Personnel(ly) Speaking

A Monthly Newsletter from

Personnel Management Systems, Inc.

April 2010

Change is the New Normal

It’s April, so all our accounting friends are moaning and groaning.

Well, HR people can honestly say “we feel your pain”.  The last few months have been brutal if you’re in the HR business.  This is not a political statement, but just an acknowledgement of the plethora of new regulations affecting business.  Health Care reform and various economic stimulus laws are the most recent to affect the way we all operate.  If your company has an HR function and/or is wondering about Health Care, I’ve provided a brief update below. 

Health Care Reform

I’m sure you have been inundated with information and commentary about the recently passed Health Care reform.  The Patient Protection and Affordable Care Act (PPACA) is complicated and serious, affecting each and every one of us.  Here are the basic elements of the plan – in extreme summary form.  (The plan is almost 3000 pages long).  Most of these items phase in over several years.

• Lifetime benefit caps are eliminated.
• Coverage is mandated for children up to age 26.
• There will be no exclusions for preexisting conditions.
• Health Care Exchanges will be created by individual states.  Anyone who does not have an employer-provided plan can purchase coverage from the exchange.
• Organizations with more than 50 employees that do not offer affordable coverage will have to pay a penalty of $2000 per full time employee (FTE).  (No penalty for less than 50 FTEs).
• Businesses with less than 25 employees may receive a tax credit to help offset the cost of purchasing health insurance.
• Waiting periods cannot exceed 90 days.
• Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) are capped at $2500 and exclude over-the-counter medicines unless you have a prescription from a licensed health care provider.
• A new 40% excise tax on “high value” plans will be implemented.  (This is intended to be a tax on very deluxe benefit plans).
• Employers will report the value of the health plan on employees’ W-2 forms.
• The Medicare tax will increase for high wage earners.
• Employers must provide a place (not just a bathroom) for nursing mothers to express breast milk.

HIRE Act

HIRE stands for Hiring Incentives to Restore Employment Act.  This Act gives businesses two new incentives to hire employees.  The first is a payroll tax exemption from the employer’s 6.2% share of social security tax on all wages paid to qualified employees hired between March 19, 2010 and December 31, 2010. 

The second incentive is a $1000 tax credit for each employee hired between February 3, 2010 and January 1, 2011 and who works for you for at least one year.

The HIRE Act is a government program so the incentives are actually a lot more complicated and have multiple conditions and exceptions.   Get professional advice.

Unemployment Insurance and COBRA Subsidy Extension

Yet again, Congress will extend Unemployment Insurance to those whose 26 weeks have ended and also continue the COBRA subsidy.  The stopping and starting, and general lack of predictability, of these programs make it very difficult to administer efficiently.

As always, if you need HR assistance, call on us.

Personnel(ly) Speaking is a monthly comment on HR issues of importance.  It is intended to provide general information and must not be construed as legal advice.  Reproductions are allowed as long as credit for this information is given to PMSI.  We welcome your comments, questions, and concerns.  © PERSONNEL MANAGEMENT SYSTEMS, INC., Corporate Office, (425) 576-1900

www.hrpmsi.com.