Medicare Part D Notices Due by Oct. 14
The deadline to distribute creditable coverage disclosure notices to Medicare-eligible individuals is only a few weeks away. If you have plan participants eligible for Medicare Part D, you must disclose to those individuals before Oct. 15 each year whether their prescription coverage through your group plan is as comprehensive as the benefits offered under Medicare Part D.
The notices can be included in your open enrollment materials or sent electronically if certain guidelines are met. Although the only requirement is that Medicare-eligible individuals receive notices, you may want to provide disclosures to all plan participants and dependents, as it can be difficult to know which participants are Medicare-eligible.
A Model Creditable Coverage Notice can be found here.
Also, as a reminder, plan sponsors are required to disclose to CMS (Centers for Medicare & Medicaid Services) whether their prescription drug coverage is creditable or non-creditable. The disclosure must be made to CMS on an annual basis or upon any change that affects whether the coverage is creditable. More specifically, the Medicare Part D disclosure notice must be provided within 60 days after the beginning date of the plan year for which the entity is providing the disclosure to CMS. The disclosure can be made here.
IRS Issues Guidance on Tax Credit for Paid Family and Medical
The IRS recently released Notice 2018-71, which provides detailed guidance in question and answer (Q&A) format on the employer tax credit for paid family and medical leave. The tax credit is contained in Section 45S of the Internal Revenue Code (Code) and applies for 2018 and 2019 tax years.
The IRS’s Q&As address the following topics:
- Eligible employers;
- Family and medical leave;
- Minimum paid leave requirements; and
- Calculating and claiming the credit.
This IRS guidance applies to taxable years beginning after Dec. 31, 2017 and before Jan. 1, 2020. In addition, eligible employers that set up qualifying paid family leave programs or amend existing programs by Dec. 31, 2018 will be eligible to claim the employer credit for paid family and medical leave, retroactive to the beginning of an employer’s 2018 tax year, for qualifying leave already provided.
Employers that want to take advantage of the new tax credit should review the IRS’s Q&As and work with their tax advisors, as necessary, to make sure they satisfy all of the applicable requirements for the tax credit.
Michigan Passes Paid Sick Leave Law
On Sept. 5, 2018, the Michigan legislature adopted the paid sick leave ballot proposal—the Earned Sick Time Act (Act). The Act, which becomes effective next spring, requires employers to provide employees with one hour of paid sick leave for every 30 hours worked.
All employers that employ one or more employees in Michigan must comply with the Act’s requirements. There is no exception for small employers. Virtually all employees are entitled to accrue and use paid sick leave. Employees begin to accrue paid sick leave upon the Act’s effective date or upon hire, whichever date is later. While there is no length of service or hours of service requirement in order to be eligible for paid sick leave, employers may require employees hired after April 1, 2019 to wait 90 calendar days before using accrued paid sick leave.
All employees must accrue a minimum of one hour of paid sick leave for every 30 hours worked. Exempt employees are assumed to work 40 hours per week, unless an employee’s normal workweek is less than 40 hours, in which case the exempt employee’s sick leave accrues based on the employee’s normal workweek.
Employers may limit employees’ use of paid sick leave to 72 hours per year. For paid sick leave purposes, a “year” is any regular and consecutive 12-month period as determined by the employer. Small businesses may limit employees’ use of paid sick leave to 40 hours per year. However, if an employee of a small employer exhausts his or her paid sick leave, the small employer must permit the employee to use up to 32 hours of unpaid leave that year, unless the employer provides a higher limit.
Because it is expected that the Act will be amended before it becomes effective, employers should monitor developments related to the paid sick leave law. Also, as the Act’s effective date approaches, employers should become familiar with the paid sick leave law and update their paid leave and attendance policies for its requirements.
New York Updates Paid Family Leave Calculations
New York’s paid family leave law requires private sector employers to provide paid family leave benefits to eligible employees starting Jan. 1, 2018. Under the law, paid family leave benefits will be phased in over a four-year period. When the law is fully implemented in 2021, an employee may be eligible for up to 12 weeks of paid family leave at 67 percent of his or her average weekly wage (capped at 67 percent of the New York state average weekly wage).
The paid family leave benefits are funded through employee paycheck deductions. Employers are not responsible for contributing to or funding paid family leave benefits, but may choose to do so. Paid family leave coverage is typically added as a rider on an employer’s existing disability insurance policy
Effective Jan. 1, 2019, eligible employees may receive up to 55 percent of their average weekly wage during family leave, not to exceed 55 percent of New York’s average weekly wage for 2019 ($1,357.11) which is $746.41. To help fund this paid leave, employers may deduct 0.153 percent of an employee’s weekly wages up to an annual maximum of $107.97 in 2017, up from 0.126 percent and $85.56 in 2018.
New York employers should confirm that they have coverage for paid family leave benefits and are collecting the employee contributions to pay for this coverage. In addition, employers should confirm that they have included paid family leave information in written materials that are distributed to employees, such as employee handbooks. Employers should also make sure that they have posted an employee notice regarding paid family leave benefits.
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