IRS Issues Guidance on Changes to Tax-Favored Health Arrangements

The Internal Revenue Service has issued guidance reflecting changes regarding the use of certain tax-favored arrangements, such as flexible spending arrangements (FSAs), to pay for over-the-counter medicines and drugs.

The Affordable Care Act established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs). Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer's plan. A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs). Employers and employees should take these changes into account as they make health benefit decisions for 2011.

Notice 2010-59 and Revenue Ruling 2010-23 further explain this change. For FAQs on the Affordable Care Act and over-the-counter medicines and drugs, please click here. To learn more about tax-favored health accounts, please see the HR & Benefits Essentials overview.

2011 HSA Contribution Limits and Minimum Deductibles to Remain Same as 2010

The IRS has released the 2011 contribution limits and minimum deductible amounts for Health Savings Accounts (HSAs), based on the Internal Revenue Code's cost-of-living adjustment rules. The amounts for 2011 are unchanged from 2010.

High Deductible Health Plan
For calendar year 2011, a "high deductible health plan (HDHP)" remains defined as a health plan with an annual deductible that is not less than $1,200 for self-only coverage or $2,400 for family coverage.

Contribution Limits
For 2011, if you have self-only HDHP coverage, you can contribute up to $3,050. If you have family HDHP coverage you can contribute up to $6,150.

To view Revenue Procedure 2010-22, please click here. For more information on Health Savings Accounts, please visit the HR & Benefits Essentials HSAs, FSAs, HRAs and MSAs Section.

The U.S. Department of Health and Human Services (HHS) has issued guidance on the process for health plans to obtain waivers of the annual limit requirements under the Affordable Care Act (PPACA).

The Affordable Care Act restricts the use of annual limits in health plans. Generally, plans issued or renewed beginning September 23, 2010, will be allowed to set annual limits no lower than $750,000. This minimum limit will be raised to $1.25 million beginning September 23, 2011, and to $2 million beginning on September 23, 2012. Beginning in 2014, plans may not impose annual limits on coverage.

However, the law recognizes that a class of group health plans and health insurance coverage, generally known as 'limited benefit' plans or 'mini med' plans, often has annual limits well below the restricted annual limits set out in interim final regulations. These group plans and health insurance coverage often offer lower-cost coverage to part-time workers, seasonal workers, and volunteers who otherwise may not be able to afford coverage at all. In order to ensure that individuals with certain coverage, including coverage under limited benefit or mini-med plans, would not be denied access to needed services or experience more than a minimal impact on premiums, the interim final regulations contemplated a waiver process for plan or policy years beginning prior to January 1, 2014 for cases in which compliance with the restricted annual limit provisions of the interim final regulations 'would result in a significant decrease in access to benefits' or 'would significantly increase premiums.'

A group health plan or health insurance issuer may apply for a waiver from the restricted annual limits if the plan or the coverage offered by the issuer was offered prior to September 23, 2010 for the plan or policy year beginning between September 23, 2010 and September 23, 2011.
Plans must submit an application not less than 30 days before the beginning of the plan or policy year, or in the case of a plan or policy year that begins before November 2, 2010 not less than 10 days before the beginning of such plan or policy year.

To view the complete requirements for the waiver application, please see the guidance here. For more on the Affordable Care Act, please visit the HR & Benefits Essentials Health Care Reform Section.

The U.S. Federal Trade Commission ('FTC') has adopted revised Guides Concerning the Use of Endorsements and Testimonials in Advertising. The Guides, which became effective as of Dec. 1, 2009, seek to protect consumers against deceptive marketing schemes by, among other things, requiring the disclosure of certain 'material connections' between advertisers and endorsers. The Guides indicate that employers may be liable under the FTC Act for their employees' postings on social media - such as Facebook, LinkedIn, Twitter, and blogs - that comment on the employer's products or services without properly disclosing the employment relationship, or where such employee postings are otherwise misleading.

Does an Employee Posting Constitute an Endorsement?
The FTC has advised that a speaker (e.g., an employee) who disseminates positive statements concerning an advertiser's (e.g., an employer's) products or services will be considered to have provided an endorsement under the Guides if he or she is 'acting on behalf of the advertiser or its agent.' According to the FTC, the factual circumstances to consider in determining whether a person was acting on behalf of the advertiser include whether the speaker is compensated by the advertiser. Consequently, where an employee receiving wages from an employer posts a comment on social media concerning the employer's products or services, such a comment will likely be considered an endorsement under the Guides.

Employer Liability for Employee Endorsements on Social Media
The Guides indicate that employers may be subject to liability under the FTC Act for their employees' 'false or unsubstantiated statements made through endorsements' or for 'failing to disclose material connections between themselves and their endorsers.' In addition, employers may be liable for such unsubstantiated or deceptive statements posted by independent contractors or other service providers of the employer. While the FTC has advised that whether a particular endorsement is deceptive will depend on the specific factual circumstances of the advertisement at issue, the text of and examples in the Guides indicate that employers may incur liability as a result of their employees' postings on social media which are misleading or discuss the employers' services but fail to disclose the employment relationship - even where the employer had no knowledge of the employee's postings or blogging. Pursuant to the Guides employees themselves may also face liability stemming from misleading statements related to the employer's services or inadequate disclosure of material connections.

Employers Should Protect Themselves by Enacting a Social Media Policy
In addition to providing employees with sufficient training and guidance, employers must consider enacting and evenly enforcing a clearly written social media policy in order to protect themselves from liability stemming from their employees' improper online postings. Although the FTC has rejected blanket immunity for employers that have adopted social media policies, it has advised that 'the establishment of appropriate procedures would warrant consideration in [the FTC's] decision as to whether law enforcement action would be an appropriate use of agency resources...' The FTC specifically noted that it has brought disciplinary action against companies that failed to establish or maintain appropriate internal procedures, resulting in consumer injury. Accordingly, employers may not rely on a rogue employee defense to avoid liability under the Guides, especially where the employer failed to implement an appropriate social media policy. For more on social media policies, please click here.

If you have any questions regarding the Guides, social media policies, or other issues of employment law, please contact any of the following attorneys at Tannenbaum Helpern Syracuse & Hirschtritt LLP at (212) 508-6700: Joel A. Klarreich (jak@thshlaw.com); Andrew W. Singer (singer@thshlaw.com); Stacey A. Usiak (usiak@thshlaw.com); or Jason B. Klimpl (klimpl@thshlaw.com).

This article, which may constitute attorney advertising, is for educational purposes only and should not be construed as legal or tax advice or a legal opinion rendered in response to a specific set of facts.

© September 2010 Tannenbaum Helpern Syracuse & Hirschtritt LLP

Successfully motivating your employees will help you achieve and maintain business goals. Ultimately, you want to create an environment that allows your employees to meet or exceed expectations, do their best and feel valued. While employees are clearly motivated by tangible rewards such as salary and promotion, there are more intangible motivational factors such as mentoring, personal and professional growth and the ability to work on independent projects.

Motivational Drivers
We are all individuals with different needs and aspirations, so what motivates one employee may not motivate another. Creating a work environment which includes a range of motivators can result in improved performance as well as increased retention and enthusiasm for the company. The following is a brief summary of different motivators:

• Opportunities for promotion
• Giving employees the freedom to work independently
• Challenging and satisfying projects
• Personal and professional growth, i.e. training and professional development
• Status/power which can be represented in a job title
• Responsibility and trust by allowing employees to work without unnecessary supervision
• Promoting the building of relationships with colleagues and customers
• Recognizing of employees' performance and contribution
• Financial rewards and incentives
• Flexible work arrangements that allow employees to accommodate personal needs

How to Motivate Your Employees
The following strategies may motivate your employees to contribute to your businesses performance:

• When the jobs are more challenging and interesting, employees may find they feel more accomplished and satisfied.
• Consider lateral moves if you can't promote employees. Many times, people like to do different jobs to build their skills and knowledge.
• Get to know your employees--learn about their interests and what is important to them.
• Recognize employees' efforts and achievements by personally thanking them for a job well done.
• Publicly recognize your employees by highlighting achievements at meetings, and on the company intranet.
• Create opportunities for social interaction such as a company sports team.

During these challenging economic times, some employers are opting to hire employees part-time, or reduce employees' hours. As a result, employers are wondering what their responsibilities are regarding reduced work schedules.

The federal Fair Labor Standards Act (FLSA) has no provisions regarding the scheduling of employees, with the exception of certain child labor provisions. Therefore, an employer may change an employee's work hours without giving prior notice or obtaining the employee's consent, unless otherwise subject to a prior agreement between the employer and employee, or collective bargaining agreement.

Exempt Employees Must Be Paid Full Salaries to Keep Their Status
According to the FLSA, exempt employees may not have their predetermined salary reduced for absences occasioned by the employer, or by the operating requirements of the business.  Reducing an exempt employee's predetermined salary may result in the loss of the employee's exempt status under the FLSA. For FAQs regarding furloughs and other reductions in pay and hours worked issues, please view this fact sheet from the U.S. DOL's Wage and Hour Division.

IRS Invites Public Comment on Expanded Business Reporting Requirement

The IRS has invited public comment on how to most effectively carry out a law change that, starting in 2012, will require businesses to report a wider range of payments to contractors, vendors and others, usually on Form 1099. These comments will help the IRS issue guidance that implements this provision in a manner that minimizes burden and avoids duplicate reporting.

• E-mail comments to include 'Notice 2010-51' in the subject line.
• Mail to: Internal Revenue Service, CC:PA:LPD:PR ( Notice 2010-51), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
• Hand deliver to: CC:PA:LPD:PR ( Notice 2010-51), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.

The deadline is Sept. 29, 2010. Further details are in Notice 2010-51, posted July 1, 2010, on IRS.gov.

New Procedures and Notices for Claims and Appeals and External Reviews under the Affordable Care Act

The U.S. Departments of Labor (DOL), Treasury and Health and Human Services (HHS) have released interim procedures and related Model Notices for claims, appeals and reviews under the Affordable Care Act. The Affordable Care Act sets standards for plans and issuers regarding both internal claims and appeals and external review. Plans and issuers in States without an applicable external review process are required to implement an effective external review process that meets certain minimum standards. An interim safe harbor provided by Technical Release 2010-01 applies to non-grandfathered, self-insured group health plans not subject to a state external review process. The standards include a number of notice requirements for internal appeals and external reviews.

Model notices that can be used to satisfy the disclosure requirements of the interim final regulations are being posted on the Department of Labor's website at http://www.dol.gov/ebsa and the Department of HHS/Office of Consumer Information and Insurance Oversight website at http://www.hhs.gov/ociio/. They include:

• Model Notice of Adverse Benefit Determination
• Model Notice of Final Internal Adverse Benefit Determination
• Model Notice of Final External Review Decision

For more on new claims, appeals, and review process requirements under the Affordable Care Act, please view a Fact Sheet by clicking here. You can also view the technical release from the U.S. Department of Labor and notice from the Departments of Labor, Treasury and Health and Human Services. For more on the Affordable Care Act, you can visit the HR & Benefits Essentials Health Care Reform Section, or visit the DOL's Employee Benefits Security Administration (EBSA) website by clicking here.

Sponsors of group health plans should pay attention to a number of significant reforms to group health coverage that start as early as this month. The Patient Protection and Affordable Care Act ('Affordable Care Act') mandates certain consumer protections in health plans, effective for plan years that start on or after September 23, 2010, which is six months from enactment of the Affordable Care Act. For calendar year plans, these changes are effective January 1, 2011.

The following features some of the most important changes to all group health plans - for plan years starting on or after September 23, 2010. These reforms also apply to 'grandfathered' plans, which are plans that existed on March 23, 2010.

Extend Dependent Coverage Up to Age 26 For plan years starting on or after September 23, 2010, the Affordable Care Act requires group health plans (including grandfathered plans) that cover dependents to continue to make dependent coverage available until age 26. However, for plan years beginning before Jan. 1, 2014, grandfathered group health plans offering dependent coverage will not need to make this coverage available if the adult child is eligible to enroll in another employer-sponsored health plan.

Prohibit Lifetime Limits For plan years starting on or after September, 23, 2010, group health plans (including grandfathered plans) may not impose lifetime limits on coverage for 'essential health benefits.' Essential health benefits will be further defined by the U.S. Department of Health and Human Services.

Restrict Annual Limits For plan years starting on or after September 23, 2010, group health plans (including grandfathered plans) are prohibited from imposing annual limits other than on 'restricted' annual limits to be set by HHS. Effective Jan 1. 2014, group health plans may not set any annual limits on essential benefits coverage.

Drop Pre-Existing Condition Exclusions for Children For plan years starting on or after September 23, 2010, group health plans (including grandfathered plans) must not exclude children under age 19 on the basis of pre-existing conditions. Effective Jan. 1, 2014, group health plans may not impose pre-existing condition exclusions on adults or children.

No Rescission of Coverage

Required Changes As Early As September for Non-Grandfathered Plans

The following changes are effective for plan years starting on or after September 23, 2010, for non-grandfathered plans. For more on grandfathered plans, including rules on maintaining grandfathered status, please click here.

Preventive Services without Cost Sharing For plan years starting on or after September 23, 2010, group health plans that are not considered grandfathered must provide without cost-sharing (deductibles, copays or coinsurance) certain preventive services recommended by the United States Preventive Services Task Force (USPSTF) when delivered in-network. You can view the chart of covered services by clicking here. You can also view a list of covered services for adults, women (including pregnancy) and children by clicking here. The interim final regulations on preventive services under the Affordable Care Act are available here.

Internal Appeals Under the new rules, new health plans beginning on or after September 23, 2010 must have an internal appeals process that:

• Allows consumers to appeal when a health plan denies a claim for a covered service or rescinds coverage;
• Gives consumers detailed information about the grounds for the denial of claims or coverage;
• Requires plans to notify consumers about their right to appeal and instructs them on how to begin the appeals process;
• Ensures a full and fair review of the denial; and
• Provides consumers with an expedited appeals process in urgent cases.

External Review New rules require plans to provide external reviews that meet standards set by the National Association of Insurance Commissioners. These standards include:

• External review of plan decisions to deny coverage for care base on medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit.
• Clear information for consumers about their right to both internal and external appeals - both in the standard plan materials, and at the time the company denies a claim.
• Expedited access to external review in some cases - including emergency situations, or cases where their health plan did not follow the rules in the internal appeal.
• Health plans must pay the cost of the external appeal under State law, and States may not require consumers to pay more than a nominal fee.
• Review by an independent body assigned by the State. The State must also ensure that the reviewers meet certain standards, keep written records, and are not affected by conflicts of interest.
• Emergency processes for urgent claims, and a process for experimental or investigational treatment.
• Final decisions must be binding so, if the consumer wins, the health plan is to pay for the benefit that was previously denied.

The Department of Labor has released Model Notices, along with other guidance jointly released by the DOL, Treasury and Health and Human Services Departments. For more on these, see 'New Procedures and Notices for Claims and Appeals and External Reviews under the Affordable Care Act'. For more on the Affordable Care Act, visit the HR & Benefits Essentials Health Care Reform Section.

New employee orientation (also called on-boarding) is the process employers have created to introduce new employees to management, staff and their new workplace environment. The goal is to familiarize your new employee with your company and create a positive first impression. Employee orientation is also designed for employees who are promoted within your company and need a similar type of program.

Be sure that your employee orientation process treats employees fairly and avoids any statements or actions that could constitute illegal discrimination under federal or state law. If you have questions regarding your orientation program and discrimination issues, contact an employment law attorney who knows your state laws.

Benefits of Employee Orientation The following are major benefits of a good orientation program:

• Increases staff retention - an effective orientation program can increase the likelihood that new employees will stay with the company.
• Enhances productivity - a proper orientation will allow new employees to be more productive at a faster pace.
• Helps new employees understand the processes and procedures that help your company run smoothly- and what is expected of them.
• Provides an opportunity for the new hire to ask questions, get help and even offer constructive suggestions as to how to improve your company.
• Reinforces the qualities you conveyed about your company and the position during the recruitment process.

New Employee Orientation Checklist Your orientation process should begin with planning ahead for your new employee's arrival. The following checklist will help things move smoothly for your new employee:

• Notify everyone in the employee's department that a new person is starting.
• Assign one of your employees to show your new hire the new workplace environment, make introductions and respond to any questions. This is a great way to put your new employee at ease.
• Encourage the team to welcome and support the new employee.
• Create a great first impression by making the employee's work location neat, clean and organized.
• Be sure that access to the company's network or intranet, email and phone extension are set up for your new employee.
• If necessary, arrange for a building pass, IDs and parking pass.
• If you will be providing an employee handbook, make sure it is ready to be distributed, along with all necessary benefits plan information , including a general COBRA notice if you are a covered employer (20+ employees).
• Develop a training plan to ensure that the new employee's first few months go smoothly.
• Organize a list of key people, i.e., team and management your new employee should meet to get a better understanding of everyone's roles.

Workplace Safety Tips for New and Existing Employees As an employer, it is important to make sure you have the safety standards and training in place that protects your new and existing employees. Federal law requires employers in general to provide a workplace that is free from recognized hazards that cause or are likely to cause death or serious physical harm to employees. The following are tips and guidelines to enhance your safety procedures:

• Be sure all employees receive relevant protective equipment and instructions on how to use it properly.
• Make sure you provide safety training and supervise all new employees to make sure they can competently handle all tasks assigned to them.
• Don't assume that your new employees are familiar with safety procedures even if they have worked in similar jobs. Now that they are working for you, be sure they fully understand your safety program.

For more on workplace health and safety responsibilities, including standards for certain industries, please visit the Department of Labor's Occupational Safety and Health Administration by clicking here.

Every employer covered by the FLSA must keep certain records for each covered, nonexempt worker. Employers must keep records on wages, hours, and other information as set forth in the Department of Labor's regulations. Most of this data is the type that employers generally maintain in ordinary business practice.

There is no required form for the records. However, the records must include accurate information about the employee and data about the hours worked and the wages earned. The Act does require that the records include certain identifying information about the employee and data about the hours worked and the wages earned. The law requires this information to be accurate. The following is a listing of the basic records that an employer must maintain:

1. Employee's full name and social security number.
2. Address, including zip code.
3. Birth date, if younger than 19.
4. Sex and occupation.
5. Time and day of week when employee's workweek begins.
6. Hours worked each day.
7. Total hours worked each workweek.
8. Basis on which employee's wages are paid (e.g., '$9 per hour', '$440 a week', 'piecework')
9. Regular hourly pay rate.
10. Total daily or weekly straight-time earnings.
11. Total overtime earnings for the workweek.
12. All additions to or deductions from the employee's wages.
13. Total wages paid each pay period.
14. Date of payment and the pay period covered by the payment.

How Long Should Records Be Retained?

Records on which wage computations are based should be retained for two years (2), i.e., time cards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages. These records must be open for inspection by the Division's representatives, who may ask the employer to make extensions, computations, or transcriptions. The records may be kept at the place of employment or in a central records office.

What About Timekeeping? Employers may use any timekeeping method they choose. For example, they may use a time clock, have a timekeeper keep track of employee's work hours, or tell their workers to write their own times on the records. Any timekeeping plan is acceptable as long as it is complete and accurate.

Where to Obtain Additional Information For additional information, visit our Wage and Hour Division Website: http://www.wagehour.dol.gov and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-487-9243.

The U.S. Department of Labor (DOL) has released a Fact Sheet on the new break time requirement for nursing mothers under the Fair Labor Standards Act (FLSA). Effective since March 23, 2010, the date the Affordable Care Act was signed into law, employers are required to provide reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child's birth each time such employee has need to express the milk. Employers are also required to provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk, according to the Fact Sheet.

HHS Launches Website and Proposed Rules on Health Information Privacy

The U.S. Department of Health and Human Services (HHS) has announced new proposed rules and resources aimed at strengthening the privacy of health information, and helping individuals understand their rights and the resources available to safeguard their personal health data. Through the Health Information Technology for Economic and Clinical Health (HITECH) Act, current health information privacy and security rules will now include broader individual rights and stronger protections when third parties handle individually identifiable health information.

According to HHS, the proposed rule would strengthen and expand enforcement of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy, Security, and Enforcement Rules by:

• Expanding individuals' rights to access their information and to restrict certain types of disclosures of protected health information to health plans;
  
• Requiring business associates of HIPAA-covered entities to be under most of the same rules as the covered entities;
  
• Setting new limitations on the use and disclosure of protected health information for marketing and fundraising; and
  
• Prohibiting the sale of protected health information without patient authorization

New Privacy Website Launched by HHS
HHS has also launched a privacy website, to help visitors easily access information about existing HHS privacy efforts and the policies supporting them. The site covers privacy in the collection, use, and exchange of personally identifiable information. This new resource is meant to provide individuals with confidence that their personal information is secure and underscore HHS' goal of greater openness and transparency in government. To visit the new HHS privacy site, please click here.

To view the HHS press release, please click here. To view the proposed rules, click here. For more on the HITECH Act and HIPAA, please visit the HR & Benefits Essentials HITECH Act Section by clicking here.

OSHA Proposes Rule to Revise Safety and Health Standards

The Occupational Safety and Health Administration (OSHA) has issued a proposed rule and request for comments on its efforts to remove or revise outdated, duplicative, unnecessary, and inconsistent requirements in its safety and health standards. The proposed rule is aimed at building on the Standards Improvement Project (SIP) - Phase I published on June 18, 1998, and SIP - Phase II published on Jan. 5, 2005. OSHA intends that the proposed revisions will reduce compliance costs, eliminate paperwork burdens, and clarify requirements without diminishing worker protections.

Comments and hearing requests must be submitted by Sept. 30, 2010. You can submit comments electronically at regulations.gov. To view the proposed rule, please click here.

New Rules on Health Plan Appeals Released

New rules issued by the Departments of Health and Human Services, Labor, and Treasury are aimed at standardizing internal and external processes for individuals to appeal decisions made by health plans. The rules provide individuals with the following:

• The right to appeal decisions made by their health plan through the plan's internal process; and
  
• The right to appeal decisions made by their health plan to an outside, independent decision-maker, regardless of the State or health plan.

Note that these new rules do not apply to grandfathered plans, which include those plans which were in place on March 23, 2010. For more on what your health plan must do to maintain grandfathered status, please click here.

For more on these appeals rules, you can view a newly released Fact Sheet by clicking here. To view the rules, click here. To learn more about the Affordable Care Act, you can also visit the HR & Benefits Essentials Health Care Reform Section by clicking here.

The Departments of Health and Human Services (HHS), Labor, and Treasury issued interim final regulations requiring new plans and issuers to cover certain preventive services without any cost-sharing requirements when delivered by network providers. Cost-sharing includes out-of-pocket costs like deductibles, co-payments and co-insurance. Employers should note that these required preventive services do not apply to grandfathered plans.

Under the new rules, services recommended by the U.S. Preventive Services Task Force (USPSTF) will generally be required to be provided without cost-sharing when delivered by an in-network provider in the plan years that begin on or after September 23, 2010 (except grandfathered plans). For recommendations that have been in effect for less than one year, plans and issuers will have one year from the effective date to comply. Thus, recommendations and guidelines issued prior to September 23, 2009 must be provided for plan years beginning on or after September 23, 2010.

Recommendations of the USPSTF appear in a released chart, which can be accessed by clicking here.

Preventive Services to Be Covered without Cost-Sharing
HHS reports that under the new rules, depending on age and plan type, individuals may have easier access to the following preventive services:

• Blood pressure, diabetes, and cholesterol tests
• Cancer screenings, including mammograms and colonoscopies
• Flu and pneumonia shots
• Routine vaccines ranging from routine childhood immunizations to periodic tetanus shots for adults, including diseases such as measles, polio, or meningitis
• Counseling from health care providers on such topics as quitting smoking, losing weight, eating better, treating depression, and reducing alcohol use
• Counseling, screening and vaccines for healthy pregnancies
• Regular well-baby and well-child visits, from birth to age 21

The interim final regulations also make clear that a plan or issuer is not required to provide coverage or waive cost-sharing requirements for any item or service that has ceased to be a recommended preventive service. For example, if a recommendation of the USPSTF is downgraded from a rating of A or B to a rating of C or D, or if a recommendation or guideline no longer includes a particular item or service, the service is not required to be provided without cost-sharing.

For more on preventive services under the Affordable Care Act, please click here, or view the chart of covered services by clicking here. You can also view a list of covered services for adults, women (including pregnancy) and children by clicking here. To view the interim final regulations, please click here. To learn more about changes to group health plans under the Affordable Care Act, including grandfathered plans, please visit the HR & Benefits Essentials Health Care Reform Section by clicking here.

If you are thinking of terminating an employee, it is vitally important to understand your company's rights and obligations under 'employment at-will'.

Employment at-will means that, generally, absent a statute or express agreement to the contrary (such as an individual or union contract), employers may discharge an employee for any reason, or no reason at all, at any time and without advance notice. Employees have equal freedom to terminate the employment relationship under employment at-will. Almost all states in the U.S. follow the traditional legal framework of employment at-will.

[Please Note: States have their own exceptions to employment at-will, and potential discrimination issues that can result in employee termination lawsuits. We strongly advise you to consult an employment law attorney who knows your state labor laws for guidance on your employment at-will policy and any termination issues you may have.]

Federal law and States, however, have restricted the breadth of employment at-will. Federal law, for example, prohibits discrimination in employment on the basis of race, color, sex (including pregnancy), age, national origin, disability, religion, genetic information and military service (including the intent to serve). Since all employees in your company could be members of a protected class, (for example, based on sex or race), the practical effect of nondiscrimination laws can make terminations a potentially problem-filled area. Leave properly taken under the Family and Medical Leave Act is also protected employee activity under federal law.

States, through legislation and the courts, also impose exceptions to employment at-will to varying degrees. Common exceptions include:

• Public policy exceptions, such as an employee's exercise of statutory rights, or the employee's refusal to engage in illegal activity
• An implied promise to deal fairly and in good faith with an employee
• Contracts of employment that are implied orally or by an employer's actions, versus a written or express agreement

To gain a full understanding of your rights and responsibilities as an employer, it is important to consult the state and local laws where your business operates. Some states may have many of their own exceptions to employment at-will, while others may have nearly none. For a thorough overview, seek the advice of local employment counsel.

Use a Clear and Prominent Disclaimer Stating Your Employment At-Will Policy in Your Employee Handbook
If you distribute an employee handbook, it is important to have a clear and prominent disclaimer employees will see stating that the employment relationship is 'at will' to the extent permitted by law.

Courts have concluded that handbooks that do not have a proper employment-at-will disclaimer may give employees reasonable expectations of continued employment. These expectations can create contractual obligations for the employer. And, even with a clear and prominent disclaimer, the handbook should not make any promises to the contrary of the employment at-will statement. Such explicit promises can create an employer contractual obligation in spite of a general statement of employment at-will.

Have Local Employment Counsel Review Your Handbook
As with learning about employment at-will in your state, it is important to have local employment counsel review your company's actual handbook. Proper 'at-will' statements, disclaimers and other contract issues arising out of employee handbooks vary from state to state. Thus, be sure to consult an employment attorney who is knowledgeable with employee handbook requirements in your jurisdiction.

The U.S. Small Business Administration (SBA) has launched a new website to help small businesses develop an emergency preparedness plan.

In an effort to encourage businesses to plan ahead, the SBA and Agility Recovery Solutions have launched the Prepare My Business (www.preparemybusiness.org) web site. Prepare My Business provides tips on how small business owners can develop their own disaster preparedness plans, and features interactive tools such as monthly webinars on business continuity planning.

Preparing for Common Everyday Events
Prepare My Business covers preparation for major disasters, such as earthquakes and flooding, as well as common everyday events such as server failure, burst pipes and power outages - all of which can be equally devastating for a small business.

Among other steps for disaster preparedness, the SBA recommends the following:

• A written emergency response plan
• Adequate insurance
• Making copies of important records
• A 'Disaster Survival Kit'

The user-friendly site (www.preparemybusiness.org) is broken down into four key actionable elements of disaster preparedness and recovery - Planning, Education, Testing and Disaster Assistance.

The SBA advises that in addition to the Prepare My Business site, more preparedness tips for businesses, homeowners and renters are available on the SBA's Web site at www.sba.gov/disasterassistance. To learn more about developing an emergency plan, visit the Federal Emergency Management Agency's Web site Ready.gov or call 1-800-BE-READY to receive free materials. You can also visit the U.S. Department of Labor's Disaster Recovery Assistance page, which links to DisasterAssistance.gov, a federal government site that provides access to disaster help and resources.

IRS Tips on Preparing for a Disaster
On July 12, 2010, the IRS released Summertime Tax Tip 2010-03, 'Four Tips on Preparing for a Disaster.' This Tax Tip encourages taxpayers to safeguard their records by taking a few important steps. Specifically, the IRS urges:

• Using paperless recordkeeping
• Documenting valuables
• Updating emergency plans
• Seeking IRS help in the event of destroyed records

The Tax Tip also links to disaster-related IRS forms; Publication 584 - Casualty, Disaster, and Theft Loss Workbook for personal-use property; and Preparing for a Disaster for Taxpayers and Businesses. To view Tax Tip 2010-03, please click here.

The U.S. Department of Labor (DOL) has clarified the definition of 'son or daughter' under the Family and Medical Leave Act to ensure that an employee who assumes the role of caring for a child receives parental rights to family leave, regardless of the legal or biological relationship.

The FMLA allows workers to take up to 12 weeks of unpaid leave during any 12-month period to care for loved ones or themselves. The 1993 law also allows employees to take time off for the adoption or the birth of a child. An administrative interpretation issued by the DOL's Wage and Hour Division clarified that these rights, which provide work-family balance, extend to various parenting relationships, including families in the lesbian-gay-bisexual-transgender community.

You can view the administrative interpretation by clicking here. For more information on the FMLA and the administrative interpretation, visit the Wage and Hour Division's website, http://www.dol.gov/whd, or call the division's toll-free helpline at 866-4US-WAGE (487-9243). To view the DOL press release, please click here. To visit the HR & Benefits Essentials FMLA Section, please click here.

DOL Releases Model Notices for Employers Implementing Health Care Reform

The U.S. Department of Labor’s Employee Benefits Security Administration has released a number of Model Notices for employer-sponsored health plans to comply with requirements of the Affordable Care Act. Model notice language is now available from the Department of Labor for the following:

Opportunity to Enroll in Connection with Extension of Dependent Coverage to Age 26
The interim final regulations extending dependent coverage to age 26 provide transitional relief for a child whose coverage ended, or who was denied coverage (or was not eligible for coverage) under a group health plan or health insurance coverage because, under the terms of the plan or coverage, the availability of dependent coverage of children ended before the attainment of age 26. This enrollment opportunity (including the written notice) must be provided not later than the first day of the first plan year beginning on or after September 23, 2010. For more information and to view the Model Notice, please click here.

Patient Protection Model Disclosure
Individuals enrolled in a plan or health insurance coverage must be notified of their rights to (1) choose a primary care provider or a pediatrician when a plan or issuer requires designation of a primary care physician; or (2) obtain obstetrical or gynecological care without prior authorization. This notice must be provided no later than the first day of the first plan year beginning on or after September 23, 2010. For more information and to view the Model Notice, please click here.

Model Language Notice Lifetime Limit No Longer Applies and Enrollment Opportunity
Plans and issuers are required to give written notice that the lifetime limit on the dollar value of all benefits no longer applies and that an individual, if covered, is once again eligible for benefits under the plan. Additionally, if the individual is not enrolled in the plan or health insurance coverage, or if an enrolled individual is eligible for but not enrolled in any benefit package under the plan or health insurance coverage, then the plan or issuer must also give such an individual an opportunity to enroll that continues for at least 30 days (including written notice of the opportunity to enroll). The notices and enrollment opportunity must be provided beginning not later than the first day of the first plan year beginning on or after September 23, 2010. For more information and to view the Model Notice, please click here.

To visit the Department of Labor’s webpage dedicated to the Affordable Care Act, please click here. For more on recent developments under health care reform, visit the HR & Benefits Essentials 2010 Health Care Reform Section by clicking here.

Applications for Early Retiree Reinsurance Program Accepted as of June 29, 2010

The Department of Health and Human Services’ Office of Consumer Information and Insurance Oversight (OCIIO) has announced it will begin accepting applications for the Early Retiree Reinsurance Program (ERRP).

The Early Retiree Reinsurance Program will reimburse employers for medical claims for retirees age 55 and older who are not eligible for Medicare, and their spouses, surviving spouses, and dependents. Employers who provide health coverage for early retirees are eligible to apply. Reimbursements will be available for 80% of medical claims costs for health benefits between $15,000 and $90,000. Program participants will be able to submit claims for medical care going back to June 1, 2010.

June 29, 2010 was the first day applications started being accepted. A draft application was made available June 7, and OCIIO has hosted several stakeholder outreach calls to explain the program. Additional application assistance, including a webinar, will be available online this week.

Applications
Application instructions and the Application are available here, along with an updated Fact Sheet, Application Submission Do’s and Don’ts, FAQs and other guidance. You can also visit www.hhs.gov/ociio to access the materials.

Interim Final Rules Cover Market Reforms Taking Effect As Early as 2010

The U.S. Departments of Treasury, Labor and Health and Human Services have issued interim final rules under the Affordable Care Act.  These rules relate to:

• Preexisting condition exclusions of children under 19,
• Lifetime and annual limits,
• Rescissions of coverage, and
• Certain other provisions. 

To view a Fact Sheet on the rules, please click here. The rules issued are now available for public comment at www.regulations.gov.

In the June newsletter, we covered the general concept of grandfathered plans under health care reform (those plans which were in place on March 23, 2010), and which parts of the new health care law apply to grandfathered plans, such as dependent coverage to age 26 and children's pre-existing conditions. We also noted that we were awaiting government guidance as to how a plan can be changed without losing grandfathered status. On June 17, 2010, the Departments of Treasury, Labor and Health and Human Services issued interim final rules that made important clarifications on maintaining grandfather status. In evaluating whether to keep your plan, it is important to review the following rules related to maintaining grandfather status:

The regulation allows employers and insurers to make "routine" changes to plans without them losing grandfather status. Routine changes will include cost adjustments to keep pace with medical inflation, adding new benefits, making modest adjustments to existing benefits, voluntarily adopting new consumer protections under the new law, or making changes to comply with state or other federal laws. Under the rules, plans will lose their "grandfather" status if they choose to significantly cut benefits or increase out-of-pocket spending for consumers. However, premium changes are not taken into account when determining whether or not a plan is grandfathered.

Compared to their polices in effect on March 23, 2010, grandfathered plans:

• Cannot Significantly Cut or Reduce Benefits: For example, if a plan decides to no longer cover care for people with diabetes, cystic fibrosis or HIV/AIDS.
• Cannot Raise Co-Insurance Charges: Typically, co-insurance requires a patient to pay a fixed percentage of a charge (for example, 20% of a hospital bill). Grandfathered plans cannot increase this percentage.
• Cannot Significantly Raise Co-Payment Charges: Frequently, plans require patients to pay a fixed-dollar amount for doctor's office visits and other services. Compared with the copayments in effect on March 23, 2010, grandfathered plans will be able to increase those co-pays by no more than the greater of $5 (adjusted annually for medical inflation) or a percentage equal to medical inflation plus 15 percentage points. For example, if a plan raises its copayment from $30 to $50 over the next 2 years, it will lose its grandfathered status.
• Cannot Significantly Raise Deductibles: Many plans require patients to pay the first bills they receive each year (for example, the first $500, $1,000, or $1,500 a year). Compared with the deductible required as of March 23, 2010, grandfathered plans can only increase these deductibles by a percentage equal to medical inflation plus 15 percentage points.
• Cannot Significantly Lower Employer Contributions: Many employers pay a portion of their employees' premium for insurance and this is usually deducted from their paychecks. Grandfathered plans cannot decrease the percent of premiums the employer pays by more than 5 percentage points (for example, decrease their own share and increase the workers' share of premium from 15% to 25%).
• Cannot Add or Tighten an Annual Limit on What the Insurer Pays: Some insurers cap the amount that they will pay for covered services each year. If they want to retain their status as grandfathered plans, plans cannot tighten any annual dollar limit in place as of March 23, 2010. Moreover, plans that do not have an annual dollar limit cannot add a new one unless they are replacing a lifetime dollar limit with an annual dollar limit that is at least as high as the lifetime limit.
• Cannot Change Insurance Companies: If an employer decides to buy insurance for its workers from a different insurance company, this new insurer will not be considered a grandfathered plan. This does not apply when employers that provide their own insurance to their workers switch plan administrators or to collective bargaining agreements.

Disclosure Requirement - Model Notice
The regulation on grandfathered plans requires a plan to disclose to consumers every time it distributes materials whether the plan believes that it is a grandfathered plan and therefore is not subject to some of the additional requirements of the Affordable Care Act. The plan must also provide contact information for enrollees to have their questions and complaints addressed. Model language that can be used to satisfy this disclosure requirement is available here, and is also provided in the interim final rules.

Recordkeeping
Under the interim final rules, to maintain status as a grandfathered health plan, a plan or issuer must also maintain records documenting the terms of the plan or health insurance coverage that were in effect on March 23, 2010, and any other documents necessary to verify, explain, or clarify its status as a grandfathered health plan.

Ways Grandfather Status Can Be Revoked
To prevent health plans from using the grandfather rule to avoid providing consumer protections, the regulation:

• Revokes a plan's grandfathered status if it forces consumers to switch to another grandfathered plan that, compared to the current plan, has less benefits or higher cost sharing as a means of avoiding new consumer protections
• Revokes a plan's grandfathered status if it is bought by or merges with another plan simply to avoid complying with the law.

For more information on this regulation, please see this Fact Sheet on the Affordable Care Act and "Grandfathered" Health Plans. Please also view FAQs on Grandfathered Plans. To view the interim final rules, please click here.

For more on grandfathered plans generally, including a timeline of required key changes to grandfathered plans, please click here.

As hiring begins to rebound, many small businesses may once again be thinking about recruitment and candidate selection. And, of course, one of the most important parts of the process is conducting the interview.

Whether you are a small business owner who conducts your own interviews, manager of a department or experienced HR professional, the following is a quick “refresher” on the do’s and don’ts related to interview questions.

Questions You May Ask
Interview questions should be job-related, and provide insight into the candidate’s ability to perform the essential functions of the position you are filling. They can also provide certain information about the interviewee. Some examples of acceptable job-related inquiries include:

• Job Requirements: desired position, salary, full time or part time, date of availability to start.
• Essential functions of the job: Essential functions are the fundamental job duties that the employee must be able to perform on his or her own or, in the case of a person with a disability, with the help of a reasonable accommodation.
• Willingness to travel
• Educational background
• Skills: word processing, computer languages, etc.
• References
• Eligibility to work in the United States

Questions to Avoid
Because of the numerous federal, state, and local anti-discrimination laws that govern the employment process, direct and indirect inquiries concerning an interviewee's race, color, religion, sex, national origin, age, disability, genetic information, military service, or any other protected class status should be avoided. In addition, some states have strict limitations on pre-employment inquiries about criminal backgrounds, in particular, arrests not leading to convictions. Questions to avoid include:

• How old are you?
• What is your nationality? Or what is the origin of your name?
• What is your race?
• Were you or are you currently disabled?
• Are you taking any medications?
• What is your religion?
• Have you ever been arrested?
• Do you have a drinking problem?

Interviewing in Compliance with the Americans with Disabilities Act
The Americans with Disabilities Act (ADA) goes one step further than the traditional civil rights laws that prohibit employment discrimination on the grounds of race, sex, age, or other protected classes. Under the ADA, it is not enough that an employer simply does not discriminate. Employers must, under certain situations, also take steps to make "reasonable accommodations" for individuals with disabilities. To avoid charges of discrimination, employers should also adhere to the following guidelines when interviewing applicants with disabilities:

• Prepare for the interview by clearly understanding the essential job functions of the position in question.
• Employers may ask about an applicant's ability to perform specific job functions. For example, an employer may state the physical requirements of a job (such as the ability to lift a certain amount of weight, or the ability to climb ladders), and ask if an applicant can satisfy these requirements.
• Employers may ask about an applicant's non-medical qualifications and skills, such as the applicant's education, work history, and required certifications and licenses
• Don't ask questions about an applicant's disabilities.

Additionally, many state civil rights agencies have their own guidelines on pre-employment inquiries based on both federal and state nondiscrimination laws. Be sure to check on any additional restrictions your state may impose on job interview questions. For more information on the ADA compliant interview, please click here. To view a list of state labor offices, please click here.

According to a recent Treasury Department survey, federal subsidies of health insurance premiums for the unemployed were widely used by the middle class during the recession. Many laid-off workers and their families maintained their health coverage as a result of the subsidy.

The American Recovery and Reinvestment Act of 2009 (ARRA) established a tax credit that paid 65 percent of the cost of health insurance premiums for eligible unemployed workers and their family members who maintained their health coverage through the federal COBRA continuing coverage program. Usually, individuals on COBRA coverage are required to pay up to 102% of the total cost of premiums. The Treasury Department estimates that for a typical family nationwide, the ARRA subsidy reduced the cost of COBRA from about $13,500 to $4,725.

The Treasury analysis is one of the earliest reports on the profile of unemployed individuals who obtained continuing health insurance coverage through the ARRA COBRA subsidy. The study surveyed more than 6,000 New Jersey workers receiving Unemployment Insurance in the fall and winter of 2009. The report found that between one-quarter and one-third of eligible unemployed workers enrolled in subsidized COBRA. In addition, roughly 15% of Unemployment Insurance beneficiaries received health insurance coverage through COBRA.

The report concludes that the subsidy appears to have been especially important for maintaining health coverage for middle-class families during the recession, and likely reduced the number of Americans who otherwise would have gone uninsured during the recession. A separate publication from the Treasury Department estimates that up to 2 million households were provided premium assistance in 2009, and over 300,000 claims were filed by employer tax reporting units through early 2010. The Treasury Department suggests that the availability of the program may have significantly slowed the growth of the uninsured population, which had been significantly increasing through Feb. 2009.

To view the Treasury Department report, please click here.

On June 1, 2010, the eligibility period to qualify for COBRA premium reduction under ARRA (as extended by the Continuing Extension Act of 2010) expired. Consequently, employers and plan administrators are not required to provide subsidies for COBRA premiums to workers terminated on or after June 1, 2010, unless and until a further extension of the ARRA COBRA subsidy is enacted.

Model Notices for Use On or After June 1, 2010
Employers and administrators should note that a further extension of the COBRA premium reduction under ARRA may still occur. However, with no further extensions, employers and administrators should use the Model General Notice and Model Election Notice provided by the DOL, for workers who are terminated on or after June 1, 2010. Remember, involuntary terminations that occurred at any time from September 1, 2008, through May 31, 2010 may have been qualifying events entitling such terminated workers to COBRA premium reductions and applicable notices. Individuals are encouraged to seek assistance regarding Notice Requirements by calling the Employee Benefits Security Administration toll-free at 1-866-444-3272. HR & Benefits Essentials will provide updates on any ARRA COBRA extensions as they occur.

In This Issue

IRS Releases Revised Form 941 for HIRE Act

The IRS has issued the newly revised payroll tax Form 941 which most eligible employers can use to claim the special payroll tax exemption that applies to many new workers hired during 2010.

Designed to encourage employers to hire and retain new workers, the payroll tax exemption and the related new hire retention credit were created by the Hiring Incentives to Restore Employment (HIRE) Act signed by President Obama on March 18, 2010.

The payroll tax exemption is an exemption from the employer's 6.2 percent share of social security tax on all wages paid to qualified employees from March 19, 2010 (the day after the date of enactment of the HIRE Act) through December 31, 2010. The employee's 6.2 percent share of social security tax and the employer and employee’s shares of Medicare tax still apply to all wages.

In addition, for each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year, businesses may claim a new hire retention credit of up to $1,000 per worker on their income tax return. Further details on both the tax credit and the payroll tax exemption can be found in a recently-expanded list of answers to frequently-asked questions about the new law now.

How to Claim the Payroll Tax Exemption
Form 941, Employer's QUARTERLY Federal Tax Return, revised for use beginning with the second calendar quarter of 2010, can be filed by most employers claiming the payroll tax exemption for wages paid to qualified employees. The HIRE Act does not allow employers to claim the exemption for wages paid in the first quarter but provides for a credit in the second quarter. The instructions for the new Form 941 explain how this credit for wages paid from March 19 through March 31 can be claimed on the second quarter return.

DOL Publishes Final Rule on Child Labor

The U.S. Department of Labor has published a final rule that revises the child labor regulations to federal Fair Labor Standards Act. The final rule revises the child labor regulations to incorporate statutory amendments to the Fair Labor Standards Act, and to update and clarify the regulations that establish protections for youth employed in nonagricultural occupations.

The new regulations give employers clear notice that there are certain jobs children are not permitted to perform, according to U.S. Secretary of Labor Hilda Solis. They also expand opportunities for young workers to gain safe, positive work experience in fields such as advertising, teaching, banking and information technology, as well as through school-supervised work-study programs.

The revisions also implement specific recommendations made by the National Institute for Occupational Safety and Health in its 2002 report to the Department of Labor. The Department of Labor is revising the regulations to incorporate the 2008 amendment to section 16(e) of the Fair Labor Standards Act that substantially increased the maximum permissible civil money penalty an employer may be assessed for child labor violations that cause the death or serious injury of a young worker. The effective date of the rule is July 19, 2010.

To view the final rule in the Federal Register, please click here.

New Office of Consumer Information and Insurance Oversight (OCIIO) Implementing Health Care Reform

The Department of Health and Human Services (HHS) has been entrusted with the responsibility for implementing many major provisions of the health care reform bill, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010. Accordingly, the Office of Consumer Information and Insurance Oversight (OCIIO) has been established to help HHS implement many of the provisions of the legislation that address private health insurance.

OCIIO is responsible for ensuring compliance with the new insurance market rules, such as the prohibitions on rescissions and on pre-existing condition exclusions for children that take effect this year. The Office will oversee the new medical loss ratio rules and will assist states in reviewing insurance rates. OCIIO will provide guidance and oversight for the state-based insurance exchanges. It will also administer the temporary high-risk pool program and the early retiree reinsurance program, and compile and maintain data for an internet portal providing information on insurance options.

The OCIIO website contains information on Initiatives and Programs of the Office, such as medical loss ratios and the high-risk pool program, Regulations and Guidance, including requests for comments, Gathering Insurance Information, and FAQs about the Office. To visit the OCIIO website, please click here.

The Affordable Care Act specifically exempts "grandfathered plans"- those plans that were in effect on March 23, 2010 - from having to implement a number of the Act's requirements. Thus, it is vital for employers and administrators of these grandfathered plans to understand what changes they must make in 2010 and in future years.

The following is a timeline of required key changes to grandfathered health plans:

What Must Be Done in 2010

Extend Dependent Coverage Up to Age 26
For plan years starting on or after September 23, 2010, the new health law requires group and individual health plans that cover dependents to continue to make dependent coverage available until age 26. This requirement applies to grandfathered as well as non-grandfathered plans. However, for plan years beginning before Jan. 1, 2014, grandfathered group health plans offering dependent coverage will not need to make this coverage available if the adult child is eligible to enroll in another employer-sponsored health plan.

Prohibit Lifetime Limits
For plan years starting on or after September, 23, 2010, grandfathered health plans may not impose lifetime limits on coverage for "essential health benefits." Essential health benefits will be further defined by the U.S. Department of Health and Human Services (HHS).

Restrict Annual Limits
For plan years starting on or after September 23, 2010, grandfathered group health plans are prohibited from imposing annual limits on essential health benefits other than restricted annual limits to be set by HHS. Effective Jan 1. 2014, grandfathered group health plans may not set any annual limits on essential benefits coverage.

Drop Pre-Existing Condition Exclusions for Children
For plan years starting on or after September 23, 2010, grandfathered group health plans must not exclude children on the basis of pre-existing conditions. Effective Jan. 1, 2014, group health plans may not impose pre-existing condition exclusions on adults or children.

No Rescission of Coverage
For plan years starting on or after September 23, 2010, grandfathered health plans are prohibited from rescinding a participant's coverage, absent fraud or an intentional misrepresentation of material fact.

Required Change in 2011

No Reimbursements for Over-the-Counter Drugs Not Prescribed
For expenses incurred after Dec. 31, 2010, distributions from HSAs or Archer MSAs, or reimbursements for FSAs or HRAs, qualify only if made for a medicine or drug that is a prescribed drug, or insulin. Over-the-counter medicine obtained with a prescription will continue to be a qualified medical expense.

What Grandfathered Plans Must Do in 2014

No Exclusions for Dependent Coverage
In 2014, grandfathered group health plans offering dependent coverage will need to continue to make this coverage available until age 26, even if the adult child is eligible to enroll in another employer-sponsored health plan.

No Annual Limits
In 2014, grandfathered group health plans may not set any annual limits on essential benefits coverage.

No Excessive Waiting Periods
For plan years starting on or after Jan. 1, 2014, grandfathered health plans may not apply waiting periods for coverage that exceed 90 days.

Future Changes to Grandfathered Health Plans

Employers and administrators should note that thus far, the Affordable Care Act does not provide guidance as to what extent a plan can be changed without losing grandfathered status. Changes relevant to a plan's continuing status as "grandfathered" might include changes in premiums, deductibles, and types of coverage.

Participants or beneficiaries receiving benefits under an ERISA-covered retirement or health plan must receive a Summary Plan Description or SPD. ERISA requires the plan administrator to provide the SPD to plan participants free of charge. The SPD is an important document that informs participants what the plan provides and how it operates. SPD information includes:

• When an employee can start to participate in the plan;
• How service and benefits are calculated;
• When benefits become vested;
• When and in what form benefits are paid; and
• How to file benefits claims

Administrators should also note that if a plan is changed, participants must be informed. The notification of the change must occur either through a revised SPD, or in a separate document called a Summary of Material Modifications (SMM). These notices must also be given to participants free of charge.

The SPD - a Legal Document
Because the SPD of a retirement or health plan discloses such important information to participants about the plan, and ERISA plans are contractual in nature, the summary can be a legally binding document. Thus, administrators should carefully review the terms included in the SPD. Any plan administrator who creates or changes a summary using a boilerplate document should consult with a benefits specialist or attorney before distributing the SPD to participants.

Written in Plain English
As the plan "summary," the SPD should be easy to understand. In fact, U.S. Department of Labor regulations actually require the summary to be written in language that average plan participants can understand. Technical terms should therefore be used only when necessary. You should also define any unclear terms. Finally, you may want to add graphics to your SPD so participants can quickly locate key information, such as vesting periods, benefits calculations and eligible beneficiaries. You can do this with charts, boxes or bullet points.

Consider Distributing the SPD Electronically
The administrator of an employee benefit plan can furnish documents to participants and beneficiaries through the use of electronic media, if it meets certain requirements under ERISA regulations. The regulations essentially require that unless the participant, beneficiary, or other individual has access to documents as part of his or her job duties, the individual must consent to receive them electronically. The plan administrator has to take steps to confirm that the individual can truly receive electronic documents through email or other electronic means. Notice must also be given to individuals of their right to withdraw their consent to electronic delivery at any time without charge, and their right to obtain paper copies of the documents upon request. For more information on distributing plan documents through the use of electronic media, please click here.

For the convenience of plan participants, consider creating a file of the SPD that can be viewed on a company intranet. By doing so, the summary can be quickly revised (with the proper notice given) and always be accessed by participants. If you post multiple SPDs on a company intranet, make sure each summary is separately grouped so users can easily understand which plan summary they are viewing.

For more information from the DOL on SPDs, please click here.

Decreasing or eliminating the use of paper from your business operation will potentially save your company money, time and physical space. Many managers and workers tend to think and perform better when their work environment is well-organized and free of clutter. Going paperless can really liberate more office space and streamline your business environment.

Less Paper Equals More Savings
Eliminating paper provides a number of clear cost savings. First, there are the costs for paper, file cabinets as well as those associated with photocopying. Then, depending on the amount of paper you accumulate, you may need additional employees to collect and organize files.

Save Time & Increase Productivity
Decreasing the amount of paper your company uses, combined with an efficient electronic document system, can directly correlate to increased productivity. For example, storing shared documents on a company server will allow workers to upload files and collaborate on projects without having to exchange multiple hard copies with their colleagues. As files are edited and updated, they can be discarded or kept with labeled dates. In addition to the cost savings of going paperless, if your employees can quickly and efficiently take care of their administrative responsibilities with electronic documentation, they will have more time to spend on other tasks.

Establish an Organized System for Company Documents
Making some office procedures paperless but not others can create a very confusing situation. If you have to search both file cabinets and server folders for a document, you may end up taking more time than you did before the reorganization. You may also create office confusion as to which files are now electronic, potentially wasting more employee time. If you do decide to go paperless, remember that technology alone is not a substitute for a structured, organized approach to your company’s documents. Decide on consistent procedures and communicate them to your employees. In the long run, your business will be better off for it.

Be Sure to Back-Up Your Important Documents
As your business grows, you may find the information your company accumulates increases right along with the size of your company. It's not all that hard to lose track of an important document here and there. For important paper documents that you receive, it’s always a good idea to scan and create a PDF version. Then, if a document or file should be misplaced, you can simply reprint it. As an extra backup, email files to yourself and/or others so they can be accessed anywhere. Finally, you may also want to consider installing a nightly backup of all the documents that reside on your server to a separate hard drive so that in the event your server should do down, your company documents are safe.

Does your business participate in charitable giving? Supporting causes that are worthwhile to companies and employees can be rewarding enough, but there are also potential tax advantages. If you are considering making a donation, you first need to ensure that the charity is a qualified organization as defined by the IRS. For more information on charitable contributions from the IRS, please click here.

According to the IRS, the organization must be structured and operated for one or more limited purposes, including religious, charitable, educational, scientific, literary, or the prevention of cruelty to children or animals. Certain other purposes include war veterans’ organizations and those that foster amateur sports competition. You can search here for an online list of organizations eligible to receive tax-deductible charitable contributions.

Before Donating - Review the Charity Checklist
The Federal Trade Commission (FTC) has established a Charity Checklist to help ensure that your donation dollars benefit the people and organizations you want to support. These tips are particularly useful if you’re solicited by an organization’s employees or volunteers by phone, mail or e-mail. The following are a number of important tips featured in the FTC’s Charity Checklist.

• Be careful to scrutinize charities that spring up quickly in connection with current events or natural disasters. They may make a compelling case for your money, but they probably don’t have the infrastructure to get the donations to the affected areas or people.
• Request written information about the charity, including the name, address, and telephone number. A legitimate charity or fundraiser will send you information about the charity’s mission, how your donation will be used, and proof that your contribution is tax deductible.
• Contact the office that regulates charitable organizations and charitable solicitations in your state to see if the charity or fundraiser must be registered. Your state office also can verify how much of each dollar donated goes to the charity, and how much goes to fundraising and management expenses.
• Don’t be shy about asking who wants your money. Some charities hire professional fundraisers for large-scale mailings, telephone drives, and other solicitations rather than use their own staff or volunteers, and then use a portion of the donations to pay the fundraiser’s fees. If you’re solicited for a donation, ask if the caller is a paid fundraiser, who they work for, and the percentage of your donation that will go to the charity and to the fundraiser. If you don’t get a clear answer —consider donating to a different organization.
• Call the charity. Find out if the organization is aware of the solicitation and has authorized the use of its name. If not, you may be dealing with a scam artist.
• Check with local recipients. If giving to local organizations is important to you, make sure they will benefit from your generosity. If a charity tells you that your dollars will support a local organization, like a fire department, police department, or hospital, call the organization to verify the claim.
• Inquire whether your contribution is tax deductible. It is important to ask for a receipt showing the amount of your contribution and stating that it is tax deductible.

In This Issue

Small Business Health Care Tax Credit

Certain small businesses and tax-exempt organizations that provide health insurance coverage to their employees may qualify for a special tax credit in 2010, according to the Internal Revenue Service. Included in the recently enacted health care reform legislation, the Patient Protection and Affordable Care Act, is a tax credit designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. The following are eligibility rules and the amount of credit as explained by the IRS.

Eligibility Rules

Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.

Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).

Average annual wage. A qualifying employer must pay average annual wages below $50,000.

Both taxable (for profit) and tax-exempt firms qualify.

Amount of Credit

Maximum Amount. The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).

 Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

 Three Simple Steps for Employers to Qualify
If you are a small employer (business or tax-exempt) that provides health insurance coverage to your employees, determine if you may qualify for the Small Business Health Care Tax Credit by following the three simple steps featured here.

 Frequently Asked Questions
The IRS has issued 22 FAQs for employers on the Small Business Health Care Tax Credit, including the following topics:

• Employer eligibility
• Claiming the credit
• Determining average annual wages
• Calculating expenses
• Tax-exempt organizations
• Relief in 2010

To view this detailed FAQ page from the IRS, please click here.

 Examples
The IRS has also provided several employer scenarios for the credit, including numbers of workers, part-time employees and non-profit groups. To view the scenarios, please click here.

 For additional information on the credit, please visit the IRS site here.

 To visit the HR & Benefits Essentials 2010 Health Care Reform Section, please click here.

HIRE Act Affidavit Released by IRS

The IRS has released a new form that will help employers claim the special payroll tax exemption that applies to qualified newly-hired workers during 2010, created by the Hiring Incentives to Restore Employment (HIRE) Act.

 New Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, is now posted on IRS.gov, along with answers to frequently-asked questions about the payroll tax exemption and the related new hire retention credit. The new law requires that employers get a statement from each eligible new hire, certifying under penalties of perjury, that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for anyone during the 60-day period. Employers can use Form W-11 to meet this requirement.

Most eligible employers then use Form 941, Employer’s Quarterly Federal Tax Return, to claim the payroll tax exemption for eligible new hires. This form, revised for use beginning with the second calendar quarter of 2010, is currently available as a draft form on IRS.gov and will be released as a final along with the form’s instructions.

 For more information on the HIRE Act affidavit and exemption, please click here.

 Updated Forms W-2 and W-3

The IRS has also issued the following updated Forms W-2 and W-3 to reflect the Social Security tax exemption available to qualifying employers under the HIRE Act.

• 2010 Form W-2 (Wage and Tax Statement)
• 2010 Form W-3 (Transmittal of Wage and Tax Statements)
• 2010 Instruction W-2 and W-3

To view additional FAQs for employers on the HIRE Act, please click here.

The Continuing Extension Act of 2010 extends the deadline for terminated employees to qualify for the COBRA premium subsidy. Workers now terminated between September 1, 2008, and May 31, 2010 may be eligible for a 65% subsidy of their COBRA premiums. The premium reduction applies to periods of health coverage that began on or after February 17, 2009, and lasts for up to 15 months.

 Employers should take note that a further extension of the premium reduction, possibly through the end of 2010, is expected. HR & Benefits Essentials will provide updates on any extensions as they occur. The following are updated Model Notices with explanations from the DOL.

Model Updated General Notice
Plans subject to the Federal COBRA provisions must provide the updated General Notice to all qualified beneficiaries (not just covered employees) who experienced a qualifying event at any time from September 1, 2008 through May 31, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice. This model notice includes updated information on the premium reduction, as well as information required in a COBRA election notice.

Note: Individuals who experienced a qualifying event that was a termination of employment from April 1, 2010 through April 14, 2010 may not have been provided proper notice and must get the updated General Notice and receive the full 60 days from the date the updated notice is provided to make a COBRA election. Those individuals who have been provided a notice that did not include information related to the most recent extension must also be provided this updated information. Depending on the specific circumstances, either the Supplemental Information Notice or the Notice of Extended Election Period may be used. See below for additional details.

Model Notice of New Election Period
Plans subject to continuation coverage provisions under Federal or State law should provide, within 60 days of the date of the termination of employment, a Notice of New Election Period to all individuals who:

• Experienced a qualifying event that was a reduction in hours at any time from September 1, 2008 through May 31, 2010;
• Subsequently experience a termination of employment at any point from March 2, 2010 through May 31, 2010; and
• Either did not elect continuation coverage when it was first offered or elected but subsequently discontinued the coverage.

Generally, individuals who have experienced a qualifying event that consists of a reduction of hours and who, from March 2, 2010 through May 31, 2010, experience an involuntary termination of employment must be provided this notice within 60 days of the event. Additionally, CEA provides that for the April 1, 2010 through April 14, 2010 period, the notice requirement attaches to any termination of employment. The DOL strongly recommends that notice be provided to individuals who experienced any termination of employment because employers may be subject to civil penalties if it is later determined that the termination was involuntary and notice was not provided.

 Model Supplemental Information Notice
Plans that are subject to continuation coverage provisions under Federal or State law should provide the Supplemental Information Notice to all individuals who elected and maintained continuation coverage based on the following qualifying events:

• All qualifying events related to a termination of employment that occurred from March 1, 2010 through April 14, 2010 for which notice of the availability of the premium reduction available under ARRA was not given; or
• Reductions of hours that occurred during the period from September 1, 2008 through May 31, 2010 which were followed by a termination of the employee’s employment that occurred on or after March 2, 2010 and by May 31, 2010.

For the first item above, plans must provide this notice to all individuals with a qualifying event related to any termination of employment if they have not already been provided notice of their rights under ARRA. This notice must be provided before the end of the required time period for providing a COBRA election notice. For the second item above, generally, individuals who experience an involuntary termination of employment from March 2, 2010 through May 31, 2010 after experiencing a qualifying event that consists of a reduction of hours must be provided this notice within 60 days of the termination of employment. However, as noted above, CEA requires plans to provide notices to all individuals with qualifying events related to any termination of employment that occurred from April 1, 2010 through April 14, 2010. In those cases, this notice must be provided before the end of the required time period for providing a COBRA election notice. Because employers may be subject to civil penalties if it is later determined that the termination was involuntary, the DOL strongly recommends that notice be provided to individuals who experienced any termination of employment.

 Model Notice of Extended Election Period
Plans that are subject to continuation coverage provisions under Federal or State law must provide, before the end of the required time period for providing a COBRA election notice, the Notice of Extended Election Period to all individuals who:

• Experienced a qualifying event that was a termination of employment at some time from April 1, 2010 through April 14, 2010;
• Were provided notice that did not inform them of their rights under ARRA, as amended by CEA; and
• Either chose not to elect COBRA continuation coverage at that time or elected COBRA but subsequently discontinued that coverage.

Model Updated Alternative Notice
Insurance issuers that offer group health insurance coverage that is subject to comparable continuation coverage requirements imposed by State law must provide the Alternative Notice to all qualified beneficiaries, not just covered employees, who have experienced a qualifying event through May 31, 2010. However, because continuation coverage requirements vary among States, this notice should be further modified to reflect the requirements of the applicable State law. Issuers of group health insurance coverage subject to this notice requirement should feel free to use the model Alternative Notice, the model Notice of New Election Period, the model Supplemental Information Notice, the model Notice of Extended Election Period, or the model General Notice (as appropriate).

 For more information on the extension of the COBRA premium reduction, see the updated fact sheet. For further information, visit www.dol.gov/COBRA.

Dependent Coverage up to Age 26

For new plan years starting on or after September 23, 2010, the new health law requires group and individual health plans that cover dependents to continue to make dependent coverage available until age 26.

Grandfathered Plans
For plan years beginning before Jan. 1, 2014, grandfathered group health plans offering dependent coverage will not need to make this coverage available if the adult child is eligible to enroll in another employer-sponsored health plan. Grandfathered plans are those plans that were in place on March 23, 2010. The law also expressly does not require a health plan or a health insurance issuer to make coverage available for a child of a child receiving dependent coverage.

Stress at work can come from significant workload, pressing deadlines and time management issues. When workplace stress feels overwhelming, the following are some simple steps managers and employees can take to reduce the pressure.

 How Managers Can Help Their Teams Reduce Stress
With so many responsibilities, projects and tasks to implement in a given day, it’s easy for employees to lose a sense of priority and simply jump from one thing to another. Sometimes the most complex and difficult tasks are avoided in favor of completing the smaller jobs. One helpful way to help alleviate stress is for managers or supervisors to develop daily or weekly to-do lists for their teams based on organizing tasks, defining goals and setting reasonable timelines.

 Step-Out a Complicated Project
For complex projects, managers should consider breaking them up into sequential steps. Thus, where you can divide a project into discrete phases, you can provide specific direction to your team, helping to maintain a calm environment and motivating them to complete their tasks.

 Start Delegating
Truly delegating tasks is another way that a manager can reduce his or her own stress. Allocating an important task to one or more employees, only to end up micromanaging his or her every move, defeats the purpose of delegating. With solid planning and open communications, employees will be ready to “run with the ball”.

 Help Alleviate Worry about Job Security
One of the major sources of stress for employees -- especially in today’s challenging economy -- is job security. Worrying about whether another round of layoffs will be coming can definitely increase stress and drain positive energy. One step to reduce stress is clearly communicating to valued employees about their future with the company.

 Your communication with employees should also include an ongoing conversation about their individual roles. Employees may be able to help identify new ways that they can contribute. Even just giving employees an opportunity to express fresh ideas and ways to improve or enhance the company can make them feel valued and important. Similarly, showing employees recognition for achievements can increase their confidence as well as reduce stress related to their workload.

 Tips for Reducing Stress Everyone Can Use
Finally, the following are some simple tips everyone can use to can lower the stress level and increase productivity.

 Make Time for Meetings and Completing Tasks - Segment your day to allow for meetings and the time necessary to complete tasks. It is very easy to lapse into scheduling meeting after meeting and not allow for the time necessary to actually complete your work. Blocking out time to complete a task on your calendar is just as important as allocating time form meetings.

 Avoid Setting Unrealistic Goals - When you strive to be perfect or try to achieve unrealistic goals, you could be setting yourself up for even greater stress and the risk of failure. Instead, set achievable goals with reasonable timelines. Remember with each successful task you achieve, your sense of accomplishment will grow while your stress level will be reduced.

 Schedule Time for Exercise - Regardless of how busy your schedule is, it is vitally important to get into an exercise routine. Whether you enjoy aerobics, jogging, walking, biking or any type of exercise, a regular routine will help reduce stress and recharge your batteries for the challenges ahead.

 Keep Your Sense of Humor - Laughter can be one of the best stress relievers of all. When things start to get too intense, it could be a time for a little humor to lighten the load.

Information Every Business Needs to Know

Benefits Newsletter
April 2010

In This Issue

Model Employer Children's Health Insurance Program Notice

On February 4, 2009, President Obama signed the Children's Health Insurance Program Reauthorization Act (CHIPRA) of 2009. CHIPRA includes a requirement that the Departments of Labor and Health and Human Services develop a model notice for employers to use to inform employees of potential opportunities currently available in the State in which the employee resides for group health plan premium assistance under Medicaid and the Children's Health Insurance Program (CHIP). The Department of Labor was required to provide the model notice to employers within one year of CHIPRA's enactment.

Through a notice in the February 4, 2010 FEDERAL REGISTER, the Department's Employee Benefits Security Administration (EBSA) announces the availability of the Model Employer CHIP Notice. The notice provides the "form and content of notice" as well as the "timing and delivery of the notice" while outlining the requirements for addition of state-specific information.

The model Employer CHIP Notice is now available in this electronic format.

Updated Application for Expedited Review of Denial of COBRA Premium Reduction

If an employee believes he or she is eligible for COBRA premium reduction through an employer-sponsored private sector health plan but the request for these benefits has been denied, the employee may apply to the U.S. Department of Labor to review the denial. If the continuation coverage is provided through a Federal, State or local government plan, or if it is provided pursuant to State insurance law, the employee should direct the request for review to the Department of Health and Human Services, or access their website. Click here for more information on Review of Denial of COBRA Premium Reduction.

Applications:
Printable Application for Expedited Review of Denial of COBRA Premium Reduction

Online Application for Expedited Review of Denial of COBRA Premium Reduction

Updated Information on Tax Benefits for Education

The IRS has released an updated version of Publication 970 (Tax Benefits for Education) for use in preparing 2009 tax returns. One of the key topics covered is employer-provided educational assistance. The publication describes qualified educational assistance programs. An employer can exclude up to $5,250 of educational assistance from the employee's wages each year under an educational assistance program. This means an employer should not include these educational benefits with employee wages, tips and other compensation in the Form W-2.

View a copy of Publication 970 or click for more information on tax issues related to employer-provided educational assistance.

HHS Releases List of Reported Breaches of Protected Health Information

On February 22, 2010, the U.S. Department of Health and Human Services’ Office of Civil Rights (OCR) posted on its website a list of the covered entities that have reported breaches of unsecured protected health information affecting more than 500 individuals. The HITECH Act requires covered entities to provide notification of breaches of unsecured protected health information to HHS. Breaches that affected 500 or more individuals must be reported to HHS within 60 days, and covered entities must provide this notification via the online form on the OCR website.

HHS is obligated under the HITECH Act to post on its website a list of the covered entities that have reported breaches affecting more than 500 individuals. The list of the covered entities that have reported such breaches, along with other relevant information about each breach.

For more information, visit the OCR website.

As businesses begin to hire in greater numbers this year, Manpower, Inc. has identified a number of hot trends that are likely to impact your business this year. From virtual workplace solutions, to flexible schedules and knowledge management - these trends will help your company be more successful in 2010.

The Agile Workforce
You will always have a place for your top talent. However, your workplace structure may need to look different than it did in the past. This new structure might include hiring contract workers or outsourcing projects or even whole functions of your business. Allowing employees to have more flexible schedules and telecommute rather than travel can make a significant difference in employee satisfaction and productivity. Evaluate your company from the top down to recalibrate who is making the business run, and consider all your available labor options in deciding how all your essential workers can be best utilized and accommodated.

Virtual Work
Embracing technology can increase productivity, enhance service and expand the geographic area in which your business operates. Creating a virtual workplace by providing employees with remote access to a company's information network and computer systems allows a business to keep valuable employees, forge collaboration and improve efficiency. You can also create virtual sales meetings by combining real-time desktop sharing with phone conferencing so your sales force and prospective clients can "meet" without having to travel. Business managers should explore these technology options when reassessing their workplace requirements and plans for the future.

Retaining Knowledge
The retirement of the vast baby boomer generation in today's workforce can mean a mass exodus of information that is vital to a company's success. How are you going to ensure that the valuable information residing with your employees is shared and preserved? Well before a worker retires, employers should put systems into place that facilitate the transfer of employee knowledge. This process is referred to as knowledge management.

Knowledge management does not wait for casual transition meetings to take place. Instead, employees should produce, organize and build an information database so that new employees do not have to duplicate prior efforts, waste time and money, or worse, lose the information permanently. These systems are especially important for employees with vitally important information related to a company's proprietary technology, as well as sales and marketing information and strategies. There should also be a continuous, sustained effort to make this information easily accessible. Businesses that do not yet have knowledge management systems in place should develop strategies to best preserve information in a structured, organized way.

As you move forward in 2010, stay ahead of the competition by realistically assessing your company, adapting to change and tap into trends that will allow your company to thrive and grow.

To transition from laying off to hiring full-time, many businesses are hiring contract or contingent workers to fulfill certain staffing needs on a temporary basis. A contract worker or independent contractor is typically hired by a company to complete an assignment or project, and may have expertise related to a specific subject matter.

The use of contract workers along with your permanent staff can help you accomplish short-term objectives and also reduce costs. However, it is important for employers that hire contract workers to make the relationship as mutually productive as possible. The following are some tips to help you get the most out of your contingent workforce.

How to Increase the Productivity of Your Contract Workers
First, an employer should make contingent workers feel that they are an important part of the business. Because of the temporary nature of their work, it's easy for contingent workers to feel emotionally and professionally disconnected from the company they serve. To overcome these issues, employers should implement orientation programs for their contingent workers. These programs should express the objectives and genuine values of the business, and ask the contingent workers to join in the effort.

Second, an employer needs to ensure that contingent workers have all the resources necessary to carry out their jobs. Having less costly labor won't pay dividends for a business that fails to invest enough in workers to enable them to accomplish their tasks. For skilled workers, this may mean updating computer equipment, or for others, giving proper guidance and management.

Avoid Penalties - Know the Difference between a Contract Worker and an Employee
Employers should be aware of the common pitfall of misclassifying contingent workers as "independent contractors" when they are in reality employees. The following are tips every business should know about hiring people as independent contractors versus hiring them as employees:

• Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.
• Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
• Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.
• The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
• If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees. For additional information, please click here.

A discrepancy in an employee's Social Security Number (SSN) usually arises when an employer reports an employee's wages on the Form W-2 (Wage and Tax Statement). The Social Security Administration (SSA) processes these wage reports as an agent of the Internal Revenue Service.

The SSA uses earnings information to determine eligibility for and the amount of Social Security benefits to which a worker may be entitled. If the combination of name and SSN on a Form W-2 cannot be matched to an SSA record, the SSA is unable to attribute the earnings to a worker's record. There are a number of reasons why reported information may not match records, including typographical errors, unreported name changes, inaccurate or incomplete employer records or misuse of a SSN.

Who Gets a No-Match Letter?
After the SSA processes wage reports submitted by an employer, it makes an effort to resolve items that do not match by sending letters to employees and employers, as well as self-employed individuals, informing them that a reported name or SSN does not match the Administration's records. These letters are commonly called "no-match" letters. The goal of these letters is to obtain corrected information to help the SSA identify the individual to whom the earnings belong so that they can be correctly credited to the individual's earnings record. The following is a brief description of two types of no-match letters.

Worker Letter - When the SSA processes wage reports, it notifies every worker whose name and SSN could not be matched to the SSA's records. This letter is sent to the address on the worker's Form W-2. If a valid address cannot be confirmed, this letter is sent to the employer.

Employer Letter - Approximately two weeks after the release of the worker letters, SSA sends employer no-match letters. Currently, these are sent to any employer who reported more than 10 no-matches that represented more than .5% of the W-2s submitted by that employer.

Responding to a No-Match Letter
The notice to employers advises them of the no-matches, and asks for corrected information. Employer notices will list up to 500 SSNs (without names) that the SSA could not match. Employers can contact the SSA for a full list if there are more than 500 no-matches. Employers are then asked to prepare Form W-2c (Corrected Wage and Tax Statement) for each SSN that was listed in the notice which the employer was able to correct.

In addition, one step recommended by the Department of Homeland Security (DHS) is to ask the employee to contact Social Security if there is a discrepancy with an SSA record. To ensure that an employee's record is correct, the SSA recommends following these steps:

1. If an employee's Social Security card does not show the correct name or SSN, or if the employee has lost his or her Social Security card, it is prudent for the employee to contact the local Social Security Office.
2. The employee should provide the employer with the correct information as shown on the Social Security card or the corrected card.

However, if the employee's name and SSN as shown on the Social Security card does match the information shown on the employee's Form W-2, it is important for the employee to contact the local Social Security office or call 1-800-772-1213 to find out why the SSA record does not match what was reported to the employer.

For More Information

• Employer No-Match Letters Process
• E-Verify - is a free Internet-based system operated by the Department of Homeland Security (DHS) in partnership with the Social Security Administration (SSA) that allows participating employers to electronically verify the employment eligibility of their newly hired employees
• Consent-Based Social Security Number Verification - is a fee and consent-based Social Security Number verification service available to enrolled private companies and Federal, State and local government agencies. It provides instant, automated verification and easily handles large volume requests. Using CBSV, participating companies can verify the SSNs of their customers and clients. An Employer Identification Number (EIN) is required to enroll and become a CBSV user.

If an individual makes eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement, a tax credit may be available if eligibility criteria are met. The following are six important areas to review related to the Retirement Savings Contributions Credit:

Income Limits
The Savers Credit, formally known as the Retirement Savings Contributions Credit, applies to individuals with a filing status and income of:

• Single, married filing separately, or qualifying widow(er), with income up to $27,750
• Head of Household, with income up to $41,625
• Married Filing Jointly, with income up to $55,500

Eligibility Requirements
To be eligible for the credit you must have been born before January 2, 1992, you cannot have been a full-time student during the calendar year and cannot be claimed as a dependent on another person's return.

Credit Amount
If you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans, you may be able to take a credit of up to $1,000 or up to $2,000 if filing jointly. The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.

Distributions
When figuring this credit, you generally must subtract the amount of distributions you have received from your retirement plans from the contributions you have made. This rule applies to distributions received in the two years before the year the credit is claimed, the year the credit is claimed, and the period after the end of the credit year but before the due date - including extensions - for filing the return for the credit year.

Other Tax Benefits
The Retirement Savings Contributions Credit is in addition to other tax benefits which may result from the retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a regular 401(k) plan are not subject to income tax until withdrawn from the plan.

Forms to Use
To claim the credit use Form 8880, Credit for Qualified Retirement Savings Contributions.

For more information, review IRS Publication 590, Individual Retirement Arrangements (IRAs), Publication 4703, Retirement Savings Contributions Credit, and Form 8880. Publications and forms can be downloaded at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Additional Information

• Tax Topic 610
• Form 8880, Credit for Qualified Retirement Savings Contributions
• Publication 590, Individual Retirement Arrangements (IRAs)

In This Issue

New Rules on Mental Health Parity

The U.S. Departments of Labor, Health and Human Services (HHS), and the Treasury jointly issued new rules providing parity for consumers enrolled in group health plans who need treatment for mental health or substance use disorders. The new rules prohibit group health insurance plans from restricting access to care by limiting benefits and requiring higher patient costs than those that apply to general medical or surgical benefits. The rules implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The new rules are effective for plan years beginning on or after July 1, 2010, and apply to employers with 50 or more workers whose group health plans choose to offer mental health or substance use disorder benefits.

The new law requires that any group health plan that includes mental health and substance use disorder benefits along with standard medical and surgical coverage must treat them equally in terms of out-of-pocket costs, benefit limits and practices such as prior authorization and utilization review. These practices must be based on the same level of scientific evidence used by the insurer for medical and surgical benefits. For example, a plan may not apply separate deductibles for treatment related to mental health or substance use disorders and medical or surgical benefits. They must be calculated as one limit.

A press release from the DOL on the regulations is available here.

COBRA Subsidy Payments in 2010

The IRS has responded to employer questions related to receiving the 35% share of the COBRA premium assistance in 2010 for 2009 coverage and what to do as it relates to Form 941 with the following guidance. If an employer receives an assistance eligible individual’s 35% share of the COBRA premium in 2010, the employer may claim the credit for the related premium subsidy on Form 941 for either the quarter in 2010 in which it receives the individual’s 35% premium payment or a later quarter in 2010, but not for a quarter in 2009, regardless of the fact that the premium is for coverage during 2009.

Q. Is the employer required to claim the credit on Form 941 for the quarter during which the COBRA subsidy is provided to assistance eligible individuals?

A. No. Instead of claiming the credit on Form 941 for the quarter during which the COBRA subsidy is provided, the employer may generally choose to claim the credit on Form 941 for a later quarter in the same calendar year.

Alternatively, if the employer has not claimed the credit on the original Form 941 for the quarter during which the COBRA subsidy was provided, the employer can file Form 941-X for that quarter. In all cases, however, if an employer chooses to reduce its payroll tax deposits during a quarter by the amount of subsidy provided during the quarter (or during a previous quarter), it must claim the credit for that subsidy amount on Form 941 for the quarter during which its payroll tax deposits were reduced. In addition, of course, an employer may not claim credit for the same subsidy amount on Forms 941 for more than one quarter.

Q. If, in 2010, an employer receives payment of an assistance eligible individual’s 35% share of the COBRA premium for 2009 coverage, does question FP-15 permit the credit for the related 65% premium subsidy to be claimed for a quarter in 2009?

A. No. If an employer receives an assistance eligible individual’s 35% share of the COBRA premium in 2010, the employer may claim the credit for the related premium subsidy on Form 941 for either the quarter in 2010 in which it receives the individual’s 35% premium payment or a later quarter in 2010, but not for a quarter in 2009, regardless of the fact that the premium is for coverage during 2009. In all cases, however, if an employer chooses to reduce its payroll tax deposits during the quarter based on the receipt of the individual’s 35% premium payment, the employer must claim the credit for the related subsidy amount on Form 941 for the quarter during which its payroll tax deposits were reduced. In addition, of course, an employer may only claim credit for the subsidy amount once.

By Andrew W. Singer, Esq. and Jason B. Klimpl, Esq.

The boundaries between personal and professional have become increasingly blurred due to the growing prevalence of internet-based social media, including interactive websites such as Facebook, MySpace, LinkedIn and Twitter. While social media outlets may be excellent platforms for employees to network and promote their employer’s business, a myriad of problems may result from an employee’s improper or unlawful use of a company’s name, reputation or confidential information while using such social media.

As a result, all employers must consider whether to implement a policy to guide their employees in responsibly and lawfully using social media and any employer that encourages its employees to use social media to further business objectives should have a social media policy in place. In deciding whether a social media policy is appropriate, an employer should first reflect upon the concepts described below.

Employee Use of Firm Identity. If an employee uses an employer’s name or a company e-mail address to communicate with or otherwise use social media, a third-party may be led to believe that the employee is speaking or writing on behalf of the company. A third-party may think that the employee is acting in an official capacity with authority to bind the employer, or that certain views espoused by the employee are the views of the company. For this reason and others, the FTC has implemented rules effective December 1, 2009, regulating the use of testimonials in advertising. Under these rules an employer may be held responsible for employee maintained blogs or other employee postings about the employer’s products and services. In an effort to avoid these problems, a social media policy may direct employees in such situations to use a disclaimer explicitly stating that his or her views are not those of the employer. The social media policy may also provide that employees are not permitted to act or speak as a representative of the company while using social media, unless given prior permission.

Conflicts with Employment Responsibilities. Employees should be prohibited from using social media – whether in or away from the office – in a way that conflicts with their professional obligations or work responsibilities. For example, an employee’s use of social media to promote services or businesses that compete with his or her employer may be prohibited. A policy should prohibit an employee’s excessive use of social media that results in deficient work performance, and employers may wish to limit employees’ in-office use of social media to certain hours. Finally, to the extent employees are permitted to use social media during working time, the policy should prohibit employees from using company computers or other equipment to conduct any commercial activity unrelated to the employer’s business.

Confidentiality and Intellectual Property Protections. A social media policy should address employees’ online use and dissemination of an employer’s confidential and proprietary information. The policy should clearly define what information is confidential to the employer and state how employees may or may not use such information. Employers may risk any right they have to protect client contact information by encouraging employees to connect with, link to or friend the employer’s clients through the employee’s personal social media accounts. These risks need to be balanced with the potential benefits to a business of doing so. The policy should also provide that the employer’s intellectual property, including trademarks, logos, and copyrighted material, may not be used by the employee while using social media without the company’s prior consent.

Employee Performance Feedback. In the event of a lawsuit by a terminated employee, positive feedback posted on social media by co-workers or supervisors may be used against the company to show that the worker was performing satisfactorily. For instance, in the event of a discrimination claim where a company terminated a worker for poor performance, it would be harmful to the company if one of its supervisors had “recommended” the worker on LinkedIn. As a result, a social media policy may contain a provision that prohibits employees from using social media to comment on or display information concerning the work performance of other employees without prior company consent.

Workplace & Co-Worker Privacy. Employees who use social media should be reminded of the need to honor the privacy rights of their co-workers. Thus, a policy may state that employees should seek permission from co-workers before writing or displaying information that might be considered a breach of privacy or confidentiality. Further, the social media policy should prohibit employees (including supervisors) from gaining or attempting to gain unauthorized or unlawful access to another employee’s private and secure social media platform, which may, for instance, be a violation of the federal Stored Communications Act and various state privacy laws.

The Employer’s Right to Monitor. Companies should be open with their employees and inform them of the company’s right to lawfully monitor their use of social media to protect legitimate business interests. However, the social media policy should also prohibit employees from using any information derived from an applicant’s or employee’s use of social media to unlawfully discriminate against that individual on the basis of a protected class.

Advising Employees to Use Common Sense. Any social media policy should appeal to employees’ common sense and sound judgment. The policy should remind employees that anything they write or display may be used to form opinions about the company and may permanently remain in the public domain. In this regard, the policy should urge employees to use common sense and utilize social media in a knowledgeable, respectful, and professional manner. Specifically, the policy should prohibit employees from jeopardizing the reputation or interests of the employer by making or engaging in personal attacks, obscenities, pornography, lewdness, defamation, harassment, intellectual property infringement, and other inappropriate behavior. Finally, employees should be reminded that any unlawful conduct while using social media may result in civil or criminal charges against them.

Conclusion. A well-crafted social media policy may be a useful tool for employers to prevent the dissemination of its confidential information, the improper use of its intellectual property, and a host of other problems stemming from employees’ use of social media. Consequently, companies should consider whether implementing such a policy would further their business objectives and fit within their company culture.

Andrew W. Singer, Esq. is partner in the employment law group at the New York City law firm of Tannenbaum Helpern Syracuse & Hirschtritt LLP. Jason B. Klimpl, Esq., an associate at the firm, focuses his practice on employment law and staffing industry issues. If you have any questions regarding the implementation of an employee social media policy or other issues of employment law please contact Mr. Singer at (212) 508-6723 (singer@thshlaw.com) or Mr. Klimpl at (212) 508-7529 (klimpl@thshlaw.com). This article is general in nature and is not intended to be legal or tax advice or a legal opinion rendered in response to a specific set of facts.

How do you write a job description that really works for your company? It’s all about a process that involves detailed investigation, collaborative effort, and streamlining of company policy. By the time you have successfully completed a job description, you will not only have a very effective tool in filling a job opening, but you will also help to reshape organizational standards for your company.

First, Perform a Job Analysis
To better understand the position you are filling, your company should first perform a job analysis. A job analysis is an investigation into the purpose and necessary requirements of any particular job. It should combine personal observation, interviews and collected data, such as questionnaires or work entries.

Identify the Job’s Purpose
The first step in performing your job analysis is to identify the reasons why the job exists at all. How does the job contribute to the success of your organization? Then, list what duties are necessary to make these important contributions. This list should only be a handful of duties, and not yet go into significant detail.

Reconstruct the Work Setting
Next, you should recreate the environment in which the employee will work. Start with the overall worksite itself. How is the site laid out? What equipment is used? Does the employee have to travel on or off the premises? What physical conditions will the employee encounter or experience? Note whether the employee will interact with the public or customers, or remain in a private setting.

After describing the worksite, think about the employee’s immediate workstation. How is the area arranged? What, if any, equipment will he or she use?

List Activities
To complete your job analysis, record the activities the employee will be required to perform. Is there an order in which work is performed on a daily basis? Do you expect the employee to produce specific results? Be sure to identify and list results or expectations.

Determine the Essential Functions
Once you have completed a job analysis, it is time to write the basic requirements or essential functions of the job. The job analysis will help you to clearly define the duties, activities and results expected of the employee. Also be sure to avoid preferences that do not relate to the essential functions of the job, such as an advanced degree for clerical work.

Include the amount of time spent on each task, possibly with ratios or percentages, as long as the figures are accurate. If appropriate, allow flexibility in the position so that an applicant does not believe he or she is pigeonholed into only a few tasks when you may want the employee’s role to grow. It is also important to include the input of several managers and employees to craft a more accurate and complete job description.

Recruiting and the ADA
When developing your job description, be sure you do not violate disability discrimination laws such as the Americans with Disabilities Act. Also, review your state's discrimination laws as well. Compliance guidance is available from the Office of Disability Employment Policy and the Job Accommodation Network (JAN). For more information on recruiting and hiring people with disabilities, please review the Recruiting and Hiring section on Disability.gov.

Use Your Job Description as a Company Standard
Finally, a skillfully-developed job description can reshape your company standards. The description should serve as the basis for how you evaluate performance in that position, since the company took the time to carefully investigate, define and revise the key requirements of the job. Using the job description in this regard will promote consistency throughout the employee relationship, from recruitment and training to performance review and succession. The more consistent and objective your company’s documents are regarding all job-related descriptions and reviews, the less exposure you will have to issues related to arbitrariness, favoritism or discrimination.

The IRS has released Rev. Proc. 2010-10, which updates for 2010 the maximum allowable fair market value (FMV) of an employer-provided vehicle for use in determining the value of an employee’s personal use of the vehicle.

If an employer provides an employee with a vehicle that is available to the employee for personal use, the value of the personal use must generally be included in the employee’s income and wages. (IRC § 61; Treas. Reg. § 1.61-21)

• The maximum value of employer-provided vehicles first made available to employees for personal use for which the vehicle cents-per-mile valuation rule provided under section 1.61-21(e) of the Income Tax Regulations may be applicable is $15,300 for a passenger automobile and $16,000 for a truck or van;
  
• The maximum value of employer-provided vehicles first made available to employees for personal use in calendar year 2010 for which the fleet-average valuation rule provided under section 1.61-21(d) of the regulations may be applicable is $20,300 for a passenger automobile and $21,000 for a truck or van.

For additional information, see Rev. Proc. 2010-10

In This Issue

Senate Passes Health Care Reform Bill

The Senate has passed a long-awaited health care reform bill, in an early-morning Christmas Eve vote.

The bill would require nearly every American to carry insurance; subsidies would be provided to help low-income people do so. Employers would be induced to cover their employees through a combination of tax credits and penalties.

The vote was 60-39, as 58 Democrats and two independents voted "yes," while Republicans unanimously voted "no." The House previously passed its own version in November. The Senate bill must now be merged with that legislation before the bill can become law.

Processing Form 5500

Beginning with plan years that start on or after Jan. 1, 2009, the U.S. Department of Labor will process Forms 5500 and 5500-SF exclusively through its Employee Retirement Income Security Act Filing Acceptance System (EFAST2).

The Department will not accept the paper versions of these forms, Annual Return/Report of Employee Benefit Plan, and Short Form Annual Return/Report of Small Benefit Plan, for plan years commencing on or after Jan. 1, 2009.  EFAST2 is scheduled to be available beginning January 2010 on www.efast.dol.gov.

Other news on plan form filing from the DOL includes:

"One-participant" plans for 2009 and later plans will also have the option of filing Form 5500-SF electronically.

Schedule SSA (Form 5500), Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits, will become its own form and no longer be a schedule to Form 5500 series.  It will become available for electronic filing during the 2010 plan year, with instructions to come in the next few months on filing 2009 plan year SSA data.

For 2009 plans, certain retirement plans that are maintained outside the U.S. for the primary benefit of nonresident aliens must file Form 5500-EZ instead of Form 5500.

More information on EFAST2, dates and filing requirements can be found at the Department of Labor's EFAST2 page, or by calling the EFAST Help Line, 1-866-463-3278.

U.S. Department of Labor Publishes Supplemental FAQs about the 2009 Form 5500

The U.S. Labor Department has published supplemental FAQs to Schedule C of the 2009 Form 5500 Annual Return/Report of Employee Benefit Plan. The FAQs are intended to provide guidance on questions from plans and service providers on requirements for reporting service provider fees and other kinds of compensation on the Schedule. The questions and answers are provided by the Department's Employee Benefits Security Administration.

The President has signed the Fiscal Year 2010 Defense Appropriations Act, which extends the eligibility period for the COBRA premium reduction for an additional two months (through February 28, 2010) and the maximum period for receiving the subsidy for an additional six months (from nine to 15 months).

COBRA Subsidy Extension Changes
On Dec. 19, 2009, the 2010 defense appropriations bill extended the COBRA premium reduction eligibility period for two months through February 28, 2010, and increased the maximum period for receiving the subsidy for an additional 6 months (from 9 to 15 months).

Individuals who had exhausted the reduced premium period before the legislation extended it to 15 months will have an extension of their grace period to pay the reduced premium. To continue their coverage, they must pay the 35 percent of premium costs by February 17, 2010, or, if later, 30 days after notice of the extension is provided by their plan administrator.

Individuals who lost their subsidy and paid the full 100 percent premium in December 2009 should contact their plan administrator or employer sponsoring the plan to discuss a credit for future months of coverage or a reimbursement of the overpayment.

Eligibility for the Premium Reduction: The premium reduction for COBRA continuation coverage is available to "assistance eligible individuals".

An "assistance eligible individual" is the employee or a member of his/her family who:

• Has a qualifying event for continuation coverage under COBRA or a state law that provides comparable continuation coverage (for example, so-called "mini-COBRA" laws) that is the employee's involuntary termination at any point from September 1, 2008 through February 28, 2010; and
• Makes a timely election of COBRA coverage.

Those who are eligible for other group health coverage (such as a spouse's plan) or Medicare are not eligible for the premium reduction. No premium reduction is available for premiums paid for periods of coverage that began before February 17, 2009.

Assistance eligible individuals who pay 35 percent of their COBRA premium are treated as having paid the full amount. The premium reduction (65 percent of the full premium) is reimbursable to the employer, insurer or health plan as a credit against certain employment taxes. For employer related COBRA subsidy administration, please click here.

About COBRA
COBRA gives workers and their families who lose their health benefits the right to purchase group health coverage provided by the plan under certain circumstances.

If the employer continues to offer a group health plan, the employee and his/her family can retain their group health coverage for up to 18 months by paying group rates. The COBRA premium may be higher than what the individual was paying while employed but generally the cost is lower than that for private, individual health insurance coverage.

The plan administrator must notify affected employees of their right to elect COBRA. The employee and his/her family each have 60 days to elect the COBRA coverage; otherwise, they lose all rights to COBRA benefits.

COBRA generally does not apply to plans sponsored by employers with fewer than 20 employees. Many States have similar requirements for insurance companies that provide coverage to small employers. The premium reduction is available for insurers covered by these State laws.

Period of Coverage
The premium reduction applies to periods of coverage beginning on or after February 17, 2009. A period of coverage is a month or shorter period for which the plan charges a COBRA premium. The premium reduction for an individual ends upon eligibility for other group coverage (or Medicare), after 15 months of the reduction, or when the maximum period of COBRA coverage ends, whichever occurs first. Individuals paying reduced COBRA premiums must inform their plans if they become eligible for coverage under another group health plan or Medicare.

Notice Requirements
ARRA, as amended, requires the provision of certain notices. Plan administrators need to provide information about the premium reduction to all individuals who have COBRA qualifying events from September 1, 2008 through February 28, 2010.

Plan administrators must also provide notice about the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act to individuals who have already been provided a COBRA election notice (unless the election notice included the updated premium reduction information).

• Individuals who are "assistance eligible individuals" must be provided this notice by February 17, 2010;
• Individuals who experience a termination of employment on or after October 31, 2009 and lose health coverage must be provided this notice within the normal timeframes for providing continuation coverage notices; and
• Individuals who are in a "transition period" (a period that begins immediately after the end of the 9 months of premium reduction under the previous ARRA limit, as long as those 9 months ended before December 19, 2009 and the premium reduction provisions of the 2010 DOD Act would apply due to the extension from 9 to 15 months) must be provided this notice within 60 days of the first day of the transition period.

The DOL is working on updating their model COBRA notices for download and should be finished by mid-January or earlier and will be available on HR & Benefits Essentials.

Expedited Review of Denials of Premium Reduction: Individuals who are denied treatment as assistance eligible individuals and thus are denied eligibility for the premium reduction (whether by their plan, employer or insurer) may request an expedited review of the denial by the U.S. Department of Labor. The Department must make a determination within 15 business days of receipt of a completed request for review. The official application form is available at www.dol.gov/COBRA and can be filed online or submitted by fax or mail.

Switching Benefit Options: If an employer offers additional coverage options to active employees, the employer may (but is not required to) allow assistance eligible individuals to switch the coverage options they had when they became eligible for COBRA. To retain eligibility for the ARRA premium reduction, the different coverage must have the same or lower premiums as the individual's original coverage. The different coverage cannot be coverage that provides only dental, vision, a health flexible spending account, or coverage for treatment that is furnished in an on-site facility maintained by the employer.

Income Limits: If an individual's modified adjusted gross income for the tax year in which the premium assistance is received exceeds $145,000 ($290,000 for joint filers), then the amount of the premium reduction during the tax year must be repaid. For taxpayers with adjusted gross income between $125,000 and $145,000 (or $250,000 and $290,000 for joint filers), the amount of the premium reduction that must be repaid is reduced proportionately. Individuals may permanently waive the right to premium reduction but may not later obtain the premium reduction if their adjusted gross incomes end up below the limits. If you think that your income may exceed the amounts above, consult your tax preparer or contact the IRS at www.irs.gov.

For additional information, see:

• Statement on COBRA subsidy extension
• Fact Sheet on COBRA subsidy extension
• H. R. 3326-64 - COBRA Premium Reduction Provision

Do you have a drug or alcohol abuse problem in your workplace?  Have you considered implementing a drug-free workplace program?  Below are a few of the most frequently asked questions about preventing and dealing with drugs in the workplace.  

Q. What exactly is a "drug-free workplace"?
A drug-free workplace is a workplace without health, safety and productivity hazards caused by the abuse of drugs or alcohol by employees.

Q. What is a drug-free workplace program?
A drug-free workplace program typically has five components:

1. A drug-free workplace policy
2. Supervisor training
3. Employee education
4. An Employee Assistance Program (EAP)
5. Drug testing 

All five of these components are not necessary, but all are worth considering.  The U.S. Department of Labor reports that the more components you include in your program, the more effective it may be.  Of course, the nature and resources of your organization may guide the scope of your program.

Q. What limits or requirements are there for drug testing employees and applicants?
Federal law largely grants employers discretion in the area of drug testing. Certain organizations in safety-sensitive transportation industries- aviation, trucking, railroads, mass transit, pipelines and other transportation industries- need to test their employees in accordance with U.S. Department of Transportation regulations.  

Many states, however, have laws that govern how employers can implement drug testing, including the types of permissible laboratory testing and confirmation of positive test results.  To see your state's laws regarding employee drug and alcohol testing, visit the HR & Benefits Essentials State Employment Laws Section or your state website.

Q. What is the Drug-Free Workplace Act of 1988?
The Drug-Free Workplace Act of 1988 requires some federal contractors and all recipients of federal grants to commit to providing a drug-free workplace as a precondition to receiving a contract or grant from any federal agency.  The Act does not require drug testing, but it does require employers to publish a policy statement, establish a drug-free employee awareness program, and notify employees of the consequences of a criminal drug violation.  Several states have their own drug-free workplace acts regarding state contracts. 

Q. Can I get my workers' compensation premiums reduced for implementing a drug-free workplace program?
Although the federal government does not certify drug-free workplace programs, some states provide discounts in workers compensation premiums to employers that implement certified drug-free workplace programs.  The maximum premium discount is typically around 5 percent.  Please check with your state's worker's compensation department for more information.

Q. Are there protections in place concerning discriminating against an employee with an addiction?
Under specific circumstances, an employee with a history of alcoholism or drug addiction may be considered a qualified individual with a disability under the Americans with Disabilities Act (ADA) and other Federal non-discrimination statues. For more information on discrimination and addiction, please click here. Job Accommodation Network (JAN) also offers information about how the ADA affects employees with a history of alcoholism and drug addiction.

*For assistance in designing a drug-free workplace policy, you can use the U.S. Department of Labor's Drug-Free Workplace Policy Builder.

The IRS has issued the optional standard mileage rates for 2010 that taxpayers may use to deduct the costs of operating an automobile for medical, business, moving or charitable purposes.

For medical and moving purposes, the standard mileage rate has been reduced to 16.5 cents per mile in 2010 from 24 cents in 2009.  For the costs of operating an automobile for business purposes, individuals may deduct 50 cents per mile in 2010.  These decreased rates for 2010 are attributed to a general reduction in transportation costs.

The standard mileage rate for serving charitable organizations is 14 cents per mile. The rates are not mandatory, but only optional in place of calculating actual operating costs that individuals spend during these activities. The new mileage rates take effect Jan. 1, 2010.  To view a copy of the IRS press release, click here.  The full rule is available here.