Vision Payroll

October 29, 2011

IRS Announces Increase in Qualified Transportation Benefits Exclusion for Qualified Parking

IRS Announces Increase in Qualified Transportation Benefits Exclusion for Qualified Parking
IRS Announces Increase in Qualified Transportation Benefits Exclusion for Qualified Parking
In IR-2011-104 and Revenue Procedure 2011-52, the Internal Revenue Service (IRS) announced that the monthly limit on the value of qualified transportation benefits exclusion for qualified parking provided by an employer to its employees for 2012 rises to $240, up $10 from the limit in 2011.

Other Exclusions Revert to Previous Levels

The IRS also announced that the temporary increase in the monthly limit on the value of the qualified transportation benefits exclusion for transportation in a commuter highway vehicle and transit pass provided by an employer to its employees expires and reverts to $125 for 2012. As previously reported, the American Recovery and Reinvestment Act of 2009, also known as ARRA, increased the monthly exclusion for transit passes and commuter highway vehicles under §132 of the Internal Revenue Code of 1986 (IRC) for part of 2009 and all of 2010 and 2011. Since this provision of ARRA expires December 31, 2011, the exclsuion reverts to the previous limit of $120, adjusted for inflation to $125 for 2012.

Contact Vision Payroll Today

Contac Vision Payroll today if you have further questions on the qualified transportation benefits exclusion.

August 31, 2011

Tip of the Week: COBRA Subsidy Not Ending Today According to the US Department of Labor

COBRA Subsidy Not Ending Today According to the US Department of Labor
COBRA Subsidy Not Ending Today According to the US Department of Labor
According to the US Department of Labor, some individuals will still be eligible to receive the COBRA premium reduction (subsidy) beyond August 31, 2011. It had been reported that the subsidy ended today.

ARRA Provided a COBRA Premium Reduction

The American Recovery and Reinvestment Act (ARRA) provided a COBRA premium reduction for eligible individuals who were involuntarily terminated from employment through the end of May 2010. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010. Since August 31, 2011 is fifteen months after May 31, 2010, it had been incorrectly reported that the subsidy was ending

Severance Agreement Among Reasons for Extended Subsidy

However, individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare even if their COBRA coverage did not start until a later date due to the terms of a severance arrangement, or the use of banked hours or other similar provision that delayed the start of their COBRA coverage. For example if an individual was involuntarily terminated on May 31, 2010 and due to the terms of a severance agreement their COBRA coverage did not start until December 1, 2010, they would still be eligible for the full 15 months of subsidy through February 29, 2012 as long as they are not eligible for another group health plan or Medicare.

Contact Vision Payroll Today

Contact Vision Payroll if you have further questions on the COBRA subsidy.

April 4, 2011

Connecticut Imposes Special Assessment on Employers

CT DOL Commissioner Glenn Marshall
CT DOL Commissioner Glenn Marshall
In Connecticut, the average number of workers filing for Unemployment Insurance (UI) benefits since 2007 has grown from 40,000 to approximately 130,000. In 2009 and 2010, UI benefit payouts greatly exceeded UI tax revenues. In 2011, UI benefit payouts will continue to exceed tax revenues by a substantial margin.

Funding Imbalance Has Led to Insolvency

Because of this funding imbalance, Connecticut’s Unemployment Trust Fund became insolvent on October 13, 2009.

Connecticut Borrowed from the US Department of Labor

In order to continue paying UI benefits to unemployed workers, as required by law, Connecticut began borrowing funds from the US Department of Labor (DOL). To date, Connecticut has borrowed approximately $650 million and the Labor Department projects that total borrowing could approach $1 billion over the next two to three years.

ARRA Waived Interest Through 2010

Generally, federal loans carry interest, but the American Recovery and Reinvestment Act of 2009 (ARRA) contains a provision waiving interest on UI trust fund loans through 2010. Connecticut will still have substantial loan balances outstanding in 2011 and beyond. Under federal law, employers are required to pay interest to the federal government beginning in 2011.

Interest Collected Through Special Assessments

Under Connecticut law, interest payments from employers are collected through annual Special Assessments, excluding those entities that reimburse the state dollar-for-dollar for the costs of benefits paid to former employees. The first annual Special Assessment date for Connecticut employers is August 1, 2011 with the payment due by August 31, 2011.

Special Assessment Estimated at $40 Million

Connecticut’s total Special Assessment for 2011 is estimated to be approximately $40 million. Based on this estimate, the average cost per employee will be roughly $40. For example, a business that employs ten workers can expect a Special Assessment bill of approximately $400 in August 2011. The 2011 Special Assessment figures are estimates and, therefore, subject to change based on variables such as the actual amounts borrowed and the total number of active employers as of August 2011.

FUTA Tax Rate Expected to increase for 2011

In addition to interest costs, Connecticut and other states with federal loans outstanding for two consecutive years must make additional payments into the Federal Unemployment Tax Act (FUTA) system to pay down the loan principal. Therefore, the effective FUTA tax rate for calendar year 2011, payable in January 2012, will increase from 0.8% to 1.1%.

Additional FUTA Tax to Be Applied To Loan Principal

The additional FUTA tax collected, approximately $21 per employee, will be applied to the state’s outstanding loan balance – thereby reducing the loan principal.

Contact Vision Payroll Today

Contact Vision Payroll if you have any questions on Connecticut payroll processing.

June 28, 2010

Department of Labor Rules That Mooning of Co-Worker Is Not Gross Misconduct

The US Department of Labor (DOL) Employee Benefits Security Adminstration (EBSA) has ruled in a determination letter that the mooning of a co-worker is not gross misconduct that would disqualify an individual from receiving COBRA premium assistance under the American Recovery and Reinvestment Act of 2009 (ARRA). The ruling came to light when the employer in the case, Stormont-Vail Health Care, Inc. (Stormont-Vail), requested a temporary restraining order (TRO) staying the final determination letter. In Stormont-Vail Health Care, Inc. v. US Department of Labor EBSA, DCKS, 10cv4052-RDR, 5/27/2010, the court denied the motion for the TRO.

According to the court, Jennifer Reavis (Reavis) was employed by Stormont-Vail as a nurse. Stormont-Vail received a report that “Reavis told [a male nurse] to answer some patient call lights, that he assertively told her ‘no, I’m busy,’ and that in response Reavis bent over with her scrub pants pulled down, exposing her rear end.” In response, “Reavis has claimed that she was responding to a provocative finger gesture and that she only partially exposed her backside to the male nurse.” Stormont-Vail fired Reavis and disallowed her claim for COBRA premium assistance under ARRA. Reavis filed an appeal with the Department of Labor, which ruled that Reavis did qualify for the premium assistance.

Due to the clear lack of standards to determine gross misconduct for COBRA and ARRA purposes, Vision Payroll strongly recommends that employers consult with a competent labor law attorney for assistance in deciding if ARRA premium assistance should be denied because of gross misconduct.

April 30, 2010

Question of the Week: When Does the COBRA Subsidy Period End?

This week’s question comes from Lisa, an office manager. We may need to layoff a few employees. Some of them may elect COBRA continuation coverage. I know there was a subsidy for employees laid off through March 31, but I just heard that the subsidy period was extended. When does the COBRA subsidy period end? As noted by the Internal Revenue Service (IRS) in IR-2010-052, under The Continuing Extension Act of 2010, workers who are involuntarily terminated during April and May might be eligible for the sixty-five percent subsidy on COBRA continuation coverage. Eligible employees pay a reduced premium to their employer who then pays the difference. The employer may claim a credit on Form 941 for the amount paid. Contact Vision Payroll for further information on the COBRA subsidy period extension.

March 12, 2010

Question of the Week: What Do We Need to Provide Vision Payroll to Get the COBRA Subsidy Credit?

This week’s question comes from James, a company controller. We have employees who are eligible for the COBRA subsidy credit. We receive a credit on Form 941 for the subsidy we provide employees. What do we need to provide Vision Payroll to get the COBRA subsidy credit? Answer: The COBRA subsidy credit has been extended to include employees terminated through March 31, 2010. The credit is generally 65% of the total premium, but Notice 2009-27 provided further details on the calculation of the premium reduction. Simply provide Vision Payroll the amount of the employer subsidy eligible for the credit and Vision Payroll will reduce the federal tax deposit due on Form 941.

March 5, 2010

Question of the Week: Has the COBRA Premium Subsidy Been Extended

This week’s question comes from Dawn, an HR manager. We are terminating someone today. I thought the COBRA subsidy expired at the end of February. Now I hear that it’s been extended again. Has the COBRA premium subsidy been extended? Answer: On Tuesday, President Barack Obama signed into law, HR 4691 (PL 111-144), which extended the COBRA premium subsidy to include workers involuntarily terminated in March 2010. Benefits were also extended to certain workers who lost coverage due to a reduction of hours and then were involuntarily terminated. Furthermore, work continues on HR 4213, which would extend coverage to employees who are involuntarily terminated during 2010. Contact Vision Payroll if you need further information on the COBRA subsidy extension.

February 3, 2010

Tip of the Week: COBRA-ARRA Subsidy Extension and New Requirements

COBRA allows eligible individuals to continue employer-provided group health coverage for a specified period due to certain qualifying events, such as job loss. In February 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) was enacted and provided a temporary 65% COBRA (or similar state continuation coverage) premium subsidy for eligible individuals. In December 2009, President Obama signed the Department of Defense Appropriations Act (2010 DOD Act or DDAA), which also amended ARRA.

The law extends the eligibility period, includes a retroactive subsidy extension, and imposes new notice requirements. The notice requirements are necessary so that all eligible employees know and understand the options that are available to them under the 2010 DOD Act. You can also get tax credits for individuals who may not have been previously eligible.

To learn more and get a list of action items that you can use right now, be sure to read the featured article by the HR pros at MyHRSupportCenter, COBRA-ARRA Subsidy Extension and New Requirements. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

January 27, 2010

Tip of the Week: DOL Releases Updated COBRA Model Notices

The US Department of Labor (DOL) has released updated COBRA model notices to help employers meet the notification requirements created by the passage of the Department of Defense Appropriation Act, 2010 (2010 DOD Act). The notices are the Updated General Notice, the Premium Assistance Extension Notice, and the Updated Alternative 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 February 28, 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.

Plan administrators must provide notice to certain individuals who have already been provided a COBRA election notice that did not include information regarding the American Recovery and Reinvestment Act of 2009 (ARRA), as amended. This model Premium Assistance Extension Notice includes information about the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act. Listed below are the affected individuals and the associated timing requirements.

  • Individuals who were “assistance eligible individuals” as of October 31, 2009 (unless they are in a transition period – see below), and individuals who experienced a termination of employment on or after October 31, 2009 and lost health coverage (unless they were already provided a timely, Updated General Notice) must be provided notice of the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act by February 17, 2010;
  • Individuals who are in a “transition period” must be provided this notice within 60 days of the first day of the transition period. An individual’s “transition period” is the period that begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under ARRA prior to its amendment. An individual is in a transition period only if the premium reduction provisions would continue to apply due to the extension from nine to 15 months and they otherwise remain eligible for the premium reduction.

Insurance issuers that provide group health insurance coverage must send the Updated Alternative Notice to persons who became eligible for continuation coverage under a State law. Continuation coverage requirements vary among States and issuers should modify this model notice as necessary to conform it to the applicable State law. Issuers may also find the model Premium Assistance Extension Notice or the Updated General Notice appropriate for use in certain situations.

Vision Payroll recommends employers consult with their benefit broker, COBRA administrator, and labor law attorney to ensure compliance with the updated notice requirements.

January 22, 2010

Question of the Week: Why Did My Federal Income Tax Refund Go Down?

This week’s question comes from Rachael, a receptionist. I just filed my 2009 tax returns. Usually I get a big refund, but this year my refund was a lot less. My income and deductions are pretty much the same as in 2008. Why did my federal income tax refund go down? Answer: Your income tax refund is based on many factors, but one important factor to consider is the amount of federal income tax withheld. Last February, the Internal Revenue Service released revised withholding tables that increased most taxpayers’ take-home pay by reducing the amount of federal income tax withheld. These tables reflected changes mandated by the American Recovery and Reinvestment Act of 2009, including the Making Work Pay Credit. Contact Vision Payroll if you have any questions.

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