Patient Protection Affordable Care Act and SCA
Federal Contractors must focus on how the Patient Protection Affordable Care Act (PPACA) may soon affect their bottom line. As the changes brought about by the PPACA Act approach, many Federal Contractors are unaware of the potential cost increases bearing down on them.
According to Cloud Business Advisors (an innovative employee benefits brokerage and consulting firm) and Proskauer law firm for Employee Benefits and (ERISA) law. There are four key components to PPACA:
- Individual Mandate (delayed to 2015)
- Subsidies
- Penalties
- Insurance Mandates
- State Mandates
- Employer Mandates
Companies must also adhere to the following PPACA mandates:
- Individual Annual Penalties for Not Maintaining Coverage
- Premium Assistance Tax Credit
- 2013 Federal Poverty Guidelines
- Exchanges: What the states are doing and not doing and how exchanges work
- What is a Large Employer
- Parent- Subsidy Controlled Group
- Brother- Sister Controlled Group
- Who do you have to offer coverage to
- What are the Penalties and how to avoid them
- Affordability Safe Harbors
- 90 Day Waiting Period
- Timing and Determination of Eligible Employees
- Taxes and Fees
When the Department of Labor, Wage and Hour Division, Washington, DC was asked a question regarding how they would be involved in integrating the PPACA with the Service Contract Act (SCA); they responded that both the PPACA and Service Contract Act are separate and must be handled individually.
For example: If a contractor does not offer fringe benefits and pays cash in lieu of benefits to service contractor employees (which is permitted by SCA), is this a violation of PPACA since no benefits are offered?
This is just one example of many questions relating to SCA and PPACA that must be resolved by individual contractors and companies prior to 2014.
If you violate the SCA Act, you may face a DOL Compliance Officer who will investigate; but if you violate the PPACA Act you can face the IRS or another Federal Administrative Agency.
These investigations are time consuming and complicated, and take an experienced individual from your company to handle them. Under SCA you may face penalties and or debarment; however we have yet to see what penalties may be handed out for PPACA violations.
At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your fringe-benefit obligations and provides your employees with valuable benefits.
What is a “Preliminary Physical Audit”?
Preliminary Physical Audit
At the beginning of your policy year, an on-site audit may be performed to review operations, classifications, and exposures. The auditor will review a representative base period in order to project exposures for the full policy term.
We are starting to see an uptick in preliminary physical workers compensation policyholder audits. Rather than waiting until the policy year-end audit to address any potential classification or payroll issues, carriers are looking for corrections at the beginning of the policy year.
Why are they doing this?
There are two main reasons. The first is to make sure that the insured is using proper classifications and the second is to make sure that appropriate payroll amounts are being attributed to the correct classifications. Both of these reasons collectively, decrease the amount of uncollected premiums as a result of improper classifications or underreporting of payroll.
Most “voluntary” workers compensation carriers do not perform preliminary audits, although they are permissible according to the policy terms & conditions. We are seeing most of them carried out by the servicing carriers of the various state “Assigned Risk” workers compensation programs. These servicing carriers are also known as the residual market, for those companies who for one reason or another have trouble getting voluntary coverage. (Hazardous industries, having higher than usual loss history or having poor safety and loss control programs are some examples of companies that use the residual markets.)
Most payroll and employee hour tracking reports are automated and readily available through payroll processing companies. These reports help to ensure that companies eventfully pay the correct amount of workers compensation premium. However, it is not unheard of for underreporting to take place during the year. Some insurance carriers are trying to collect the proper premiums at the beginning of the policy year instead of waiting until the final audit.
Employee classifications can have a drastic impact on workers compensation premium as the rates are significantly different from class to class. For instance, the Massachusetts “Clerical” (code 8810) rate per $100 of payroll is $.09, whereas the rate for “Iron or Steel Erection” (code 5040) is $54.08 and there are hundreds of classifications with rates in between. Purposeful misclassification is a criminal act. However, there are many ways to interpret what an employee does as his “governing” classification. It is natural for the policyholder to want a lower rated class and for the carrier to want a higher rated class.
If you have any questions as to what the proper payroll run rate should be or how to properly classify your employees please reach out to us and we would be happy to assist you. It is important to keep in mind that you can and in certain instances should have your broker at any audit, not just a workers compensation preliminary audit. We are always available to assist you.
At Cleary, we will evaluate your business exposures and work with you to develop a comprehensive plan to safeguard your business. Give us a call today at 617-723-0700.
Avoiding Inheritance Conflict in Your Family
Presented by John B. Steiger
You may have a will in place, but have you taken steps to ensure that your children won’t be left bickering over inheritances once you’ve passed away? In even the most close-knit clan, grief over a family member’s passing can bring tensions to the surface, especially when money is involved.
A typical scenario
Throughout their marriage, John and Jane Smith had kept a close eye on their finances. Working with their financial advisor, they’d saved and invested carefully over the years, and they planned to leave a sizable inheritance to their three children, Jack, Olivia, and Harry. Unfortunately, though they had prepared a will, John and Jane failed to outline exactly who would get what. They named Jack, the eldest child, as the beneficiary on their life insurance policy and other accounts, assuming he would divide up the funds equally. They left meaningful family jewelry to Olivia, because she was their lone daughter, and gave Harry all of their artwork, since he loved to paint.
Because the children had always been so close and gotten along so well, John and Jane figured they would split everything three ways and, if someone wanted a specific item, they’d work out an equitable arrangement. But things didn’t turn out as the Smiths had planned. Upon discovering that he was the sole legal beneficiary of his parents’ accounts, Jack decided to keep the money for himself, using it to pay for the vacation house he and his wife had long dreamed of buying. In his view, Olivia and Harry had received their fair share of the family estate and there was no need to split the money three ways. A family inheritance feud ensued, with Olivia and Harry vowing never to speak to Jack again.
Tips for keeping the peace
You may be thinking, “That would never happen to my family!” But situations like this are all too common. To help prevent inheritance conflict among your children, consider these suggestions:
Be realistic and communicate openly. Your children may be expecting a significant inheritance, one that could help them purchase a home, pay for their children’s education, or simply make them rich. To avoid disappointment, it’s important to give them a sense of where you stand financially and to emphasize that your finances may change, depending on medical expenses or other unexpected costs.
Keep your documents up to date. Be sure to update your will and beneficiary designations to reflect life events such as marriages, divorces, new grandchildren, and so on. Keeping your documents current will help ensure that you don’t unintentionally include someone who’s no longer part of your family or exclude someone you wish to benefit.
Address personal property specifically and separately. In addition to your last will, leave a separate list of personal property with instructions detailing who should inherit each item. The list should describe each piece of property you wish to gift, leaving no room for interpretation. That said, if you’re not sure of how to write a will, you could either consult a lawyer or get it done using sites like 12Law.com.
Don’t task the oldest beneficiary with distributing your assets. It’s not wise to leave one child to handle the distribution of your assets, trusting he or she will do the right thing. If you want all of your children to inherit equally, put them all down as beneficiaries.
Give everyone a role. Dividing assets equally can help reduce conflict among heirs, but it’s important to think about the division of responsibilities as well. When you assign responsibility for handling your estate, you’re making a statement about whom you think is capable and trustworthy. Consider how your children will react and, if possible, assign everyone a role, even a small one, to play in the decision-making.
Explain yourself. What happens if you don’t want to split your assets equally among your children? Many parents consider this option if one child is financially successful while another is struggling. If you plan to distribute your assets unequally, write a personal note to accompany the will, explaining your reasoning. This may help reduce any resentment your heirs may feel.
Eliminate uncertainty with a trust. A common estate planning tool, a trust can help you manage and control the distribution of your assets in the event of your death. Through a trust, you can elect to distribute your assets in increments if you pass away before your children are mature enough to manage money wisely-for instance, one-third at age 25, another third at 30, and the final installment at age 35. You might also consider using a trust to hold a distribution until a later date if your child has financial problems or creditor concerns. Aside from that, you may want to hire an estate planning attorney from a firm similar to J.S. Burton PLC to assist you in writing a last will. Your estate planning attorney can also help you reduce any estate or inheritance taxes. They can also help the executor of your will transfer assets to your beneficiaries after you die. They can also assist with probate if it becomes necessary.
Protecting your legacy
Though the estate planning process involves many legal responsibilities, it’s important not to lose sight of the personal aspects. If you plan to leave an inheritance to your children, be sure to consider ways to reduce conflict once you’re gone. You can sit and discuss these with Estate Planning Lawyers Gold Coast or wherever your property is based so that they can help you decipher a rational solution, in the interest of both you and your family members.
By carefully planning and setting expectations ahead of time, you’ll help protect the most valuable part of your legacy-your family.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult a tax preparer, professional tax advisor, and/or lawyer.
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John B. Steiger is a financial consultant located at 460 Totten Pond Road Suite 600 Waltham, MA 02451. He offers securities as a Registered Representative of Commonwealth Financial Network , Member FINRA/SIPC.. He can be reached at 781.547.5621 or at john@financialconnector.com.
2013 Commonwealth Financial Network
At Cleary, we are committed to a holistic approach of protecting and preserving our clients’ financial assets. Give us a call today at 617-723-0700 and let us know how we can help you.