How to Handle Employee Requests for Time Off to Vote

Did you know how to handle employee requests for time off to go and vote last Tuesday? Laws related to voting leave varies between states, leaving some employers questioning how they should address employee requests. Read on to learn more.


Many employees will be eligible to cast their ballot on Nov. 6, but will they have time to vote? Some states require employers to give workers time off to vote, and even in states that don't, some businesses are finding other ways to get employees to the polls.

With Election Day around the corner, employers should be mindful that, while no federal law provides employees leave to vote, many states have enacted laws in this area, said Marilyn Clark, an attorney with Dorsey & Whitney in Minneapolis. Depending on the state, employers may have to give workers notice about their voting rights and provide paid or unpaid time off to vote.

Even in states where there is no voting leave law, it is good practice to let employees take up to two hours of paid time off to vote if there isn't enough time for the employee to vote outside of working hours. "Encouraging and not discouraging employees should be the general rule," said Robert Nobile, an attorney with Seyfarth Shaw in New York City.

Encourage Employees

"Here in the United States, too many people don't vote because they don't have time due to jobs, child care and other responsibilities," said Donna Norton, executive vice president of MomsRising, an organization of more than 1 million mothers and their families. "Getting to the polls can be especially challenging for people in rural communities [or] single-parent households, and those who are juggling multiple jobs."

About 4 in 10 eligible voters did not vote in the 2016 presidential election, according to research conducted by Nonprofit VOTE and the U.S. Elections Project. And voter turnout has been historically lower for midterm elections, such as this year's, which are held near the midpoint of a president's four-year term, according to Pew Research Center.

"Businesses can help solve this problem by making sure that all employees have paid time off to vote," Norton said.

Some employers are offering solutions by making Election Day a corporate holiday, offering a few hours of paid time off for employees to vote and giving employees information about early and absentee voting, according to TheWashington Post.

Giving employees time off to participate in civic or community activities tends to improve worker performance, said Katina Sawyer, Ph.D., an assistant professor of management at George Washington University. Employers who are offering paid time off to vote will likely reap the benefits through improved employee attitudes and performance.

Know the Law

Employers in states with voting-leave laws should be familiar with the specific requirements, as some state laws have a lot of details. Even in states without such laws on the books, employers should check to see if there are any local voting leave ordinances in their cities.

Employers required to give workers time off to vote should plan for adequate work coverage to ensure that all employees can take time off, Clark said.

In many states, the employer may ask workers to give advance notice if they need time off and may require that workers take that leave at a specific time of the workday. In some states where leave is paid, employers might have the right to ask employees to prove they actually voted. Most states prohibit employers from disciplining or firing an employee who takes time off from work to vote.

"Ultimately, fostering an environment that generally encourages employees to exercise this important right is a good practice to mitigate the risk of a potential retaliation claim," Clark said.

Although state laws vary, "the general theme across the U.S. with respect to voting laws is that employees will be given time off to vote if there is insufficient time between the time the polls open and close within the state and the time employees start and finish work," Nobile said. "Typically, two to three consecutive nonworking hours between the opening and closing of the polls is deemed sufficient."

Some state laws provide unpaid leave to vote or do not address whether the leave must be paid. Oregon and Washington no longer have voting leave laws because they are "vote-by-mail" states.

voting leave laws.jpg

In some states, such as California and New York, employers must post notices in the workplace before Election Day to inform employees of their rights. Employers might have to pay penalties if they don't comply.

The consequences for denying employees their voting rights can be harsh, with some states even imposing criminal penalties, Clark noted.

Create a Policy

At a minimum, employers should adopt a policy spelling out the voting rights available to employees under applicable laws, Clark said. For businesses that operate in states that don't have a voting-leave law, employers may still wish to adopt a policy outlining their expectations about time off for voting.

Multistate employers may elect to adopt a single policy that includes the most employee-friendly provisions of the state and local laws that cover them. "By taking this approach, employers avoid the administrative burden of adopting and promulgating multiple policies for employees working in different locales," Clark said. All voting-leave policies should be sure to include strong anti-retaliation provisions, which make clear that the employer will not take any adverse action against employees for exercising their voting rights.

"It's important to remember that the law sets the floor," said Bryan Stillwagon, an attorney with Sherman & Howard in Atlanta. "Companies with the happiest and most-engaged employees recognize that positive morale comes from doing more than what is required."

Nagele-Piazza, L. (29 October 2018) "How to Handle Employee Request for Time Off to Vote" (Web Blog Post). Retrieved from https://www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/Pages/How-to-Handle-Employee-Requests-for-Time-Off-to-Vote.aspx

Dana Wilkie contributed to this article. 


8 ways to maintain HSA eligibility

Employers sponsoring high-deductible health plans with HSAs have to ensure their HDHPs maintain their HSA eligibility. Continue reading for eight ways employers can maintain HSA eligibility.


For employers sponsoring high-deductible health plans with health savings accounts, ensuring that the HDHP continuously remains HSA qualified is no easy task. One challenge in this arena is that most of the rules and regulations are tax-related, and most benefit professionals are not tax professionals.

To help, we’ve created a 2019 pre-flight checklist for employers.

With 2019 rapidly approaching and open enrollment season beginning for many employers, now’s a great time to double-check that your HDHP remains qualified. Here are eight ways employers can maintain HSA eligibility.

1. Ensure in-network plan deductibles meet the 2019 minimum threshold of $1,350 single/$2,700 family.

To take the bumps out of this road, evaluate raising the deductibles comfortably above the thresholds. That way, you won’t have to spend time and resources amending the plan and communicating changes to employees each year that the threshold increases. Naturally, plan participants may not be thrilled with a deductible increase; however, if your current design requires coinsurance after the deductible, it’s likely possible on a cost neutral basis to eliminate this coinsurance, raise the deductible and maintain the current out-of-pocket maximum. For example:

Current Proposed
Deductible $1,350 single / $2,700 family $2,000 single / $4,000 family
Coinsurance, after deductible 80% 100%
Out-of-pocket maximum $2,500 single / $5,000 family $2,500 single / $5,000 family

This technique raises the deductible, improves the coinsurance and does not change the employee’s maximum out-of-pocket risk. The resulting new design may also prove easier to explain to employees.

2. Ensure out-of-pocket maximums do not exceed the maximum 2019 thresholds of $6,750 single/$13,500 family.

Remember that the 2019 HDHP out-of-pocket limits, confusingly, are lower than the Affordable Care Act 2019 limits of $7,900 single and $15,800 family. (Note to the U.S. Congress: Can we please consider merging these limits?) Also, remember that out-of-pocket costs do not include premiums.

3. If your plan’s family deductible includes an embedded individual deductible, ensure that each individual in the family must meet the HDHP statutory minimum family deductible ($2,700 for 2019).

Arguably, the easiest way to do so is making the family deductible at least $5,400, with the embedded individual deductible being $5,400 ÷ 2 = $2,700. However, you’ll then have to raise this amount each time the IRS raises the floor, which is quite the hidden annual bear trap. Thus, as in No. 1, if you’re committed to offering embedded deductibles, consider pushing the deductibles well above the thresholds to give yourself some breathing room (e.g., $3,500 individual and $7,000 family).

For the creative, note that the individual embedded deductible within the family deductible does not necessarily have to be the same amount as the deductible for single coverage. But, whether or not your insurer or TPA can administer that out-of-the-box design is another question. Also, beware of plan designs with an embedded single deductible but not a family umbrella deductible; these designs can cause a family to exceed the out-of-pocket limits outlined in No. 2.

Perhaps the easiest strategy is doing away with embedded deductibles altogether and clearly communicating this change to plan participants.

4. Ensure that all non-preventive services and procedures, as defined by the federal government, are subject to the deductible.

Of note, certain states, including Maryland, Illinois and Oregon, passed laws mandating certain non-preventive services be covered at 100%. While some of these states have reversed course, the situation remains complicated. If your health plan is subject to these state laws, consult with your benefits consultant, attorney and tax adviser on recommended next steps.

Similarly, note that non-preventive telemedicine medical services must naturally be subject to the deductible. Do you offer any employer-sponsored standalone telemedicine products? Are there any telemedicine products bundled under any 100% employee-paid products (aka voluntary)? These arrangements can prove problematic on several fronts, including HSA eligibility, ERISA and ACA compliance.

Specific to HSA eligibility, charging a small copay for the services makes it hard to argue that this isn’t a significant benefit in the nature of medical care. While a solution is to charge HSA participants the fair market value for standalone telemedicine services, which should allow for continued HSA eligibility, this strategy may still leave the door open for ACA and ERISA compliance challenges. Thus, consider eliminating these arrangements or finding a way to compliantly bundle the programs under your health plan. However, as we discussed in the following case study, doing so can prove difficult or even impossible, even when the telemedicine vendor is your TPA’s “partner vendor.”

Finally, if your firm offers an on-site clinic, you’re likely well aware that non-preventive care within the clinic must generally be subject to the deductible.

5. Depending on the underlying plan design, certain supplemental medical products (e.g., critical illness, hospital indemnity) are considered “other medical coverage.” Thus, depending on the design, enrollment in these products can disqualify HSA eligibility.

Do you offer these types of products? If so, review the underlying plan design: Do the benefits vary by underlying medical procedure? If yes, that’s likely a clue that the products are not true indemnity plans and could be HSA disqualifying. Ask your tax advisor if your offered plans are HSA qualified. Of note, while your insurer might offer an opinion on this status, insurers are naturally not usually willing to stand behind these opinions as tax advice.

6. The healthcare flexible spending account 2 ½-month grace period and $500 rollover provisions — just say no.

If your firm sponsors non-HDHPs (such as an HMO, EPO or PPO), you may be inclined to continue offering enrollees in these plans the opportunity to enroll in healthcare flexible spending accounts. If so, it’s tempting to structure the FSA to feature the special two-and-a-half month grace period or the $500 rollover provision. However, doing so makes it challenging for an individual, for example, enrolled in a PPO and FSA in one plan year to move to the HDHP in the next plan year and become HSA eligible on day one of the new plan year. Check with your benefits consultant and tax adviser on the reasons why.

Short of eliminating the healthcare FSA benefit entirely, consider prospectively amending your FSA plan document to eliminate these provisions. This amendment will, essentially, give current enrollees more than 12 months’ notice of the change. While you’re at it, if you still offer a limited FSA program, consider if this offering still makes sense. For most individuals, the usefulness of a limited FSA ebbed greatly back in 2007. That’s when the IRS, via Congressional action, began allowing individuals to contribute to the HSA statutory maximum, even if the individual’s underlying in-network deductible was less.

7. TRICARE

TRICARE provides civilian health benefits for U.S Armed Forces military personnel, military retirees and their dependents, including some members of the Reserve component. Especially if you employ veterans in large numbers, you should become familiar with TRICARE, as it will pay benefits to enrollees before the HDHP deductible is met, thereby disqualifying the HSA.

8. Beware the incentive.

Employers can receive various incentives, such as wellness or marketplace cost-sharing reductions, which could change the benefits provided and the terms of an HDHP. These types of incentives may allow for the payment of medical care before the minimum deductible is met or lower the amount of that deductible below the statutory minimums, either of which would disqualify the plan.

SOURCE: Pace, Z.; Smith, B. (22 October 2018) "8 ways to maintain HSA eligibility" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/8-ways-to-maintain-hsa-eligibility


Avoiding red flags: How to lower your plan's audit risk

The largest plans aren’t the only ones that are audited. Audits are triggered by big events. Read this blog post to learn more.


Are only the largest retirement plans audited? The truth is that plans of any size can be audited by the IRS and the DOL. Your plan could be selected for a random audit, or as a result of IRS datasets that target certain types of plans. However, lots of audits are triggered by specific events. Learning to avoid the red flags can help reduce your risk and increase the odds that you will survive any audit for which you are selected without major problems.

Your Form 5500 can be audit bait

Bad answers to Form 5500 can attract the Labor Department’s attention and serve as audit bait. The best way to make sure that your Form 5500 filing doesn’t lead to an audit is to check it carefully — with outside assistance if necessary — to make sure that the compliance questions are answered correctly.

For example, one compliance question asks whether the plan is protected by an ERISA bond and if so, the amount of coverage. Never answer “no” to this question. If for some reason you didn’t have a bond before, get one now. It is even possible to obtain retroactive coverage.

A coverage amount that is too low is also a red flag. In most cases, the bond must be for at least 10% of plan assets at the beginning of the year, although plans with certain types of investments must have higher coverage. Since assets at prior year end and at the beginning of the year are also shown on the 5500, showing an amount lower than 10% of those assets will invite the DOL to follow up.

The DOL will also look at the investment and financial information shown in the asset report. If your plan has many alternative investments such as hedge funds, has invested in other hard-to-value investments, or if you have large amounts of un-invested cash, you may also be inviting a follow up by the DOL. If your asset values as of the end of the prior year do not match your opening year balance for the succeeding year, you are also inviting unwanted inquiries.

Other answers that may get you targeted for further investigation are: if you indicate that you have late deposits of employee contributions or that you have not made required minimum distributions to former employees who are 70.5 years old. Note that this question does not need to be answered “Yes” if reasonable efforts have been made to find the participants but they still can’t be located.

Don’t ignore employee claims and complaints

Many plan sponsors don’t realize that employee complaints to the IRS and DOL often lead to audits. Make sure that employee questions and complaints receive a response, and if a formal claim for benefits is filed, make sure to follow the ERISA regulations on benefit claims and appeals. It is a good idea to run any denials past your ERISA attorney to make sure they are consistent with the written plan terms and clearly explain the participant’s appeal rights and the reason for the denial.

Be prepared

If your plan is selected for IRS or DOL audit, expect to be asked to provide executed plan documents, participant notices and fiduciary policies, such as your Investment Policy Statement. Keep these in a file to avoid a last-minute scramble to satisfy the auditor’s requests. You should also be prepared to show that you are making diligent efforts to find missing participants, deal with defaulted loans and review plan fees, which are current hot issues for auditors.

To be even better prepared, you can do a self-audit to identify problems that need correction before the IRS or DOL do.

SOURCE: Buckmann, C (29 June 2018) "Avoiding red flags: How to lower your plan's audit risk" (Web Blog Post). Retrieved from: https://www.benefitnews.com/opinion/irs-dol-audit-red-flags-and-avoiding-plan-risks


Compliance Recap July 2018

July was a quiet month in the employee benefits world. The Internal Revenue Service (IRS) released draft Forms 1094-B, 1095-B, 1094-C, and 1095-C. The IRS also released an information letter on the employer shared responsibility provisions.

UBA Updates

UBA released two new advisors:

UBA updated existing guidance:

IRS Releases Draft Forms 1094-B, 1095-B, 1094-C, and 1095-C

The Internal Revenue Service (IRS) released draft Forms 1094-B, 1095-B, 1094-C, and 1095-C. Employers will use the final version of these forms to report on offers of health coverage to full-time employees and their family members, and enrollment in health coverage by employees and their family members (for employers that sponsor self-insured health plans).

There are no substantive changes to draft Forms 1094-B, 1095-B, or 1094-C for 2018. There is a minor formatting change to draft Form 1095-C for 2018. There are dividers for the entry of an individual’s first name, middle name, and last name.

Employers will have more information about any additional changes to these forms when the IRS releases its draft instructions for these forms.

IRS Releases Information Letter on Employer Shared Responsibility

The Internal Revenue Service (IRS) released its Information Letter 2018-0013 to reiterate how the employer shared responsibility provisions would apply to an applicable large employer. Specifically, the IRS explained how the Service Contract Act (SCA) interacts with the Patient Protection and Affordable Care Act (ACA).

As background, the SCA requires workers who are employed on certain federal contracts to be paid prevailing wages and fringe benefits. An employer generally can satisfy its fringe benefit obligation by providing the cash equivalent of benefits or a combination of cash and benefits. Alternatively, an employer may permit employees to choose among various benefits, or various benefits and cash. An employer may choose to provide fringe benefits under the SCA by offering an employee the option to enroll in health coverage provided by the employer (including an option to decline that coverage). If the employee declines the coverage, that employer would then generally be required by the SCA to provide the employee with cash or other benefits of an equivalent value.

This Information Letter refers to IRS Notice 2015-87 which describes how the ACA and the SCA may be coordinated for plan years beginning before January 1, 2017, and until further guidance is issued and applicable. Notice 2015-87 clarifies that, for employees under the SCA, the choice of a cash-out payment will generally not require an employer to pay a greater share of the cost of the health coverage for the coverage to be considered affordable.

Question of the Month

  1. What if a plan sponsor fails to file or pay the PCORI fee?
  2. Although the PCORI statute and its regulations do not include a specific penalty for failure to report or pay the PCORI fee, the plan sponsor may be subject to penaltiesfor failure to file a tax return because the PCORI fee is an excise tax.

The plan sponsor should consult with its attorney on how to proceed with a late filing or late payment of the PCORI fee. The PCORI regulations note that the penalties related to late filing of Form 720 or late payment of the fee may be waived or abated if the plan sponsor has reasonable cause and the failure was not due to willful neglect.

If a plan sponsor already filed Form 720 (for example, for a different excise tax), then the plan sponsor can make a correction to a previously filed Form 720 by using Form 720X.


Notifying Participants of a Plan Change

Curious about when you should notify a participant about a change to their health care plan?

The answer is that it depends!

Notification must happen within one of three time frames: 60 days prior to the change, no later than 60 days after the change, or within 210 days after the end of the plan year.

For modifications to the summary plan description (SPD) that constitute a material reduction in covered services or benefits, notice is required within 60 days prior to or after the adoption of the material reduction in group health plan services or benefits. (For example, a decrease in employer contribution is a material reduction in covered services or benefits. So is a material modification in any plan terms affecting the content of the most recent summary of benefits and coverage (SBC).) While the rule here is flexible, the definite best practice is to give advance notice. For collective practical purposes, employees should be told prior to the first increased withholding.

However, if the change is part of open enrollment, and communicated during open enrollment, this is considered acceptable notice regardless of whether the SBC, SPD, or both are changing. Essentially, open enrollment is a safe harbor for all 60-day prior/60-day post notice requirements.

Finally, changes that do not affect the SBC and are not a material reduction in benefits must be communicated and summarized within 210 days after the end of the plan year.

Source:
Capilla D. (19 April 2018). "Notifying Participants of a Plan Change" [blog post]. Retrieved from address http://bit.ly/2w1wvHk