Vision Payroll

This week’s question comes from Sandy, an HR manager. We’ve just had our first employee sign up to receive the COBRA premium subsidy. What information do we need to keep to document the COBRA credit? Answer: Employers reimbursing employees for 65% of the eligible COBRA continuation premium must maintain specific documentation. This information is not to be submitted with the Form 941, Employer’s QUARTERLY Federal Tax Return, but must be maintained and presumably presented to the Internal Revenue Service or Department of Labor upon request. The required information is:

1. Information on the receipt, including dates and amounts, of the assistance eligible individuals’ 35% share of the premium.
2. In the case of an insured plan, copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier required under COBRA.
3. In the case of a self-insured plan, proof of the premium amount and proof of the coverage provided to the assistance eligible individuals.
4. Attestation of involuntary termination, including the date of the involuntary termination (which must be during the period from September 1, 2008, to December 31, 2009), for each covered employee whose involuntary termination is the basis for eligibility for the subsidy.
5. Proof of each assistance eligible individual’s eligibility for COBRA coverage at any time during the period from Sept. 1, 2008, to Dec. 31, 2009, and election of COBRA coverage.
6. A record of the social security numbers of all covered employees, the amount of the subsidy reimbursed with respect to each covered employee, and whether the subsidy was for one individual or two or more individuals.
7. Other documents necessary to verify the correct amount of reimbursement.

Earlier posts have discussed the COBRA premium subsidy in further detail. Click the COBRA tag for more information or contact Vision Payroll.

According to the US Department of Labor, in the week ending March 21, the advance figure for seasonally adjusted initial claims was 652,000, an increase of 8,000 from the previous week’s revised figure of 644,000. The 4-week moving average was 649,000, a decrease of 1,000 from the previous week’s revised average of 650,000.

The advance seasonally adjusted insured unemployment rate was 4.2% for the week ending March 14, an increase of 0.1 percentage point from the prior week’s unrevised rate of 4.1%.

The advance number for seasonally adjusted insured unemployment during the week ending March 14 was 5,560,000, an increase of 122,000 from the preceding week’s revised level of 5,438,000. The 4-week moving average was 5,331,250, an increase of 123,750 from the preceding week’s revised average of 5,207,500.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 4.646 million.

Do you have former employees eligible for the COBRA continuation coverage premium subsidy? Do you need to know how to enter the premiums paid so that you may claim the credit on your Form 941, Employer’s QUARTERLY Federal Tax Return? Do you have questions on how the credit will be applied? This week’s Tip of the Week guides you through all this and more.

Under 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 COBRA continuation coverage. Employers may then claim a credit on their Form 941 to be reimbursed. Earlier posts discussed the requirements and mechanics of the credit. Click the COBRA tag to learn more. This post assumes that you have made eligible premium payments and now need to initiate the process to claim the credit on Form 941.

First, contact Vision Payroll and ask for a full overwrite. You should plan for us to do this immediately after your payroll has been processed. Locate the former employee for whom the payment was subsidized and select the employee’s Manual Adjustment Screen. If the premiums subsidized were for a single plan, choose code FS, otherwise choose code FM. Enter the 65% subsidy as a credit amount, e.g., -200.00. Key 0.00 in the Check Amount field—this is a mandatory step. Save the adjustment and you’re finished.

If the credits are less that that payroll’s Form 941 tax deposit, Vision Payroll will deposit the net amount. If the credit is greater than that payroll’s Form 941 tax deposit, Vision Payroll will reduce the amount of the claimed credit to exactly offset that payroll’s deposit and carry-forward any balance to the next payroll to reduce that payroll’s deposit.

Contact Vision Payroll if you have any questions on the COBRA continuation coverage premium subsidy.

The American Recovery and Reinvestment Act of 2009, also known as ARRA, increased the monthly exclusion for transit passes and commuter highway vehicles under §132 of the Internal Revenue Code of 1986 (IRC). For January and February 2009, the maximum excludible amount of qualified transportation fringes was $230 per month for qualified parking and $120 per month for transit passes and commuter highway vehicles. Starting in March 2009, the excludible amount for transit passes and commuter highway vehicles increased to $230 per month. The qualified parking fringe remained the same. The amounts will be indexed for inflation for 2010. The fringe benefits can be either paid by the employer and excluded from income or paid from funds contributed on a tax-free basis to a transit reimbursement account as part of a plan established by employers. Contact Vision Payroll if you have any questions on qualified transportation fringe benefits under IRC §132.

The third and final deadline applicable to federal filing of Forms W-2 is approaching. The first deadline, January 31, 2009, was the deadline for providing copies of Form W-2 to employees. The second deadline, February 28, 2009 (extended to March 2, 2009 because of the weekend), was the deadline for filing paper copies of Forms W-3 and Forms W-2 with the Social Security Administration. The final deadline, March 31, 2009, is the deadline for electronic filing of Forms W-3 and Forms W-2 with the Social Security Administration. In addition to the later deadline, electronic filing offers the following benefits to employers:

1. It is free, fast and secure.
2. It saves time and reduces filing burden.
3. It provides an immediate receipt for proof of filing.

Vision Payroll uses electronic filing for all filing of Forms W-3 and Forms W-2 with the Social Security Administration. Contact Vision Payroll if you have further questions on these forms.

The Internal Revenue Code of 1986 as amended (IRC) provides in §106 for an exclusion from income for employer-provided health insurance that covers the employee, the employee’s spouse, the employee’s children, and the employee’s qualifying relatives. Prop. Treas. Reg. § 1.125-1(h), 22 Fed. Reg. 43937 (August 6, 2007) clarified that coverage for a former spouse who is not a dependent is not excludible from an employee’s income. Therefore, the fair market value of coverage for a former spouse is includible in an employee’s income for federal income tax purposes.

In the recently released, Working Draft Directive 09-XX, Personal Income Tax Treatment of Employer-Provided Health Insurance Coverage for an Employee’s Former Spouse, the Massachusetts Department of Revenue concludes that any income required to be included in federal gross income for coverage required under Massachusetts General Laws (MGL) shall be excluded from Massachusetts gross income. Coverage may be required for former spouses under the following laws, among others: MGL c. 176G § 5A, MGL c. 32A § 11A, MGL c. 175 § 110, MGL c. 176A § 8F, and MGL c. 176B §6B. Contact Vision Payroll if you have any questions on this Working Draft Directive.

Vision Payroll announces updates to our web-based general ledger (G/L) import program. Clients may use the program to import general ledger entries and paychecks into most popular accounting packages.

In some very limited cases, clients with a large chart of accounts were receiving an Exceed Buffer Limit error since too many items were appearing in the drop down menu on the Master Map Screen. The program has been changed to eliminate this error.

In addition, bank account numbers are now partially masked on the Bank Account Screen and on Web G/L reports.

Contact Vision Payroll if you would like more information on our web-based general ledger (G/L) import program or have questions on these changes.

This week’s question comes from John, an HR Director. We need to send COBRA notices to terminated employees. Are model notices available for the COBRA premium reduction? Answer: The American Recovery and Reinvestment Act of 2009 (ARRA) made changes to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) continuation health coverage. In certain situations, employers must pay 65% of the continuation premium and take a credit on Form 941, Employer’s QUARTERLY Federal Tax Return. The US Department of Labor recently announced the availability of model notices for use in four different situations.

The first notice is the General Notice (full version). Plans subject to the Federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, regardless of the type of qualifying event, AND who either have not yet been provided an election notice or who were provided an election notice on or after February 17, 2009 that did not include the additional information required by ARRA. This full version includes information on the premium reduction as well as information required in a COBRA election notice.

The second notice is the General Notice (abbreviated version). The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under ARRA, but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event during on or after September 1, 2008, have already elected COBRA coverage, and still have it.

The third notice is the Alternative Notice. Insurance issuers that provide group health insurance coverage must send the Alternative Notice to persons who became eligible for continuation coverage under a State law. Continuation coverage requirements vary among States, and issuers should modify this model notice as necessary to conform it to the applicable State law. Issuers may also find the model Alternative Notice or the abbreviated model General Notice appropriate for use in certain situations.

The final notice is the Notice in Connection with Extended Election Periods. Plans subject to the Federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election were in effect) who:

1. Had a qualifying event at any time from September 1, 2008 through February 16, 2009; and
2. Either did not elect COBRA continuation coverage, or who elected it but subsequently discontinued COBRA.

This notice includes information on ARRA’s additional election opportunity, as well as premium reduction information. This notice must be provided by April 18, 2009.

Contact Vision Payroll if you have any questions on the COBRA model notices.

According to the US Department of Labor, in the week ending March 14, the advance figure for seasonally adjusted initial claims was 646,000, a decrease of 12,000 from the previous week’s revised figure of 658,000. The 4-week moving average was 654,750, an increase of 3,750 from the previous week’s revised average of 651,000.

The advance seasonally adjusted insured unemployment rate was 4.1% for the week ending March 7, an increase of 0.2 percentage points from the prior week’s revised rate of 3.9%.

The advance number for seasonally adjusted insured unemployment during the week ending March 7 was 5,473,000, an increase of 185,000 from the preceding week’s revised level of 5,288,000. The 4-week moving average was 5,251,250, an increase of 118,750 from the preceding week’s revised average of 5,132,500.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 4.577 million.

The employee review process is one that makes many employers cringe and many employees anxious. When is it required by law? Should you do it if not required by law? Can the employee evaluation be an effective tool in business management?

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 five key areas in the employee performance review process:

1. Appraisal System
2. Performance Standards
3. Businesss Goals
4. Individual Reviews
5. Workforce Feedback

Then, log-in to MyHRSupportCenter and click Essentials, Guides, and search “performance”. You’ll be brought to the Performance Management System Guide, a profile that will help you analyze your performance management process and your use of performance appraisals.

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.