By: Karen N. Shapiro
On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act which was modified by a reconciliation measure on March 26, 2010. This law implements significant change to our health care system and there are many provisions that affect employers. Below is a discussion of some of them.
Effective in 2014, state-based health insurance exchanges must be established to allow individuals and small businesses with up to one hundred (100) employees to purchase qualified coverage. Each exchange will be administered by a government agency or non-profit organization and will have rules about the offering and pricing of health insurance. The exchanges are intended to provide an organized and competitive marketplace for health insurance.
The law will not require employers to offer health insurance. However, effective in 2014, employers with fifty (50) or more employees that do not offer coverage, offer coverage that is unaffordable (exceeds nine and one half percent (9.5%) of family income), or offer too little coverage (the plan’s share of the cost is less than sixty percent (60%)) are subject to a penalty if at least one full-time employee receives health coverage assistance in an amount equal to $2,000 per full-time employee, excluding the first thirty (30) employees.
In addition, employers with fifty (50) or more employees that do offer coverage but have at least one full-time employee receiving a premium tax credit will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee excluding the first thirty (30) employees.
Effective in 2014, employers that offer coverage will be required to provide a free choice voucher to employees with incomes less than four hundred percent (400%) of the federal poverty level whose share of the premium exceeds eight percent (8%) but is less than nine and eight-tenths (9.8%) of their income and who choose to enroll in a plan in the health insurance exchange. The voucher amount is equal to what the employer would have paid to provide the greatest amount of coverage to the employee under the employer’s plan and will be used to offset the premium costs for the plan in which the employee is enrolled. Employers providing free choice vouchers will not be subject to penalties for employees that receive premium credits in the exchange.
Effective in 2014, employers with more than two hundred (200) employees must automatically enroll employees’ coverage offered by the employer. Employees may of course opt out of coverage.
In addition, on March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act. Employers who hire individuals between February 3, 2010 and January 1, 2011 who have been out of work for more than 60 days and who are hired into newly created positions or positions that are vacant because the prior occupant was laid off, resigned or was terminated with cause are eligible for an exemption on their Social Security payroll tax if these newly-hired employees remain on their books from March 19, 2010 through December 31, 2010. Employers of such employees may reduce their Old Age, Survivors, and Disability Insurance (OASDI) portion of the Federal Insurance Contribution Act (FICA) taxes by 6.2%. In addition, the HIRE Act provides an income tax credit of up to $1,000 for every new employee who is employed for 52 weeks.
Federal bills of note include…
Section 127 of the Internal Revenue Code allows an employee to exclude from income up to $5,250 per year in educational assistance at the undergraduate and graduate levels, regardless of whether the education is job-related. This benefit is currently scheduled to end on December 31, 2010. A bill is pending to extend the benefit beyond the current sunset date.
The Protecting Older Workers Against Discrimination Act, introduced in October 2009, proposes to amend The Age Discrimination in Employment Act and overturn a U.S. Supreme Court decision by permitting an individual to show that age was a motivating factor rather than the motivating factor in an employment decision.
The Employment Non-Discrimination Act, which was introduced in June 2009, would apply to employers with 15 or more employees and would prohibit discrimination on the basis of sexual orientation and gender identity.
The FORE Warn Act proposes to amend the WARN Act by expanding employer coverage from employers with 100 or more employees to employers with 75 or more employees, increasing the required notice period from 60 to 90 days, and generally prohibiting waivers of WARN rights.
The Healthy Families Act would require employers with 15 or more employees to provide at least one hour of paid leave for every 30 hours worked up to a maximum of 56 hours. Accrual would start on the first day of employment and could be used on the 60th day of employment. Accrued, unused leave would carry over from year to year. Leave could be used for the employee's own illness or to care for a relative or for victims of domestic violence.
Lastly, there are somewhere around 20 bills proposing to amend the federal Family Medical Leave Act. Proposed amendments include expanding employer coverage from employers with 50 or more employees to those with 25 or more employees, providing leave to eligible employees to attend their child's school or community organization activities, and providing leave to eligible employees for routine, family medical needs.
The 427th session of the Maryland General Assembly ended at midnight on Monday, April 12, 2010. There were a total of 169 bills introduced in the House and Senate relating to employment. Of the 169 bills introduced, 60 passed both chambers and 15 have been signed into law by the Governor. Some highlights are:
The Maryland Wage Payment and Collection Law has been amended to expressly state that the definition of “wage” includes overtime wages. Although the definition arguably already included overtime wages, it did not do so expressly and some federal courts in Maryland have held that unpaid overtime is not a claim under the Wage Payment and Collection Law. The statute is now clear and employees who are successful in bringing a claim under the Wage Payment and Collection Law, including a claim for overtime, may receive up to three times their unpaid wages plus their attorneys’ fees.
There is now an administrative procedure for the Commissioner of Labor and Industry to issue an order to pay wages not to exceed $3,000 under certain circumstances and provides an employer the right to request a de novo hearing on such order when it becomes final.
The Modernization and Tax Relief Act provides alternative methods for determining the base period for unemployment insurance under special circumstances and modifies benefit eligibility for part-time workers. The law further creates limited additional training benefits for specific individuals if not paid by employers.
The Job Creation and Recovery Tax Credit provides a tax credit of $5,000 per employee up to $250,000 for an employer who hires a qualified employee (one who lives in the State of Maryland, is currently receiving unemployment benefits, or has recently exhausted unemployment benefits) for a qualified position (full time, expected period of 12 months or more, and located in Maryland or a newly created position / one that has been vacated for 6 or more months).
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This article is reprinted with permission from MCSHRM.
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