It’s almost fall, and it’s time to start thinking about your Massachusetts PFML private plan exemption if you have one.  Many employers got an exemption by using a private PFML plan through an insurance company.  Those exemptions have to be renewed annually.

Here’s a bit more info:

• Many exemptions were effective on October 1, 2019, but the state extended most of those to December 31, 2020 to get them on a calendar year cycle.  That means that the early adopters of the private plans will likely need to renew their exemptions prior to January 1, 2022.
• I’m told by the Department of PFML that there was a “small set of employers” that were not able to be extended (roughly 170 employers), and they will need to renew their exemptions before October 1.
• An employer can begin the renewal process in the quarter before the renewal is due.  So, if your exemption ends on December 31, 2021, you can begin your renewal process after October 1.  If you’re one of the employers whose exemption expires on October 1, you need to begin the exemption renewal process now if you haven’t already.
• The Department will be sending out emails to remind employers that the renewal is due.  For those that have to renew by October 1, the first email went out on August 11, and a second was sent on August 30.  A notice is also generated via MassTaxConnect.  If your exemption expires on December 31, you’ll start to see reminders on October 4.

If you want to double-check to see exactly when your exemption expires, here’s how:

• Log in to your MassTaxConnect account.
• Locate the PFML account panel.
• Select “Exemptions” link in the “Account” pane.  This will list your exemption start and end dates.

The state website has some good information as well:  https://www.mass.gov/info-details/renewing-your-private-plan-exemption

If you have questions about your PFML exemption, the renewal process, or private plans, give us a call at 866-724-0008 or click the link below.

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I don’t think many people grow up saying, “I really want to be in the insurance business when I grow up.”

It also might be hard for most to understand how somebody can get excited about life insurance.  I may be one of the few, but I was absolutely pumped this week because I was able to get an uninsurable person the coverage that he really needs.

Here’s the story.

An employee benefits client has a manager with a rare health condition that has prevented him from getting life insurance.  We have group life at the company, but he has a young family, and he’s been trying to figure out a way to get more coverage, preferably coverage that’s portable.

The company has 10 managers that have worked there for a long time.  I asked them if they’d be open to looking at an executive life insurance program for the management team, and they agreed.  We found a company willing to offer $25,000 of guaranteed issue permanent life insurance for each of the managers on an employer-paid basis (higher limits are available for bigger companies).  But it gets better.

Each of the managers is able to supplement the $25,000 with additional coverage up to $250,000 at their own expense if they’re able to answer “no” to a couple of health questions.  In addition, another $250,000 is available to them each year at plan anniversary.

We’re in the midst of the enrollment now, but many of the managers are taking advantage of the extra life insurance and taking out policies on their dependents as well.  The guy that was previously uninsurable is now able to get as much life insurance as he feels he needs over the next several years.  It’s an absolute home run.  I actually did a little jig when he was able to answer both health questions with a “no.”

This type of program can fit well in a number of different situations.  This example is an executive benefit, but it can also be used to reward long term employees at any level or as a completely voluntary benefit.

In the end, this was the perfect solution for both the manager and the employer.

If you’d like to talk about executive benefits, we’d love to hear from you.  Give us a call at (866) 724-0008 or click the link below.

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Despite the madness of the last 14 months, there have been some good things that have come from the pandemic.  One of those good things is we’ve all learned to work differently, and in some cases, we’ve learned to work better.

Last February, if you asked me if I thought employee benefits open enrollments could be done effectively without in-person employee meetings, I’d have said, “No way.”  Well 14 months later, I can say with certainty that virtual employee open enrollment meetings can actually be better than doing it the old way.

Think about it.  When you have open enrollment meetings in person, it looks like this:

• You travel to each of your company’s locations.
• Your employees stop working to attend the meeting if they happen to be present that day.
• Any employees who are away from the office miss the meeting and miss the details of new plans and reinforcement of the value of the existing ones.
• Someone from your company needs to try to replicate this employee education and enrollment for every new hire during the upcoming plan year.
• If you don’t have an online enrollment system, you wheel or carry in reams of paper to pass out to employees, then you chase them down to get enrollment forms back in to you.

Contrast this with the virtual open enrollment:

• You schedule 1 virtual meeting.  Those employees who can attend join the meeting in a conference room with a video feed, sit at their desks and watch on their own terminals if they have them, or watch the video on their phones.
• If anyone misses the session, it’s recorded, and you can email the link to them.
• If you would prefer that employees continue working rather than attend the education session, you can send them the link to the recording, and they can watch it at home or listen on their way to work.
• The recorded education session becomes an efficient way to handle employee benefits orientation for new hires.  Just send them the link!  Now you have a consistent benefits presentation for the entire plan year.
• If you have an online enrollment system, you can save a bunch of trees and your back, and just have employees enroll electronically.

Here are a couple of objections I’ve heard:

Our guys are not computer savvy.  They won’t understand how to click on the link to watch the video.

If that’s the case, then you’ve probably had employees gather in a conference room, shop floor, or warehouse to see the presentation in the past.  You can do the same thing.  Gather them together, but instead of having a live person up front, project the presentation on a screen.

With the link to the recording, you can then play that same video an unlimited number of times for different shifts or new hires.

Finally, most people have a smart phone, and most are able to watch a video on their phone.

I need my employees to be able to ask questions.  They can’t do this with a recording.

True.  However, we typically get several questions during the recorded meeting, and we always provide contact information for our office and the insurance company representatives.  Employees who didn’t think of a question during the live session or weren’t able to attend can call or email with questions.  This can actually be better because some employees’ questions are personal and not suitable to shout out in a group setting.

As you can see, I’m a convert.  I’m not saying we won’t ever do in-person open enrollment meetings again.  I’m just trying to illustrate why virtual open enrollment meetings can be better than the old way.

If you’d like to talk about employee education, communication strategies, or other topics related to employee benefits, we’d love to hear from you!  Give us a call at (866) 724-0008 or click the link below.

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Today we were fortunate to have Bill Alpine, Executive Director and Lisa Shepard, Senior Manager, Benefit Operations, Program Integrity, and Appeals from the Department of Paid Family and Medical leave join us as guest speakers at our round table.  We covered a lot of ground in an hour, but here were the most important things that I took away from the discussion:

• As of last week, the Department has had about 15,000 claimants, and they’ve paid about $80MM in PFML claims.
• They have 45 employees on staff.
• Total paid claims are running a bit lower than expectations.
• Employers should update their company policies to add language about the PFML plan and how it operates.
• If employers have questions or concerns about claimants or the request for information, they call the Department at 833-344-PFML.
• A common claims issue happens when a new mother applies for bonding leave first, before applying for medical leave.  Things are much more smooth if she applies for medical leave first and then bonding leave.  In this situation, no new elimination period is needed, and the mother can attach the bonding leave to the medical leave with a phone call to the Department.
• The most common reason a claim is denied is because there is no match with the employee to the employer, no wages showing up in the system for the employee, an incorrect Social Security number, or an incorrect employer identification number.
• All denials can be appealed, and the appeal begins with a phone call.  It’s rare that an appeal requires a hearing because more often than not, the denial was something simple like the issues noted above.  These can be easily rectified.
• You may have seen the emails from the state, but if you are using the state plan (not a private plan), you will need to re-authenticate your leave administrator on Mass Tax Connect.  This should be done before May 11.
• Employers can find the end date for a claim on the approval letter, but be aware extensions for claims can be requested.
• Employees who think they need an extension beyond the initial approval date should contact the Department 2 weeks PRIOR to the end date to let them know an extension is requested.  They should not wait until the ending date to call.
• We still have no guidance from the IRS about the tax treatment of PFML claims.

Here is a timeline for a PFML claim with the state, assuming that all of the proper documentation is submitted:

• The waiting, or elimination period is 7 days.
• The employer has up to 10 days to respond to the request for information.
• The claims team has up to 14 days to approve the claim.
• The regulations state that the Department will not pay a claim until 14 days after the claim is approved.

If you add up those days, an employee could be looking at up to 45 days before a check is mailed to them, although it could be faster.  This is good information to share with claimants to establish realistic expectations.

If you have questions about PFML, or if you’d like to join us for an upcoming round table event, give us a call at 866-724-0008 or click the link below.

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Fallon recently announced they are leaving the commercial health insurance market to focus on Medicare plans.  On January 4, Tufts and Harvard Pilgrim announced they have formally combined the two organizations.  https://tuftshealthplan.com/visitor/company-news/2021/tufts-health-plan-and-harvard-pilgrim-health-care

For a number of years, Massachusetts, and Western Mass in particular, have had several excellent local and national health plan options available.  I think it’s unfortunate that the number is now 2 fewer.  Despite the fact that prices have continued to rise, competition is good for employers and their employees.  Less competition doesn’t seem like a win for anyone.

But is there really less competition?  I get calls every week from companies trying to gain market share in Massachusetts, many with some very creative ideas.  The reality is there are plenty of options available for plan sponsors that are willing to think a little outside the box.  Here are a few examples:

• A local client was getting hammered with increases every year due to an employee’s family using a very expensive specialty medication.  We helped them save over 40% with a change in pricing structure.
• A small client got a refund check of over $30,000 due to favorable claims experience on a dividend-eligible plan.
• We have 2 clients considering a new approach that will save more than 20% if they decide to implement the recommended changes.

Other examples include, but are not limited to no-network plans, banding together with a group of other employers to drive down costs, co-employment relationships, and plans that provide incentives to get better quality care at a lower cost.

Losing 2 of our local health plan options is a bummer, but it doesn’t necessarily have to mean there will be a reduction in competition.  Maybe it’s time to think a little outside the box and consider some creative and new alternatives.

If you’d like to discuss creative health plan solutions, give us a call at 866-724-0008 or click the link below to send a message.

The post Is it Finally Time to Think Outside the Box? appeared first on Millbrook Benefits LLC.

To date, the IRS still has not clarified how PFML benefits in Massachusetts will be taxed.  We’ve had several questions from employers about this, and there are simply no firm answers yet.

In the absence of IRS guidance, the insurance companies offering private plans have had to decide what to do.  We started asking around, and we got so many different answers, I thought I’d share a few of them.  The names of each carrier aren’t important for this post.  My point is to document the variety of approaches the different companies are taking.

Carrier 1:

• Paid medical leaves will be treated the same as disability – they would be subject to FICA depending on the taxability of the claim.
• Paid family claims are not tied to the employee’s medical condition and will not be considered sick pay.  It will not be subject to FICA, and should be set up as non-taxable so FICA does not get withheld.

Carrier 2:

• Medical leave benefits will be reported on Form W-2 and will be subject to payroll tax withholding, including FICA, and federal income tax withholding, if applicable.
• Family leave benefits will be reported on Form 1099-MISC and will not be subject to payroll tax withholding.

Carrier 3:

“Our stance is since there is no guidance from the state…all benefits are taxable to the employees no matter how the premiums are paid.”

Carrier 4:

“(We) are taking the position that both family and medical leave benefits are taxable.”

Carrier 5:

• Medical leave if employer pays 100%:  fully taxable
• Medial leave with shared contributions:  taxable based on the premium portion paid by the employer
• Family leave if employer pays 100% or employee pays 100%:  reported on Form 1099, no FICA tax

Hopefully we’ll hear from the IRS on this soon, but in the meantime, if you have a private plan, you should reach out to your carrier to see how they’re planning to tax your claims payments.  If you’re with the state plan, you could ask them or your accountant.  This won’t get any easier until we have a firm decision from the IRS.

If you have questions about Massachusetts PFML or other employee benefits, we’d love to hear from you.  Give us a call at (866) 724-0008 or click the link below.

The post How Will PFML Benefits Be Taxed? appeared first on Millbrook Benefits LLC.

We recently met with an employer that is recruiting incredibly intelligent engineers from schools like MIT.  She said she needs her benefits package to appeal to a wide variety of potential employees – particularly young college grads, and she was wondering what would appeal to them.

We thought we’d do a bit of research on this topic, and we chose a platform called Pollfish, recommended by Pete’s son Danny.  We asked 100 recent college graduates ages 20-34 two questions, and the results were pretty interesting.

Here’s a summary of our findings:

Question 1:

What are the coolest/most unique employee benefits or perks that you or a friend have encountered at a job?

There were 6 broad categories of responses:

• Free stuff and discounts- 25%
• Traditional benefits package (health, dental, PTO, retirement plan)- 20%
• Salary and bonuses- 15%
• Tuition reimbursement/ loan repayment assistance- 10%
• Work environment- 10%
• Misc.- 20%

Almost half of the responses mentioned free perks and discounts on the job or the benefits package offered.  Things like free food, discounts for clothing or merchandise, free gym access, vacation, retirement, and paid time off were the most common things mentioned.  Employer assistance with student loans and clothing allowances were also a common response.

Some of the more obscure miscellaneous answers included things like being in charge, costume parties at Halloween, having the ability to work extra hours if desired, and a lenient dress code.

Question 2:

What employee benefits or perks would make you stay at your job even if you could get a higher salary elsewhere?

 The same 6 categories showed up here as well in slightly different percentages:

• Traditional benefits package – 25%
• Free stuff and discounts – 20%
• Salary and bonuses- 20%
• Work Environment- 15%
• Tuition reimbursement/ loan repayment assistance – 5%
• Misc.- 15%

Sometimes we hear people question whether or not the traditional benefits are important to younger workers, and our admittedly unscientific findings clearly show that they are.  They may not be as jazzy as free food and clothing discounts, but they still matter.

Equally important was the work environment.  A good boss, friendly co-workers, and a clean and safe place to work that was inclusive were all mentioned.

Here are some of the most unique and interesting responses I found throughout the survey:

• Paid workout time
• A company vehicle
• Clothing allowances/ lenient clothing policy
• Gym membership/ workout equipment
• Unlimited PTO
• The ability to work from home
• Paid courses and education
• Student loan assistance
• Opportunities for growth within the company

If you would like to chat about cool, unique, or traditional benefits, give us a call at 866-724-0008 or click the link below.  We’d love to hear from you!

The post Cool Benefits and Perks appeared first on Millbrook Benefits LLC.

We often get questions from clients about imputed income – what is it?  When do we report it?  How do we calculate it?

For employee benefits purposes, imputed income is the fair market value (FMV) of benefits given to employees that are not part of salary or wages but should be taxed as part of their income. The intent is to ensure income taxes are applied to income whether it be in the form of salary/wages or non-monetary fringe benefits.

There are others, but the two most common examples are group term life and health care coverage for Domestic Partners.

Group term life is almost always paid for by the employer, and if it is, the cost associated with that coverage is subject to imputed income. The IRS (through IRC Section §79) provides an exclusion for the first $50,000 as well as any amount paid by the employee.  It requires that the imputed cost of coverage in excess of $50,000 paid for by the employer  be included in income for income tax purposes.

For Domestic Partners, the process is a little more involved.  A Domestic Partner is not acknowledged as a federal tax dependent under IRC Section §105(b). That means any health care coverage provided to them as a dependent by an employer-sponsored group health plan is subject to imputed income.

To determine the amount of imputed income, you need to identify the FMV of the coverage provided and subtract any employee paid portion of premiums made on a post-tax basis. Employee contributions made on a pre-tax basis do not get subtracted. The reason for distinguishing between the two is post-tax contributions have already been taxed as income whereas pre-tax contributions have not.

The simplest way to identify FMV is to use the individual monthly rate (which can be referred to as full monthly rate or COBRA rate).

Example:  Medical-Rx rates and employee contributions for ABC Co. are below:

• Single:  monthly rate of $500, employee contribution of $200
• Couple:  monthly rate of $1000, employee contribution of $400
• Employee + child(ren):  monthly rate of $850, employee contribution of $340
• Family:  monthly rate of $1300, employee contribution of $520

In this example, if ABC Co. were to add a Domestic Partner to the plan, and the employee’s contribution was made on a pre-tax basis, the imputed income would be $500 per month.  The FMV is $500 even though the employee contributed $200.   That amount was never taxed because it was taken on a pre-tax basis, so the full FMV is considered imputed income.

If the employee’s $200 contribution was made on a post-tax basis, we would deduct it from the FMV of $500 because it has already been taxed as income.  The idea is not to tax the income twice.

This example should be followed for all plans considered “health plans” by the IRS such as medical-Rx, dental and vision care plans. There may be others so please be sure to ask your benefits consultant or accountant for guidance.

The IRS guidance on FMV is not clear. Our ERISA counsel suggests using the above method to determine imputed income.  However, they believe using the “True Dependent Cost” value where you take the couple rate of $1000 and subtract the individual rate of $500 to get $500 is also acceptable.  We find that some 4-tier rate structures don’t always assign a 2x value to the individual rate for couples – so it could result in a higher or lower amount.  The best practice for you would be to find the calculation that works for you and be consistent with its application.

If you have questions about this post or other matters pertaining to employee benefits, give us a call at (866) 724-0008 or click the link below.

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Last week was a busy week of questions from people getting ready for the Paid Family and Medical Leave launch on January 1.  Thought I’d share some of the info here.

Q:  We have employees in Massachusetts and Connecticut, and we want to provide the same benefits for all.  How can we do that with the CT plan starting in 2022?

A:   It’s not easy.  Even if the MA and CT PFML plans were starting at the same time, there are differences between them.  The best answer is to set up a short term disability plan for all.  If and when the state plans pay, the STD supplement will smooth out the benefits a bit for your employees.  This will not be perfect, but it’s probably the best solution to the problem.

Q:  Our company is set up as a partnership.  Do I have to include the partners in the MA PFML?

A:  No.  They are not W2 employees, so you don’t have to include them.  They may be able to opt in as self-employed people, however.

Q:  Can I supplement the PFML plan with PTO?

A:  If you’re on the state plan, no.  If you have a private plan, some carriers will allow it up to 100% of pay.

Q:  What do I have to do next for my private PFML plan?

A:  If you haven’t done so already, you need to go onto Mass Tax Connect and apply for the 2021 renewal or first approval for your private plan.  You’ll need the insurance company’s Policy Form Number to do this.

Q:  Is there any chance MA and CT could get together and allow the state of a company’s headquarters to just be the PFML plan for all employees across both states?

A:  Great idea.  So far, no.

Q:  If someone is on an STD claim that starts in December, and it rolls into January, 2021, might they qualify for PFML as well?

A:  Maybe.  Unlike disability plans, PFML does not consider a “date of disability.”  As such, somebody could be on STD claim in December and qualify for PFML in January after the PFML 7 day elimination period.  At that point, the PFML would become “first payer,” and the STD benefit would be reduced by the PFML benefit.

Q:  Is there a way I could hire a company to manage STD, FMLA, and PFML for me so I don’t have to worry about it?

A:  Yes.  There are a few companies that can do it.  Seems that it could be worth consideration.

Q:  Should I cancel my STD plan?

A:  You could make a good argument for either side of this.  I covered this topic in a previous post, linked here:  https://www.millbrookbenefits.com/integration-of-pfml-and-group-disability-plans-employer-paid-std/

If you’re interested, we’re hosting an open round table on January 21 at 9:00, “PFML…3 Weeks In.”  Mary Jo Kennedy from Bulkley Richarson will be our guest speaker.  If you’d like to join us, email Sally Felix at sally@millbrookbenefits.com or click the link below.

The post Paid Family and Medical Leave Questions From Last Week appeared first on Millbrook Benefits LLC.

I was talking to a client a couple of weeks ago about long term care insurance. One of her most important goals is to be able to remain in her home if she needs care later in life. We were talking about the cost of 24/7 home care. She has an aunt in the Boston area that’s paying $30/hour for 24/7 care. Thirty dollars per hour doesn’t sound like too big of a deal until you do the math and realize how many hours there are in a year. In case you’re wondering, there are 8760 of them.

8760 X $30 = $262,800

$262,800 is a really big number. Having some personal experience with this, my guess is the real number is actually higher. For example, if the caregiver isn’t a “live in” caregiver, you need to pay overtime for anything over 40 hours per week. Well, there’s 168 hours in a week. That means 128 hours at a much higher rate than $30 if there’s only 1 caregiver.

There can be additional expenses as well. An agency that I know charges more if the client doesn’t sleep through the night, if they require transportation to doctor appointments, or if they’re working on or near holidays.

Most people think this will never happen to them, but it does happen, and it happens often. Here’s a stat from longtermcare.gov: “Someone turning 65 today has almost a 70% chance of needing long term care services and supports in their remaining years.” Seventy percent is another big number.

Further, most Americans don’t have nearly enough assets to pay for this type of care. A recent report from the Federal Reserve showed an average net worth of $187,300 in the 55-64 age group. Do the math. That’s not going to last long.

I really think this is one of the biggest financial risks that most of us are facing today. There are lots of ways to plan for it, but some form of long term care insurance is worth considering. In addition, if you’re an employer, adding a discounted, employee paid long term care insurance program could be one of the most impactful benefits you can offer your employees.

If you’d like to learn about adding long term care insurance to your benefits plan or explore the option for yourself, call us at 866-724-0008 or click the link below.

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