Vision Payroll

According to the US Department of Labor, in the week ending April 18, the advance figure for seasonally adjusted initial claims was 640,000, an increase of 27,000 from the previous week’s revised figure of 613,000. The 4-week moving average was 646,750, a decrease of 4,250 from the previous week’s unrevised average of 651,000.

The advance seasonally adjusted insured unemployment rate was 4.6% for the week ending April 11, an increase of 0.1 percentage points from the prior week’s unrevised rate of 4.5%.

The advance number for seasonally adjusted insured unemployment during the week ending April 11 was 6,137,000, an increase of 93,000 from the preceding week’s revised level of 6,044,000. The 4-week moving average was 5,944,000, an increase of 142,500 from the preceding week’s revised average of 5,801,500.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 4.837 million.

Masschusetts DD 09-2, Personal Income Tax Treatment of Employer-Provided Health Insurance Coverage for an Employee’s Former Spouse

In tough economic times, employers may need to consider various strategies for reducing payroll costs. In so doing, they need to be aware of many issues. Will our strategy be considered discrimination against a protected group? How will employees’ exempt status be impacted by our strategy? Is severance pay a viable addendum to our chosen strategy? Do WARN or state “mini-WARN” laws apply to our strategy? How many options should we consider? What is the key to choosing the correct option?

The answers to these questions and many more can be found in this month’s HRCast a recording provided by our team of HR Pros and available exclusively on MyHRSupportCenter. Learn what you need to know about these six key strategies:

1. Decrease Wages
2. Reduce Work Schedules
3. Redistribute Work Loads
4. Offer Leaves of Absence
5. Provide Voluntary Separation Packages
6. Exercise a Phased Layoff

Visit MyHRSupportCenter regularly not only for our HRCasts, but also to get late-breaking compliance alerts, best practices to implement, and HR tools to use every day. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

The Internal Revenue Service (IRS) recently released an advance copy of Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll provided an overview of Notice 2009-27 when it was first issued. Today we will be reviewing Comparable State Continuation Coverage.

Individuals who would otherwise be eligible under Federal COBRA may also qualify under comparable state laws that provide for continuation coverage for those who may not qualify under Federal COBRA. The fact the state plan has a different period of continuing coverage, different qualifying events, different qualified beneficiaries, or different maximum premiums generally does not mean the plan is not “comparable solely for those reasons.”

For plans subject solely to state law that require the insurer to provide continuation coverage, only the insurer may claim the premium reduction credit, even if the employer collects the reduced premium and pays the full premium to the insurer. The IRS left open the possibility that future guidance may change this conclusion.

The next topic covered will be Additional Issues. Contact Vision Payroll if you have any questions on Notice 2009-27.

The Internal Revenue Service recently released an advance copy of Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll provided an overview of Notice 2009-27 when it was first issued. Today we will be reviewing Payments to Insurers under Federal COBRA under Notice 2009-27.

For plans subject to COBRA that are not multiemployer plans and for which the insurer collects the premiums directly from the qualified beneficiaries, the insurer is required to treat the payment of 35% of the premium by assistance eligible individuals as payment of the full premium, regardless of when the employer pays the remaining 65% of the premium. Failure to do so may subject the employer to the excise tax under §4980B(e)(1)(B) of the Internal Revenue Code of 1986.

The next topic covered will be Comparable State Continuation Coverage. Contact Vision Payroll if you have any questions on Notice 2009-27.

The Internal Revenue Service recently released an advance copy of Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll provided an overview of Notice 2009-27 when it was first issued. Today we will be reviewing Extended Election Period under Notice 2009-27. Most of the issues covered in this topic unless otherwise indicated “apply only for purposes of Federal COBRA and temporary continuation coverage under” Federal Employees Health Benefits Program (FEHBP).

Employees who elected self-only coverage and were involuntarily terminated after August 31, 2008 and before February 18, 2009 are allowed an extended election period to elect coverage for a spouse and dependent children who are qualified beneficiaries and eligible for premium reduction.

COBRA continuation coverage begins with the first period of coverage after February 16, 2009 for coverage elected during the extended election period. For plans that require coverage to be paid for on a calendar month, March 2009 is the first period of coverage eligible for premium reduction. This is true even if the plan requires employees to pay a pro-rata portion of the February 2009 premium. If, however, the plan requires coverage to be paid for on a monthly period based on the last day of coverage, the first period of coverage could be different. Assuming the last day of coverage were October 3, 2008, the first period the employee would be required to pay for would be October 4, 2008 through November 3, 2008. The first period of coverage beginning after February 16, 2009 would be March 4, 2009 through April 3, 2009.

Employees who still had open COBRA elections as of February 17, 2009 may forego coverage under the initial election and elect only under the extended election period. Employees who do so need pay for COBRA continuation coverage for coverage periods after February 16, 2009. Employees who elect under their original COBRA election period would only be eligible for premium reduction for periods of coverage after February 16, 2009.

For most purposes, the extended election period is available only to plans subject to Federal COBRA or FEHBP. The extended election period does not apply to state plans that provide comparable coverage. State programs that allow a similar extended election would result in premium reduction for assistance eligible individuals (AEIs).

Qualified beneficiaries with health reimbursement arrangement (HRA) coverage “have access to the same level of COBRA continuation coverage as was available immediately before the qualifying event.”

AEIs that were eligible for other group coverage before February 17, 2009 but unable to enroll in group health coverage after February 16, 2009 are eligible for the premium reduction until they are eligible to enroll in another plan or until the premium reduction period ends.

A plan cannot require payment of the initial premium under the extended election period coverage “earlier than 45 days after the date on which the election of Federal COBRA under the extended election period is made for that qualified beneficiary.”

The next topic covered will be Payments to Insurers under Federal COBRA. Contact Vision Payroll if you have any questions on Notice 2009-27.

Notice 2009-27, Premium assistance for COBRA benefits

The California Employment Development Department (EDD) has released revised withholding tables to reflect the changes to the budget recently agreed to by California Governor Arnold Schwarzenegger and the state legislature. The changes include increases to the tax bracket percentages and decreases to the low income exemptions. Vision Payroll has implemented the revised California PIT Withholding Schedules and California employees should see the impact in their next pay check. Contact Vision Payroll if you have any questions on the revisions to California income tax withholding.

This week’s question comes from Rocco, a plant manager. We pay employees on active military duty a differential wage that makes up for wages that they would have earned had they not been on active military duty. Which payroll taxes do we need to pay on differential pay to active military duty employees? Answer: Under the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act), differential wage payments are now subject to income tax withholding. The Internal Revenue Service recently released an advance copy of Revenue Ruling 2009-11, covering §3401(h) of the Internal Revenue Code of 1986, Differential Wage Payments to Active Duty Members of the Uniformed Services and is effective for differential wage payments made after December 31, 2008. The holdings of Rev. Rul. 2009-11 are:

1. Differential wage payments made to an individual while on active duty in the United States uniformed services for more than 30 days are subject to income tax withholding, but are not subject to FICA or FUTA taxes.
2. Employers may use either the aggregate method or optional flat rate withholding to calculate the amount of income tax required to be withheld on differential wage payments which do not exceed $1,000,000 when added to all other supplemental wages paid by the same employer to the individual during the calendar year.
3. The amounts of the differential wage payments must be reported by the employer on the employee’s Form W-2.

Contact Vision Payroll if you have any questions on Rev. Rul. 2009-11.

Revenue Ruling 2009-11, Differential Wage Payments to Active Duty Members of the Uniformed Services, §3401(h)