It’s MLR Rebate Time Again!
The ACA requires insurers to submit an annual report to HHS accounting for plan costs. If the insurer does not meet the medical loss ratio standards, they must provide rebates to policyholders. Rebates must be distributed to employer plan sponsors between August 1, 2022, and September 30, 2022. Employers should keep in mind that if they receive a rebate, there are strict guidelines as to how the rebate may be used or distributed.
For more information, download “Medical Loss Ratio Rebates: A Guide for Employers.”
Hawaii Establishes a Retirement Savings Account Program
August 02, 2022
On July 12, 2022, Gov. Ige signed SB 3289 into law, establishing the Hawaii Retirement Savings Account Program. The program will be a state-facilitated payroll-deduction retirement savings plan for private sector employees in Hawaii who do not have access to employer-sponsored retirement plans. The new law also creates a new board within the Department of Budget and Finance. The board, once appointed, will determine the program’s time frames, including effective dates of employee contributions and enrollment.
Any employer who is in business in Hawaii, has at least one employee working in that state and did not maintain a tax-qualified retirement plan for employees during the preceding two years will be required to provide a notice to employees. The notice, for which we expect a model from the board, will inform employees of their right to opt into the program. If an employee enrolls, the employer will be required to withhold the contribution amount from the employee’s salary or wages. The employer will then be required to transmit the contributions to the state program on the earliest date that the amount can reasonably be segregated from the employer's assets, but no later than the fifteenth day of the calendar month following the month in which the employee's contribution amounts were withheld. Failure to comply could result in a penalty of no less than $500 for each violation or failure (up to a maximum of $5,000 per calendar year).
The default election amount will be 5% of the employee’s salary or wages. The employee may elect to contribute a higher or lower percentage as long as the amount does not exceed IRS limits. The program shall establish for each enrolled employee a Roth IRA, into which the contributions deducted from an employee's payroll shall be deposited. The board may decide to add a traditional IRA as an option. Employer contributions will not be permitted. However, there is a special fund from which the board may decide to contribute $500 for the first 50,000 covered employees who participate in the program for twelve consecutive months after initial enrollment.
This is just the latest requirement for employers with at least one employee in Hawaii. The state already has a statutory disability requirement as well as unique requirements related to medical coverage. For additional information on these requirements, please ask your advisor for details. In regard to the new retirement savings program, employers should be aware of the new requirement and continue to watch for updates in Compliance Corner.
Michigan Court Strikes Down Paid Medical Leave Act and Minimum Wage Laws, Reverts to Prior Versions
August 02, 2022
On July 19, 2022, in Mothering Justice et al. v. Nessel, et al., a Michigan court ruled that the state’s legislature violated Michigan’s Constitution when it amended two recently adopted ballot initiatives in 2018. The court’s ruling voids Michigan’s current Paid Medical Leave Act (PMLA) and current minimum wage laws and reverts to versions of those laws originally adopted by the legislature, versions which provide expanded paid sick leave and a higher minimum wage.
The original law called the Earned Sick Time Act (ESTA) and the increased minimum wage law were proposed as ballot initiatives and enacted by the legislature on September 5, 2018. Soon after, in December 2018, before the ESTA and new minimum wage law became effective, the legislature significantly amended the adopted initiatives. The ESTA was amended to exempt employers with fewer than 50 employees, reduce the annual leave entitlement hours and remove a section giving employees protection from retaliation. This amended ESTA became the PMLA. We reported on both the ESTA and PMLA in the October 3, 2018, and January 8, 2019, editions of Compliance Corner. The minimum wage law was amended to reduce the increase and eliminate wage increases specific to tipped employees. The amended laws were then signed into law in December 2018 by outgoing governor Rick Snyder and became effective March 29, 2019.
In striking down the amended laws, the Michigan court found the legislature’s single session “adopt and amend” strategy violated the Michigan Constitution by denying the people of Michigan a vote between the ballot initiative version and the legislature’s modified version. Consequently, the court voided the PMLA and existing minimum wage law and ordered the ESTA and higher minimum wage ($12.00/hour) to be immediately reinstated as law. However, the legislature quickly appealed the court’s decision and requested the law reversal be stayed until the appeals court can decide the matter.
At this point, Michigan’s paid sick leave law and minimum wage requirements remain uncertain. Employers in Michigan should monitor the state’s Department of Labor and Economic Opportunity website for updates and work with legal counsel to modify their paid leave policies and compensation practices as necessary.
This material was created by PPI Benefit Solutions to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The service of an appropriate professional should be sought regarding your individual situation. PPI does not offer tax or legal advice. "PPI®" is a service mark of Professional Pensions, Inc., a subsidiary of NFP Corp. (NFP). All rights reserved.