- by Jim O'ConnellFeb 14, 2017
If the president’s executive orders on the Affordable Care Act and immigration are any guide, employers can expect big changes in the scope, complexity and cost of federal government compliance requirements during the first 100 days of the Trump Administration. Working with a Republican-controlled Congress, Trump Administration policy initiatives can be expected not only to break new policy ground, but reverse Obama Administration positions on several key compliance issues. Employers need to be ready to adapt quickly to changing government requirements and should expect the driving principles to be deregulation—and jobs. more...
Retain, Remove, Replace, Reduce and Now Repair? Understanding How the Fifth “R” Will Affect the Affordable Care Actby Jim O'ConnellFeb 13, 2017
President Trump and congressional Republicans now realize that they cannot allow the existing ACA health insurance infrastructure, now seven years in development, to collapse, not only taking insurance away from over 20 million people but jeopardizing already-fragile insurance markets. As a result, we expect the Republican strategy to “repeal” ACA would be superseded by a “4-R’s” plan: certain sections of the healthcare reform law would be “retained,” others would be “removed,” still others would be “replaced,” and a few would be “reduced.” In addition, there seems to the late-breaking news of a fifth “R”: “repair.” more...
- by Jim O'ConnellJan 26, 2017
There seems little doubt that President Trump’s executive order, together with the January votes in the House and Senate on a budget resolution that contemplates repeal and replacement, sometime in 2017, represent the first steps in an effort to dismantle the Affordable Care Act. Read the blog to learn what employers can expect in the coming months. more...
- by Jim O'ConnellJan 6, 2017
With Republicans in control of the White House and both chambers of Congress, Administrative and legislative intent to repeal the Affordable Care Act (ACA), including the employer mandate to offer affordable coverage, would appear certain. But nothing is certain in Washington DC in 2017. In fact, there is so much uncertainty about the Affordable Care Act that three crystal balls are needed to forecast ACA change: for policy, process and timing. more...
- by Jim O'ConnellJan 5, 2017
The Washington D.C. Council recently approved the Universal Paid Leave Act of 2015 requiring employers to provide employees up to 8 weeks of paid parental leave, up to 6 weeks of paid family leave and up to 2 weeks of paid sick leave (“8/6/2”). The Paid Leave Act is awaiting approval from the mayor, who can veto the bill or allow it to become law without approval. If the DC Universal Paid Leave Act becomes law, it would be among the most generous mandatory paid leave measures in the nation. more...
- by Jim O'ConnellDec 9, 2016
In a December webcast hosted in conjunction with HR.Com, Ceridian's Jim O'Connell's presentation focused on the implications of the U.S. presidential election for compliance change and the need for proactive compliance management using HCM technology. These compliance changes will involve great uncertainty about costs, complexities and risks. Employers can meet challenges, costs and risks with a proactive compliance management strategy based on state-of the-art HCM technology. This blog post recaps the compliance content from that webcast. more...
- by Jim O'ConnellNov 29, 2016
Only nine days before sweeping changes to Fair Labor Standards Act rules were to have taken effect, a federal judge has issued a preliminary injunction suspending the final rule. From the standpoint of employer compliance, this ruling adds a new level of uncertainty to an already uncertain and complex 2017 compliance picture. more...
- by Jim O'ConnellNov 14, 2016
The election of Donald Trump and Republican majorities in Congress, will bring disruptive change to Washington DC—including to the Affordable Care Act. While media attention on President-elect Trump’s position on the healthcare reform law has focused on his desire to repeal it, the Trump-Congressional Republican position is best characterized as retain, remove, replace, reduce.
- by Jim O'ConnellNov 1, 2016
There is good news and bad news on the ACA Open Enrollment front. One million more Americans are expected to enroll in federal or state exchange plans in 2017, which is good news for 2 reasons. On the other hand, news that health insurance premiums are skyrocketing and more enrollees are receiving federal subsidies constitute the bad news. Read on to get the details and background behind both the good and bad news. more...
- by Jim O'ConnellOct 24, 2016
The October 7 jobs report stated the U.S. economy added a respectable 156,000 jobs in September, while the headline unemployment rate crept up to 5 percent from 4.9 percent in August. Though this gain is a welcome sign of a still-healthy economy, it demonstrates a slowing trend. Is anemic economic growth a temporary phase in the traditional business cycle or has something more fundamental changed to make slow growth permanent? more...
- by Jim O'ConnellOct 6, 2016
The District of Columbia Council recently tabled a bill that would have limited employers’ flexibility to schedule their workers. The “Hours and Scheduling Stability Act” would require certain Washington DC employers to give workers two weeks’ notice of their schedules, with workers would be entitled to additional “predictability pay” if employers changed schedules within fourteen days. Supporters of the legislation say working families need “predictable” or “fair” scheduling. Of particular concern to retailers and restaurant chains, however, were the bill’s extensive recordkeeping requirements as well as its civil and administrative enforcement provisions, including private rights of action by “injured employees.” As federal, state and local governments move more directly to regulate workplace practices on behalf of working families, “predictable scheduling” could emerge as the next big workplace issue. more...
- by Jim O'ConnellSep 19, 2016
The U.S. government recently announced a final rule to help state governments, and later some municipalities, set up novel government-sponsored IRAs for employees who don’t have access to retirement plans where they work. These plans are designed to help the one-third of all workers have no workplace retirement savings arrangement. However, the final rule and corresponding state legislation are not without controversy more...
- by Jim O'ConnellSep 13, 2016
Since the Great Recession of 2008-2009 ended, U.S. employers have created an unprecedented 15 million new jobs. At a 4.9 percent national unemployment rate employers are experiencing a labor market phenomenon absent in the economy for 8 years—worker shortages. Employers and Chief Human Resources Officers must put strategies in place to retain and attract top talent. Human capital management technologies can help employers design their workforce for maximum effectiveness, particularly to increase productivity—a key objective for workforce management in a tight labor market environment. more...
- by Jim O'ConnellAug 25, 2016
The “no-confidence” vote of the health insurance giants clearly imperils the Affordable Care Act. Unchanged, enrollees face rising premiums, fewer plan choices and increasingly narrow provider networks. Soaring premiums could squeeze out middle-income households, further skewing risk pools in a reinforcing insurance “death spiral.” How might this affect employers? What is to become of the ACA?
- by Jim O'ConnellAug 22, 2016
Affordable Care Act compliance became more complicated recently when federal and state government insurance exchanges began sending notices to some employers advising they may be liable for a payment to the IRS.
- by Jim O'ConnellAug 5, 2016
Employers created a solid 255,000 new jobs in July, the second best monthly performance this year and the headline unemployment rate held steady at 4.9 percent. However, the labor market is but one aspect of an extremely large and multifaceted U.S. economy. Jim O'Connell takes a look at other factors such as personal consumption, Fed rates and GDP to provide a holistic look at the August 5 jobs report in this blog.
- by Jim O'ConnellJul 29, 2016
In Part 2 of his two-part series on the Republican and Democratic Party Platforms, Jim O'Connell reviews the platform statement of key principles and policies adopted by the Democratic National Convention this week in Philadelphia.
Unlike the Republican statement, which emphasized market-oriented policies to promote broad macroeconomic goals, the July 21 Democratic statement calls for targeted government action to help raise middle class incomes and strengthen the social safety net. HR policy is clearly a top priority. more...
- by Jim O'ConnellJul 22, 2016
In part one of a two-part series on the human resources-related policies of the Republican and Democratic parties, focuses on health policy and the future of the Affordable Care Act (ACA). Party platforms are as much about political philosophy as they are about practical proposals. The Republican platform is no exception, leaning in favor of private sector as opposed to government approaches. The Republican Party platform on healthcare policy generally parallels that of the party’s nominee for president, advocating for the “repeal” of the ACA, including the individual mandate, and supports the sale of insurance across state lines, full deductibility of insurance premium payments, stronger health savings accounts and the importation of pharmaceuticals from overseas. more...
- by Jim O'ConnellJul 8, 2016
The government announced July 8 that the U.S. economy created a whopping 287,000 jobs in June, welcome news after the May report of a mere 38,000 new jobs. What’s the takeaway from the latest employment data? The good news is that job growth momentum is still positive, though slowing, and the U.S. remains at or very near full employment. The less-good news is that national economic growth, the real engine of job creation, appears to be sputtering. more...
- by Jim O'ConnellJul 6, 2016
Over 500 clients and guests joined Noah Katz of PSK Supermarkets and Jim O’Connell, Washington DC compliance analyst and consultant for an informative webcast, “The Affordable Care Act—Get Ready; Change is Coming.” Attendees asked great questions about Affordable Care Act employer compliance as well as scenarios for 2017 legislative and regulatory change. Below we answer their questions—with the understanding that answers are intended for educational and informational purposes only, not legal advice. Questions have been edited for clarity. more...
- by Jim O'ConnellJun 17, 2016
In a recent webcast on Affordable Care Act employer compliance challenges, Ceridian's Jim O'Connell discussed how a new President and Congress might be expected to change the healthcare reform law next year.
- by Jim O'ConnellJun 7, 2016
Like the current NBA championship series between the Warriors and the Cavs, an epic battle is playing out in the U.S. economy. How could the U.S. economy generate healthy jobs data every month at the same time it posted anemic GDP numbers? How could we keep churning out new jobs at a robust clip when the economy itself wasn’t putting up strong numbers? Would the jobs data also languish like the GDP numbers or would GDP accelerate to parallel jobs growth? The two series couldn’t continue going in opposite directions.more...
- by Jim O'ConnellMay 24, 2016
The Obama Administration has unveiled final regulations that will make 4-5 million additional workers eligible for overtime pay starting December 1, 2016. These new rules may provide an opportunity for employers to reimagine employee scheduling; to consider new cloud-based HCM technology; and to adopt innovative scheduling strategies that will not only control overtime costs but improve organizational productivity. more...
- by Jim O'ConnellMay 12, 2016
Picking up on issues raised in Part 1, Part 2 outlines proactive steps for employers as they consider the bewildering array of requirements around Mandatory Paid Leave in the United States. more...
- by Jim O'ConnellMay 9, 2016
Economists are divided over whether April's unusually soft jobs number represents a harmless statistical glitch or portends something ominous: a sinking economy. Economist and long-time Washington-watcher Jim O'Connell says "right now jobs data and GDP data are going in different directions, like an economic scissors with one blade pointing up and one blade pointing down." One month does not a trend make, but read on to understand the economic factors that might affect either employment numbers or productivity figures. more...
- by Jim O'ConnellMay 3, 2016
States have begun to enact paid sick or family leave laws, but for employers, complying with many separate paid leave experiments means higher compensation costs, greater administrative complexity and added scheduling uncertainty. more...
- by Jim O'ConnellApr 1, 2016
The economy added 215,000 jobs in March, for a 3-month average gain of 209,000 and a past-12-month average of 223,000 new jobs. The U.S. is creating literally millions of new jobs, demonstrating its resilience in the face of strong headwinds, including slowdowns in China, Europe and South America and financial market volatility. As in the NCAA championship, however, upsets can come at any time. more...
- by Jim O'ConnellMar 4, 2016
Friday’s jobs report—the third key piece in the government’s monthly data trifecta—underscored the worrisome asymmetry that now marks the U.S. economy.
On jobs, it was mostly good news: the economy churned out 242,000 new jobs in February, on the heels of an upwardly revised 172,000 in January and 271,000 in December, for a monthly average of 228,000 new jobs. more...
- by Jim O'ConnellFeb 5, 2016
Seeming to defy the law of gravity, the U.S. economy continued to churn out new jobs at a healthy pace in January even as the nation’s GDP growth rate stalled at 0.7% in late 2015.
The Labor Department’s Bureau of Labor Statistics (BLS) reported Friday that the economy created 151,000 new jobs last month while the unemployment rate dipped below 5% for the first time in more than eight years. more...
ACA Employer Shared Responsibility Compliance: What Employers Need to Know About Premium Tax Creditsby Jim O'ConnellJan 26, 2016
With the end of CY 2015 and the start of wage reporting, many employers are making preliminary determinations about potential liability for penalties under the section 4980H Employer Shared Responsibility (ESR) provisions of the Affordable Care Act.
To be sure, IRS extension of the due dates for Form 1095-C health coverage information reporting—the Service’s main enforcement mechanism for the ESR mandate—will delay notice of such penalties until late 2016. Still, applicable large employers will give priority to managing compliance with the “Play or Pay” mandate and to recognizing the pivotal role of Premium Tax Credits in penalty determination. more...
- by Jim O'ConnellJan 13, 2016
In his final State of the Union address on January 12, 2016, President Obama cited a number of priority policy issues that have important implications for today's workplace. The address was a reminder to HR, benefits, compensation and payroll professionals that affect the world of workmore...
- by Jim O'ConnellJan 8, 2016
The U.S. economic engine continued to churn out jobs in December, generating 292,000 new jobs and keeping unemployment at the “full employment” rate of 5%, the government’s Bureau of Labor Statistics reported Friday.
December job growth was pretty much across the board, with the biggest boosts in professional and business services, construction, health care and food services.
Last month’s job gains followed 252,000 in November and 307,000 in October, totaling a robust 2.7 million new jobs for all of 2015. December highlighted a remarkable 63 consecutive months of job expansion, according to The Wall Street Journal. more...
- by Jim O'ConnellJan 7, 2016
As the November presidential election increasingly dominates 2016 headlines, employers will be paying close attention to at least three key compliance issues. Affordable Care Act developments, Fair Labor Standards Act Overtime Rules, and Paid Family and Medical Leave Federal Mandate.
Voters will be reminded that on controversial issues like these, as well as on immigration reform and minimum wage, they share the same aspiration as employers—for political compromise as the key to practical public policy. more...
- by Jim O'ConnellDec 29, 2015
In a move sure to add more complexity and uncertainty to an already complex and uncertain Affordable Care Act compliance situation, the Internal Revenue Service on December 28 announced extensions of the 2016 ACA information reporting deadlines.
Specifically, IRS Notice 2016-4 extends the due dates for Code section 6055 information reporting by insurers, self-insured employers and other providers, and for Code section 6056 information reporting by applicable large employers as follows... more...
- by Jim O'ConnellDec 28, 2015
In part 2 of this year end series on the Omnibus Appropriations Act we cover extensions of a number of other expiring tax breaks, though in most instances only through 2019 or 2016. Highlights include:
- Extension of the Work Opportunity Tax Credit
- Suspension of the medical device excise tax
- by Jim O'ConnellDec 22, 2015
President Obama on December 18 signed into law the $1.8 trillion Omnibus Appropriations Act, a huge tax cut and spending measure that includes extensions worth $680 billion of over 50 expiring tax provisions.
The new tax law extends a number of important tax provisions permanently, meaning individuals and businesses will no longer have to endure the annual end-of-year drama over whether Congress would allow the cuts to expire. Other tax breaks are extended for 5 or 2 years. more...
- by Jim O'ConnellDec 17, 2015
Congressional leaders have announced agreement on a mammoth $1.6 trillion spending and tax cut package that includes a 2-year delay of the Affordable Care Act’s 40% excise tax on high-value health plans. The so-called “Cadillac Tax” was scheduled to take effect in January 2018.
Assuming the House and Senate approve the new deal and President Obama signs it into law, the Cadillac Tax effective date would be postponed to January 2020. more...
- by Jim O'ConnellDec 4, 2015
Heralding an upbeat holiday season, the Department of Labor announced Friday that the U.S. economy added 211,000 new jobs in November, while the nation’s unemployment rate held steady at a seven-year “full employment” low of 5%.
The November job increases, plus an upward revision in the October figure to 298,000, mean an average monthly gain of 237,000 jobs in 2015, for a total of more than 2.3 million new jobs this year alone. more...
- by Jim O'ConnellNov 20, 2015
The nation’s largest health insurance company, Minnesota-based UnitedHealth Group, announced Thursday that huge losses in its Affordable Care Act health plans would prompt the company to evaluate their “viability” for 2017.
Including $275 million in advanced recognition of losses for 2016, the company said it expected total 2015 operating losses for its ACA exchange plans at $700 million. “We cannot sustain these losses,” said Mr. Hemsley, “We can’t subsidize a market that doesn’t appear at this point to be sustaining itself.” more...
- by Jim O'ConnellNov 17, 2015
Everyone knows the job description of the President of the United States: Commander-in-Chief; Leader of the Free World; Chief Executive; nominates Cabinet officials, Supreme Court justices and federal judges; executes the laws passed by Congress; initiates major domestic legislation, treaties and trade agreements; can veto legislation approved by Congress; etc., etc.
But what about the “Speaker” of the House of Representatives? What does he or she do? The House on October 29 elected a new Speaker—Rep. Paul Ryan (R-WI). At age 45 he is the youngest speaker elected since 1869. more...
- by Jim O'ConnellNov 10, 2015
In what was clearly the best jobs news in years, the Department of Labor announced last week that the U.S. economy created a whopping 271,000 new jobs in October, the biggest one month gain this year.
The revving American jobs engine pushed the nation’s unemployment rate down to 5%, the lowest it’s been in 7 ½ years. While economists bicker over exactly what constitutes the “full employment” unemployment rate—4.5, 4.75 or 5.0—for all practical purposes the U.S. is now at full employment. more...
- by Jim O'ConnellOct 14, 2015
When Capitol Hill Republicans and Democrats as well as many employers and labor unions all agree that a law should be repealed you’d think that law soon would be history. In the case of the unpopular “Cadillac Tax” the outcome is not so clear.
The Affordable Care Act Cadillac Tax, set to take effect in 2018, is a whopping 40% excise tax on the total value of employer-sponsored health plans that exceed a statutory dollar threshold--$10,200 for self-only coverage and $27,500 for coverage other than self-only. more...
- by Jim O'ConnellOct 2, 2015
The Bureau of Labor Statistics on Friday reported that the U.S. economy created 142,000 new jobs in September, much less than the 200,000 economists had forecast and well below the 2014 average monthly jobs gain of 260,000.
Does the paltry 142,000 jobs increase represent a mere blip on the radar screen or is it a sign of deeper weakness to come? more...
- by Jim O'ConnellSep 28, 2015
The following is adapted from an article that appears in the Fall 2015 inaugural issue of Ceridian HCM’s connect magazine.
Democratic and Republican candidates are already focusing on next year’s presidential election and the #1 issue could be income inequality.
No one disputes that the rich are getting richer and everyone else is staying the same or losing ground. Since 1979 the inflation-adjusted incomes of the top 10% have soared while the incomes of the middle 60% and the bottom 20% of households have stagnated. Inflation-adjusted median household income in 2013, $51,939, was actually lower than it was in 1999.
- by Jim O'ConnellSep 18, 2015
September 4 marked the deadline to submit comments to the Department of Labor on its proposed new overtime rules. The Washington Post reports that the Labor Department received 155,000 comments—demonstrating controversy around the new rules.
The Obama Administration had proposed to make 5 million additional workers eligible for overtime pay by more than doubling the salary level below which employees are eligible for overtime from $23,660 a year ($455 a week) to $50,440 ($970 a week) in 2016. more...
- by Jim O'ConnellSep 9, 2015
President Obama on Labor Day signed an executive order requiring federal contractors to offer their employees paid sick leave, including paid leave for family care.
Under the plan, “Helping Middle Class Families Get Ahead by Expanding Paid Sick Leave,” employees of federal contractors will earn 1 hour of paid leave for every 30 hours worked, up to 7 days of paid time off a year. more...
- by Jim O'ConnellSep 8, 2015
The government’s Bureau of Labor Statistics reported September 4 that the U.S. economy created 173,000 new jobs in August, another solid month for the American jobs engine. Job gains for June and July were revised upward to a half-million for the two months.
So far this year the economy has racked up a robust 1.7 million new jobs, averaging 218,000 new jobs a month and on pace to rival last year’s 2.9 million. more...
- by Jim O'ConnellAug 24, 2015
“The Health Insurance Marketplaces are working. We’ve seen a historic reduction in the uninsured and consumers are finding the coverage they need at a price they can afford.”
- HHS Secretary Sylvia Burwell
It’s hard to disagree with HHS Secretary Burwell that the health insurance exchanges are working. Over 10 million Americans are enrolled in federal and state exchanges and 85% of those are receiving a tax credit subsidy to make their premiums affordable. more...
- by Jim O'ConnellAug 20, 2015
- by Jim O'ConnellAug 17, 2015
In a departure from recent trends, national healthcare spending is now projected to grow an average 5.8% for 2014-2024, the government’s Centers for Medicare and Medicaid Services (CMS) said recently.
- by Jim O'ConnellAug 7, 2015
The U.S. economy churned out 215,000 new jobs in July and the nation’s unemployment rate remained at 5.3%, the Department of Labor reported on August 7.
These job gains continue the economy’s 200,000-plus monthly pace that has produced some 2.7 million new jobs in the past 12 months, an average monthly gain of 246,000.
The 5.3% unemployment rate is about as close to “full” employment as it gets and represents the lowest jobless rate in over seven years. more...
- by Jim O'ConnellJul 29, 2015
Social Security’s trustees confirmed in their 2015 annual report on July 22 that the Old Age and Survivors Insurance and Federal Disability Insurance (OASDI) trust funds are heading for insolvency.
The combined trust funds will be depleted in 2034, and beneficiaries, who then must rely solely on payroll tax revenue for their benefits, will be hit with a 20 percent cut. This doomsday scenario can be averted if Republicans and Democrats in Washington DC work together to put Social Security on a sound financial footing. more...
- by Jim O'ConnellJul 23, 2015
Rep. Rosa DeLauro (D-CT), Sen. Elizabeth Warren (D-MA) and others on July 15 introduced the “Schedules that Work Act,” legislation that would establish federal standards for employer scheduling practices.
According to the lawmakers, “unstable, unpredictable and rigid scheduling practices,” especially in retail, food service and cleaning, “make it difficult for workers to maintain stable child care, care for other family members or pursue career development or other education.” more...
- by Jim O'ConnellJul 9, 2015
An overview of Jim O'Connell's upcoming session at next week’s Ceridian INSIGHTS Conference in Las Vegas. I'll be presenting Compliance Priorities 2015: Congress Pushes for Change, covering major employer compliance issues affecting HR, Payroll, Benefits and Compensation. more...
- by Jim O'ConnellJul 8, 2015
There's still time to join me at Ceridian INSIGHTS 2015 customer conference July 15-17 in Las Vegas. Together with Ceridian’s own Jill Barber and Addie Brunskow, I will be hosting a special interactive discussion of Affordable Care Act issues as well as proactive strategies for ACA compliance. 2015 represents a watershed year for compliance more...
- by Jim O'ConnellJul 1, 2015
Legislative and regulatory actions are best understood in their broader public policy context—and the proposed new overtime regulations are no exception.
Doubling the salary threshold to $50,440 and entitling 5 million more workers to overtime pay is fundamentally about persistent income inequality and wage stagnation. more...
- by Jim O'ConnellJun 30, 2015
The U.S. Department of Labor on June 30 proposed new rules that would entitle some 5 million additional workers to overtime pay under the Fair Labor Standards Act. The most significant regulatory change would be to double the salary level threshold more...
- by Jim O'ConnellJun 26, 2015
In an important decision for the future of the Affordable Care Act the U.S. Supreme Court, in King v. Burwell, on Thursday upheld the Obama Administration’s interpretation of the law that premium subsidies to purchase health insurance are available to enrollees in the federal health insurance exchange as well as state exchanges.
Challengers had argued that IRS had misinterpreted the language of the 2010 law that subsidies are available for coverage purchased “through an Exchange established by the State,” and therefore that enrollees in the federal exchange were not eligible for subsidies. more...
- by Jim O'ConnellJun 8, 2015
In a further sign that the U.S. economy has shaken off the winter doldrums, the Bureau of Labor Statistics reported June 5 that a net 280,000 new jobs were created in May, with the unemployment rate essentially unchanged at a very low 5.5%.
BLS also said that job gains have averaged 251,000 a month over the past year, producing a total of 3 million new jobs since May 2014. more...
- by Jim O'ConnellJun 2, 2015
Sometime this month the U.S. Supreme Court will announce a decision on whether subsidies for enrollees in the federal government’s health insurance exchange are lawful.
Plaintiffs in the case before the High Court, King v. Burwell, argue that IRS misinterpreted a key provision of the 2010 Affordable Care Act. more...
- by Jim O'ConnellMay 8, 2015
The Bureau of Labor Statistics in Washington DC reported Friday that the U.S. economy racked up a solid 223,000 new jobs last month, making April the 13th of the last 14 months that the economy has clocked over 200,000 new jobs.
The latest jobs spike seems to confirm that March’s anemic 85,000 jobs gain, revised downward from an original 126,000, was indeed an aberration owing to the severe winter, a soaring dollar, a collapse in oil prices and maybe the West Coast dock strike. more...
- by Jim O'ConnellApr 15, 2015
Just as employers were working to ensure compliance with 2015 Affordable Care Act mandates like employer “Play or Pay” and health coverage information reporting IRS reminded everyone that the ACA “Cadillac Tax” is looming on the horizon.
A central component of the 2010 healthcare reform law, this 40% excise tax on the value of coverage that exceeds certain limits is intended both to raise new revenue for premium subsidies for lower and moderate income households and to slow the growth of health costs. more...
- by Jim O'ConnellApr 4, 2015
Basketball fans the world over this weekend will be watching the University of Kentucky Wildcats play the University of Wisconsin Badgers and the Duke Blue Devils take on the Michigan State Spartans in the NCAA basketball “Final Four,” setting up next week’s championship game. more...
- by Jim O'ConnellMar 6, 2015
With all the disturbing news coming out of Washington DC these days—Supreme Court arguments over Affordable Care Act subsidies, a congressional battle over President Obama’s immigration order and concern with Iran’s nuclear program—great news on jobs is a welcome change.
The U.S. economy in February created 295,000 new jobs, according to the Bureau of Labor Statistics, reducing the national unemployment rate to 5.5%. This continues a steady improvement from the 10% unemployment rate posted in October 2009, when BLS estimated that an incredible 15.3 million Americans were out of work. more...
- by Jim O'ConnellFeb 24, 2015
Any day now the U.S. Department of Labor will propose new rules that could make up to six million more workers eligible for overtime pay. The regulations, expected as early as this week, are a response to specific direction from President Obama. more...
- by Jim O'ConnellFeb 18, 2015
The Internal Revenue Service on February 9 published the final forms and instructions employers must use to comply with the Affordable Care Act section 4980H requirement to report employee health coverage information to employees and the IRS. more...
- by Jim O'ConnellFeb 6, 2015
The government’s Bureau of Labor Statistics (BLS) announced today that in January the U.S. unemployment rate was essentially unchanged from December at 5.7%, edging toward national full employment, and an impressive 257,000 new jobs were created, continuing last year’s healthy pace and suggesting solid economic momentum to kick off 2015. more...
- by Jim O'ConnellFeb 3, 2015
The U.S. House of Representatives last month approved legislation that would increase the Affordable Care Act threshold for designating a worker as “full-time” from an average of 30 hours a week to 40 hours. Twelve House Democrats joined all the Republicans in the vote.
The bill now goes to the Senate where its prospects are uncertain. President Obama has threatened to veto the House-passed bill if it reaches his desk. more...
- by Jim O'ConnellJan 28, 2015
Today, we’re the only advanced country on Earth that doesn’t guarantee paid sick leave or paid maternity leave to our workers. Let’s put it to a vote right here in Washington. Send me a bill that gives every worker in America the opportunity to earn seven days of paid sick leave.
President Obama, State of the Union Address, January 20, 2015
HR, payroll and benefits professionals are well informed about the federal Family & Medical Leave Act (FMLA), which entitles most workers to 12 weeks of job-protected unpaid leave for their own illness or to care for a family member. more...
- by Jim O'ConnellJan 21, 2015
In his sixth State of the Union Address on January 20 President Obama offered a number of proposals that would break new ground in federal government policy to help lower and middle-income households and increase taxes on high-income earners. more...
- by Jim O'ConnellJan 9, 2015
The government announced January 9 that the U.S. economy added 252,000 new jobs in December, bringing 2014’s total new jobs to just under 3 million, the best in 15 years.
The December unemployment rate came in at 5.6%, much lower than the 7% just a year ago and the lowest U.S. unemployment rate posted since June 2008. Last month’s unemployment rate was dramatically improved over the 10% unemployment rate hit at the recession bottom in October 2009. more...
- by Jim O'ConnellDec 30, 2014
President Obama and Congress should share a common New Year's resolution to: to work together to solve the nation's problems. There are a number of high profile and challenging issues to address, including reforming immigration law, the Affordable Care Act and even tax policy. The question is, can the executive branch and the legislative branch succeed where so many of us fail at keeping our resolutions? more...
- by Jim O'ConnellDec 19, 2014
In Charles Dickens’ holiday classic A Christmas Carol (1843), Jacob Marley’s ghost tells tight-fisted Ebenezer Scrooge that he will be haunted by three spirits, representing Christmas past, present and future.
Like old Scrooge, the Affordable Care Act this holiday season is being haunted by the spirits of the past, present and future. Having extended health coverage to over 7 million uninsured and secured insurance reforms like a ban on pre-existing condition exclusions, hopes remain high that Scrooge’s happy ending will come to the healthcare reform law. more...
- by Jim O'ConnellDec 5, 2014
President Obama’s November 20 executive order shielding almost half of the nation’s 11 million illegal immigrants from deportation poses unique challenges for both Congress and employers.
What to Expect on Capitol Hill—
In explaining his decision to grant temporary legal status and work permits to up to 5 million immigrants the President blamed congressional Republicans for failing to pass immigration reform legislation. For their part, leading Republicans seem determined to undo the executive order, arguing presidents lack the authority to change law unilaterally. more...
- by Jim O'ConnellNov 25, 2014
In a November 20 address President Obama announced a broad executive action that will change the legal status of 4 million undocumented immigrants living in the U.S.
This blog will outline the President’s executive order, looking specifically at the immigration categories and numbers involved. Part 2 will consider the implications for employers and the new Congress that convenes in January. more...
- by Jim O'ConnellNov 24, 2014
Part 1 of this blog described two strategies congressional Republicans might pursue next year to roll back the Affordable Care Act: (1) advancing a philosophy by voting to scrap the law in its entirety; and (2) as a practical matter offering specific amendments to chip away at the law’s key features.
What ACA amendments might Congress consider in 2015? more...
- by Jim O'ConnellNov 17, 2014
Fresh from election victories, Republicans are charting a new legislative agenda that likely includes both philosophical and practical strategies to roll back the Affordable Care Act, President Obama's signature healthcare reform law. more...
- by Jim O'ConnellNov 11, 2014
In a new threat to the Affordable Care Act the U.S. Supreme Court announced November 7 that it will review lower court decisions on an Internal Revenue Service interpretation of a key provision in the landmark healthcare reform law.
At issue are conflicting federal appeals court decisions on the exact meaning of language in the Affordable Care Act that government subsidies may be available to individuals who enroll in health insurance through exchanges that “are established by the state.” more...
- by Jim O'ConnellOct 16, 2014
In a second blog post about how mid-term elections could affect the Affordable Care Act, we evaluate the prospects for change in Employer Shared Responsibility -- the Play or Pay mandate. more...
- by Jim O'ConnellOct 13, 2014
Political forecasting models seem to be signaling that Election Day, now just three weeks away, could bring a change in power in the U.S. Congress. While Republicans are likely to remain the majority party in the House of Representatives, some question whether Democrats can hold their majority in the U.S. Senate.
In this sense voters indirectly may decide what’s next for the Affordable Care Act. From the perspective of the ACA and employer compliance, one of two scenarios will unfold...more...
- by Jim O'ConnellOct 8, 2014
The January 1, 2015 effective date for new Affordable Care Act compliance requirements is less than 90 days away—and with HR and Payroll gearing up for open enrollment and year-end, be prepared with an ACA compliance checklist... more...
- by Jim O'ConnellSep 9, 2014
This post focuses on the highlights of IRS Code section 6056 reporting, including reporting requirements imposed on employers, factors driving reporting and deadline for ACA Code 6056 compliance, to help employers prepare for 2015 compliance with Affordable Care Act health coverage reporting requirements. more...
- by Jim O'ConnellSep 5, 2014
Mandatory reporting of employee health coverage information ranks as one of the most important compliance requirements the Affordable Care Act imposes on employers. Acknowledging this, the Internal Revenue Service on August 29 released draft instructions and helpful questions and answers.
IRS clearly understands that to comply with new ACA reporting requirements employers will need time not only to learn the intricacies but to put in place HCM systems that can correctly identify, collect and organize the information that must be filed with IRS and furnished to employees.
Code section 6055 reporting relates to the individual mandate to have health insurance; Code section 6056 applies to the employer mandate to offer coverage to full-time employees. more...
- by Jim O'ConnellSep 2, 2014
As the Obama Administration grapples with legal questions of what a president has the authority to do on immigration policy absent legislation, the White House is contemplating action in at least three areas of immigration policy. more...
- by Jim O'ConnellAug 21, 2014
The Family & Medical Leave Act became law 21 years ago, one of the first bills signed by newly-inaugurated President Bill Clinton in 1993.
Over the years covered employers have learned the intricacies of FMLA compliance, including notice requirements to eligible employees, serious health conditions, intermittent leave issues, 12 workweeks of job-protected leave, special military family leave and state-by-state variations.
To be sure, FMLA regulations and case law have changed continuously since 1993, clarifying employer and employee responsibilities. Most recently the U.S. Department of Labor proposed new regulations revising the definition of spouse in light of the Supreme Court decision regarding same-sex marriages.
Through often conflicting court decisions and regulatory interpretations, however, there has been one constant: FMLA leave is unpaid leave. Eligible employees are entitled to up to 12 weeks of job-protected unpaid leave. more...
- by Jim O'ConnellAug 13, 2014
Looming Social Security insolvency (see Aug 5 blog) is a public policy crisis with many sensible solutions.
If politics is the art of the possible then saving Social Security will require democrats and republicans to hammer out a consensus among a range of possible options.
The first step comes from 2010 Nobel Prize-winning economist Peter Diamond: “The central question is how much do you do with benefit cuts and how much do you do with more revenue?” (Washington Post Interview, Oct 21, 2012).
In other words, the key to political consensus on a plan to restructure and save Social Security for generations to come is to strike a reasonable balance between tax increases and benefit cuts. Put simply, a final rescue package must include both payroll tax increases and Social Security benefit cuts—there’s no other way.
With that premise, here are 5 ideas to save Social Security—based on recommendations of the National Commission on Fiscal Responsibility & Reform (2010) and analysis by the Congressional Budget Office (2014). Revenue increasing measures come first, followed by options to pare benefits growth. more...
- by Jim O'ConnellAug 5, 2014
“Social Security’s total expenditures have exceeded non-interest income of its combined trust funds since 2010…. After 2019, Treasury will redeem trust fund asset reserves…until depletion of combined trust fund reserves in 2033…. Thereafter, tax income would be sufficient to pay about three-quarters of scheduled benefits….”
Social Security and Medicare Trustees Message, July 2014
On July 28 the Social Security and Medicare Trustees released their 2014 report, including a forecast that, absent measures to shore up its finances, the Old Age and Survivors Insurance (OASI) trust fund, which pays Social Security benefits, will run out of money in 2034. And the theoretical combined OASI and disability insurance trust fund (OASDI) will exhaust in 2033. more...
- by Jim O'ConnellJul 29, 2014
On July 24 the Internal Revenue Service released prototypes of forms employers will use to comply with the extensive reporting requirements mandated by the Affordable Care Act (ACA). The healthcare reform law requires employers annually to report details of employer-sponsored health coverage to the IRS and to their full-time employees. more...
- by Jim O'ConnellJul 22, 2014
In breaking ACA news, The D.C. Circuit Court of Appeals ruled that IRS, in issuing regulations on individuals’ eligibility for premium tax credit subsidies to buy health insurance on government exchanges, misinterpreted the statutory language of the ACA.
In a further extraordinary development, a few hours later another federal appeals court, this time in Richmond, Virginia, reached the opposite conclusion in King v. Burwell, holding that the Affordable Care Act as a whole gives IRS and HHS broad authority to interpret the statutory language. more...
- by Jim O'ConnellJun 19, 2014
Starbucks recently announced a dramatically innovative “College Achievement Program” for many of its employees. The implications of this new form of corporate social responsibility are many, and may even prompt Congress to change Sec. 127 of the tax code. more...
- by Jim O'ConnellJun 12, 2014
In Congressional testimony this week on final Affordable Care Act regulations, the U.S. Chamber of Commerce expressed concern about compliance with mandated employer reporting. While the U.S. Chamber has worked extensively with the IRS and U.S. Treasury to streamline ACA reporting, U.S. Chamber Executive Director of Health Policy Katie Mahoney states that employers face "exceedingly high administrative burdens and expenses" to comply with ACA reporting requirements.
- by Jim O'ConnellJun 3, 2014
New research suggests the Affordable Care Act may cause a sweeping change in employers' role in the health care system. Will the ACA have unintended consequences?more...
- by Jim O'ConnellMay 22, 2014
Next year, as the Affordable Care Act employer mandate and other provisions kick in, a new issue is sure to make headlines: up to 1 million of the 8 million people enrolled in health exchanges will find they owe more in federal income taxes than they expected, and for some a lot more. more...
- by Jim O'ConnellMay 5, 2014
Calling income inequality the “defining challenge of our time,” President Obama has been a powerful advocate of expanding government aid to lower and middle-income households.
He has urged support for housing, education, food stamps, unemployment insurance and, his signature achievement, the Affordable Care Act, which commits $1 trillion over ten years to expand Medicaid and provide subsidies to help pay health insurance premiums.
A key part of the strategy has been to boost incomes of the working poor—those who work full-time but don’t earn enough to make ends meet.
- by Jim O'ConnellApr 15, 2014
Does the arrival of spring, heralded by the annual blossoming of the cherry trees in Washington, also signal a thaw in political deep freeze that has descended on our nation's capital? more...
- by Jim O'ConnellMar 25, 2014
The NCAA college basketball tournament invariably features surprise winners and losers. Shockers in this year’s Big Dance include Dayton’s upset of Syracuse, Mercer’s knockout of the Duke Blue Devils and the Kentucky Wildcats toppling #1 seed Wichita State.
The Affordable Care Act has its own version of March Madness, with the ACA’s four-year anniversary on March 23 and the deadline for exchange plan open enrollment on March 31. All this suggests an ACA “bracket” of winners and losers.more...
- by Jim O'ConnellMar 14, 2014
The IRS got the attention of employers in February when it issued final rules on ACA “employer shared responsibility.” Known colloquially as “Play or Pay,” the regulations spell out penalties employers face for failing to offer minimum essential coverage to full-time employees and their dependents starting in 2015.
Regulation round two followed on March 5: section 6056 reporting.
The two sets of regulations send an important message: Play or Pay cannot work without extensive employer reporting. This explains why IRS will require employers annually to (a) file a return with IRS, similar to the Form W-2, with respect to each full-time employee; and (b) furnish each full-time employee with a statement of their health insurance coverage. more...
- by Jim O'ConnellMar 5, 2014
One of the few issues lawmakers from both political parties support is tax reform, meaning to simplify the U.S. tax code by eliminating special preferences and cutting tax rates.
Democrats and Republicans agree the solution is obvious: repeal as many special deductions as possible, which will raise billions in revenue, and then return revenue to taxpayers in the form of lower rates.
Last week Rep. Dave Camp (R-MI), chairman of the powerful House Ways & Means Committee, unveiled a comprehensive tax reform proposal years in the making.
Will it become law this year? more...
- by Jim O'ConnellFeb 19, 2014
Our efforts to help you understand the Feb 10 final rules on “Employer Shared Responsibility” continue here with excerpts and commentary on the IRS Q&A, including on Transition Relief for 2015. For information about the penalties as described in the IRS Q&A, please see Part 1 of this blog series.
Transition Relief for 2015:
- Employer Shared Responsibility provisions are effective for 2015;
- Employers will not be subject to a potential Employer Shared Responsibility payment until the first day of the 2015 plan year;
- An employer that takes steps during its 2014 plan year toward offering dependent coverage will not be subject to an Employer Shared Responsibility payment solely on account of a failure to offer coverage to dependents for plan year 2015, i.e., temporary relief for dependent coverage.
- For employers with fewer than 100 full-time employees in 2014 no Employer Shared Responsibility payment will apply for any calendar month during 2105;
- What percent of an employer’s full-time workforce must be offered coverage in plan year 2015?
- by Jim O'ConnellFeb 18, 2014
Concerned that the Feb 10 final rules on “Employer Shared Responsibility” create more compliance uncertainty, the IRS has now posted 46 questions and answers about the Affordable Care Act employer play or pay mandate.
Understanding the IRS requirements is like learning a foreign language: it involves an entirely new vocabulary. In the first of two blog posts on this topic, the excerpts and commentary below attempt to translate the new language. In Part 2 we’ll cover Transition Relief for 2015.
All employers that are Applicable Large Employers (i.e., they have 50 or more full-time employees) are subject to the Employer Shared Responsibility provisions, including for-profit, nonprofit and government employers. more...
- by Jim O'ConnellFeb 11, 2014
As our Reading the Tea Leaves blog predicted a few weeks ago, the Obama Administration has once again delayed the Affordable Care Act “Employer Shared Responsibility” requirement, also known as the Play or Pay mandate.
This controversial compliance requirement was to have taken effect this year for employers with 50 or more full-time employees but was delayed in July 2013 until next year. It has now been delayed again for most employers, this time until 2016. more...
- by Jim O'ConnellFeb 6, 2014
The Congressional Budget Office in Washington DC this week issued a special report on the economic outlook, including how the Affordable Care Act might affect jobs, sparking a new debate on the controversial healthcare reform law.
Respected on both sides of the aisle for non-partisan analysis, CBO forecast that generous ACA insurance premium subsidies and other factors would cut the number of hours worked by Americans by the equivalent of over 2 million jobs by 2021.
While supporters and opponents of the law put their own spin on the report there was no parsing the key finding: the healthcare reform law could adversely affect jobs.
Almost overlooked was another interesting CBO conclusion—because of the fumbled launch of the health insurance exchanges 2014 enrollment is expected to come in at 6 million, 1 million fewer people than the initial forecast. By 2024 total exchange enrollment would reach 24 million, good as far as it goes, but it would still leave some 31 million uninsured. And employment-based coverage would have dropped by 7 million. Read more.
- by Jim O'ConnellFeb 3, 2014
Immigration reform legislation is expected this spring to take center stage on Capitol Hill as lawmakers try to resolve the status of some 12 million illegal aliens.
The tea leaves tell us that two words, one procedural and one substantive, will determine the outcome: “comprehensive” and “special.”
Last year the Democrat-controlled US Senate approved, with President Obama’s enthusiastic support, S.744, the Border Security, Economic Opportunity and Immigration Modernization Act, a sweeping immigration reform package. The bipartisan bill would address a wide range of issues, including mandatory E-Verify, visa processing and border security. Read more.
- by Jim O'ConnellJan 24, 2014
Retail giant Target this week announced that it would discontinue health insurance coverage for part-time workers, beginning April 1, 2014. Target joins other big-name employers like Home Depot and Trader Joe’s in making the change.
Significantly, Target EVP of Human Resources Jodee Kozlak cited the availability of Affordable Care Act health insurance exchanges as a reason for dropping coverage.
“Health care reform is transforming the benefits landscape,” said Ms. Kozlak, and “the launch of Health Insurance Marketplaces provides new options for health care coverage,” including “newly available subsidies” for many enrollees.
Is Target’s decision a harbinger of what employers will consider in 2014 and beyond? The tea leaves tell us, yes. Read more.
- by Jim O'ConnellJan 17, 2014
In his annual State of American Business address last week, US Chamber of Commerce CEO Tom Donahue appeared to tone down previous positions favoring total repeal of the Affordable Care Act. Employee Benefit Adviser magazine reports that Mr. Donahue said “…the Chamber has been working pragmatically to fix those parts of Obamacare that can be fixed,” including the employer mandate to offer health coverage.
But realistically, what are the chances that Congress and President Obama will agree to legislation to “fix” the ACA employer mandate? Read more.
- by Jim O'ConnellJan 9, 2014
Reading the Affordable Care Act (ACA) tea leaves is a little like reading a foreign language you haven’t fully learned: you can translate a few words but you can’t discern the full meaning.
Nevertheless, the tea leaves tell us a few things about ACA 2014:
First the data—The New Year begins with over 2 million people having selected a plan through the federal or state health insurance exchanges (HIX) during open enrollment from October 1-December 24, 2013.
And the window for selecting an HIX plan will remain open until March 31, 2014, allowing even more to enroll. Chances are that the White House will come pretty close to hitting its 2014 plan selection goals. Read more.
- by Jim O'ConnellJan 2, 2014
Democrats and Republicans in Washington DC agree that it’s impossible to predict HR-related legislation and regulations for 2014 — a battleground “mid-term” election year.
Since Democrats control the White House and the Senate, and Republicans control the House of Representatives, gridlock becomes the New Year’s default option.
With 21st Century forecasting models unhelpful in politics, this blog turns to a 19th Century alternative: tea leaves. According to Wikipedia, the Dutch introduced into the British Isles a belief that the future could be predicted by “reading” the tea leaf residue in cups. Therefore, over the next month or so we’ll look at the tea leaves to forecast what’s likely to happen in 2014 on five key HR-related issues:
- The Affordable Care Act: The Obama Administration says that as of January 1 over 1 million people have enrolled in the federal health insurance exchange and another 1 million in various state exchanges. What does 2014 hold for ACA? Will it be repealed? What about the employer “play or pay” mandate now set for 2015?
- by Jim O'ConnellDec 20, 2013
“On balance, the benefit of having a deal is better than no deal.” Senator Lisa Murkowski (R-Alaska)
In Dickens’ holiday classic three ghosts visit cranky Ebenezer Scrooge on Christmas Eve and he awakens transformed by the experience. Unlike his late colleague Jacob Marley, Scrooge gets a second chance and changes his ways.
In this week’s 2-year budget agreement Congress mimics Scrooge’s redemption. Republicans and democrats have learned their lesson: this fall’s government shutdown drove public disapproval of Congress to historic highs—to over 80% in many polls. Read more.
- by Jim O'ConnellDec 9, 2013
President Obama’s healthcare reform initiative is in the national spotlight these days, as officials scramble to fix the website data hub at the heart of the Affordable Care Act.
But behind the scenes another healthcare reform project is underway, part of an effort to reduce America’s unsustainable $17 trillion public debt—the highest since World War II as a share of the economy. While an agreement to cut government spending and raise additional tax revenue is unlikely right now, Capitol Hill budget experts have targeted tax policy for employee health benefits as among the best options for reducing Uncle Sam’s gargantuan debt burden.
The Congressional Budget Office, in a November paper, Options for Reducing the Deficit: 2014-2023, identified the present law tax “exclusion” for employer-provided health coverage as the most expensive revenue loser in the U.S. tax code.
More specifically, CBO concludes that exempting employer and employee payments for health insurance from income and payroll taxes “costs the federal government about $250 billion in foregone revenues each year.” (Italics added)
Little wonder then that the search for new sources of government revenue to reduce federal budget deficits could impact today’s tax-free treatment of employer-provided health coverage. Indeed, it’s almost impossible to conceive of a bipartisan deficit reduction package that would not involve in some way curtailing the present law exemption. Read more.
- by Jim O'ConnellNov 15, 2013
Like long-hopeful sports fans whose patience is finally rewarded when their team wins the championship, advocates of change in the FSA “use-it-or-lose-it” rule have just won a huge victory.
In a move that had been expected, the U.S. Treasury Department and the IRS announced in Notice 2013-71 on October 31 that employers would be permitted to amend their health FSAs to allow workers to carry over into the immediately following plan year up to $500 of unused amounts remaining at the end of the plan year. Read more.
- by Jim O'ConnellOct 28, 2013
Breakdowns in the rollout of the government’s health insurance exchange have fueled speculation about delaying the ACA “Individual Mandate.” This is the requirement that Americans buy health insurance in 2014 or pay a tax penalty of $95 or 1% of income, whichever is greater.
Three options are on the table to delay the individual mandate:
First, the mandate itself could be delayed for one year—much as the employer “play or pay” mandate has been delayed until 2015. Senator Joe Manchin (D-WV) advocates legislation to do just that.
While republican and some democrat lawmakers support a one-year delay, the White House opposes it, reflecting insurance industry concerns that plan pricing has been based on the mandate’s spurring millions of younger and healthier people to enroll in 2014. Read more.
- by Jim O'ConnellOct 23, 2013
The fifth and final ACA Megatrend in our series is, paradoxically, the most important and the least connected directly to the ACA itself: the economy.
The health of our economy, nationally and regionally, sector-by-sector, will profoundly affect how employers and working families respond to the healthcare reform law.
It is the great misfortune of President Obama’s signature legislative achievement to be launched into a persistently weak economy, with anemic GDP growth, high unemployment and widespread economic uncertainty.
With only a 2% real growth rate, recovery from the worst recession since the Great Depression has been unusually lackluster. Meanwhile, 11 million people remain unemployed, with another 7 million classified part-time while seeking full-time work. It’s hard to imagine a more inhospitable climate in which to implement major social policy legislation. Read more.
- by Jim O'ConnellOct 17, 2013
Democrats and Republicans yesterday hammered out an agreement to reopen the federal government and raise the public debt ceiling. That’s good news.
The bad news is the agreement is only for 90 days—until January 15.
But there’s more good news and bad news in this agreement that comes after a two-week government shutdown. First the good news...Read more.
- by Jim O'ConnellOct 10, 2013
With the controversy swirling around the Affordable Care Act and launch of health insurance exchanges, it’s easy to lose sight of a Megatrend the 2010 law could accelerate: healthier people!
Affordable Care Act Megatrends 1, 2 and 3, respectively Uncertainty, Re-imagination and Consumer-Directed Health, will inevitably lead to a new culture of personal health responsibility as a keystone of employer-sponsored health benefits.
History will judge healthcare reform on many levels, including by the success of the exchanges, the response of individuals and employers, the effect on health costs and insurance premiums, the burden of employer compliance mandates, the impact of subsidies on the federal budget deficit, entitlement spending and taxes, the reduction in the number of uninsured, now roughly 50 million, and the involvement of government in healthcare, with Medicare, Medicaid and now “Obamacare.” But at the end of the decade the biggest test may be whether Americans are healthier. Read more.
- by Jim O'ConnellOct 1, 2013
For the first time in 17 years the US government today is shut down—triggered once again by a policy dispute between the House of Representatives and the White House.
The policy issue is healthcare reform, specifically a Republican amendment to a federal government spending bill to delay the Affordable Care Act’s (ACA) “individual mandate,” scheduled to take effect on January 1.
Of course the ACA requirement that everyone buy health insurance or pay a penalty tax remains controversial, with majorities of the public opposed. Nevertheless, the ACA is the law of the land and upheld last year by the US Supreme Court. While Republicans would like to delay one of the law’s central tenets, Capitol Hill Democrats and President Obama himself staunchly defend them. Read more.
- by Jim O'ConnellSep 16, 2013
The first big step in the Megatrend of consumer-directed health occurred ten years ago, with enactment of tax-favored Health Savings Accounts (HSAs) for out-of-pocket medical expenses coupled with high-deductible health plans.
According to America’s Health Insurance Plans, more than 13.5 million people are covered by HDHP/HSA plans, a jump of almost 20 % in one year.
While HSAs gave a push to consumer-directed health, the Affordable Care Act could turbo-charge this trend. With so much uncertainty about how healthcare reform will affect employer costs, new ACA compliance mandates could catalyze a transformation of employer-sponsored health coverage.
Facing a cascade of onerous new regulations, employers will share greater responsibility with employees for making choices about coverage options, health care providers and wellness programs. Read more.
- by Jim O'ConnellAug 29, 2013
Re-imagine: to imagine again or anew; especially to form a new conception of; recreate. –Merriam Webster Online
Partly because of widespread uncertainty about the Affordable Care Act (ACA) and partly because of rising costs, in conference rooms all across the land C-level executives and senior managers are re-imagining legacy concepts of employer-sponsored health benefits.
Like 21st Century Impressionist painters these leaders are re-inventing—breaking with tradition by creating new models of employee health benefits.
ACA drivers of this creativity include the employer “play or pay” mandate (delayed until 2015 but based on next year’s look-back hours worked); the ban on annual and lifetime dollar coverage limits; the availability of quality coverage from insurance exchanges; the new transitional reinsurance fee; burdensome reporting requirements; and, of course, the looming 40% “Cadillac Tax” on high-value health plans. Read more.
- by Jim O'ConnellAug 20, 2013Much of the recent conversation about healthcare reform has been necessarily granular—focused on details like delays in the employer mandate or in the scheduled dollar limits on patient cost sharing for certain plans.But it’s important not to lose sight of the big picture—the healthcare reform-inspired macro changes that will define employer-sponsored health benefits for years to come.Employers need to keep these Affordable Care Act Megatrends in mind even as they pay strict attention to new regulatory guidance. This occasional blog series, while staying ahead of the regulatory curve, will look at five Megatrends and outline their implications for employers.We start today with ACA Megatrend #1: pervasive uncertainty about the effects of the healthcare reform law.Almost 3 ½ years since the Patient Protection & Affordable Care Act was signed into law, no one knows what the consequences will be when a parallel health insurance universe for 35 million uninsured is stood up adjacent to the existing employer-sponsored system that insures over 160 million people.
Much of the recent conversation about healthcare reform has been necessarily granular—focused on details like delays in the employer mandate or in the scheduled dollar limits on patient cost sharing for certain plans.
But it’s important not to lose sight of the big picture—the healthcare reform-inspired macro changes that will define employer-sponsored health benefits for years to come.
Employers need to keep these Affordable Care Act Megatrends in mind even as they pay strict attention to new regulatory guidance. This occasional blog series, while staying ahead of the regulatory curve, will look at five Megatrends and outline their implications for employers. Read more.
- by Jim O'ConnellAug 13, 2013
The New York Times reported this week that the Obama Administration has delayed until 2015 another important Affordable Care Act provision that was to have taken effect next year. This time it’s dollar limits on patients’ total annual out-of-pocket costs for essential health benefits.
Affordable Care Act (ACA) Background
Under the 2010 law, starting in 2014 health insurance plans were to be subject to strict limits on patient cost-sharing requirements, e.g., deductibles, co-pays and co-insurance. The combined annual “out-of-pocket” maximum for 2014 was slated to be $6,350 for individual plans and $12,700 for family coverage.
More specifically, the Patient Protection & Affordable Care Act provided that in the individual and small group plan markets, the 2014 annual deductible limit was to be $2,000 for self-only coverage and $4,000 for family coverage. The law made clear, however, that the annual deductible limit did not apply to self-insured plans or to large group health plans. Read more.
- by Jim O'ConnellAug 2, 2013
Congress will soon begin its August recess, planning not to return to Washington DC until after Labor Day. Among the unfinished business is comprehensive immigration reform.
In late June the Senate approved a 1,200-page bipartisan immigration measure on a 68-32 vote, suggesting that the Obama Administration and Capitol Hill might be able to hammer out the first big changes in U.S. immigration law in almost 30 years.
The Senate-passed legislation would strengthen border security, mandate electronic employment eligibility verification, update the nation’s visa system and create a 13-year “path to citizenship” for most of the 11 million immigrants now in the U.S. illegally. While full citizenship is envisioned as a multi-year, multi-hurdle process, provisional legal status for undocumented aliens could be granted within months of the bill becoming law. Read more.
- by Jim O'ConnellJul 3, 2013
The Obama Administration announced yesterday that the central employer compliance provision in the Patient Protection & Affordable Care Act, the so-called employer “Play or Pay” mandate, would be delayed until January 1, 2015.
Specifically postponed for one year is the healthcare reform law requirement that employers with more than 50 full-time employees offer minimum essential coverage to employees and their dependents, and further, that health coverage offered to employees meet tests of affordability and minimum value, originally scheduled to take effect starting in January 2014. Read more.
- by Jim O'ConnellMay 2, 2013
A so-called “Gang of Eight” U.S. senators, four democrats and four republicans, last week unveiled comprehensive immigration reform legislation that would among other things create a “path to citizenship” for some 11 million illegal immigrants.
The bipartisan measure, a top domestic priority for President Obama, represents Congress’s first major attempt to address the issue of illegal immigration since 2007. Read more.
- by Jim O'ConnellMar 22, 2013
At long last the first day of Spring has arrived, on Wednesday, March 20 to be exact, with the vernal equinox at 7:02 AM Eastern Time. The first day of Spring calls forth images of sunny days, warm afternoons, March Madness, baseball, flowers and the promise of new beginnings. But this week’s Employee Benefit Research Institute (EBRI) report on its 2013 retirement confidence survey confirms that a “vernal equinox” may be needed for a new beginning to address America’s retirement savings crisis. Read more.
- by Jim O'ConnellFeb 18, 2013
It’s often said that our elected officials in Washington DC have a way with words. Fiscal cliff, filibuster, earmarks and unanimous consent immediately come to mind.
Now they have come up with a word that’s destined for the Congressional linguistic obscurity hall of fame: “sequestration.”
Merriam-Webster’s dictionary defines it as “a legal writ authorizing a sheriff to take into custody the property of a defendant—or to take possession of property in a dispute to await the order of the court as to who is entitled.”
The word “sequester” itself is derived from the Latin sequestrare, meaning to “place in safekeeping.” Read more.
- by Jim O'ConnellFeb 11, 2013
A bipartisan group of senators recently announced a Framework for Comprehensive Immigration Reform that would create a “Path to Citizenship” for the 11 million illegal immigrants now living in the U.S.
That four Democratic senators and four Republican senators would endorse a common set of legislative principles on this controversial issue significantly improves its chances of enactment this year or next. Read more.
- by Jim O'ConnellJan 24, 2013
Defending his trades of future first-round draft choices for veteran stars, famed Washington Redskins coach George Allen insisted, “The future is now!”
That’s good advice for America’s employers, who must prepare right now for the January 1, 2014 effective date of the most challenging compliance provision in the 2010 healthcare reform law—the Patient Protection & Affordable Care Act (PPACA).
In brief, “Play or Pay,” or more formally, “Employer Shared Responsibility,” requires employers with more than 50 full-time employees to offer workers and their dependents health coverage that is both “affordable” and of “minimum value.” If the coverage does not meet both of those tests the employer can be subject to a special penalty–$3,000 for each full-time employee who qualifies for an insurance premium subsidy for health coverage bought from a State health insurance exchange marketplace. Read more.
- by Jim O'ConnellJan 2, 2013
As an estimated one million Times Square revelers counted down the seconds to the New Year, one hundred U.S. senators counted down the votes to approval of a January 1 legislative compromise to prevent across-the-board tax rate increases and spending cuts that has come to be known as the “Fiscal Cliff.” The House of Representatives followed suit later in the day.
Like most New Years, this agreement brings good news and bad news. The good news is that democrats, led by Vice President Joe Biden, and republicans, led by Senate Minority Leader Mitch McConnell (R-KY), hammered out compromises to prevent everyone’s income tax rates from going up on January 1. Economists had predicted that the combination of higher income tax rates and a scheduled “sequester” of a big chunk of defense and domestic spending could have triggered a recession in 2013. Read more.
- by Jim O'ConnellDec 17, 2012
Any day now the White House and the Congressional leadership will announce an agreement to avoid going over the fiscal cliff on New Year’s Day; it will be a “down payment” on a comprehensive deficit reduction plan to be negotiated in 2013.
They will declare the obvious: to reduce annual federal budget deficits and prevent America’s $16 trillion public debt from hitting $23 trillion in ten years, government spending will be cut and taxes will go up.
Today we examine the tax part of this equation.
President Obama has been saying for months that as the first step toward deficit reduction the rich should be “asked” to pay “their fair share.” Read more.
- by Jim O'ConnellDec 9, 2012
Like the annual winter solstice, Washington DC in December repeats a familiar scenario: yet another issue pits Democrats against Republicans; President Obama against Congressional Republicans; Liberals against Conservatives. Americans rightly ask, why is the “Fiscal Cliff” apparently impossible to resolve?
Why so much drama? Why is compromise so painful? Looking at the headlines we’re tempted to ask whether our elected officials even speak the same language.
In truth there are several reasons that explain why reaching consensus on reducing budget deficits and the public debt is proving so elusive. Read more.
- by Jim O'ConnellDec 4, 2012
Over six months ago, in a blog entitled The Fiscal Cliff: Thelma and Louise?, we predicted that “as the nation nears the Fiscal Cliff Washington DC will either show extraordinary political leadership and a spirit of compromise or go over the cliff into partisan polarization that will invite economic disaster.”
We went on to say that a post-election, “lame-duck” Congress would have about six weeks “to get behind the steering wheel and drive toward the Fiscal Cliff—hopefully ever mindful of Thelma and Louise!”
Turns out we were right on both counts: One, our country needs extraordinary political leadership and a spirit of compromise. Two, Washington DC is driving at top speed toward the Fiscal Cliff. If the President, Senators and Representatives of both parties can’t or won’t compromise their partisan positions our government, like Thelma and Louise, will drive the country right off the cliff. Read more.
- by Jim O'ConnellOct 8, 2012
“Big Firms Overhaul Health Coverage,” shouted the headline on the front page of the September 26 Wall Street Journal.
The nation’s leading business newspaper was reporting on recent announcements by two major U.S. employers that could foretell a revolution in employee health benefits.
Sears Holdings Corporation and Darden Restaurants Inc. are planning what the Journal calls “a radical change in the way they provide health benefits to their workers.” Sears, with some 90,000 full-time employees, and Darden, owner of restaurants like Olive Garden and Red Lobster, with about 45,000 workers, have made arrangements to refer their employees to a private sector health insurance exchange which will offer competing health insurance plans.
Operated by Aon Hewitt, the private insurance exchange will offer several employer-supported group health plans with varying annual premiums, deductibles and co-pays. Workers will be able to navigate among the different plan choices via a website much as consumers do today on Orbitz to make travel arrangements. Read more.
- by Jim O'ConnellAug 8, 2012
It may not go away in a New York minute but the days of the payroll tax holiday are numbered. As of this posting, only 145 days to go.
Recall that in 2010 President Obama and the Congress agreed to extend Bush-era income tax rate cuts and add a special one-year employee payroll tax holiday, reducing the Social Security tax rate from 6.2% to 4.2% for 2011.
The payroll tax holiday saves the average family about $1,000 in taxes annually and benefits some 122 million people.
Which is why as 2011 wound down the White House and Capitol Hill began to worry about the election year “tax increase” that would occur if they let the payroll tax holiday expire as scheduled. The only question was how to pay for another one-year extension—which would cost the U.S. Treasury (which compensates the Social Security Trust Fund for diverted Social Security tax revenues) about $120 billion? Read more.
- by Jim O'ConnellJul 2, 2012
The Federal Government does not have the power to order people to buy health insurance. The Federal Government does have the power to impose a tax on those without health insurance.
NFIB, et al., v. Sebelius, Chief Justice John Roberts Majority Opinion, p 44
The Supreme Court of the U.S. (SCOTUS) last week upheld the Patient Protection & Affordable Care Act (PPACA) as a constitutional exercise of Congress’s power to “lay and collect taxes.”
The historic 5-4 split decision brings to a dramatic close two years of contentious litigation over President Obama’s signature healthcare reform legislation.
The 2010 healthcare reform law, and specifically its controversial mandate that citizens purchase health insurance coverage or pay a special tax, is constitutional.
The decision of the nation’s Highest Court effectively puts a big “The End” to thousands of pages of legal briefs and millions of words of argumentation about constitutional law. Read more.
- by Jim O'ConnellJun 12, 2012
In two weeks or less the U.S. Supreme Court will announce a decision on the constitutionality of President Obama’s healthcare reform law. To say this decision will be important is an understatement: it promises to be one of the High Court’s most historic statements on the power of the federal government.
While the justices will be weighing several questions related to the 2010 healthcare reform law, the centerpiece of their deliberations is the so-called “Individual Mandate,” which requires nearly all Americans to purchase health insurance coverage or face a stiff government penalty.
Justices will decide a core question—whether the Congress, in including an individual mandate in the Patient Protection & Affordable Care Act, exceeded its authority to regulate interstate commerce under the U.S. Constitution.
The so-called “Commerce Clause” of the Constitution authorizes Congress “to regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” Read more.
- by Jim O'ConnellMay 30, 2012
Perhaps the most memorable “cliff scene” in modern motion pictures is the surprise ending in the film “Thelma and Louise,” the 1991 Hollywood classic starring Geena Davis and Susan Sarandon.
That will be an appropriate image to contemplate as a real-life cliff scene plays out at the end of this year—a “Fiscal Cliff” drama that will unfold December 31 unless Congress and the President take action to avert it.
Seven months from now, as most of us celebrate New Year’s Eve, several major legislative events are scheduled to occur almost simultaneously that, taken together, create a giant fiscal cliff our economy could drive right off.
The Congressional Budget Office recently summarized some of the issues Congress and the President must address before year-end to avoid this Fiscal Cliff. (See report, especially page three). Read more.
- by Jim O'ConnellMay 21, 2012
Americans don’t always heed reports that we’re not saving enough for retirement. It’s like our doctor advising that we need to exercise, reduce caffeine intake and avoid fatty foods. What else is new?
But two recent reports put stark numbers behind all the advice—like finally tipping the scales at 250. Or seeing our cholesterol number move into the danger zone.
First, Employee Benefit Adviser reported May 15, in an article by Marli Riggs, that a recent LIMRA survey found that half of all Americans say they aren’t contributing anything to a retirement plan. Half of us. Contributing nothing.
Second, the US Labor Department Assistant Secretary for Employee Benefits, Phyllis C. Borzi, in a retirement security newsletter entitled “Before It’s Too Late,” cited a recent report from the Employee Benefits Research Institute (EBRI) that 60% of U.S. workers say they have less than $25,000 in savings and investments. Ms. Borzi goes on to say that because of these low retirement savings only 14% of Americans are very confident they will have enough money to live comfortably in retirement. Read more.
- by Jim O'ConnellMay 9, 2012
Unless Washington acts soon to strengthen Social Security’s finances, the Trust Fund will run out of money in twenty-one years—in 2033 to be exact.
That grim forecast comes from the latest report of the Social Security trustees, who just last year predicted the reckoning would come three years later—in 2036. An accompanying chart shows the fundamental mismatch between Social Security (OASDI) revenue and costs.
Social Security’s finances are being hammered by three reinforcing trends: persistent high unemployment that lessens incoming payroll tax revenues; waves of retiring baby boomers claiming their benefits; and high energy prices that have necessitated greater cost-of-living adjustments.
In short, Social Security benefit payouts are more than expected and FICA payroll tax revenues are less than expected. Read more.
- by Jim O'ConnellApr 18, 2012
Lawmakers hoping next year to eliminate tax breaks in order to raise the tax revenue needed to finance cuts in income tax rates have their work cut out for them, according to a new report by the nonpartisan Congressional Research Service (CRS).
The CRS analysis, which is not available to the public, was obtained by the Washington Post, which reported on the findings on March 24.
The report concludes that it will be almost impossible for Congress to repeal the tax breaks that account for the greatest revenue losses to the U.S. Treasury—precisely because these breaks are hugely popular with voters and are intended to incentivize important policy objectives. Read more.
- by Jim O'ConnellApr 2, 2012
“Could you define the market — everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market; therefore, you can make people buy broccoli.”
—Supreme Court Justice Antonin Scalia questioning Solicitor General Donald B. Verrilli, March 27, 2012
The U.S. Supreme Court on Tuesday March 27 heard oral arguments on the constitutionality of the Patient Protection & Affordable Care Act—the landmark healthcare reform President Obama signed into law two years ago.
At issue is the so-called “Individual Mandate,” the provision of the 2010 law, scheduled to take effect in 2014 that would require almost all Americans to buy health insurance. Read more.
- by Jim O'ConnellMar 20, 2012
The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) last week released a special report that addresses what may be the biggest concern about healthcare reform: that when full implementation starts in 2014 employers may quit sponsoring health benefits for their employees.
The argument that the healthcare reform tide might sweep away employer-sponsored coverage stems mainly from the so-called “employer shared responsibility” provision of the almost-two-year old law.
Also known as the “Play or Pay” mandate, it forces employers to either provide employee health coverage that meets government standards for both comprehensiveness and affordability or pay a hefty fine based on the number of employees that qualify for subsidized coverage from state exchanges. Read more.
- by Jim O'ConnellMar 6, 2012
Support is growing in Washington DC and around the country for comprehensive tax reform, defined as legislation to eliminate or curtail certain tax breaks, deductions, exclusions and loopholes in return for cutting tax rates.
President Obama recently proposed a business tax overhaul that would scale back tax credits and deductions and cut the top corporate tax rate to 28%. Others are looking at reform of individual income tax rules.
But tax reform is like healthcare reform and balancing the budget: everyone is for it in theory. It’s the specifics they disagree on. The devil is in the details.
What details? First, what tax deductions to eliminate? The old saying that one person’s tax incentive is another person’s tax loophole is not far from the truth on Capitol Hill. Read more.
- by Jim O'ConnellFeb 24, 2012
There’s an old joke about the king who assembled all his economists and asked them to distill all economic wisdom into a single sentence. They worked and worked and finally gave the king this advice: “There is no such thing as a free lunch!”
Apparently Congressional Democrats and Republicans haven’t heard this story because last Friday they approved legislation to extend the 2% payroll tax holiday, at a cost of about $100 billion for the remaining ten months of 2012, without any budgetary offsets, i.e., without corresponding spending cuts or tax increases.
Signed into law by the President on Wednesday, the measure includes provisions to extend unemployment benefits and postpone scheduled cuts in Medicare reimbursements for physicians, within the next few days. Read more.
- by Jim O'ConnellFeb 17, 2012
With all the attention on the Republican presidential primaries, the payroll tax holiday, healthcare reform mandates and the state of the economy, it’s understandable that many Americans overlook what may be the biggest long term issue: retirement insecurity.
In this regard, the President’s Council on Economic Advisers (CEA) has done the Nation a great service in releasing a new report, “Supporting Retirement for American Families.”
Citing a number of “risks” that can “threaten a secure and stable retirement for American retirees,” the CEA says that the estimated share of households that may not have sufficient assets for retirement at age 65 has increased over the last thirty years from 31 to 51 percent.
Put another way, the dream of being able to retire at age 65 without fear of running out of money is no longer available to a majority of American households.
Part of the reason for these gloomy retirement prospects is the decline in the percent of workers covered by traditional “defined benefit” pension plans. The CEA estimates that in 2008, the most recent year for which data is available, only 20 percent of private sector workers were covered by DB plans, down from almost 40 percent in a little over twenty-five years. Read more.
- by Jim O'ConnellFeb 7, 2012
Alarm bells went off in Washington DC this week when the Congressional Budget Office (CBO) released its latest estimate of the federal budget deficit. For the fiscal year ending this September 30 Uncle Sam’s budget deficit will top $1 trillion—for the fourth year in a row.
Just to put this number in perspective, if you spent $1 million every single day since the year 1, that’s right, the year 1, $1 million every single day for 2,011 years, you would not yet have spent $1 trillion! To say the least, it’s a very big number and we’ve been racking up trillion deficits for four consecutive years. Read more.
- by Jim O'ConnellJan 25, 2012
A top priority for Congress this month will be deciding the fate of the payroll tax holiday.
We saw the preview of this movie in December when lawmakers, unable to reach agreement on a full-year extension of the 2011 Social Security tax break, finally settled on a two-month extension after a bitter partisan debate.
Will the 2% payroll tax holiday be extended for all of 2012? Or will it fall victim to the Republican versus Democrat legislative dysfunction that has imperiled other initiatives? Read more.
- by Jim O'ConnellJan 18, 2012
Last year’s Capitol Hill battles over reducing federal budget deficits and our $15 trillion public debt centered around rival plans either to cut government spending or raise taxes.
Democrats and Republicans presented the issue as a stark binary choice: cut government entitlements like Medicare or increase income taxes. No wonder the Congressional “Super-committee” failed to reach consensus.
- by Jim O'ConnellJan 10, 2012
IRS on January 3 issued new guidance to employers on the requirement to report the cost of health coverage on employees’ 2012 Forms W-2. In general the guidance gives employers greater flexibility.
Background: The Patient Protection and Affordable Care Act, the 2010 healthcare reform law, requires employers to report the value of employer-sponsored health coverage on employee W-2s for information purposes. There are no tax consequences associated with this mandate.
See the Ceridian Human Resources Legislation Blog for November 1, 2011 for details about the earlier IRS guidance (Notice 2011-28) on this requirement. Read more.
- by Jim O'ConnellDec 23, 2011
House Speaker John Boehner (R-OH) announced Thursday afternoon that a deal had been reached on Capitol Hill to extend the 2% payroll tax holiday for the first two months of 2012. If approved by the House and Senate and signed into law, the employee payroll tax rate for January and February will remain at the 4.2% rate that has been in effect for 2011.
In an apparent reference to a wage cap provision in the Senate-passed bill that the National Payroll Reporting Consortium had said would be difficult to implement with so little lead time, Speaker Boehner said that the agreement ensures that “a complex new reporting burden is not unintentionally imposed on small business job creators.” Read more.
- by Jim O'ConnellDec 23, 2011
The U.S. Senate and the House of Representatives this morning approved legislation to extend the 4.2% employee payroll tax rate for two months, i.e., until February 29, 2012. The legislation appears to drop a provision in the original Senate-passed bill that would have imposed a special wage cap of $18,350, above which a 6.2% employee payroll tax rate would have applied.
The newly approved measure now goes to President Obama, who is expected to sign it into law shortly. Read more.
- by Jim O'ConnellDec 20, 2011
Creating even more uncertainty for January payroll taxes, the U.S. House of Representatives today rejected legislation the U.S. Senate had recently approved to extend the 2011 payroll tax holiday for the first two-months of 2012.
Senate Democratic and Republican leaders, unable last week to hammer out a compromise on how to pay for President Obama’s proposed extension of the 4.2% employee payroll tax rate for all of 2012, had negotiated a two-month extension through February 29, assuming that the House would go along and work out a final agreement on a full year extension in February.
Meanwhile, the National Payroll Reporting Consortium (NPRC), a nonpartisan organization of payroll service providers, said the Senate-passed bill might be unworkable as written. The group pointed to a provision in the bill establishing an $18,350 cap on wages to which the 4.2% payroll tax rate would apply during January and February. Wages paid in those months above $18,350 would be subject to a 6.2% payroll tax rate. Read more.
- by Jim O'ConnellDec 6, 2011
In a December 5 White House statement President Obama turned up the heat on lawmakers, saying if the payroll tax holiday is allowed to expire the average American family would see a tax hike of about $1,000. Noting that Democrats and Republicans deadlocked last week over legislation to extend the tax cut for 2012, the president urged Congress to extend the payroll tax holiday to spur economic growth and new hiring. Read more.
- by Jim O'ConnellDec 2, 2011
Webster’s New World Dictionary defines the word “dilly-dally” to mean “to waste time in hesitation or vacillation.” Whether we use that word or words like procrastinate, dawdle, filibuster or stall, Washington DC is certainly dragging its collective feet on the question of the payroll tax holiday.
The basic issue is whether the one-year 2% employee payroll tax holiday in effect for 2011 will be extended, ended or expanded.
While at least 4 scenarios could play out on Capitol Hill, about one thing we can be certain: the employee payroll tax in 2012 will not revert back to 6.2%. As confident as we can be that the sun will rise in the morning, we can be confident that Congress will not increase payroll taxes in a presidential election year. A 2% “increase” in the payroll tax rate next year would translate into a $900 tax hike for the average household. It’s not going to happen. Read more.
- by Jim O'ConnellNov 14, 2011
The latest news on employee benefits costs, particularly health costs, is not good. A battery of recent reports confirms that employers saw their costs rise sharply in 2011 and have fastened their seat belts for more of the same in 2012.
First, the annual Kaiser/HRET Survey of Employer-Sponsored Health Benefits found that in 2011 average annual health insurance premiums for family coverage crossed the $15,000 threshold for the first time. Kaiser also found that over the last decade insurance premiums more than doubled, with the employee share of premiums rising by 131%.
Analysts compared health insurance costs to BLS data on prices and earnings and noted that since 1999 health insurance premiums have risen 160% while workers’ earnings have risen only 50%. In other words, health insurance costs are absorbing a greater and greater share of employee total compensation.
Towers Watson promptly echoed the Kaiser/HRET bad news in its own Health Care Trend Survey for 2011. Anticipating how employers might respond to unrelenting health cost pressures the firm forecast that “2012 looks like a year when we will start to see (employee) costs go up primarily via increased premium contributions, with a higher proportion of the increase borne by families.” Read more.
- by Jim O'ConnellNov 1, 2011
Just as residents in the path of giant storms try to learn as much as they can about temperature, winds and severity, HR and Payroll professionals are trying to learn as much as they can about the compliance hurricane known as healthcare reform.
We know that the Patient Protection & Affordable Care Act (PPACA) imposes a number of blockbuster mandates, including the employer requirement to provide affordable health coverage (2014), the so-called “individual mandate” to buy health insurance (2014) and a raft of insurance mandates such as extending coverage to adult children and ending annual and lifetime coverage limits.
But there are lesser known mandates as well, including one that was the subject of a great IRS Webinar on Oct 31—the healthcare reform law’s new W-2 reporting requirement. Read more.
- by Jim O'ConnellOct 19, 2011
Even the most ardent supporters of the Patient Protection and Affordable Care Act (PPACA), last year’s landmark healthcare reform law, acknowledge that it’s not perfect—indeed, that changes will be needed to correct defects that become apparent over time.
A good example came last week, when Kathleen Sibelius, the secretary of the U.S. Department of Health & Human Services, pulled the plug on the so-called CLASS Act, the section of PPACA that would have created a new federal government long-term care insurance program.
The Community Living Assistance Services and Supports Act (CLASS) was added to the healthcare reform legislation as it made its way through Congress in 2009. Controversial from the start, the program envisioned a vast structure in which employers would voluntarily enroll employees in payroll deduction plans to pay premiums for future long term care coverage. Employees could opt-out within a certain period of time after enrollment. Read more.
- by Jim O'ConnellSep 26, 2011
Comedians Bud Abbott and Lou Costello brought 1950s audiences to their feet with their iconic “Who’s on First” skit. Costello became hopelessly confused by the names of those playing first (“Who”), second (“What”), third (“I Don’t Know”), etc.
2011 audiences can identify with Costello as they try to understand all the budget plans Washington is considering these days. Perhaps this summary will clarify things:
Plan A. The August 2 “Budget Control Act” raises the debt ceiling by $900 billion (from the existing $14 trillion) and authorizes an additional $1.5 trillion increase if either (1) a Congressional super-committee comes up with an additional $1.5 trillion in deficit reduction that House and Senate approve; or (2) automatic cuts are triggered in entitlement programs like Medicaid and Medicare as well as national defense. Read more.
- by Jim O'ConnellSep 16, 2011
Last week the Human Resources Legislation Blog described parts of President Obama’s “American Jobs Act” proposal, including payroll tax holidays for workers and employers to boost employment and consumer spending.
It was pointed out that one of the biggest questions about the legislation is whether Congress will approve it—and that a key factor in answering that question is how the President proposes to pay for its $447 billion cost.
New government spending and tax cuts are sensitive subjects in Washington DC these days, particularly after this summer’s bruising battle over raising the public debt ceiling above the previous $14 trillion limit. A special Congressional “Super-Committee” has already begun the hard work of identifying $1.5 trillion in new spending cuts as part of a longer term budget deficit reduction program. Read more.
- by Jim O'ConnellSep 9, 2011
With the unemployment rate stuck above 9%, 14 million Americans out of work and economic growth at stall speed, President Obama last night proposed to a Joint Session of the U.S. Congress a new $447 billion plan he says will “jolt” the economy and create new jobs.
While specifics are not yet available, it’s clear that the centerpiece of the President’s plan—$240 billion of it—is an extension and expansion of the payroll tax holiday enacted in December 2010.
The payroll tax holiday in effect for 2011 reduces the employee Social Security tax rate from 6.2% to 4.2%, putting an average of about $1,000 in workers’ pockets. This law is set to expire at the end of this year, effectively “increasing” taxes on workers in 2012. Read more.
- by Jim O'ConnellAug 29, 2011
Of the 2010 healthcare reform law it’s said that the only thing certain is uncertainty.
Topping the list of regulatory uncertainties is the so-called employer mandate—to either offer coverage to full-time employees that is both “affordable” and “comprehensive” or face a hefty fine. The provision is slated to take effect January 2014.
Employers got some good news August 12 when the U.S. Department of the Treasury and the IRS issued a Notice of Proposed Rulemaking (NPRM) clarifying what constitutes “affordable” employer-provided health coverage.
The Patient Protection & Affordable Care Act (PPACA) provides that an employee may qualify for federal government-subsidized health insurance from a state insurance exchange if the coverage offered by their employer is either unaffordable or not comprehensive, i.e., it doesn’t cover at least 60 percent of total allowed health costs. Under the law an employer can be subject to an “assessment” up to $3,000 for each such employee that qualifies for exchange-subsidized coverage. Read more.
- by Jim O'ConnellAug 18, 2011
With roller-coaster stock markets, downgrades of US government debt and Capitol Hill gridlock over deficit reduction, healthcare reform hasn’t gotten much attention recently.
But two new developments late last week reminded us that the Patient Protection & Affordable Care Act (PPACA) remains one of the nation’s most controversial—and complicated—policy issues.
First, the U.S. Court of Appeals for the 11th Circuit in Atlanta on Friday ruled unconstitutional the “Individual Mandate” section of the 2010 healthcare reform law.
Also on August 12 the Internal Revenue Service (IRS) proposed new rules clarifying the “affordability” test for the minimum essential coverage employers must offer full-time employees starting in 2014.
This HR Policy Blog will explore the Appeals Court ruling; next week we’ll look at the IRS notice and its implications for employers. Read more.
- by Jim O'ConnellAug 4, 2011
This week the White House and Capitol Hill finally came to an agreement on a plan to raise the public debt ceiling and reduce projected federal budget deficits.
The immediate effect of the agreement is to avert almost certain default by the U.S. government on some obligations, owing to the fact that Washington DC must borrow almost $150 billion just to pay bills coming due in August.
The debt crisis that has roiled the nation’s capital for months can be looked at on two levels—the budgetary facts and figures and the lawmaking process itself. Public debt and budget deficit data and forecasts are readily available, as are good summaries of the final agreement.
Equally important, however, may be the public’s perception that a hyper-partisan political process has come to fuel acrimonious disagreement on every issue. Many Americans worry that decision-making on issues vital to the nation and to the world has become, in a word, dysfunctional. Read more.
- by Jim O'ConnellJul 28, 2011
While Washington DC arguments over raising the government’s debt ceiling have grown louder the past few weeks, Congress has quietly begun discussing a key issue for HR and Payroll: whether to amend the 73-year old Fair Labor Standards Act.
For decades FLSA and its state and local variations have regulated the pay practices of millions of employers, creating among other things the bedrock workplace distinction between hourly and “exempt” employees. The question is, does the law still make sense?
On July 14 Randy MacDonald, IBM Senior Vice President for Human Resources and Chairman of the HR Policy Association, bluntly told the U.S. House of Representatives Education & Workforce Committee that “the Fair Labor Standards Act is failing America.” Everyone interested in the world of work should read the testimony.
Suggesting that the nation’s basic wage-hour law has become an anachronistic obstacle to competitiveness, Mr. MacDonald called for major updating, observing that the U.S. economy has “changed drastically” since 1938 and that it “has an entirely new paradigm for how, where and when we work, as well as how professional employees want and expect to be treated.” Read more.
- by Jim O'ConnellJul 1, 2011
What will happen to the 2 percent payroll tax holiday when it expires at the end of this year? Enacted last December the special tax break, which cut workers’ Social Security taxes from 6.2% to 4.2% for 2011 only, will save the average worker some $1,000 in payroll taxes up to a maximum tax cut of $2,136.
The question of its future came up recently in the context of Capitol Hill negotiations on a plan to reduce the federal government’s mammoth present and future budget deficits. The White House signaled that that it would like to see the payroll tax holiday extended through 2012 and possibly expanded to include employers.
Why would the White House be interested in extending the payroll tax cut, which would add up to $111 billion to the federal budget deficit, in the context of negotiations to reduce the deficit?
Because the economy has thrown a monkey wrench into budget deficit reduction talks. To be sure, if nothing is done to cut the deficit, the government’s red ink will hemorrhage by another $9 trillion over the next ten years, on top of the present public debt ceiling of $14 trillion. With a projected deficit this year of $1.4 trillion, Uncle Sam already borrows about 40 cents of every dollar it spends. Read more.
- by Jim O'ConnellJun 28, 2011
Rep. Lamar Smith (R-TX), chairman of the House Judiciary Committee, on June 14 introduced legislation that would require most employers to use the U.S. government’s electronic employment verification system, known as E-Verify, to check the work eligibility of new hires.
The Legal Workforce Act, H.R. 2164, promptly won the support of the U.S. Chamber of Commerce.
Speaking on behalf of more than 3 million member firms of all sizes, the Chamber said that the “legislation represents a legitimate balancing of many competing interests” on immigration policy.
Similarly, SHRM, the association of HR professionals, expressed its appreciation to Chairman Smith for introducing legislation that would create “a fully integrated, federal, electronic employment verification system.” Read more.
- by Jim O'ConnellJun 17, 2011
In a setback for supporters of President Obama’s healthcare reform law, management consulting firm McKinsey & Co said last week that 30 percent of employers will “definitely” or “probably” quit offering health coverage to employees in the years after the law takes full effect in 2014.
According to McKinsey, the figure rises as high as 50 percent among employers with a greater awareness of the healthcare reform law.
Key provisions of the Patient Protection & Affordable Care Act (PPACA) are slated to take effect in 2014, including the employer “Play or Pay” mandate, the individual mandate to buy health insurance and the state-based health insurance exchanges.
The finding of a 30 percent health coverage drop rate appears to result from the interplay between the employer mandate and the state exchanges. The “Play or Pay” provision requires employers to offer coverage that meets both minimum value and affordability tests, while the state exchanges will make available to the uninsured and others subsidized insurance plans covering essential health benefits. Read more.
- by Jim O'ConnellJun 8, 2011
Friday’s news from the federal government’s Bureau of Labor Statistics about the U.S. employment situation in May sent shock waves through Capitol Hill and the White House.
Economic growth appears to be stalling as reflected in the jobs data—only 54,000 new jobs created nationwide in May; the unemployment rate up to 9.1% of the labor force; and almost 14 million Americans out of work.
Beneath the headline data was another significant barometer of economic weakness: the number of people classified as “long-term unemployed ,” i.e., those out of work for longer than 26 weeks, increased by 361,000 in May to 6.2 million people, fully 45 percent of the unemployed. Read more.
- by Jim O'ConnellJun 2, 2011
On May 26 Senator Orrin Hatch of Utah and Representative Erik Paulsen of Minnesota, along with cosponsors, introduced a new bill to improve FSAs and HSAs.
The “Family and Retirement Health Investment Act,” bill number S. 1098 in the Senate and HR 2010 in the House of Representatives, would among other provisions allow employees to “carry-forward” up to $500 of unspent end-of-year FSA funds into the following year.
The $500 carry-forward, or “rollover,” would modify the present law “use it or lose it” rule that requires families to forfeit unspent FSA balances at the end of the year. It is widely believed that the forfeiture rule discourages employees from participating in FSA programs. Read more.
- by Jim O'ConnellMay 23, 2011
Casting superstition to the winds, the trustees of the Social Security and Medicare Trust Funds Friday, May 13th reported scary news.
Social Security will become insolvent in 2036, one year earlier than estimated last year, while Medicare’s Hospital Insurance Trust Fund will be exhausted in 2024—5 years earlier than previously estimated. Trustees blamed the weak economy for the change.
Put another way, Social Security and Medicare will run out of money sooner—and payroll tax revenues will not be sufficient to pay promised benefits.
The two trust funds face the same problem: demographics. Baby boomers are retiring and entitled to more benefits under present law than payroll taxes generate. In 1960 there were about 8 workers for every Social Security beneficiary; by 2000 the ratio was about 3.4:1; right now it’s about 3:1. By 2040 it’s forecast that only two workers will support every beneficiary. Read more.
- by Jim O'ConnellMay 13, 2011
One of “Dancing With the Stars” favorite couples, Romeo and Chelsea Hightower, were voted off in this eighth week of competition. While ABC News reported that “judges had praised Romeo’s dramatic improvement and commitment,” he and Chelsea did not make it to the final four. President Obama’s immigration reform proposal appears destined for the same fate.
The president visited El Paso, Texas, on Tuesday in an effort to boost support for comprehensive immigration reform legislation that among other things would create a pathway to citizenship for undocumented immigrants. Like Romeo and Chelsea, the idea of immigration reform enjoys support, including for proposals like the so-called “DREAM Act” that would promise citizenship for some children of illegal immigrants.
But the obstacles to enactment are formidable and it’s not likely that comprehensive immigration reform legislation will make it to the “final four” of new public laws. Read more.
- by Jim O'ConnellApr 26, 2011
Unless you spent Spring Break on Mars you know that what to do about the exploding federal budget deficit and public debt has become the big issue of 2011.
Without getting into the details or the politics, we can hazard a few observations:
- As they did to avert a government shutdown recently, Democrats and Republicans will find a way to reach agreement on raising the public debt ceiling above the present $14 trillion level. Yes, that’s $14,000,000,000,000! An impressive number even by Washington standards.
- The nonpartisan Congressional Budget Office estimates that President Obama’s FY 2012 budget, submitted in February, has a cumulative 2011-2021 deficit of $9.4 trillion. The White House and Capitol Hill are unanimous that urgent steps are needed to reduce this figure substantially—perhaps by as much as $4 trillion over ten years. The disagreement is over exactly how.
- Economic pressures, some external, seem to be building. Oil prices keep soaring, commodity prices like gold have reached record highs and the dollar has been plunging—evidence of worries that our political process may not be capable of resolving this issue any time soon.
- We can be certain that the issue ultimately will be resolved—though maybe not before 2013. Sooner or later annual trillion-dollar+ deficits will trigger a loss of confidence and sharply higher interest rates if something isn’t done. At the end of the day the White House and Congress have no choice. Read more.
- by Jim O'ConnellApr 18, 2011
In a sign that few things in Washington DC other than monuments are carved in stone, the U.S. Congress acted recently to repeal two key provisions of the 2010 Patient Protection & Affordable Care Act, the landmark healthcare reform law.
First to be repealed is the provision that was to have taken effect in 2012 mandating Forms 1099-Misc reporting for payments in excess of $600 annually made to individuals and businesses for purchases of property or services.
Having nothing whatever to do with healthcare reform, this dramatic expansion of 1099 reporting was included in the final legislation for one reason—to raise $17 billion over ten years to help pay the $1 trillion cost of the new entitlement.
By late last year a crescendo of opposition was loudly heard on Capitol Hill, led by the IRS’ National Taxpayer Advocate, small business representatives and many others. They complained that the new mandate would represent an impossible compliance burden impacting millions of businesses and routine transactions, sending a tidal wave of paper to IRS. Read more.
- by Jim O'ConnellApr 12, 2011
Employers got a little compliance help recently, when Washington addressed the Forms W-2 and 1099-Misc reporting requirements enacted into law as part of the 2010 Patient Protection & Affordable Care Act (PPACA).
This edition covers the new W-2 reporting requirement. Next week we’ll provide an update on repeal of the 1099 requirement—the first provision of the controversial new law to be knocked out.
On March 29 IRS issued long-awaited guidance, in Q/A format, on the PPACA mandate that employers report the value of employer-provided health coverage on employees W-2s. While the new requirement was intended for information purposes only, the statute itself offered little guidance as to what items were to be included and even less on how “value” was to be calculated. Read more.
- by Jim O'ConnellApr 5, 2011
Keeping track of all the proposed health care reform changes, especially as we approach the one-year anniversary of the Patient Protection and Affordable Care Act (PPACA), is a big challenge for HR, payroll and benefits professionals. Employers face continued uncertainty about how health care reform will affect their employees’ health benefits in the months and years ahead. The only thing that’s certain is that health care will affect nearly every U.S. employer, small, medium and large.
We invite you to join our April 7th webcast as I share the latest health care reform news and updates.
Title: Reforming Health Care Reform: New Directions for 2011-2012
Time: Thursday, April 7, 2011 — 1:00 p.m. Central Time
- by Jim O'ConnellMar 18, 2011
Lawmakers are considering a bill that would give employees with health care Flexible Spending Accounts (FSA) the option to cash out unused balances at the end of the year and report those amounts as taxable income.
The Medical Flexible Spending Account Improvement Act of 2011, introduced recently by Reps. Charles Boustany (R-LA), John Larson (D-CT), Erik Paulsen (R-MN) and others, aims to encourage more people to use health care FSAs by eliminating the so-called “use-it-or-lose-it” rule.
Currently, health care FSA account holders are required to forfeit any unspent funds in their account at the end of each year. The bill does not affect dependent care FSAs, which have no “use-it-or-lose-it” provision. Read more.
- by Jim O'ConnellMar 1, 2011
To follow up on my last blog post, I wanted to wrap up the summary of our latest webinar. My presentation made the point that with republicans now in the majority in the U.S. House of Representatives, there is a possibility that healthcare reform, opposed by all republican lawmakers in 2010, will itself be reformed.
I began by discussing the single biggest healthcare reform challenge now facing employers and insurance carriers—total uncertainty. No one really knows what the PPACA will mean for employer-sponsored health benefits.
To be sure, there are many aspects of healthcare reform about which employers are uncertain: they don’t know whether the PPACA will bend the cost curve down, as promised, or up; similarly, they have no idea whether they will be able to comply with the many mandates included in the new law. They also worry about the law’s impending tax increases, including the 40% excise tax on high-value health plans slated for 2018. Read more.
- by Jim O'ConnellFeb 22, 2011
Last Wednesday, The Knowledge Group and Ceridian teamed up to present a Webinar: “Healthcare Reform and Its Impact on Carriers.” To present this special program I was pleased to join West Virginia Insurance Commissioner Jane Cline, DLA Piper partner Marcia Augusburger and Deloitte Consulting principal Bernard Tubiana.
While each of the panelists focused on a different aspect of healthcare reform and the Patient Protection & Affordable Care Act (PPACA), the presentations had a common theme: unprecedented uncertainty for carriers, employers, employees, states, health plans and brokers. Read more.
- by Jim O'ConnellFeb 14, 2011
What should employers expect from the 112th Congress on healthcare reform? PPACA opponents have a 3-D strategy: de-fund, delay, dismantle.
Republicans are likely to use their majority control of the U.S. House of Representatives to attempt to cut the appropriations for agencies charged with implementing the most controversial parts of the healthcare reform law.
For example, the FY 2012 appropriations bill for Health and Human Services (HHS) might contain a specific prohibition on the use of any appropriated funds to enforce new regulations directing the states to expand Medicaid eligibility. Similarly, IRS might be prohibited from spending any money to implement the W-2 reporting requirement. Read more.
- by Jim O’ConnellJan 25, 2011
It now appears that the March 23, 2010 White House signing ceremony marked the beginning — not the end — of debate on healthcare reform. Republicans seem determined to use their new majority to change what they perceive to have been the catalyst for their Election Day victories — the Patient Protection & Affordable Care Act (PPACA). Last week the US House of Representatives approved legislation to repeal President Obama’s signature healthcare reform law.
Democrats still control the U.S. Senate, so House-passed repeal legislation is not likely to become law. But the repeal vote is likely the beginning of a multi-year process to amend the 2010 law and forge a long-elusive bipartisan consensus.
From an employer perspective, this week’s House vote and the score of pending amendments offer little respite from their biggest single problem with healthcare reform: almost infinite uncertainty. Fundamentally, no one knows how healthcare reform ultimately will affect employer-sponsored health benefits. Health costs have been soaring for a decade or more and it’s possible that healthcare reform will actually accelerate these costs. Read more.
- by Jim O'ConnellJan 10, 2011
Required New Year reading for every member of the U.S. House of Representatives and the U.S. Senate should be the just-issued annual report of National Taxpayer Advocate Nina E. Olson. The Taxpayer Advocate Service (TAS) is a unit of the federal government’s Internal Revenue Service.
In a section entitled “The Most Serious Problems Encountered by Taxpayers,” Ms. Olson asserts that the single most serious problem taxpayers face is “the complexity of the Internal Revenue Code.” While that fact is certainly not news for taxpayers or Members of Congress, what is news is the incredible amount of time and money taxpayers are spending to comply with an encyclopedic tax code.
TAS analysis of IRS data indicates that individual and business taxpayers spend “6.1 billion hours a year” complying with a tsunami of complex tax-filing requirements. To help us grasp the enormity of that figure TAS says that “it would require three million full-time employees to work 6.1 billion hours, making ‘tax compliance’ one of the largest industries in the United States.” Read more.
- by Jim O'ConnellDec 22, 2010
Taxpayers are merry about legislation Congress recently passed and President Obama signed into law to extend for another two years income tax rate cuts that were set to expire on New Year’s Eve. The legislation also cuts Social Security taxes by two percentage points for 2011, from 6.2% to 4.2%.
The special payroll tax break will reduce the Social Security taxes of workers who earn $50,000 by a total of $1,000 in 2011. Workers who earn the maximum Social Security wage base of $106,800 will see a total tax cut of $2,136. And a two-worker household earning a total of $100,000 will see a $2,000 cut in their combined Social Security taxes. This is surely a Christmas present that will keep giving all through the year 2011!
There’s only one problem with this payroll tax “holiday:” Like Dickens’ Ebenezer Scrooge, we’re about to be visited by the Ghost of Christmas Future. The 2 percentage point cut in payroll taxes shoots a $112 billion hole in a Social Security trust fund already on the verge of insolvency. Read more.
- by Jim O'ConnellDec 17, 2010
The House of Representatives late Thursday approved legislation that President Obama and Republican leaders earlier this month agreed upon that will extend Bush-era income tax rates for two years for all income levels, create a payroll tax holiday for workers and extend unemployment insurance benefits. The $858 billion package measure, which includes a number of other tax-related provisions, now goes to the President who is expected to sign it into law in the next day or so.
The House vote was 277 to 148, following Senate approval earlier this week by a vote of 81 to 19. After months of intense partisan battles on economic stimulus and healthcare reform legislation, the tax cut bill represents the most important bipartisan legislative achievement of the Obama presidency. Read more.
- by Jim O'ConnellDec 7, 2010
As mentioned here previously, five constellations of policy issues are likely to dominate Washington’s 2011-2012 calendar: health care reform implementation, targeted jobs creation measures, tax policy, retirement security and immigration. Despite the sense of urgency about the looming federal budget deficit, Washington seems to be focusing on tax policy this week.
As of this writing, it looks like President Obama and Congress have agreed on a partial payroll tax holiday for all employees. The overall agreement temporarily to extend Bush-era tax rate cuts includes a 2 percentage point reduction in the employee share of Social Security taxes—i.e., a cut for the year 2011 from 6.2% to 4.2%. The payroll tax cut would, for example, reduce the taxes of an individual earning $50,000 per year by $1,000. This would shoot a big hole in Social Security revenues for 2011, which would have to be made up by transfers of general revenue to the trust fund, but would give a short term boost to disposable income.
Also high on the tax policy agenda for the rest of 2010 and into 2011 are the Bush-era income tax rate cuts. The cuts were enacted as part of the 2001 and 2003 economic stimulus measures and are scheduled to expire at the end of this year. Read more.
- by Jim O'ConnellDec 7, 2010
Five constellations of policy issues are likely to dominate Washington’s 2011-2012 calendar: health care reform implementation, targeted jobs creation measures, tax policy, retirement security and immigration. Overshadowing all of these, of course, will be the compelling question of reducing the federal budget deficit and government debt as a percent of GDP.
Now, let’s examine the second constellation…
Targeted Jobs Creation
Jobs will continue to be the main focus of congressional and voter concern. Unlike most other measures that Congress approved, the HIRE Act employer tax holiday enjoyed bipartisan support in 2010. Meanwhile, unemployment remains stubbornly in the 10% range with upfront hiring costs a big obstacle, especially for smaller employers.
As of this writing it looks like President Obama and Congress have agreed on a partial payroll tax holiday for all employees. The overall agreement temporarily to extend Bush-era tax rate cuts includes a 2 percentage point reduction in the employee share of Social Security taxes—i.e., a cut for the year 2011 from 6.2% to 4.2%. The payroll tax cut would, for example, reduce the taxes of an individual earning $50,000 per year by $1,000. This would shoot a big hole in Social Security revenues for 2011, which would have to be made up by transfers of general revenue to the trust fund, but would give a short term boost to disposable income. Read more.
- by Jim O'ConnellNov 22, 2010
Based on participation in meetings of the National Business Group on Health and the American Benefits Council and other sources, here’s a brief assessment of the ways the political changes in Washington could affect health care reform. What are the implications of the elections for the Affordable Care Act? What are the options for changing the law in the next couple of years? Read more.
- by Jim O'ConnellNov 4, 2010
A famous Latin phrase best captures Tuesday’s election results — vox populi, meaning the voice of the people.
The people spoke loud and clear Tuesday as Republicans gained an historic 60 seats and majority control of the House of Representatives. Republicans also gained six seats in the Senate, substantially narrowing the Democrats’ majority. 2010 proved to be a tidal wave election, sweeping away a number of veteran Democrats and abruptly ending one-party government after just two years.
In voting to change the congressional leadership the people unmistakably were saying that they want the President and the Congress to focus on jobs and the economy. Millions of Americans went to the polls believing that Washington, DC had not given enough attention to policies to get the country moving again and put people back to work. Read more.
- by Jim O'ConnellOct 14, 2010
Five constellations of policy issues are likely to dominate Washington’s 2011-2012 calendar: health care reform implementation, targeted jobs creation measures, tax policy, retirement security and immigration. Over the next several weeks, we will explore into each of the five constellations – starting with the first.
Healthcare Reform Implementation
While the direction of the regulatory pendulum may depend on this November’s congressional elections, many employers believe the compliance crunch is only beginning on healthcare reform. They are convinced that the Patient Protection & Affordable Care Act threatens a flood of regulations for years to come, especially in new reporting requirements and added tax burdens.
Indeed, close inspection of the legislation reveals new employer compliance burdens for 2011, 2012, 2013, 2014 and even 2018, including a prohibition on FSAs for over-the-counter drugs, W-2 reporting of the value of worker health benefits, extensive reporting to IRS and employees of health coverage information, limits of annual FSA elections, special new Medicare taxes on higher-income employees and a new excise tax on so-called Cadillac health plans.
IRS Notice 2010-69 on October 12 offered some much-needed “interim relief” to employers by providing that the new law’s requirement to report the value of health coverage on employees’ Forms W-2 would not be mandatory at least for 2011. Read more.
- by Jim O'ConnellSep 17, 2010
In my blog debut I take a look back at two overarching themes defined the 2009-2010 congressional agenda: a faltering economic recovery and the enactment of monumental legislation.
The financial collapse of 2008 triggered a cascade of economic difficulties, including the worst recession since the Great Depression of the 1930s. With the loss of some 8 million jobs, the nation faced the highest unemployment rate in 27 years. A precipitous drop in stock prices erased billions in retirement savings. We also experienced an unprecedented seize-up in the housing market and skyrocketing budget deficits for federal, state and local governments.
The hoped-for V-shaped economic bounce back failed to materialize in 2009, leaving lawmakers feeling like firefighters battling multiple blazes. As the economy stumbled, pressure grew for quick action to prevent a double-dip recession. Read more.
- by Jim O'ConnellSep 1, 2010
Ceridian executive consultant and Washington insider Jim O’Connell blogs about upcoming legislation, policy changes, employment law and compliance issues that may affect employers including health care reform, employee benefits, FLSA, employment taxes and more.With more than 30 years of experience in federal legislative and regulatory affairs, Jim O’Connell focuses on HR and payroll policy issues, keeping customers informed about fast-changing and complex compliance regulations and workforce trends. O’Connell is a frequent participant in national and chapter HR and payroll industry meetings. He is an adjunct professor at Georgetown University in Washington, D.C., and specializes in international business-government relations. O’Connell has been with Ceridian since 1982. Before joining Ceridian, he served in the U.S. Senate as chief legislative assistant to New York Senator Jacob K. Javits and later with Connecticut Senator Lowell P. Weicker. O’Connell holds a Ph.D. in economics from New York’s Fordham University.
Ceridian executive consultant and Washington insider Jim O’Connell blogs about upcoming legislation, policy changes, employment law and compliance issues that may affect employers including health care reform, employee benefits, FLSA, employment taxes and more.
With more than 30 years of experience in federal legislative and regulatory affairs, Jim O’Connell focuses on HR and payroll policy issues, keeping customers informed about fast-changing and complex compliance regulations and workforce trends. O’Connell is a frequent participant in national and chapter HR and payroll industry meetings. He is an adjunct professor at Georgetown University in Washington, D.C., and specializes in international business-government relations. O’Connell has been with Ceridian since 1982. Before joining Ceridian, he served in the U.S. Senate as chief legislative assistant to New York Senator Jacob K. Javits and later with Connecticut Senator Lowell P. Weicker. O’Connell holds a Ph.D. in economics from New York’s Fordham University.