tag:blogger.com,1999:blog-17387027484783029122024-02-19T08:07:50.685-08:00Employee BenefitsEmployee Benefits is the definite online source of news, information, retirement plans, health life insurance, life insurance, disability insurance, vacation, employee stock ownership for the benefits and HR industry.Unknownnoreply@blogger.comBlogger402125tag:blogger.com,1999:blog-1738702748478302912.post-30945713537391205232019-08-18T01:43:00.000-07:002019-08-18T01:43:02.231-07:00IRS Penalty Waivers for Certain Form 8955-SSA Delinquencies <br />
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">On October 1, 2014, the IRS announced that due
to changes to the DOL’s electronic filing system, filings under DFVC no longer
include all information required by the IRS. The Form 8955-SSA, Annual Registration
Statement Identifying Separated Participants With Deferred Vested Benefits,
which replaced the Schedule SSA (Form 5500), must be filed directly with the
IRS (see Question 65 for details). <o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">The IRS has therefore modified the requirements
for qualifying for IRS penalty relief. The IRS is now waiving its late filing
penalties only for filers who: <o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">1.<span style="mso-spacerun: yes;">
</span>satisfy the Department of Labor’s DFVC requirements for: <o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
</div>
<ul>
<li><span style="font-family: inherit;"><span style="mso-list: Ignore;">·<span style="font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #1c263d;">Forms 5500, Annual Return/Report of Employee
Benefit Plan, or </span>Form 5500-SF, Short Form Annual Return/Report of Small Employee
Benefit Plan; </span></li>
</ul>
<!--[if !supportLists]--><br />
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<br /></div>
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<span style="font-family: inherit;">2.<span style="mso-spacerun: yes;"> </span>file a paper
Form 8955-SSA with the IRS for the same delinquent tax year filings; and <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: inherit;">3.<span style="mso-spacerun: yes;"> </span>meet the
requirements of Notice 2014-35 (see below). <o:p></o:p></span></div>
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<span style="font-family: inherit;"><br /></span></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: inherit;">Plans Eligible for
Relief <o:p></o:p></span></u></b></div>
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<br /></div>
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<span style="font-family: inherit;">Retirement plans governed by Title I of ERISA that: <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: inherit;">•<span style="mso-spacerun: yes;"> </span>must file a Form
5500-series return (but not Forms 5500-EZ or 5500-SF for plans without
employees); and <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: inherit;">•<span style="mso-spacerun: yes;"> </span>are eligible for
DOL’s Delinquent Filer Voluntary Compliance Program. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: inherit;">Note: The IRS has a separate Form 5500-EZ Late Filer Program
for relief from late filing penalties for non-ERISA plans that must file Forms
5500-EZ or 5500-SF because they cover only the owner, partner and spouses.<o:p></o:p></span></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-4112605327580186352019-08-16T01:40:00.000-07:002019-08-16T01:40:01.652-07:00Who is eligible to participate in the DFVCP? <br />
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">The DOL has stated that: <o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Plan administrators are eligible to pay reduced
civil penalties under the program if the required filings under the DFVCP are
made prior to the date on which the administrator is notified in writing by the
department of a failure to file a timely annual report under Title I of the
Employee Retirement Security Act of 1974 (ERISA). DFVCP is not available to
plans that are not covered by Title I of ERISA. DFVCP relief is available only
if the plan is required to file an annual report under Title I of ERISA. If a
Form 5500-EZ is filed late, the plan administrator may request relief from the
IRS for any applicable tax code penalties. <o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">The relief under the DFVCP is available only to
the extent that a Form 5500 is required to be filed under Title 1 of ERISA and
for certain one-participant and foreign retirement plans under the pilot
program issued in 2014 (subject to the reporting requirements of IRC §§
6047(e), 6058, and 6059).<o:p></o:p></span></span></div>
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<br /></div>
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<span style="font-family: inherit;"><span style="background: white; color: #1c263d;"><span style="mso-spacerun: yes;"> </span>The IRS
has made this pilot program permanent for plan years 2015 and beyond</span><o:p></o:p></span></div>
<br />Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-1738702748478302912.post-13730891789033617392019-08-12T01:58:00.000-07:002019-08-12T01:58:00.572-07:00What is the Delinquent Filer Voluntary Compliance Program (DFVCP or DFVC Program)? <br />
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">The Delinquent Filer Voluntary Compliance
Program (DFVCP, DFVC Program) was adopted by the Department of Labor’s Employee
Benefits Security Administration (formerly the Pension and Welfare Benefits
Administration) in an effort to encourage delinquent filers to voluntarily
comply with the annual reporting requirements under Title I of ERISA. As
adopted, the DFVCP permitted eligible plan administrators the opportunity to
avoid the assessment of civil penalties otherwise applicable to administrators
who failed to file timely annual reports (commonly referred to as the Form
5500) by voluntarily complying with the filing requirements under Title I of
ERISA and paying reduced civil penalties specified in the DFVCP. <o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">In early 2013, the DOL updated the DFVCP to
reflect the mandatory electronic filing requirement for the Form 5500 under
EFAST 2. The updated DFVCP replaces the program adopted on April 27, 1995, and
updated on March 28, 2002, and became effective on January 29, 2013. The
updated program maintains the penalty structure that was announced in the 2002
update.<o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">In an effort to further encourage and
facilitate voluntary compliance by plan administrators with the annual
reporting requirements of Title I of ERISA, the DOL updated the DFVCP by
simplifying the procedures governing participation and lowering the civil
penalty assessments thereunder. <o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">According to DOL guidance, the penalty
structure under the DFVCP is as follows: <o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">•<span style="mso-spacerun: yes;">
</span>Reduced per-day penalty: The basic penalty under the program was reduced
from $50 to $10 per day for delinquent filings. <o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">•<span style="mso-spacerun: yes;">
</span>Reduced per-filing cap: The maximum penalty for a single late annual report
was reduced from $2,000 to $750 for a small plan (generally a plan with fewer
than 100 participants at the beginning of the plan year) and from $5,000 to
$2,000 for a large plan. <o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">•<span style="mso-spacerun: yes;"> </span>“Per
plan” cap: The DFVCP’s “per plan” cap is designed to encourage reporting
compliance by plan administrators who have failed to file an annual report for
a plan for multiple years. The “per plan” cap limits the penalty to $1,500 for
a small plan and $4,000 for a large plan regardless of the number of late
annual reports filed for the plan at the same time. There is no “per
administrator” or “per sponsor” cap. If the same person is the administrator or
sponsor of several plans required to file annual reports under Title I of
ERISA, the maximum applicable penalty amounts would apply for each plan. <o:p></o:p></span></span></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">•<span style="mso-spacerun: yes;">
</span>Small plans sponsored by certain tax-exempt organizations: A special “per
plan” cap of $750 applies to a small plan sponsored by an organization that is
tax-exempt under Internal Revenue Code Section 501(c)(3). The $750 limitation
applies regardless of the number of late annual reports filed for the plan at
the same time. It is not available, however, if as of the date the plan files
under the DFVCP, there is a delinquent annual report for a plan year during
which the plan was a large plan. <o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">•<span style="mso-spacerun: yes;"> </span>Top
hat plans and apprenticeship and training plans: The penalty amount for “top
hat” plans and apprenticeship and training plans was reduced to $750. <o:p></o:p></span></span></div>
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<br /></div>
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<span style="font-family: inherit;"><span style="background: white; color: #1c263d;">Questions about the DFVCP should be directed to
EBSA by calling (202) 693.8360 or accessing its Web site at
http://www.dol.gov/ebsa.</span><o:p></o:p></span></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-72259389569601792932019-08-08T07:00:00.000-07:002019-08-08T07:00:04.434-07:00What are the minimum funding standards under ERISA? <br />
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">A plan shall be treated as satisfying the
minimum funding standard for a plan year if:<o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">1.<span style="mso-spacerun: yes;"> </span>In
the case of a defined benefit plan that is not a multiemployer plan, the
employer makes contributions to or under the plan for the plan year that, in
the aggregate, are not less than the minimum required contribution determined
under IRC Section 430 for the plan for the plan year; <o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">2.<span style="mso-spacerun: yes;"> </span>In
the case of a money purchase plan that is not a multiemployer plan, the
employer makes contributions to or under the plan for the plan year that are
required under the terms of the plan; <o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="background: white; color: #1c263d;">3.<span style="mso-spacerun: yes;"> </span>In
the case of a multiemployer plan, the employers make contributions to or under
the plan for any plan year that, in the aggregate, are sufficient to ensure that
the plan does not have an accumulated funding deficiency under IRC Section 431
as of the end of the plan year.</span><o:p></o:p></span></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-59359813292720584292019-08-05T01:30:00.000-07:002019-08-05T01:30:01.081-07:00What are the rights of veterans upon reemployment after a severance from service for military service? <br />
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">The Uniformed Services Employment and
Reemployment Rights Act of 1994 (USERRA) establishes that upon reemployment
after a period of military service, participants are entitled to all rights and
benefits based upon seniority that they would have accrued with reasonable
certainty had they maintained continuous employment without the separation from
service for military service (including basic seniority).<o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Depending on the length of the military
service, a returning servicemember is entitled to take from one (for periods of
service not exceeding thirty-one days) to ninety (for periods of service exceeding
180 days) days following the military service before reporting back to work.
The employer is generally required to rehire the employee within two weeks of
application for reemployment “absent unusual circumstances.” <o:p></o:p></span></span></div>
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<br /></div>
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<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Regulations make it clear that this period must
be treated as service with the employer for purposes of eligibility, vesting,
and benefit accrual.<o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">With respect to qualified retirement plans,
reemployed veterans are given an opportunity to make up elective deferrals that
they would have made had it not been for the separation from service for
military service. The compensation considered in making up salary deferrals
will be the amount of compensation the reemployed veteran would have made from
the employer had he not separated from service for military service. Where it
would be difficult to establish the compensation the reemployed veteran would
have been paid had he not incurred a separation from service, the plan must use
the reemployed veteran’s average compensation from the twelve-month period
preceding the break in service for military service. Any makeup of employee
salary deferrals and matching contributions will not result in the plan’s
violating the limits on contributions or minimum participation rules. The
returning employee is not required to pay interest (lost opportunity costs) on
made-up contributions. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">If the missed elective deferrals cannot be made
up by the employee, the employee will not receive the employer match or the
accrued benefits attributable to his or her contribution, because the employer
is required to make contributions that are contingent on or attributable to the
employee’s contributions or elective deferrals only to the extent that the
employee makes up payments to the plan.<o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Employer contributions that are not contingent
on employee contributions (or elective deferrals) must be made no later than 90
days after the date of reemployment, or when plan contributions are normally
due for the year in which the uniformed service was performed, whichever is
later <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Additionally, reemployed veterans will not be
treated as having incurred any breaks in service for the period of time spent
on active military duty. That period of time is to be considered service with
the employer even though the veteran was actually in active military status.
This rule applies to the plan’s rules regarding nonforfeitability of accrued
benefits and for determining accruals under the plan.<o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Finally, the plan is permitted to suspend any
requirement of loan repayments by participants during the period the
participants are in active military service. If the returning employee withdrew
part or all of his account balance prior to the military service, the employee
must have buy-back rights, and must be allowed a certain amount of time to
repay the amount withdrawn. In the case of a defined benefit plan, the employee
must have the right to buy back the interest that would have otherwise accrued.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Regarding multiemployer plans, the regulations
specify that a returning servicemember does not have to be reemployed by the
same employer for whom the employee worked prior to the period of service in
order to be reinstated under the plan with all of his or her USERRA rights. An
employer of a returning servicemember who is entitled to benefits under a plan
is required to notify the plan administrator of the reemployment within thirty
days.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">USERRA covers ERISA-qualified group health
plans, including multiemployer plans. If the employee has coverage under such a
plan, the plan must permit employees to elect to continue coverage for
themselves and their dependents for a period of time that is the lesser of the
twenty-four-month period beginning on the date on which their leave of absence
for military service begins, or the date on which their absence for military
service begins and ending on the date when they fail to return from service or
apply for reemployment.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Regarding veterans’ reemployment rights under a
health plan, the regulations describe two situations in which health coverage
may be canceled upon departure for uniformed service: <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: inherit;"><span style="color: #1c263d;"><span style="mso-list: Ignore;">1.<span style="font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span></span><!--[endif]--><span style="background: white; color: #1c263d;">The departing employee fails to give advance
notice of service and fails to elect continuation coverage; and <o:p></o:p></span></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: inherit;"><span style="color: #1c263d;"><span style="mso-list: Ignore;">2.<span style="font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span></span><!--[endif]--><span style="background: white; color: #1c263d;">An employee leaves for a period of service
exceeding thirty days and gives advance notice of service but fails to elect
continuation coverage.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">If the employee is in active military service
for less than thirty-one days, he or she cannot be required to pay more than
the regular employee share, if any, for the health coverage. Employees in
military service thirty-one or more days may be required to pay no more than
102 percent of the full premium under the plan, which represents the employer’s
share, plus the employee’s share, plus 2 percent for administrative costs.
Plans may also adopt reasonable rules allowing cancellation of continuation
coverage if timely payment is not made.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">However, if a departing employee who fails to
give advance notice and fails to elect continuation coverage was excused from
giving advance notice of service under USERRA’s provisions because of military
necessity, impossibility, or unreasonableness, then coverage must be
retroactively reinstated upon the employee’s election to continue coverage and
upon his or her payment of all amounts due (no administrative reinstatement
costs can be charged).<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">If the employee who has provided advance notice
of leave exceeding thirty days but has failed to elect coverage subsequently
elects to continue coverage, the scope of his reinstatement right depends upon
whether the plan has developed reasonable rules regarding the period within
which employees may elect continuing coverage. If reasonable rules have been
established, then the plan must permit retroactive reinstatement of
uninterrupted coverage upon the employee’s election and payment of all unpaid
amounts due within periods established under the plan rules. If the plan has
not established reasonable rules regarding the election period, it must permit
retroactive reinstatement of uninterrupted coverage upon the employee’s
election and payment of all unpaid amounts at any time during the maximum
coverage period under USERRA.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">The Veterans’ Housing Opportunity and Benefits
Improvement Act of 2006(VHOBIA) extended employer health plan continuation and
reinstatement rights to reservists entitled to the federal government’s health
insurance program for all branches of the military. The program, known as
TRICARE, provides health care coverage to civilian dependents of military
servicemembers. VHOBIA extends TRICARE participation rights to active-duty
reservists and their dependents upon being called to active duty. It also
extends USERRA continuation coverage rights to reservists upon termination of
active-duty status. The USERRA rights apply even if reservists’ active-duty
orders are cancelled and they do not actually leave employment to perform
active military service. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Reservists who receive active-duty orders with
delayed effective dates are treated as if called to active duty for more than
thirty days, starting on the later of the date the order was issued or ninety
days before the date for active service. When these reservists are considered
on “active duty,” they and their family members are eligible for military
health and dental benefits under TRICARE. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Practitioner’s Pointer: An employer who fails
to establish reasonable rules regarding the election period may find itself
bound to longer maximum coverage periods than those otherwise mandated under
USERRA. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">The regulations indicate that where health
plans are also covered by COBRA, it may be reasonable to adopt COBRA-compliant
rules regarding election of and payment for continuing coverae, so long as
those rules do not conflict with USERRA or the new cancellation rules. This has
the effect of allowing plan sponsors to streamline their health plan
administrative provisions by implementing applicable COBRA provisions already
in place (except where they would violate USERRA).<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">The definition of “employer” under the final
regulations excludes entities to which employers or plan sponsors have
delegated purely ministerial functions, such as third-party administrators. The
preamble to the final regulations indicates that the definition of employer was
intended to apply to insurance companies administering employers’ health plans,
“so that such entities cannot refuse to modify their policies in order for
employers to comply with requirements under” USERRA, adding that employers with
insured health plans are “obliged to negotiate coverage that is compliant with
USERRA”<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">On June 17, 2008, President Bush signed the
Heroes Earnings Assistance and Relief Tax Act of 2008 into law.¹ The Heroes Act
makes specific modifications to USERRA in an effort to assist veterans who die
or become totally disabled while on active military duty and the beneficiaries
of veterans who die on active military duty. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">After December 31, 2006, the Heroes Act
requires 401(k) and other qualified retirement plans to provide the survivors
of a plan participant who dies while performing qualified military service with
any additional benefits (such as accelerated vesting and ancillary life
insurance benefits) that would have been provided if the participant had
resumed employment and then died.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="background: white; color: #1c263d;">Another provision of the Heroes Act permits
(but does not require) 401(k) and other qualified retirement plans to be
amended to treat individuals who die or become disabled while performing
qualified military service as if they had resumed employment in accordance with
their USERRA reemployment rights on the day before death or disability, and
then terminated employment on the date of death or disability. This provision
allows a plan to provide such “deemed rehired employees” (or their survivors)
partial or full retroactive benefit accruals that the plan must provide to
reemployed service members under USERRA. These additional benefit accruals must
be credited on a reasonably equivalent basis to all individuals who die or
become disabled during their military service. Under this rule, when
determining the amount of matching contributions, individuals are treated as
having made deferrals based on their average deferrals for the 12 months immediately
before qualified military service. This provision applies to deaths or disabilities
occurring after December 31, 2006.</span><o:p></o:p></span></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-85523986348373247092019-08-03T01:21:00.000-07:002019-08-03T01:21:05.628-07:00What plans are subject to ERISA’s vesting rules? <br />
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="background: white; color: #1c263d;">A plan will not be a “qualified” plan under IRC
Section 401 unless it satisfies the minimum vesting standards established
under IRC Section 411 (which are mirrored under ERISA Section 203(a). Under
ERISA, these vesting rules apply to all pension plans that are established or
maintained by any employer engaged in commerce or in any industry or activity
affecting commerce, or by any employee organization or organizations
representing employees engaged in commerce or in any industry or activity
affecting commerce, or both. As such, both qualified and nonqualified plans
that provide for retirement income or result in the deferral of income to
termination or retirement are generally subject to the vesting requirements of
ERISA.</span><o:p></o:p></span></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-28489213719469046262019-08-01T14:00:00.000-07:002019-08-01T14:00:03.591-07:00What are the basic requirements for vesting under ERISA? <br />
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">ERISA Section 203 establishes the minimum
vesting standards for an ERISA-covered pension plan. Under that section,
each pension plan must provide that an employee’s right to his normal
retirement benefit is nonforfeitable upon the attainment of normal
retirement age. ERISA Section 203(a)(1) states that an employee’s accrued
benefit derived from the employee’s own contributions must, at all times,
be conforfeitable. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Section 904 of the Pension Protection Act of
2006, has altered the mandatory vesting requirements for qualified benefit
plans by eliminating ERISA Section 203(a)(4) and IRC Section 411(a)(12). The
PPA also amended ERISA Section 203(a)(4) and IRC Section 411(a)(2) by providing
that for plan years beginning after 2006, employer non-elective contributions
must vest at least as rapidly as the mandated vesting schedules for employer
matching contributions—that is, either a three-year cliff vesting schedule or a
schedule of 20 percent after two years, 40 percent after three years, 60
percent after four years, 80 percent after five years, and 100 percent after
six years.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">IRS Notice 2007-7 has clarified that employer
discretionary contributions remitted to a plan trust prior to 2007 may remain
under the pre-PPA vesting provisions of either a five-year cliff vesting
schedule or a 3/20 schedule graduating at 20 percent per year after three years
and culminating in 100 percent vesting after seven years.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">Most qualified retirement plans provide for a
graduated vesting schedule on a “2/20” basis. That is a vesting schedule that
provides for 2 percent vesting after two years of credited service and then
increases the vesting percentage by 20 percent for each additional year of
credited service until the participant becomes 100 percent vested. However,
employer-matching contributions (as defined under IRC Section 401(m)(4)(A))
must be vested on a three-year cliff or six-year graded vesting schedule. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">For defined contribution plans, the “accrued benefit”
is the balance of assets allocated to the participant’s individual account. For
purposes of a defined benefit plan, “accrued benefit” is defined as the
employee’s accrued benefit as determined under the plan and expressed in the
form of an annual benefit commencing at normal retirement age.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="background: white; color: #1c263d;">Both ERISA and the Internal Revenue Code
generally prohibit any plan amendment that has the effect of decreasing accrued
benefits under a plan. This would include any amendment increasing the vesting
schedule. The IRS takes this provision very seriously and has disqualified
plans for violations of this prohibition. Such violations are often referred to
as the “death penalty” for qualified plans.</span><o:p></o:p></span></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-61436790861348224862019-07-29T01:15:00.000-07:002019-07-29T01:15:13.329-07:00Does ERISA expressly exclude 403(b) tax sheltered annuities from ERISA coverage? <br />
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">For purposes of ERISA, a program for the
purchase of an annuity contract or the establishment of a custodial
account as described under IRC Section 403(b), pursuant to salary
reduction agreements or agreements to forgo an increase in salary and
which satisfies the requirements of treasury regulations under
Section 403(b), will not be considered “established or maintained by an
employer” as that term is used in the definition of the terms “employee
pension benefit plan” and “pension plan” if: <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">1. Participation is
completely voluntary for employees; </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">2. All rights under the
annuity contract or custodial account are enforceable solely by the
employee, by a beneficiary of such employee, or any authorized
representative of such employee or beneficiary; <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">3. The sole involvement
of the employer is limited to any of the following: <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">a. permitting annuity
contractors to publicize their products to employees, <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">b. requesting
information concerning proposed funding media, products, or annuity
contractors, <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"> c. summarizing or
otherwise compiling the information provided with respect to the proposed
funding media or products that are made available, or the annuity
contractors whose services are provided, in order to facilitate review and
analysis by the employees, <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">d. collecting annuity or
custodial account considerations as required by salary reduction
agreements or by agreements to forgo salary increases, remitting such
considerations to annuity contractors, and maintaining records of such
considerations, <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">e. holding in the
employer’s name one or more group annuity contracts covering its
employees, and </span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">f. limiting the funding
media or products available to employees, or the annuity contractors who
may approach employees, to a number and selection that is designed to
afford employees a reasonable choice in light of all relevant
circumstances; and <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="background: white; color: #1c263d;">4. The employer receives
no direct or indirect consideration or compensation in cash or otherwise
other than reasonable compensation to cover expenses properly and actually
incurred by the employer</span><o:p></o:p></span></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-11762232869429011842019-07-26T10:00:00.000-07:002019-07-26T10:00:00.336-07:00What type of group or group-type insurance programs are expressly excluded from ERISA coverage? <br />
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">For purposes of ERISA coverage, the term
“employee welfare benefit plan” does not include a group or group-type
employee pay-all insurance program offered by an insurer to employees or
members of an employee organization, under which: <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">1. No contributions are
made by the employer or employee organization; <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">2. Participation in the
program is completely voluntary for employees or members; <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">3. The sole functions of
the employer or employee organization with respect to the program are,
without endorsing the program, to permit the insurer to publicize the
program to employees or members, to collect premiums through payroll
deductions or dues checkoffs, and to remit them to the insurer; and <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">4. The employer or
employee organization receives no consideration in the form of cash or
otherwise in connection with the program, other than reasonable
compensation, excluding any profit, for administrative services actually
rendered in connection with payroll deductions or dues checkoffs. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">A U.S. District Court in Florida ruled that a
disability plan originally maintained by an employer remains subject to
the provisions of ERISA even after it
becomes an employee pay-all welfare benefit arrangement. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="background: white; color: #1c263d;">Such employers who pay all of an insurance
program may, unintentionally, find themselves subject to ERISA where the
employer or employee organization that has offered the program
inadvertently endorses it (e.g., advising employees that the program
offers a “valuable” extension of existing insurance coverage, or
the marketing pamphlets for the program contain the employer or
employee organization’s logos). </span><o:p></o:p></span></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-82566517474097786192019-07-23T07:10:00.000-07:002019-07-23T07:10:01.710-07:00What welfare benefit plans are not subject to ERISA?<br />
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">The following welfare benefit arrangements are
not subject to the general fiduciary provisions of ERISA: <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">1. Payroll practices
that are established by an employer and that provide for payment by an
employer to employees on account of overtime pay, shift premiums, holiday
premiums or weekend premiums, sick pay, vacation pay, jury duty pay, and pay while on leave for military service; <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">2. The maintenance of
on-premises facilities such as recreation, dining, or medical/first aid
for the treatment of work-related injuries or illness occurring during
normal work hours, or other facilities (excluding
day care centers) for use by employees;<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">3. Programs for the provision of holiday gifts such as turkeys or hams;<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">4. Sales to employees of
articles or commodities (whether or not they are offered at below-market
prices) of the kind the employer offers for sale
in the regular course of business;<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">5. Hiring halls
maintained by one or more employers,
employee organizations, or both;<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">6. Remembrance funds
under which contributions are made to provide remembrances such as
flowers, small gifts, or obituary notices on occasion of the illness, hospitalization, or death of an employee;<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">7. Str</span></span><span style="color: #1c263d;">ike funds maintained by an employee organization to provide payment to its members during strikes and for related purposes;</span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">8. Industry advancement
programs that have no employee participants and do not provide benefits,
regardless of whether the program serves as a conduit through which funds
or other assets are channeled to
employee benefit plans subject to ERISA; and <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: 0.5in; text-align: left;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">9. Unfunded scholarship
programs, including tuition and education reimbursement programs, under
which payments are made solely from the general assets of an employer or employee organization<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-55970465562714306812019-07-19T01:05:00.000-07:002019-07-19T01:05:00.311-07:00Which employee benefit plans does ERISA expressly exclude from coverage? <br />
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">ERISA Section 4(b) establishes that the
provisions of ERISA do not apply to any employee benefit plan if: <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">1. The plan is a
governmental plan (as defined under ERISA Section 3(32)); <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">2. It is a church plan
(as defined in ERISA Section 3(33)) that has not made an IRC Section
410(d) election to have participation, funding, and vesting provisions
apply; <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">3. It is maintained
solely for the purpose of complying with applicable workers’ compensation
laws or unemployment compensation laws or disability insurance laws; <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">4. It is maintained
outside the United States primarily for the benefit of persons
substantially all of whom are nonresident aliens; or <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="background: white; color: #1c263d;"><span style="font-family: inherit;">5. The plan is an
unfunded excess benefit plan (as described under ERISA Section 3(36),
which provides benefits for certain employees in excess of the limitations
on contributions and benefits imposed by IRC Section 415). </span></span><o:p></o:p></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-46229596854112761332019-07-17T01:48:00.000-07:002019-07-17T01:48:06.577-07:00Family Caregiver, Maternal, and Paternal Leave The Family and Medical Leave Act allows certain employees to take up to 12 weeks of unprotected, unpaid leave per year. This can be expanded upon by the state or the employer. The employer will continue to pay the employer-paid portion of your health premium (you may have to continue paying your portion of the premium during the leave). Upon returning from leave, you must be restored to the same job or an equivalent job. This means that, the leave does not guarantee that the actual job you held prior to going on leave will still be available and yours upon your return. However, you should get a job that is virtually identical in terms of pay, benefits, and other employment terms and conditions, including shift, location, and overtime. You should also be able to get any unconditional pay increases that occurred while you were on leave, such as cost-of-living increases. <br />
<br />
The Family Medical Leave Act allows you to take time off at any time during your pregnancy or even after childbirth within one year of your child’s birth. You may be able to take leave as a mother before and after having or adopting a baby, which is called maternity or pregnancy leave. Paternity leave for fathers is less common but is available at some firms. <br />
<br />
If enough leave is not provided by your employer, you may be able to negotiate for more leave or negotiate to work from home or on a flex schedule to better suit your adjustment to life with a new child.<br />
<div>
<br /></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-66032822349931330012019-07-15T04:06:00.000-07:002019-07-15T04:06:03.562-07:00Key Considerations and Regulations of Military LeaveKeep in mind that to get these military leave benefits, you must follow all applicable rules (including giving notice for the need to leave for military service). You must also be released from service under honorable conditions, and you must not exceed five years of military leave with any one employer (with some exceptions, such as annual training and monthly drills; these do not count against the cumulative total). The five-year limit does not include active duty training, annual training, involuntary recall to active duty, involuntary retention on active duty, voluntary or involuntary active duty in support of war, national emergencies, or certain operational missions.<br />
<br />
There are also benefits for military caregivers. Military caregiver leave entitles an eligible employee who is the spouse, son, daughter, parent, or next of kin of a covered service member to take up to 26 work weeks of leave in a 12-month period to care for a covered service member with a serious injury or illness.<br />
<br />
It’s important to note that you’ll have to report back to your civilian job in a timely manner and submit a timely application for employment. This timeliness depends on how long you were deployed for, so it’s important to keep track of all the rules and check off every box on your way back into civilian life. Some other key considerations to keep in mind include the following:<br />
<br />
<br />
<ul>
<li>Make sure you thoroughly read through anything your employer has you sign since you may be signing something that waives some of your legal entitlements. </li>
</ul>
<ul>
<li>You must report back to your civilian job by the appropriate deadline, which can range from eight hours to 90 days depending on the length of service. </li>
</ul>
<ul>
<li>Military leave coverage may vary for National Guard members performing state service rather than federal service for deployment. </li>
</ul>
<br />
<div>
<br /></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-51469917527671977632019-07-11T02:44:00.000-07:002019-07-11T02:44:01.552-07:00Potential Risks of Military Leave<br />
<div class="MsoNormal">
<span style="background: white; color: #1c263d; font-family: "scala-sans-offc-pro--",serif;">It is important to know which work benefits
will be put on hold and what will stay in place. Don’t assume that
disability insurance, life insurance, or any other benefits will stay in
place while you are on leave, whether you are receiving pay from the
employer, working part time for the employer, or just on leave. It
is important to talk to your HR department so you know in advance what
benefits will stay and what will disappear while you are gone. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d; font-family: "scala-sans-offc-pro--",serif;">Generally, employers don’t have to pay the cost
of health insurance if you’re on military leave unless you’re on leave for
less than 31 days. For longer leaves, you may have COBRA rights, which may
require you to pay the full cost of your participation in your employer’s
health plan. If there are any lapses in paying any of the employer health
insurance money due, you may find that even though your employer agreed to
pay health insurance while you are on leave, your health insurance lapses
and you are pushed onto a COBRA. So, it’s very important to keep up with
all necessary payments because you may need to write checks for
the coverage since you are not receiving paychecks from your employer,
which would otherwise withhold pay and send medical insurance premiums to
the insurer. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d; font-family: "scala-sans-offc-pro--",serif;">If you have an FSA, you may find yourself in a
position in which the Heroes Earnings Assistance and Relief Act (HEART) of
2008 (H.R. 6081) waives the “use it or lose it” clause of the FSA program.
It’s important to know whether you will need to spend down any of this
money for any given period and what happens to this money if something
happens to you during deployment so all contingencies can be planned
for. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; color: #1c263d; font-family: "scala-sans-offc-pro--",serif;">For dependent care reimbursement accounts,
remember that you will have to maintain eligibility to use this money;
otherwise, the money will no longer be available. For instance, if the
spouse who is not deployed quits their job, the family may no longer be
eligible for their dependent care reimbursement account. </span><o:p></o:p></div>
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-52280998568666732502019-07-08T08:30:00.000-07:002019-07-08T08:30:14.981-07:00Potential Advantages of Military LeaveYou are not required to use your vacation pay while on military leave like you may be required to for general leave. It may be worth thinking about using your vacation pay during the leave time to use optimal tax planning strategies and to provide additional income you may not otherwise realize if you do not return to your employer. For example, since pay while you’re deployed isn’t taxable, using your PTO first means you get paid tax free, and you can then take unpaid leave in another year to lower a second year’s taxes. This strategy is better than having to pay taxes for your PTO days and being in a higher tax bracket than necessary the following year. Any time when you are deployed and not paying taxes on ordinary income may also be a prime time to convert some of your retirement plan money into Roth IRA money.<br />
<br />
Keep in mind that leave provided by the government is unpaid leave, so the employer may choose to provide some pay during your absence. Under certain cases, if you perform work for the employer while you are on military leave, you must be paid your full salary from the employer minus any military pay. Unpaid leave is required in some amount for certain employees. However, some companies may opt to cover non-required employees during leave, have extended leave, or provide a combination of these two solutions.<br />
<br />
While deployed, the military provides its own benefit of allowing you to put up to $10,000 into a savings account, giving you a guaranteed interest rate of around 10% during the deployment period. It is generally worthwhile to maximize your contributions to this plan.<br />
<br />
As long as you continue your health coverage, the full amount of your FSA, minus any prior expenses for the year, must be available to you at all times during your leave period. However, if your coverage under the health plan terminates while you are on leave, you are no longer entitled to receive reimbursement for claims during the period in which the coverage was terminated.<br />
<br />
Military members returning from military leave who have defined contribution retirement plans must be given three times the period of their leave of absence, as long as it’s not greater than five years, to make up for any contributions missed during the leave period. This can be very beneficial in terms of allowing the military personnel to overcontribute to a deductible 401(k) plan, thus lowering their taxes for the years following the return from deployment.<br />
<br />
It’s worth keeping four other potential advantages in mind:<br />
<br />
<ul>
<li>Your state may have greater protections than federal law, so it’s important to look at not only federal law but also what your state has passed to protect you before going on military leave. </li>
<li>For pension purposes, returning service members must be treated as if they have been continuously employed for purposes of participation vesting in accrual of benefits. </li>
<li>You may be able to take leave to care for yourself or certain family members (e.g., parents, relatives, or even non-relatives depending on your employer). </li>
</ul>
<br />
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-32345673749017842402019-07-05T00:09:00.000-07:002019-07-05T00:09:02.263-07:00Over-50 Catch-Up Contributions For those who will reach age 50 before the year’s end, the limit on the amount you may contribute to a 403(b), 401(k), or 457 account increases by $6,000. This boosts the individual contribution limit from $18,500 to $24,500. <br />
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<br />
<b><span style="color: red;">General Breakdown of 401(k)s, 403(b)s, and 457 Plans </span></b><br />
When it comes to comparing 401(k)s, 403(b)s, and 457 plans, there are many similarities and few differences. The similarities include: <br />
<br />
<br />
<ul>
<li>$18,500 contribution limit (2018);</li>
<li>$6,000 over-50 catch-up contribution; </li>
<li>Risk of investing falls on employee; </li>
<li>Withdrawals taxed as ordinary income; and </li>
<li>Amounts deferred on a pre-tax basis. </li>
</ul>
<br />
<br />
The major differences include: <br />
<br />
<ul>
<li>403(b)s and 457s have additional catch-up deferrals, as discussed above; </li>
</ul>
<ul>
<li>401(k)s are open to most employers, 403(b)s are open to tax-exempt and non-profit organizations, and 457s are open to state/local governments and some non-profit organizations; and </li>
<li>457 plans may not be subject to early withdrawal penalties like 403(b)s and 401(k)s. </li>
</ul>
<br />
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-89920971019530020592019-07-02T14:00:00.000-07:002019-07-02T14:00:06.022-07:00Mingling Contributions Among 401(k)s, 403(b)s, and 457 Plans If you have a 401(k) and a 403(b), the maximum amount you can contribute to both accounts combined is $18,500 (2018). If you have a combination of a 401(k) and/or a 403(b) paired with a 457 plan, the maximum you can contribute combined is $37,000: $18,500 to the 401(k) and/or 403(b) and $18,500 to the 457. Plus, you can make any catch-up contributions allowed. The money you save into each account should be in order of employer matching with the employer plan that matches you at the highest rate first, until the match is completely maximized; then the money should flow to the account with the second-best matching and so on until you have contributed your overall maximum contribution to all plans. <br />
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<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-15801708546328480892019-06-30T02:33:00.000-07:002019-06-30T02:33:03.861-07:00457 Special Catch-Up Deferrals Another catch-up tool available to 457 plan participants is the 457 special catch-up deferral. This allows plan participants who are three years away from attaining normal retirement age in their 457 plan to defer: <br />
<br />
<ul>
<li>Twice the yearly limit on deferrals ($37,000 in 2018, which is two times the yearly maximum contribution of $18,500 in 2018) for the three years leading up to normal retirement age; or </li>
</ul>
<ul>
<li>The yearly limit on deferrals plus any amount allowed in prior years that you chose not to or could not contribute. Plans will keep an ongoing list of amounts you were allowed to defer in prior years, the amount you actually deferred, and any shortfall from those years. If you choose this option, they add up all your shortfall and allow you to contribute an amount equal to the shortfall over the next three years. </li>
</ul>
<br />
<br />
For governmental 457 plans, this additional contribution cannot be paired with the over-50 catch-up, which makes it important to use the one that will provide you with the greatest benefit or largest contribution. <br />
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<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-4493571850104579832019-06-27T09:00:00.000-07:002019-06-27T09:00:06.254-07:0015-Year 403(b) Catch-Up Deferrals There may be a special provision in a 403(b) plan that allows an additional catch-up separate from the over-50 catch-up. The additional catch-up, which amounts to $3,000 per year, is available to employees who have provided the same employer with 15 years of service. The amount of the allowable 15-year catch-up deferral is calculated as the lesser of: <br />
<br />
<ul>
<li>$3,000; or </li>
<li>$15,000 reduced by all prior 15-year catch-up deferrals; or </li>
<li>$5,000 x years of service, reduced by all prior elective deferrals (including all past 15-year catch-up deferrals) to your 401(k)s, 403(b)s, SARSEPs, or SIMPLE IRAs sustained by your employer. </li>
</ul>
<br />
For employees who are eligible for the 15-year catch-up deferral and the over-50 catch-up, the 15-year catch-up deferral should generally be used first; the over-50 catch-up falls second in priority.<br />
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<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-67810767478279003502019-06-25T00:28:00.000-07:002019-06-25T00:28:03.231-07:00Optimizing Taxes: Backdoor Roth IRA ContributionsThis unique strategy becomes available if your 401(k) plan allows you to roll over an IRA account into the 401(k) plan. Normally, single people making over $120,000 a year and married people filing taxes jointly making over $189,000 a year are limited in their ability to contribute to a Roth IRA (the income numbers are based on your Modified Adjusted Gross Income). By using the backdoor Roth IRA strategy, a highly compensated individual can contribute to a non-deductible IRA and convert it to a Roth IRA. The problem is that any Roth conversions must be done pro-rata across all IRA accounts. This means that, if you have a deductible IRA in addition to a non-deductible IRA being funded, any conversion of IRA money would be taken from both pre- and post-tax IRA accounts pro-rata. This creates a tax on the distributions from the deductible IRA where otherwise there would be none. <br />
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<br />
<br />
To avoid this additional taxation, you could potentially transfer the deductible IRA money into your 401(k) and then convert the new non-deductible IRA contributions to a Roth IRA without creating a taxable distribution.<br />
<div>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-91085610156302221422019-06-22T08:25:00.000-07:002019-06-22T08:25:00.177-07:00Potential Downsides for Company Stock in a 401(k)All tax strategies can be useful, but it is generally not recommendable to let the “tax tail wag the dog.” Trying to pursue this NUA strategy too aggressively can lead to you owning too much company stock and not having your portfolio appropriately diversified. You only have a few different triggering events, which means you only have a few opportunities to distribute the stock, possibly leading to overzealous distributions in the year in which they can be made. This can lead to paying taxes at a higher-than-normal tax bracket and not leaving as much money as you would normally leave in your retirement account, ultimately leading to higher taxes in the long run because all the investments held outside your retirement account are taxed every year. Your heirs do not receive a “step up in basis” on NUA shares upon your passing. You may be charged a penalty for an early retirement account withdrawal if you retire earlier than 59.5 years old, (although in some cases you can take penalty-free distributions as early as age 55). You cannot strategically convert these assets into Roth IRA assets over the years at a potentially low tax rate if they are taken as NUA; however, any amounts rolled into an IRA and not taken as an NUA distribution can still be converted to a Roth IRA. You will have to pay any applicable state taxes on the NUA withdrawal, which may apply equally to ordinary income and capital gains.<br />
<br />
<b><u><span style="color: red;">Keep in Mind </span></u></b><br />
<br />
<ul>
<li>You will have to pay gains (for any price changes in the stock subsequent to the distribution) on any shares distributed from the retirement account and not sold immediately as either short- or long-term gains. </li>
</ul>
<ul>
<li>It is generally wise to keep the NUA stock in an account separate from other company stock to simplify your recordkeeping. </li>
</ul>
<ul>
<li>In addition, note that the NUA is not subject to the 3.8% Medicare surtax on net investment income. </li>
</ul>
<ul>
<li>You are allowed to “cherry pick” which shares of stock to distribute in kind to the brokerage account and roll the remainder into an IRA. </li>
</ul>
<ul>
<li>Your heirs are allowed to take an NUA distribution when you pass away if the shares are still held in the company plan. </li>
</ul>
<ul>
<li>If you separate from service before the age of 59.5, have a very highly appreciated employer stock position, and you need to make a distribution from your retirement account, you would have to pay the normal 10% early withdrawal penalty. However, the penalty will be calculated off of your cost basis. This means if you purchased shares for $1,000 that are now worth $50,000, you can withdraw the $50,000 in employer stock and only pay the ordinary taxes and 10% penalty on the $1,000 cost basis. Then you would only have to pay taxes on the remaining $49,000 at your current capital gains tax rate. </li>
</ul>
<ul>
<li>You may be able to take an NUA distribution and then strategically sell the shares off in small amounts over the years to keep your income limited to a level that allows for 0% capital gains rates. </li>
</ul>
<ul>
<li>You can use the NUA distribution to satisfy your first required minimum distribution if you are over the age of 70.5 when you retire so you only have to pay ordinary income taxes on a potentially low-cost basis amount rather than the full amount of your first distribution when you would have had to distribute money from your retirement account anyway. This can significantly reduce the taxes due on your first required minimum distribution.</li>
</ul>
<br />
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-82954342564086647432019-06-19T04:00:00.000-07:002019-06-19T04:00:05.950-07:00Company Stock in a 401(k): Net Unrealized Appreciation Net Unrealized Appreciation (NUA) is the name of a little-known tax break that can help save you money on taxes from employer stock held in a 401(k) plan if you qualify. NUA rules allow you to take employer stock out of your 401(k) upon certain triggering events, only pay ordinary income taxes on the cost basis of the stock (the price you originally paid for the stock) for the withdrawal, and then have the gains taxed at capital gains tax rates. This can be particularly valuable if: <br />
<br />
<br />
<ul>
<li>You have highly appreciated employer stock (stock with very low-cost basis); </li>
<li>You have an immediate need to withdraw money from your 401(k); </li>
<li>You are retiring after age 70.5 and you have to take your first required minimum distribution (RMD); or </li>
<li>You have a short RMD period, including stretch RMDs. </li>
</ul>
<br />
<br />
The rules for an NUA distribution are very strict, and you should work with your CPA to make sure you follow all the rules precisely. The rules are as follows: <br />
<br />
<br />
<ul>
<li>You have to distribute the entire balance of your 401(k) and any other qualified plans you have with the employer in a single tax year (some can be withdrawn directly to a taxable account and some can be rolled into an IRA, but there can be no money left in your 401(k) account at the end of the tax year). </li>
<li>You must take the distribution of company stock from your 401(k) in actual shares—you cannot sell the shares in the 401(k) and then distribute cash. </li>
<li>You must have experienced one of the following triggering events: </li>
<li>Separation from service from the company whose plan holds the stock (this may include certain cash buyouts of the company you work for); </li>
<li>Reached age 59.5; </li>
<li>Become disabled; or </li>
<li>Death </li>
</ul>
<br />
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-38525254381378188792019-06-17T00:18:00.000-07:002019-06-17T00:18:36.586-07:00Mega Backdoor Roth 401(k) contributions By using the right strategies, you may be able to contribute more than you thought possible and, in turn, save more money on taxes over time. In general, employees can only contribute up to $18,500 per year to a retirement plan with an additional catch-up of up to $6,000 per year if the employee is 50 years old or older (“employee contribution limit”). Many employees don’t realize that the maximum contribution to one of these accounts is $55,000 per year plus the catch-up (“maximum contribution limit”)—and that they may be able to contribute up to that amount despite the employee contribution limit and employer matching amounts adding up to less than the full maximum contribution limit.<br />
<br />
The strategy is as follows:<br />
<br />
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<br />
<br />
Normally, this would mean you could not fund your 401(k) up to the maximum contribution limit of $55,000, leaving a full $24,000 on the table ($55,000 – $31,000 = $24,000). If you have a nondeductible 401(k) and work for a company with retirement plan documents that allow it, however, you can make a $24,000 contribution to the nondeductible part of the 401(k) and then convert the contribution to the Roth portion of your 401(k). This effectively allows you to maximize the yearly contribution to your retirement account. <br />
<br />
A very highly compensated employee can still take advantage of this strategy because employers can only base 401(k) matching off $275,000 of an employee’s compensation per year no matter how highly compensated the individual is. A 401(k) can provide a versatile savings account by allowing penalty-free (but not tax-free) distributions of certain amounts for a down payment on a home purchase or medical expenses. Keep in mind that any additional profit-sharing plan contributions by the employer must be considered when calculating the overall yearly contribution. It is very important to check the plan documents and speak with your HR department or plan administrator to make sure you are getting the most from your retirement plan.<br />
<div>
<br /></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1738702748478302912.post-45427055566185306542012-05-30T08:08:00.000-07:002012-05-30T08:08:00.167-07:00Why is LTC A Pressing Issue?<br />
<h2 class="first-section-title" id="annotationlabel-first" style="background-color: white; color: navy; font-family: Arial, Helvetica, sans-serif; font-size: medium; margin-bottom: 0.5em; margin-top: 0em; text-align: left;">
<br /></h2>
<div class="first-para" id="nr-wbp17Chapter13P9" style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0em; margin-top: 0em; text-align: left;">
Long-term care is an important concern for several reasons:<a href="" id="940" name="940" style="outline-color: initial; outline-style: none; outline-width: initial;"></a><a href="" id="beginpage.B4E35BDA-7CD5-4A85-9FA0-EC1975802307" name="beginpage.B4E35BDA-7CD5-4A85-9FA0-EC1975802307" style="outline-color: initial; outline-style: none; outline-width: initial;"></a></div>
<ul class="itemizedlist" style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: small; list-style-image: initial; list-style-position: initial; list-style-type: square; margin-left: 3em; margin-top: 0.9em; text-align: left;">
<li class="first-listitem" style="margin-top: 0.9em;"><div class="first-para" id="940-1" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">The demographics</i> of the baby boom lead to projections of a population explosion in the higher age groups. In 2000, approximately 34 million Americans, 12.6 percent of the population, were older than age 65. By 2030, that age group will have grown to over 70 million, more than 20 percent of the population. Further, the population at greatest risk of needing LTC, those 85 years old and older, is expected to grow in number from 4.3 million in 2000 to between 8.9 and 10.1 million in 2030.</div>
</li>
<li class="listitem" style="margin-top: 0.9em;"><div class="first-para" id="940-2" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">Medical advances</i>, ironically, have helped to convert many critical short-term health problems into long-term health problems. New techniques and technology save the lives of heart attack and stroke victims, premature babies, and many other people whose diseases or injuries would have been fatal in the past. Yet, while modern medicine prevents death, it often cannot restore health. Particularly for older people, life-saving medical treatment often is the threshold to months or years of custodial care. And even without a major health "event," some people's health and strength deteriorate slowly and steadily. Those who think the need for long-term care "won't happen to me" stand on shaky ground; for example, at age 65, there is a 40 percent probability of staying in a nursing home sometime before death. More will need some type of support at home.</div>
</li>
<li class="listitem" style="margin-top: 0.9em;"><div class="first-para" id="944-1" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">Changes in family structure </i>have made it less likely that long-term care can be provided at home by the patient's family. Few people enjoy the built-in support system of a large, local extended family to provide help with occasional nonmedical affairs, such as financial paperwork, meal preparation, or transportation, much less physical care or 24-hour supervision. And now, women, who were the traditional informal caregivers, regularly work outside the home for pay. Women who work outside the home, some 59.5 percent of women age 16 and over in 2003, cannot necessarily be counted on to care for their ailing parents, in-laws or husbands. Even if family members and friends are able to provide LTC, there are other costs to consider such as personal stress, the need to reduce or terminate employment, and out-of-pocket expenses for travel, supplies and babysitting for other dependents.</div>
</li>
<li class="listitem" style="margin-top: 0.9em;"><div class="first-para" id="944-2" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">The high charges</i> for LTC services are surprising, if not shocking. Long-term care costs vary considerably depending on location, and are beyond the means of many Americans. (See Table 1.)</div>
<a href="" id="946" name="946" style="outline-color: initial; outline-style: none; outline-width: initial;"></a><a href="" id="wbp17Chapter13P16" name="wbp17Chapter13P16" style="outline-color: initial; outline-style: none; outline-width: initial;"></a><table border="1" class="table" id="wbp17Chapter13P16" style="font-family: verdana, arial, helvetica, sans-serif; font-size: 11px; margin-bottom: 1em; margin-top: 1em;"><caption class="table-title" id="946-1" style="color: maroon; font-family: Arial, Helvetica, sans-serif; font-size: small; font-weight: bold; margin-top: 0.3em; text-align: left;"><span class="table-title" style="margin-top: 0.3em;"><span class="table-titlelabel">Table 13–1: </span>Privately Paid LTC Costs in Selected U.S. Cities, Mid-2004</span></caption><thead>
<tr valign="top"><th align="left" class="th" scope="col" style="color: maroon; font-family: Arial, Helvetica, sans-serif; font-size: small;" width="36%"> </th><th align="left" class="th" scope="col" style="color: maroon; font-family: Arial, Helvetica, sans-serif; font-size: small;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R1C2" style="margin-left: 0.3em; margin-right: 1em;">
Annual Cost of Nursing Home Confinement (semi-private rooms)</div>
</th><th align="left" class="th" scope="col" style="color: maroon; font-family: Arial, Helvetica, sans-serif; font-size: small;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R1C3" style="margin-left: 0.3em; margin-right: 1em;">
Annual Cost of Five Four-Hour Home Health Aid Visits/Week (at average hourly rate)</div>
</th></tr>
</thead><tbody>
<tr valign="top"><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="36%"><div class="table-para" id="nr-wbp17Chapter13T1R2C1" style="margin-left: 0.3em; margin-right: 1em;">
Atlanta, GA</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R2C2" style="margin-left: 0.3em; margin-right: 1em;">
$49,275</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R2C3" style="margin-left: 0.3em; margin-right: 1em;">
$17,680</div>
</td></tr>
<tr valign="top"><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="36%"><div class="table-para" id="nr-wbp17Chapter13T1R3C1" style="margin-left: 0.3em; margin-right: 1em;">
Chicago, IL</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R3C2" style="margin-left: 0.3em; margin-right: 1em;">
$45,260</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R3C3" style="margin-left: 0.3em; margin-right: 1em;">
$16,640</div>
</td></tr>
<tr valign="top"><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="36%"><div class="table-para" id="nr-wbp17Chapter13T1R4C1" style="margin-left: 0.3em; margin-right: 1em;">
Dallas/Fort Worth, TX</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R4C2" style="margin-left: 0.3em; margin-right: 1em;">
$39,785</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R4C3" style="margin-left: 0.3em; margin-right: 1em;">
$16,640</div>
</td></tr>
<tr valign="top"><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="36%"><div class="table-para" id="nr-wbp17Chapter13T1R5C1" style="margin-left: 0.3em; margin-right: 1em;">
Milwaukee, WI</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R5C2" style="margin-left: 0.3em; margin-right: 1em;">
$63,510</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R5C3" style="margin-left: 0.3em; margin-right: 1em;">
$22,880</div>
</td></tr>
<tr valign="top"><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="36%"><div class="table-para" id="nr-wbp17Chapter13T1R6C1" style="margin-left: 0.3em; margin-right: 1em;">
New York City, NY</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R6C2" style="margin-left: 0.3em; margin-right: 1em;">
$109,865</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R6C3" style="margin-left: 0.3em; margin-right: 1em;">
$15,600</div>
</td></tr>
<tr valign="top"><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="36%"><div class="table-para" id="nr-wbp17Chapter13T1R7C1" style="margin-left: 0.3em; margin-right: 1em;">
Philadelphia, PA</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R7C2" style="margin-left: 0.3em; margin-right: 1em;">
$76,650</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R7C3" style="margin-left: 0.3em; margin-right: 1em;">
$18,720</div>
</td></tr>
<tr valign="top"><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="36%"><div class="table-para" id="nr-wbp17Chapter13T1R8C1" style="margin-left: 0.3em; margin-right: 1em;">
Phoenix, AZ</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R8C2" style="margin-left: 0.3em; margin-right: 1em;">
$51,465</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R8C3" style="margin-left: 0.3em; margin-right: 1em;">
$19,760</div>
</td></tr>
<tr valign="top"><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="36%"><div class="table-para" id="nr-wbp17Chapter13T1R9C1" style="margin-left: 0.3em; margin-right: 1em;">
San Francisco, CA</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R9C2" style="margin-left: 0.3em; margin-right: 1em;">
$74,825</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R9C3" style="margin-left: 0.3em; margin-right: 1em;">
$21,840</div>
</td></tr>
<tr valign="top"><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="36%"><div class="table-para" id="nr-wbp17Chapter13T1R10C1" style="margin-left: 0.3em; margin-right: 1em;">
Seattle, WA</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="31%"><div class="table-para" id="nr-wbp17Chapter13T1R10C2" style="margin-left: 0.3em; margin-right: 1em;">
$69,715</div>
</td><td align="left" class="td" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;" width="33%"><div class="table-para" id="nr-wbp17Chapter13T1R10C3" style="margin-left: 0.3em; margin-right: 1em;">
$21,840</div>
</td></tr>
</tbody><tbody>
<tr><td class="td" colspan="3" style="font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0px;"><div class="footnote" id="footnote.37711F48-E9AB-4D89-8753-484BD19665E4">
<div id="946-2">
Based on daily and hourly data from the MetLife Market Survey of Nursing Home and Home Care Costs, September 2004.</div>
</div>
</td></tr>
</tbody></table>
</li>
<li class="listitem" style="margin-top: 0.9em;"><div class="first-para" id="947-1" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">Existing medical coverage </i><a href="" id="948" name="948" style="outline-color: initial; outline-style: none; outline-width: initial;"></a><a href="" id="beginpage.E2E53CDF-9355-4568-95D6-2A1B4FEB4136" name="beginpage.E2E53CDF-9355-4568-95D6-2A1B4FEB4136" style="outline-color: initial; outline-style: none; outline-width: initial;"></a>is inadequate to pay for long-term care. Government and private medical insurance programs cover nursing home care and home health care, but generally for limited time periods or as a response to an acute medical problem. Such benefits generally are capped. For example, Medicare covers up to 100 days in a skilled nursing facility per "benefit period" (effectively a service interval involving an illness or injury requiring hospitalization) and in very restricted circumstances, and Medicaid is only available to individuals below certain income thresholds and those who have "spent down their assets." Other coverages such as long-term disability insurance and pension plans are typically not structured to pay the significant out-of-pocket costs associated with purchased LTC services. Since most insurance plans provide little or no coverage for LTC expenses while traditional sources of LTC caregiving are contracting, individuals and families are exposed to a potentially huge financial risk.</div>
</li>
<li class="listitem" style="margin-top: 0.9em;"><div class="first-para" id="948-1" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">Low public awareness </i>about the risks and costs of long-term care has been an ongoing concern for policymakers and industry experts. Unless someone's family or friends have had to address a long-term care situation, he or she is unlikely to recognize the amount of physical and emotional attention required, may underestimate actual LTC charges, and may believe that Medicare, Medigap or other insurance policies will cover the full cost of long-term care. In the past, surveys found that about half the population had the misconception that traditional insurance products would cover this care although this is now changing.</div>
</li>
<li class="listitem" style="margin-top: 0.9em;"><div class="first-para" id="948-2" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">Government help </i>is limited. The 2002 offering by the federal government of a private, participant-paid group LTC insurance (LTCI) plan for its workforce, retirees and their families sent the message that government would not provide broad, publicly financed LTCI for all citizens. And it is unlikely that this will change in the foreseeable future because of the high cost of such programs.</div>
</li>
</ul>
<div class="last-para" id="nr-wbp17Chapter13P94" style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: small; margin-top: 0.9em; text-align: left;">
Since most people cannot save enough money to cover ongoing LTC costs, private LTC insurance may serve as the only realistic option for people to pay for personal care and certain health care services if and when they are needed. More Americans are recognizing this need—from 1987 through 2001, almost 8.3 million LTC insurance policies had been sold.<sup>[<a href="http://www.books24x7.com/assetviewer.aspx?bookid=13174&chunkid=539926072&noteMenuToggle=0&leftMenuState=1#ftn.footnote.8F9DD91B-5A81-4FA2-8A8D-D1E13E6A1FE8" name="footnote.8F9DD91B-5A81-4FA2-8A8D-D1E13E6A1FE8" style="outline-color: initial; outline-style: none; outline-width: initial; text-decoration: none;">7</a>]</sup> And at the end of 2003, over six million persons retained LTC coverage, almost one-third of whom were in group (typically employer-sponsored) plans.</div>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-1738702748478302912.post-55438509496145728242012-05-25T04:35:00.000-07:002012-05-25T04:35:00.265-07:00Future Developments in Behavioral Health Care<br />
<h2 class="first-section-title" id="annotationlabel-first" style="background-color: white; color: navy; font-family: Arial, Helvetica, sans-serif; font-size: medium; margin-bottom: 0.5em; margin-top: 0em; text-align: left;">
<br /></h2>
<div class="first-para" id="nr-wbp16Chapter12P309" style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: small; margin-bottom: 0em; margin-top: 0em; text-align: left;">
Recent survey results indicate that as many as 24 million Americans may need mental health treatment but are not getting it. Some of the reasons for this are cost, lack of insurance, stigma, and not understanding what behavioral insurance covers. Although the stigma associated with mental health care is fading, some individuals are still concerned that employers, coworkers, or friends will think less of them for seeing a therapist. Others are skeptical that therapy is effective and actually solves problems. And some people simply cannot find, or do not know how to find a therapist who works well with them.</div>
<div class="para" id="nr-wbp16Chapter12P310" style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: small; margin-top: 0.9em; text-align: left;">
The costs for not accessing needed behavioral treatment are many. Depression can complicate a patient's recovery from a major illness. Patients with chronic or serious mental illnesses who do not have appropriate outpatient care can bounce in and out of inpatient facilities, while families and patients suffer from poor outcomes and mounting insurance bills. Finally, lack of care can lead to the most serious outcome possible: death of the patient through suicide.</div>
<div class="section" id="wbp16Chapter12P311" style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: small; text-align: left;">
<h3 class="sect3-title" id="928-1" style="color: maroon; font-size: medium; margin-bottom: 0.9em; margin-top: 1.3em;">
<a href="" id="930" name="930" style="outline-color: initial; outline-style: none; outline-width: initial;"></a><a href="" id="wbp16Chapter12P311" name="wbp16Chapter12P311" style="outline-color: initial; outline-style: none; outline-width: initial;"></a>Broadening Care Access</h3>
<div class="first-para" id="nr-wbp16Chapter12P312" style="margin-bottom: 0em; margin-top: 0em;">
Radical new approaches to reaching those in need of mental health care are needed—and fortunately, are either in development or in use already. They include:<a href="" id="931" name="931" style="outline-color: initial; outline-style: none; outline-width: initial;"></a><a href="" id="beginpage.D58B9AFF-A4CC-46FC-845A-A1A89EC95273" name="beginpage.D58B9AFF-A4CC-46FC-845A-A1A89EC95273" style="outline-color: initial; outline-style: none; outline-width: initial;"></a></div>
<ul class="itemizedlist" style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-left: 3em; margin-top: 0.9em;">
<li class="first-listitem" style="margin-top: 0.9em;"><div class="first-para" id="931-1" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">Proactive disease management programs </i>that operate on several fronts: working with employers to reach out to employees through the workplace, and with health plans to identify patients taking psychotropic medications who need additional support; and reaching out to patients with other diseases like diabetes or cardiac conditions who may also suffer from mental illness.</div>
</li>
<li class="listitem" style="margin-top: 0.9em;"><div class="first-para" id="931-2" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">Outreach to people</i> who want treatment but do not know how to access it or to find a therapist who is best for them. One's choice of a psychotherapist is primarily impacted by a physician's recommendation, the health plan network, and the location of the clinician's office. Offering information about clinicians online, even identifying those within a network with specializations or a track record of producing the best outcomes, can help people make more informed choices. Just as health plans publish physician "report cards" to educate consumers, so psychotherapist report cards might help people choose the best therapist for their needs.</div>
</li>
<li class="listitem" style="margin-top: 0.9em;"><div class="first-para" id="931-3" style="margin-bottom: 0em; margin-top: 0em;">
<i class="emphasis">New ways of delivering therapy</i> that are more accessible and cost effective. For example, patients with mild to moderate levels of distress can benefit from a "coach" who offers counseling over the telephone or via the Internet. The Internet can also play an important role in promoting compliance with treatment, and augment other treatment offerings.</div>
</li>
</ul>
</div>
<div class="section" id="wbp16Chapter12P318" style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: small; text-align: left;">
<h3 class="sect3-title" id="931-4" style="color: maroon; font-size: medium; margin-bottom: 0.9em; margin-top: 1.3em;">
<a href="" id="932" name="932" style="outline-color: initial; outline-style: none; outline-width: initial;"></a><a href="" id="wbp16Chapter12P318" name="wbp16Chapter12P318" style="outline-color: initial; outline-style: none; outline-width: initial;"></a>Productivity</h3>
<div class="first-para" id="nr-wbp16Chapter12P319" style="margin-bottom: 0em; margin-top: 0em;">
<a href="" id="933" name="933" style="outline-color: initial; outline-style: none; outline-width: initial;"></a><a href="" id="beginpage.2D4F8C28-9A9A-4297-B4F6-FE477DD521E5" name="beginpage.2D4F8C28-9A9A-4297-B4F6-FE477DD521E5" style="outline-color: initial; outline-style: none; outline-width: initial;"></a>One of the challenges of managed behavioral healthcare organizations is the ability to demonstrate to purchasers that the benefits they deliver result in increased workplace productivity. Studies of this type are usually collaborative efforts between an employer group and MBHO, and results are often skewed by nuances of the individual group. In 2003, PacifiCare Behavioral Health, a leading national managed behavioral health care organization, reported the results of a four-year study of nearly 20,000 of its members in behavioral treatment representing multiple employer groups and health plans across the country. By measuring the degree of work impairment through a patient survey tool administered in clinicians' offices at the beginning and at multiple points during psychotherapy, the MBHO was able to track patient improvement. Five questions on the survey assessed degrees of work impairment. The MBHO found that 31 percent of people accessing behavioral services met criteria for being work impaired—meaning their day-to-day functioning was impaired. After only three weeks of treatment, the percentage of work-impaired patients dropped to 18 percent, and after nine weeks, it dropped to 15 percent. Generally, patients who still appear work-impaired after a few months of treatment are those with chronic behavioral health conditions that need more intensive services with careful monitoring and typically are enrolled in a disease management program.</div>
<div class="last-para" id="nr-wbp16Chapter12P320" style="margin-top: 0.9em;">
If an employer knew that nearly one-third of its employees accessing its behavioral health benefits were work-impaired, that employer would undoubtedly see treatment as a worthwhile investment if half of those starting treatment work-impaired are able to return to nonimpaired status. U.S. employers report that they suffer $24 billion a year in losses due to absenteeism and presenteeism (working, but not functioning at full capacity) from depression in the workforce, while the cost of substance use disorders is estimated at $100 billion. If these costs can be reduced substantially with treatment, then behavioral health care services would rank as one of the most worthwhile investments an organization's management can make.</div>
</div>Unknownnoreply@blogger.com0