effective strategies for mitigating risk in administering ......effective strategies for mitigating...
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Effective Strategies for Mitigating Risk in
Administering Wage Parity and Employee
BenefitsPaul Essner, CFP®, CLU, ChFC, Principal – Homecare Specialty Group
TSG Financial, A Division of Risk Strategies
Emina Poricanin, Esq., Partner – Home Care Practice Leader,
Hodgson Russ LLP
Friday September 6, 2019
HCA Senior Financial Managers Retreat
Mohonk Mountain House – New Paltz, NY
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COMMERCIAL MESSAGE (DISCLAIMER)
All proposals and related materials presented by RSC Insurance Brokerage, Inc. represents a proprietary work product in which
RSC Insurance Brokerage, Inc. retains any and all copyrights and trademarks. The information contained herein and in any
other proposals is intended for the use of CDPAANYS Wage Parity & Provider Intensive Attendees Only, and may not be
shared with any other person or entity without the express prior written consent of RSC Insurance Brokerage Inc.
The information contained herein is for general reference only without warranty of any kind, express or implied, and with the
understanding that RSC Insurance Brokerage, Inc. and its affiliates (collectively “RSC”) are not engaged in rendering legal,
accounting, tax or other professional advice. RSC, cannot and does not warrant the accuracy or completeness of any
information contained herein, and assumes no liability for damages incurred, directly or indirectly, as a result of errors,
omissions or discrepancies in such information.
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WHO’S MONITORING WAGE PARITY
COMPLIANCE?
• NY Attorney General, Medicaid Fraud Unit
• NY Attorney General, Labor Bureau
• NY Office of Medicaid Inspector General
• New York Department of Labor
• U.S. Department of Justice
• Government agencies are sharing information in conjunction with specific
initiatives, such as wage parity compliance.
Don’t forget lawsuits. There are approximately 200 wage and hour class
action lawsuits in New York, against home care agencies, and almost all
of those lawsuits assert some sort of wage parity noncompliance.
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WHAT DOES THE GOVERNMENT WANT?
• All payroll records for a specific period of time
• All employee handbooks and policies
• All timesheets/EVV records
• All wage parity benefit plans and documents
• Proof that aides received $4.09/$3.22 per hour
worked on eligible Medicaid cases
• Any communications to employees, explaining
the slate of wage parity benefits
• All communications between agency
owners/managers and any other party
concerning wage parity benefits
(e.g., benefit card vendors)
• Bank statements, general ledgers
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SAMPLE OMIG LETTER INITIATING AUDIT
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WHAT HAPPENS THEN, IN OMIG AUDITS?
• An initial conference with two to three auditors from OMIG
• Follow up-request for timesheets and payroll records for 10 employees, selected by the Company
• Follow-up questions
- Examples of questions asked by auditors in follow-ups:
Specific questions about compensation for aides, such as, calculation of overtime by the agency
Whether the Company paid travel time
Policies between benefit brokers and the benefits providers (e.g., the life insurance company)
• Referral to NYS DOL for further review of the matter
- DOL notifies the provider that they are reviewing the case and requests additional information
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WHAT IS OMIG LOOKING FOR?
COMMON AREAS OF FOCUS:
• Is overtime paid after 40 hours/week?
• Is the overtime rate computed correctly?
• Are aides paid weekly?
• Are wage parity benefits adding up to $4.09/$3.22 per hour for employees?
• Are Wage Notices provided to employees at the outset of employment?
• Are aides paid for in-service?
• Does the Agency pay for travel time?
• Are home care owners benefiting from wage parity benefits, directly or indirectly?
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WHAT DOES THE ATTORNEY GENERAL WANT
TO SEE? In addition to the items that are requested by OMIG, the Attorney
General wants to see:
**All this information is requested for the time period beginning on
January 1, 2012 to the present.
• QIVAPP applications
• Any and all communications with MLTCs and the DOH
regarding wage parity
• MLTC contracts
• Wage parity certifications
“…IF IT’S BROKEN, FIX IT,
IF IT A’INT BROKEN, MAKE IT
BETTER…”
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HCA SFMR 2019RISK STRATEGIES TODAY
Privately held - 50+ offices nationally
‐ Headquarters: Boston, MA
1,100+ employees
Risk Strategies places over $3B in premiums on
behalf of its 50,000+ clients
Business Insurance
‐ 17th largest US broker in 2018
‐ 7th fastest growing firm in 2017/18
Insurance Journal
‐ 11th largest privately-held US P&C broker
‐ 10th largest personal lines broker in US
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Risk Strategies is a privately held,
national brokerage
and consulting firm.
Ranked in the top 20 brokers in
the country, the company offers
sophisticated risk management
advice and insurance placement
for health care, property &
casualty, and employee benefits
risks.
Health, Accident, Life, Disability, Insurance and Reinsurance
Qualified and Non-Qualified Retirement Planning and 401(k)
Property & Casualty, Medical Malpractice, and Employee Benefits Insurance
Mid-Market to Global Commercial, and High Net Worth Individuals
Industry verticals include: Entertainment, Fine Arts, Real Estate, Health Care, Private Equity, Higher Education, Construction, Manufacturing, Professional Liability, Public Entity
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DISCUSSION OBJECTIVES
Examination of Popular Wage Parity Strategies
Options and Risks
Reminder about the objective of Wage
Parity
Best practices for designing and delivery Employee
Benefits for Wage Parity
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TAKE OUT YOUR CELL PHONES…
Paul Essner, CFP® CLU ChFC Emina Poricanin, Esq.
Bryan Pendrick, CFP® CLU ChFC
Sean Rosenfeld
Mobile | 516-790-5068
[email protected] | 516-747-7373
Mobile | 516-790-5068
Office | 516-336-5962
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WAGE PARITY – OLD NEWS - OVERVIEW
Since 3/1/12, NYC and LI/Westchester Home Care Agencies are Required to provide a Prevailing Wage and Benefits Package to all covered employees
Known as NY Home Care Worker Wage Parity
Effective 10-13-17, this applies to CD PAP
NYC Req’t*LI/Westchester Req’t*
Employers have a
choice of providing
this as compensation
or as an employer
paid benefit
*Source - https://www.health.ny.gov/health_care/medicaid/redesign/mrt_61.htm
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SO THE EMPLOYEE BENEFITS MARKET BEGAN
REACTING…
Mandatory MEC Plans
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WE ARE REMINDED OF
THE BASIC PURPOSE OF THE LAW
*Source -https://www.health.ny.gov/health_care/medicaid/redesign/2012-02-17_worker_parity_faqs.htm
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SO – WHAT’S WRONG WITH THOSE STRATEGIES?
A PROPERLY structured Wage Parity Benefit SHOULD have three core elements
“…primarily benefit the employee.”
Tax Favored to Employee and Employer
Properly Distributed to the Employees
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“…PRIMARILY BENEFIT THE EMPLOYEE.”
Did you give to them?
Did you properly
communicate it?
Did they understand
it?
Did they use it?
Did they appreciate it?
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SO – WHAT WORKS?
Just pay the wage in full (less PTO, et
al)!
Benefits that are priced on a per
hour basis
Benefits that are fully funded
Benefits that do not expire or
require a true-up
Benefits that properly represent a responsible FI or
LHCSA
Benefits supported and reviewed by
counsel!
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STILL NEED TO CONSIDER EMPLOYER SHARED
RESPONSIBILITY (PP)ACA REQUIREMENTS FOR
EMPLOYERS/FIS?
Your must make an offering at least once per
year to ELIGIBLE HHAs – This is how to
decide when…
Brand New Terminology -
easurement
Period
Initial and Standard
dministrative
Period
tability Period
Initial and Standard
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What if you fail to file the Forms – or, there is a
challenge to your data…
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ERISA AND DOL NOTIFICATIONS –
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily
established pension and health plans in private industry to provide
protection for individuals in these plans.
Employers must provide a series of notices to employees pertaining to
the offering of benefits and, in many cases, file reporting with the DOL
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EXAMPLES OF COMPLIANCE NOTICES
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FORM 5500 – IF YOU HAVE 100 OR MORE
COVERED PAs OR HHAs OR A RETIREMENT PLAN
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- HOW TO USE THE $4.09/$3.22
TO FUND HEALTH INSURANCE – NOT SO SIMPLE…
Premium level does not allow for consistent hourly spend for employees electing health insurance
• Unless the HHA/PA works consistent hours each month, how do you calculate the spend per hour?
• What if the hours are so low for a health insurance eligible HHA/PA that the cost of coverage is greater than the $4.09/$3.22?
• Average Cost of Single HMO coverage/budget liability for Northeast Employers is $598 per month*
• After subtracting as $0.35 per hour average accrual for PTO, a NYC HHA/PA would need to work 159.9 hours per month (every month) for the cost of coverage to benefits to equal EXACTLY $4.09. (185.7 hours for LI and Westchester)
Is there a solution?
• If agencies could adopt a similar strategy to that of a union – wherein they contribute an hourly cash contribution to a trust and “spread” the cost of health insurance to only those that elect it.
• This trust is known as a VEBA –Voluntary Employees’ Beneficiary Associations
*Source – Kaiser Family Foundation 2018 Employer Health Benefits Survey
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WHAT IS A VEBA?
The VEBA is a mutual association of employees providing certain
specified benefits to its members or their designated beneficiaries. It may
be funded by the employees or their employer.*
Has existed in tax law since 1928.
The VEBA purchases benefits (i.e. medical, accident, life et al)
Fund all or part of your wage parity hourly contributions
into the VEBA…
and Satisfy ACA Compliance
A VEBA is created and established by your ATTORNEY
Provides some benefits to all participants and some only to
those electing medical insurance
* Source – IRS - https://www.irs.gov/pub/irs-tege/eotopicf84.pdf
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In order to create QUALITY and
COMPLIANT Benefits –
Priced on a PER HOUR basis…
MUST Determine your ACA/Health
Insurance Strategy…
Fill in the blank – the rest of the wage
parity hourly spend!
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CONCEPT – PRE-TAX RETIREMENT PLAN | 401(a)
Specially Designed Pre-tax, fully vested retirement plans
Hourly credited
FlexibleLow
Expense
Employees can see the
$ value grow
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CONCEPT – PRE-TAX RETIREMENT PLAN | 401(a)
Specially Designed Plan Document for
Wage Parity
Applies Only to Qualifying Hours
of Service
Permits only those Eligible employees
and Hours to qualify (No OT)
Low Cost Options to Co-Trustee/Co-
Fiduciary
Can be expanded to benefit admin
and executive staff
Audited Annually to ensure IRS and ERISA compliance
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CONCEPT – ENHANCED…401(a), PLUS…
Benefit Programs designed to help HHAs and PAs at the weakest moment
Specially administered Life, Accident and Critical Illness programs
FEATURING AFLAC, TRANSIT OR ANY COMPLIANT BENEFIT
Cash Payments to HHAs, PAs and their
family
Priced per hour, to ensure wage parity
compliance and valueLow expense programs
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PROGRAMS WITH ISSUES/PROBLEMS…
The Medical Reimbursement
The Cell Phone Benefit
The Transit Account
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THE MEDICAL REIMBURSEMENT
Version #1 The Flexible Spending Account
Allow the Employee Access to up to $500 in APPROVED unreimbursed expenses
Uniform Coverage Rule
Annual Rollover of Unused Balances
*Source -https://www.irs.gov/pub/irs-drop/n-13-71.pdf
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THE MEDICAL REIMBURSEMENT
Version #2 The (limited purpose) HRA
Allow the Employee Access a specified amount of Dental or Vision Benefits during the plan year
Why would the majority use it?
What happens to the balance for a
terminated employee?
How does the ACA Market Reform
Statute apply here to full HRA?
Many/Most have Medicaid – Why do they need or want this
Can you effectively pay out unused benefits?
What happens if the employee does NOT have underlying Minimum Essential Coverage?
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THE CELL PHONE BENEFIT –
The PA/HHA love this
Is it clean?
So – unless it is an excludable fringe benefit, it is includable in the PA/HHAs Gross Income? Is that purposeful?
So – if it is a Working Condition Fringe, is it an employee benefit deductible from income?
Source – IRS Publication 15-BEmployer’s Tax Guide to Fringe Benefits
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WHAT ELSE?
Transit Still Works!
Hourly credited
Up to $265 per month
Low Expense
PAs and HHAs use Mass Transit
Non-Dedutible to LHCSA and
FI
But, Corp. Tax Rates
dropped
Many Agencies continue using this
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THE TRANSIT ACCOUNT – It still works, but since 1/1/18…
You also have the unused benefit/rollover issue –did you fund it in cash?
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OTHER STUFF THAT YOU NEED TO BEWARE OF…
PER OMIG/DOL/DOH…
TROUBLE!
High Admin
Expense
The Hour Bank
The Captive
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MORAL OF THE STORY…
You need counsel to review all
strategies and protect you from
the risk of non-compliance
You need informed Employee
Benefit consultants to assure
the program is executed and
administered properly
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TAKE OUT YOUR CELL PHONES…
Paul Essner, CFP® CLU ChFC Emina Poricanin, Esq.
Bryan Pendrick, CFP® CLU ChFC
Sean Rosenfeld
Mobile | 516-790-5068
[email protected] | 516-747-7373
Mobile | 516-790-5068
Office | 516-336-5962
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PREPARED BY YOUR RSC BENEFITS TEAM AND HODGSON RUSS, LLP
Thank you for your time and attention!