors, like reducing employee coinsurance or deductibles or getting better access to the most effective pharmaceuticals.

Two suggestions they had: Discounts or point-of-sale rebates, in which patient payments reflect a post-rebate price.

Getting value for employees – Employers want to understand the thought process when PBMs create formularies and exclusionary list decisions, such as the clinical, financial and economic impacts.

Employers had these suggestions:

  • Using value-based insurance design, where high-value drugs cost patients less than low-value drugs.
  • Setting payments based on the effectiveness of a drug.

Employee Embezzlement on the Rise – Are You Protected?

A typical organization will lose an estimated 5% of its revenues every year due to fraud, according to a study by the Association of Certified Fraud Examiners.

The median loss among organizations both large and small was $140,000 per occurrence, and more than 20% of embezzlement losses were more than $1 million, the association found.

With those staggering numbers in mind, if you have not already done so, you need to take steps to reduce the possibility of employee theft – and also make sure you are adequately covered if they do steal from you.

Small organizations are especially susceptible to losses from employee embezzlement. These problems are often seen in cash-heavy businesses, or those with large inventories, but employee embezzlement is most frequently experienced in organizations lacking owner oversight of financial processes, usually due to placing far too much trust in employees and having no internal controls.

The new study by the fraud examiners association was released as another study, this one by professional security firm Marquet International, found that arrests and indictments for embezzlements had reached a five-year high in 2012.

Embezzlers are most likely to be a company bookkeeper, accountant or treasurer, who is female, in her 40s, and without a criminal record. The reason it’s more often than not a woman is that they are typically in the three aforementioned jobs.

How do they do it?

Marquet International in its study found that the most common ways of embezzling are:

  • Bogus loan schemes, which include cases in which fraudulent loans are created or authorized by the perpetrator from which funds are taken for their own benefit.
  • Credit card/account fraud cases, which involve the fraudulent or unauthorized creation and/or use of company credit card or credit accounts.
  • Forged/unauthorized check cases, which are those in which company checks are forged or issued without authorization for the benefit of the perpetrator.
  • Fraudulent reimbursement schemes, which include expense report fraud and other cases in which a bogus submission for reimbursement is made by the perpetrator.
  • Inventory/equipment theft schemes, including those cases in which physical corporate assets were stolen and sold or used for the benefit of the employee.
  • Payroll shenanigan cases, including all forms of manipulation of the payroll systems in order for the perpetrator to draw additional income.
  • Theft/conversion of cash receipt cases, which involve the simple taking of cash or checks meant for company receipts and pocketing or converting them for one’s own benefit.
  • Unauthorized electronic funds transfers, including those cases in which wire transfers and other similar transfers of funds are the primary mode of theft.
  • Vendor fraud cases, which include those where either a bogus vendor is created by the perpetrator to misappropriate monies or a real vendor colludes with the perpetrator to siphon funds from the company.

Thwarting embezzlers

Liability insurer Camico suggests that educating employees on the detrimental effects of employee fraud on the organization can reduce the likelihood of embezzlement.

Also, if you implement a regular review of bank and credit card statements, you’ll have a better chance of catching a thief. Company owners should look at the cleared transactions to determine the legitimacy of payees, including examining actual cancelled checks.

Also, it’s easy for transactions to be changed in the accounting system after the fact. An ill-intentioned bookkeeper could use this tactic to cover up their tracks. If you feel you do not have the time or expertise to oversee you finance department, you should contract with a qualified CPA to perform these checks and balances.

There are also inexpensive physical barriers that should be used to deter criminal activity. To protect cash, you can buy a $200 drop-slot safe to securely keep the night’s deposit until it is taken to the bank.

Similarly, security cameras deter misbehavior and can be the source of valuable evidence in case an incident occurs.

Securing coverage

Finally, you should consider taking out a crime insurance policy.

Most business insurance policies either exclude or provide only nominal amounts of coverage for loss of money and securities as well as employee-dishonesty exposures.

But a crime insurance policy protects against loss of money, securities or inventory resulting from crime. Common crime insurance claims include employee dishonesty, embezzlement, forgery, robbery, safe burglary, computer fraud, wire-transfer fraud, and counterfeiting.

Call us to discuss whether a crime policy is right for your company.


Proposed Rule Would Allow Employers to Reimburse Staff for Health Premiums

The Trump administration is moving ahead with new regulations that would make it easier for employers to enter into health reimbursement arrangements (HRAs) with their employees, a practice that can be severely penalized under the Affordable Care Act.

Under the proposed regulations – issued by the departments of Labor, Treasury and Health and Human Services – employees would be allowed to shop and pay for their own coverage using tax-free HRAs that are set up by their employers.

Under the proposed rule, employers that offer traditional health insurance would be allowed to fund an HRA with up to $1,800 per year. The money in the HRA could be used to reimburse employees for certain medical expenses, as well as for premiums for health insurance policies or stand-alone dental benefits.

And offering HRAs used to help employees pay for individual health insurance premiums would count as an offer of coverage to satisfy the employer mandate under the ACA.

More options, lower costs

Administration officials said expanding HRAs would give employees more options in terms of health coverage, and it also would reduce costs and administrative burdens on employers.

If enacted, the new regulations would undo Obama administration guidance (as it was not actually written into the regulations) barring employers from paying into HRAs to help workers pay for health insurance premiums from policies they buy on the open market or on government-run exchanges.

Companies that were caught in such arrangements faced a hefty fine of up to $36,000 a year.

The employer mandate would stay intact but the proposed rule would allow an employer to satisfy the mandate by funding HRAs for its workers. Under the employer mandate, organizations with 50 or more full-time or full-time-equivalent employees are required to purchase “affordable” health coverage that covers at a minimum 10 essential benefits as outlined under the law.

HRAs must be affordable

The key is that the HRA must also be affordable under the proposed rules. That would depend in part on the amount the employer contributes to the HRA.

The agencies proposing the new regulations said in an announcement that they would provide further guidance on the HRA-specific affordability test.

Funds going into HRAs would be exempt from federal income and payroll taxes. Additionally, employers would be able to deduct the amount they put into HRAs from their taxes.

The proposed rule would also require employers that offer HRAs to allow a worker to opt out and instead claim a federal premium tax credit to purchase coverage on the individual exchanges.

This is the early part of the rule-making. The proposed regulations will have to go out for public comment before final rules are written and implemented.


OSHA Stays Serious About Temp Worker Safety

While the Trump administration has eased off a number of regulations and enforcement actions during the past two years, Fed-OSHA continues focusing on the safety of temporary workers as much as it did under the Obama presidency.

This puts the onus not only on the agencies that provide the temp workers, but also on the companies that contract with them for the workers.

As evidence of its continued focus on temp workers, OSHA recently released guidance on lockout/tagout training requirements for temporary workers. This was the third guidance document released in 2018 and the 10th in recent years that was specific to temp workers.

One reason OSHA is so keen on continuing to police employers that use temporary workers, as well as the staffing agencies that supply them, is that temp workers are often given some of the worst jobs and possibly fall through the safety training cracks.

OSHA launched the Temporary Worker Initiative in 2013. It generally considers the staffing agency and host employer to be joint employers for the sake of providing workers a safe workplace that meets all of OSHA’s requirements, according to a memorandum by the agency’s office in 2014 to its field officers.

That same memo included the agency’s plans to publish more enforcement and compliance guidance, which it has released steadily since then.

Some of the topics of the temp worker guidance OSHA has released since the 2014 memorandum include:

  • Injury and illness record-keeping requirements
  • Noise exposure and hearing conservation
  • Personal protective equipment
  • Whistleblower protection rights
  • Safety and health training
  • Hazard communication
  • Bloodborne pathogens
  • Powered industrial truck training
  • Respiratory protection
  • Lockout/tagout

Joint responsibility

OSHA started the initiative due to concerns that some employers were using temporary workers as a way to avoid meeting obligations to comply with OSHA regulations and worker protection laws, and because temporary workers are more vulnerable to workplace safety and health hazards and retaliation than workers in traditional employment relationships.

With both the temp agency and the host employer responsible for workplace safety, there has to be a level of trust between the two. Temp agencies should come and do some type of assessment to ensure the employer meets OSHA standards, and the host employer has to provide a safe workplace.

Both host employers and staffing agencies have roles in complying with workplace health and safety requirements, and they share responsibility for ensuring worker safety and health.

A key concept is that each employer should consider the hazards it is in a position to prevent and correct, and in a position to comply with OSHA standards. For example: staffing agencies might provide general safety and health training, and host employers provide specific training tailored to the particular workplace equipment/hazards.

Successful joint employer relationship traits

  • The key is communication between the temp agency and the host to ensure that the necessary protections are provided.
  • Staffing agencies have a duty to inquire into the conditions of their workers’ assigned workplaces. They must ensure that they are sending workers to a safe workplace.
  • Ignorance of hazards is not an excuse.
  • Staffing agencies need not become experts on specific workplace hazards, but they should determine what conditions exist at the host employer, what hazards may be encountered, and how best to ensure protection for the temporary workers.
  • The staffing agency has the duty to inquire and verify that the host has fulfilled its responsibilities for a safe workplace.
  • And, just as important, host employers must treat temporary workers like any other workers in terms of training and safety and health protections.

For a look at all 10 of the guidance documents OSHA has issued in the last few years, visit the agency’s temp worker page: www.osha.gov/temp_workers/


Proposed Rules Include New Ways to Satisfy Employer Mandates

The IRS has proposed new regulations that could let employers avoid Affordable Care Act employer mandate-related penalties by allowing them to reimburse employees for insurance they purchase on health insurance exchanges or the open market.

The regulations are not yet finalized, but the IRS has issued a notice explaining how applicable large employers, instead of purchasing health coverage for their workers, would be able to fund health reimbursement accounts (HRAs) to employees who purchase their own plans.

Under current ACA regulations, employers can be penalized up to $36,500 a year per employee for reimbursing employees for health insurance they purchase on their own.

Employer mandate refresher
Applicable large employers (ALEs) – employers with 50 or more full-time employees or full-time equivalents – must offer health coverage to at least 95% of full-time employees that includes:

  • Minimum essential coverage: The plan must cover 10 essential benefits.
  • Minimum value: The plan must pay at least 60% of the costs of benefits.
  • Affordable coverage: A plan is considered affordable if the employee’s required contribution does not exceed 9.56% (this amount is adjusted annually based on the federal poverty line; 9.86% will be the 2019 affordability percentage).

ALEs that fail to offer coverage are subject to paying a fine (called the responsibility payment) to the IRS.

How the new rule would work
The IRS is developing guidance on how HRAs could be used to satisfy the employer mandate.

In its recent notice, the agency addressed how the regulation will play out, as follows:

Requirement that ALEs offer coverage to 95% of their employees, and dependents if they have them – Under the proposed regs and the notice, an employer could satisfy the 95% test by making all of its full-time employees and dependents eligible for the individual coverage HRA plan.

Affordability – The employer would have to contribute an amount into each individual account so that the remaining out-of-pocket premium cost for each employee does not exceed 9.86% (for 2019, as adjusted) of the employee’s household income.
This could be a logistical nightmare for employers, and the IRS noted that employers would be able to use current affordability-test safe harbors already in place in regulations.

Minimum value requirement – The notice explains that an individual coverage HRA that is affordable will be treated as providing minimum value for employer mandate purposes.

What you should do

At this point, employers should not act on these regulations. The IRS is aiming for the regs to take effect on Jan. 1, 2020.

The final regulations have yet to be written, so they could change before they are promulgated. We will keep you informed of developments.


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