U.S. DOL Issued Updated Fact Sheet (#71) on Internship Programs
As summer approaches and employers engage in partnerships with local academic institutions, many consider using summer interns as a part of school-to-work programs. In April the U.S. Department of Labor (DOL) published an updated Fact Sheet (#71) reminding employers about how to properly classify an intern as paid versus unpaid. While this information is not new they serve as a good reminder of what an employer should consider before properly classifying a worker as an unpaid intern. The fact that the DOL chose now to publish this reminder may also reasonably indicate the Department's intent to monitor these classifications more closely in the upcoming months. The DOL considers six factors to determine whether an internship has been properly classified as unpaid in the private sector. Unlike assessing the classification of an independent contractor in which a variety of factors are weighed against one another, all six of the following factors must be met in order to properly classify an intern as unpaid:
1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If you are a public or non-profit sector employer you should note that the DOL is considering issuing guidance for the classification of unpaid interns in those sectors. Consider, too, that volunteers may pose another classification challenge for employers. In June 2009, Reuters reported that volunteerism was on the increase, "Applications for the AmeriCorps rose 234 percent this year compared with last. Similarly, Teach for America, the program that sends America's brightest college graduates to teach in its poorest schools, saw a 42 percent increase in applications this year...There is more of a desire to serve the community among people in [their] 20s and 30s." Remember that just because someone volunteers to work for free does not mean it is legal to permit them to do so. Unlike the test for interns, the DOL uses a three factor test to determine whether an individual is properly classified as an unpaid volunteer. Generally the individual:
1. works part time in the volunteer role;
2. works for a religious, civic, or humanitarian organization; and
3. works for a religious, civic, or humanitarian objective.
When classifying any worker as something other than an employee, be it an unpaid intern, volunteer or independent contractor you should review the classification with your company's employment counsel. And don't forget that if your company is looking for ways to support and advance school-to-work programs you might consider participating in CHRA's Pathways to Success program!
May
2010 Healthcare Reform Implications & Update
Submitted by: Greta Engle, Director, Government Affairs
In March
of this year, President Obama signed into law the Patient Protection
and Affordable Care Act as well as its companion bill, the Health Care
and Education Reconciliation Act of 2010. Together, these two acts create
what is known as "Health Care Reform", or the "Health
Care Act". There are 5,000 pages associated with the combined Act.
It is anticipated that over the summer, a corrections bill will be introduced
providing clarification and amendments to the already 5,000 pages of
legislation.
Update
- Tax treatment dependent children
Most recently, the IRS provided guidance on tax treatment of employers
providing health benefits for children under age 27. The IRS is encouraging
employers to begin covering young adults voluntarily before the 9/23/10
implementation date of the adult dependent child provision (for plan
years beginning 6 months after the date of the law's enactment). The
rationale is the avoidance of gaps in coverage for new college graduates
and saving administration costs of re-enrolling and disenrolling members.
Parents
will now be able to add their children under age 27 for their health
coverage on a tax-free basis.
Effective
3/30/2010 employers may permit employees to make pre-tax contributions
under a Section 125 plan for children under age 27.
The expanded
health care tax benefit applies to various workplace and retiree health
plans. This also applies to self employed individuals who qualify for
the self employed insurance deduction on their federal income tax return.
Employers
may allow this change under their current Section 125 plan even if that
plan has not yet been amended to reflect the change in coverage options.
To reduce the employer burden, employers will have until the end of
2010 to amend Section 125 language to incorporate the change.
This new
guidance has large potential impact on health FSA's and on HRA's. These
plans may now reimburse tax free expenses of children who have not attained
age 27 as of the end of the calendar year.
Employees
may approach their employer to request an election change based on the
expanded tax benefit. The IRS and Treasury intend to amend Section 125
plan election change regulations retroactively to 3/30/2010 to include
change in status events affecting children under age 27 who are newly
eligible for coverage. However, the guidance is not requiring FSA and
HRA plans to reimburse expenses for the expanded definition of a child
dependent. Although, it is changing the rules to create the potential
if the employer sponsor later chooses.
Beginning
March 30, 2010, employers can allow employees to immediately make pre
tax salary reduction contributions for group health benefits under an
FSA for children under age 27 even if the FSA plan has not yet been
amended. A retroactive amendment to an FSA plan to cover children under
age 27 has to be made no later then December 31, 2010 and must be effective
retroactively to the first date in 2010 when employees are permitted
to make pre tax salary reduction contributions to cover children under
age 27.
Update
- Healthcare Reform
March 23, 2010
- Immediate
access to insurance for uninsured individuals with pre-existing conditions
- Small
business tax credit in effect
June
21, 2010
- Reinsurance
program begins for early retirees ages 55-64
Plan
years beginning on or after September 30, 2010
- Eliminate
preexisting condition exclusions for children
- Eliminate
lifetime limits and restrict usage of annual limits
- Begin
covering preventive health services without any member cost share
- this will be further defined by the Secretary of Health & Human
Services (HHS) but presumes a wellness exam and diagnostic work to
be covered at 100% by the employer's plan with no co payment
- Dependents
covered through age 26
- A $250
rebate under Medicare Part D
- Medicaid
eligibility expands to cover parents and childless adults up to 133%
of federal poverty level
- Insurance
carriers/health plans must sustain medical loss ratios of 80% for
small group and 85% for large group - if benefit plans run more profitably
then these ratios, funds returned to participants. This has the insurance
industry rethinking expenses on member communications, value added
wellness services, internet services, cost calculators, etc…
as well as broker commissions.
Effective
in 2011
- Employers
are required to report plan value on W2's
- Standardize
the definition of medical expenses under IRS 213D and no longer allowing
over the counter drugs covered under FSA, HRA and HSA without a physician
prescription
- Non
qualified withdrawals of HSA money will see an increased penalty of
20% vs. 10%
- Medicare
D to include discount brand name drugs in the "doughnut hole"
- Reductions
in Medicare Advantage reimbursements
- Medicare
D premiums increase for higher income retirees
- Section
125 or Cafeteria plan changes - a simplified cafeteria plan created
- Voluntary
Long-Term care program created
Effective
no later than March 23, 2012
- Employers
required to provide as plan sponsors a 4-page standardized benefits
summary that accurately describes the coverage under their plan and
must be distributed to all applicants and participants prior to open
enrollment
Effective
2013
- Limits
Healthcare FSA's to $2,500 in annual contributions (consumer price
index for subsequent years)
- Eliminates
the employer subsidy available to those offering retiree benefits
under Medicare D
- Increases
threshold for claiming itemized deductions for medical expenses
- Additional
hospital tax of 0.9% on individual taxpayers earning over $200,000
or $250,000 for a joint return
Plan
years beginning on or after January 1, 2014
- Individual
and employer coverage mandates commence or penalties are to be paid
- Small
business tax credit expanded
- Employers
must offer vouchers to employees < 400% federal poverty level with
contributions between 8% - 9.8% of household adjusted gross income
($88,000 for a family of four)
- State
based exchanges for individuals and small groups (exchange can be
made available to large employers in 2017 depending upon what the
states decide)
- Employer
penalty begins for employees who opt out of their group health plan
-
If an employer does not offer coverage, penalty $2,000 annual
for each full time employee so long as one employee receives the
tax credit
- If
an employer offers coverage, there will be a $3,000 penalty for
each employee receiving the tax credit
- Employers
will be required to file reporting documentation on the group health
plan with employees and the Secretary of HHS
- Preexisting
conditions for all enrollees is eliminated
- Annual
limits are prohibited for "essential" benefits (defined
by HHS)
- Employers
must automatically enroll employees in the plan, with a provision
to allow the employee to opt out of the plan
- Penalties
commence for waiting periods over 30 days and waiting periods over
90 days are no longer permissible
- Maximum
out of pocket limits for all plans are not to exceed HSA limits
- Medicaid
eligibility increases to 133% of federal poverty level for all non-elderly
individuals
- Wellness
incentive maximum increases from 20%-30%
- Guaranteed
issue and community rating 3 to 1 ratio maximum
Effective
in 2018
- Excise
tax on high cost employer provided health plans, "Cadillac plans"
It should
be noted that Maryland lawmakers received a study on February 3, 2010,
regarding the establishment of a health insurance exchange in our state.
The report evaluates the logistical and cost considerations in setting
up an exchange and details the non-group and small group markets in
Massachusetts prior to reform. Massachusetts spent millions of dollars
on creating a connector (a place where consumers go to purchase coverage
through the state).
The studies
authors, Bob Carey and Jonathan Gruber, visited Maryland. They studied
our insurance markets and the role that third party intermediaries already
operating in Maryland would play as connectors or sub connectors.
The authors
determined Maryland already has the infrastructure in place, which many
states do not. Our transition into healthcare reform will likely be
easier and less costly. However, there are a number of policy issues
that will need to be addressed prior to Maryland moving in to an exchange
environment. It is our hope that given our current position, many leading
experts in our state will be called upon to help clarify and refine
this next phase of national healthcare reform.
Click
here to view the most recent legislative updates.
