Posts Tagged ‘Internal Revenue Service’

Form 5500 Revisions Impact Both Small And Large Employers

Tuesday, September 20th, 2016

The post below is a guest blog from Rob Krieg who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

hcw5500revisionsblogThe Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) recently proposed significant changes to the form 5500 which has implications for both large employers and small employers. Targeting an effective date of 2019 plan year filings, the recent DOL Factsheet explains that many changes are on the horizon in an attempt to modernize and improve the Form 5500 annual return/report filed by employee benefit plans.  They identify the driving forces behind the changes include a desire to 1) modernize financial reporting, 2) provide greater information regarding group health plans, 3) enhance data mine-ability, 4 ) improve service provider fee information, and 5) enhance compliance with ERISA and the code.

The most notable proposed changes include:

  • Removing the small group exemption where previously many employers with less than 100 enrolled participants were exempt from filing;
  • Adding a new comprehensive schedule J (Group Health Plan Information) requirement;
  • New Schedule C requirement for each service provider;
  • And an expanded schedule H for funded plans.

Regardless of a group’s size, benefit plans should pay special attention to the new Schedule J requirements. Plans will now be asked to complete information on the types of benefits offered and the funding methods, including if benefits are HDHP, health FSA or HRA.  There will also be questions on participant contributions and employer contributions as well as enrollment information, including participants and dependents.  There appears to be requirements for claims data (including claims submitted, denied, appealed, paid, and where claims are paid from – insurer, trust or employer general assets.  And last but not least, there will be a focus on plan compliance with questions around COBRA, grandfathered status, MLR rebates, HIPAA, GINA, MHP SBC requirements, and SPD requirements.

As traditionally occurs, the DOL has asked for comments to the proposed regulations and these comments are due by October 4, 2016.  It is clear that the agencies are working together to significantly increase Form 5500 reporting obligations for many employers with group health plans. As explained in the fact sheet, the agencies are looking to update the filing requirement to gather data sufficient to support their enforcement efforts. Therefore, employers should take note and make sure to tighten up their benefit plan compliance over the next year.  The silver lining is that the agencies have provided plenty of lead time for employer’s to get into compliance.

If you have questions about these new regulations, or about your health benefit plan’s compliance with some of the regulations mentioned in the proposed regulations, contact your HCW consultant.

Six Key Steps to Properly Classifying Independent Contractors

Thursday, September 16th, 2010

It has been well documented that the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) are cracking down on employers who misclassify employees as independent contractors.

Federal and state governments are seeking to contest these misclassifications due to the current economic strain on their finances.  Independent contractors, who can be reclassified as employees, represent increased revenue in the form of federal and state payroll income taxes, Social Security taxes, Medicare taxes, and unemployment insurance taxes.  President Obama has allocated $25 million to the DOL to hire additional federal investigators to lead this effort, and predicts the outcome will bring in another $7 billion in tax revenues over the next 10 years.

What Steps Should Employers Take to Properly Classify Their Workers?

1. Written, signed contracts.  Independent contractors should have specific contracts with the employer, including all terms and conditions citing when and where the work will be performed and that the contractor is not entitled to the same benefits as an employee.

2. Performance of duties. Provide an independent contractor with a general overview of his or her responsibilities within the contract itself.

3. Form 1099 vs. W-2. Independent contractors should receive a Form 1099 at the end of a calendar year, not a W-2.  A Form 1099 demonstrates the contractor was treated as any other accounts payable, and not as an employee requiring taxation.

4. Be consistent.  Treat your employees like employees and your contractors like contractors.  Independent contractors should not be supplied with the same perks (for example, equipment, cars, expenses, etc.) as your employees.

5. Recordkeeping. Retain any information that demonstrates the independent contractor is in business for themselves and is not an “employee” of your organization.  These items could include business cards, letterhead, signed contracts, federal taxpayer ID number, copies of business insurance and workers’ compensation insurance policies.

6. Conduct your own audit.  You can have your attorney, auditor, or an HR professional conduct an audit on your behalf to ensure these steps and others are being followed to properly classify your workers.

The IRS uses Form SS-8 as a guideline for determining worker classification.  Familiarizing yourself with the contents of this form and the questions asked will help you when classifying your workers.

For more details on the proper classification of employees and independent contractors, please call a member of CAI’s Advice and Counsel team at (919) 878-9222 or (336) 668-7746.

Photo Source: Wikimedia Commons