Why Combine Policies?

If you Combine your Policies, you save.  Here's how....

You have a number of polices that protect the precious facets of your life. Home, auto, life – you have all your bases covered. Now, if you haven’t considered it before, you may want to consider it now: combining your policies.


At Winthrop & Gray Company, we can combine your policies and even reduce your monthly premium. Just think, less hassle, less paperwork, and a nifty discount.
Contact us today – or fill out online contact form – to get the details!

No Single Factor Determines a Worker's Status

Does your firm use outside workers for some jobs? This can result in significant tax breaks if the workers are properly classified as independent contractors rather than employees.
Key point: If a worker is an employee, your company must withhold federal income tax and employment taxes from his or her wages. In addition, your business is responsible for paying the employer's share of federal payroll taxes. Conversely, if a worker is characterized as an independent contractor, your company isn't liable for these payroll tax obligations.
In addition, employers aren't required to offer independent contractors the same fringe benefits that regular employees receive, which can result in extra savings.
However, it's not always easy to distinguish independent contractors from employees. There are several factors the IRS and courts examine but it often boils down to a "control" issue. If you control how, where and when the worker does the job, he or she is usually classified as an employee.
Here are two cases heard in U.S. Tax Court that illustrate some of the traps that taxpayers can fall into on the employee-versus-independent-contractor issue:
Case #1: Tax Court Disregards Contracts
An Ohio trucking firm had written contracts with drivers to operate as independent contractors. The company filed 1099 Forms with the IRS for each of the drivers working under the contract. Nevertheless, the corporation:
Hired drivers, oversaw all work performed by them and confirmed
    Under Section 530 of the Revenue Act of 1978, an employer can claim independent contractor status for misclassified workers and not owe employment taxes if it can show:
There is a "reasonable basis" for the classification.
The business consistently treated workers as contractors.
    Here are the ways to qualify for Section 530 relief:
    1. The classification is a long-standing practice of a significant segment of the industry or profession.
   2. The employer was audited regarding the employment tax treatment of workers and the classification was allowed to stand.
    3. The employer relies on an authoritative court decision or IRS ruling to support its position.
   4. The employer based the determination on the sound reasoning of a paid tax professional.
the work had been completed.
Directed, supervised, paid, disciplined and discharged the drivers.
Decided which days that drivers would work and which loads they carried.
Determined when repairs to the trucks were necessary and was responsible for truck maintenance. The drivers had no investment in the trucks.
Based on these facts, the Tax Court ruled that the drivers should be treated as employees, despite the existence of the written contracts, because the company exerted significant control over their activities. (Peno Trucking, Inc., TC Memo 2007-66)
Footnote: The trucking firm argued that it should be entitled to "Section 530 relief" based on its consistent treatment of workers as independent contractors and the fact that two prior Workers' Compensation requests by drivers were denied by the state due to their written contracts. (See right-hand box for an explanation of Section 530 relief). But the Tax Court stated the Workers' Comp cases did not evaluate the employment relationships "through a common law analysis." Case #2: Are Workers Liable for Taxes if an Employer Wrongly Classifies Them?
What happens if an employer misclassifies a worker as an independent contractor and doesn't withhold income taxes or FICA? Does that mean the person is not liable for the taxes? One Florida woman found out the hard way that the answer is "no."
She worked as a seamstress at a retail bridal gown shop. The shop classified the woman as an independent contractor and paid her $11,210 during the year in question. The shop did not withhold income or employment taxes from its payments to her. The seamstress also received unemployment compensation of $208 that year from the Florida Agency for Workforce Innovation.
The woman also failed to file a tax return for the year. So the IRS filed one for her as a self-employed person with its "Substitute for Return Program" and sent her a tax bill. Later, the IRS agreed that the seamstress was an employee, rather than an independent contractor. The woman contended that the bridal shop, which failed to withhold taxes from her wages, was solely liable for the tax bill.
The Tax Court stated that it was "unfortunate" the employer classified the seamstress as an independent contractor and not as an employee.
But, the court added, "that does not alter the fact that the first principle of income taxation is that income must be taxed to (the person) who earns it" and "misclassification of an employee does not relieve the employee of his liability for filing a correct tax return." (Natalia Ravelo Escandon, TC Memo 2007-128)
These two cases are two in a long list of court filings against companies that hire independent contractors. In some cases, workers sue for benefits they claim they were eligible for, including health insurance and retirement plan contributions.
To make matters worse, the IRS continues cracking down on companies that hire independent contractors. If the tax agency "reclassifies" a worker as an employee, your company could be slapped with hefty bills for back taxes, interest and penalties. Audits by state agencies are also common and frequently occur when independent contractors apply for unemployment or Workers' Compensation.
Unfortunately, no single factor determines a worker's status. In the trucking company case described above, the Tax Court looked at these seven questions:
1. What degree of control is exercised by the business? Under this test, the court examined how much control the company exerted over the way the services were performed. But exercising control is not required in an employer-employee relationship, the Tax Court noted, as long as the company has the right to direct a worker if necessary.
2. Which party invests in "work facilities," used by the individual? "The fact that a worker provides his or her own tools generally indicates a non-employee status," the Tax Court explained.
3. Does the individual take any financial risk? "A worker's opportunity to earn a profit and assume risk of loss may indicate a non-employee status," the Court stated.
4. Can the business discharge the individual? "Generally, an employer's right to discharge an employee indicates an employer-employee relationship," the Tax Court noted.
5. Is the work an integral part of the company's regular business? An employer-employee relationship is supported when workers perform a service essential to the success of a business operation.
6. How permanent is the relationship? The Tax Court stated that "a transitory work relationship may point toward a non-employee status."
7. What kind of relationship do the parties believe they are creating? Entering into a written agreement that states a worker is an independent contractor indicates a non-employee relationship. However, a contract alone is not enough. "If an employer-employee relationship exists, characterization by the parties as some other relationship is immaterial," according to the Tax Court.

  Did  you know that if you sell your house after 2012 you will pay a 3.8% sales  tax on it?        That's  $3,800 on a $100,000 home etc.
       When  did this happen? It's in the health care bill. Just thought you should  know.
       SALES  TAX TO GO INTO EFFECT 2013 (Part of the Health Care Bill)  Why 2013? Could it be  to come to light AFTER the 2012 elections?
       REAL  ESTATE SALES TAX
              Under  the new health care bill - all real estate transactions  will be subject to a 3.8% Sales Tax? The bulk of these new taxes don't  kick in until 2013  If you sell your $400,000 home, there will be a $15,200 tax. This  bill is set to penalize ALL Americans and the retiring generation who often downsize their homes. Does this stuff make your November and 2012 vote more  important?
       You were not aware this was in the Health Care Reform bill? Guess what, you aren't  alone. There are more than a few members of Congress that aren't aware of  it either .....   click on this to verify  ......
              http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home <http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home>
   
       An educated public, is a public that votes.

"Health-care overhaul law"

A federal appeals court on Wednesday upheld the most contentious provision of the health-care overhaul law, ruling that Congress can require Americans to carry insurance coverage.

In backing the individual mandate, the U.S. Court of Appeals for the 6th Circuit in Cincinnati became the first appellate court to rule on President Obama's signature domestic initiative. The decision also marked the first time a Republican-appointed judge has sided with the administration in evaluating the law's constitutionality.

"We find that the minimum coverage provision is a valid exercise of legislative power by Congress under the Commerce Clause," Judge Boyce F. Martin Jr., a Democratic appointee, wrote for the majority. He was joined by Republican appointee Jeffrey Sutton.

The 2 to 1 ruling was hailed by the Justice Department and administration allies, who called it an important bipartisan test of the law's ability to withstand numerous legal challenges. Opponents of the health-care act disputed the ruling's significance, calling it one incremental step in a legal struggle widely expected to wind up at the Supreme Court.

"It's an unfortunate decision," said David Rivkin, a lawyer representing 26 states in a Florida-based lawsuit that also challenges the law. "By the time this gets to the Supreme Court, it's not going to matter which decision was first or second," added Rivkin, who predicted that the law will be overturned.

The differing interpretations reflected the deep divisions over a measure that has provoked vehement opposition and equally strong support among the public and politicians alike. More than 30 lawsuits have been filed since the Patient Protection and Affordable Care Act was pushed through Congress by Democrats in March 2010, resulting in several rulings by lower-court judges that, until now, have cleaved along partisan lines.

As a result, the ultimate fate of the statute, which aims to bring about the broadest changes to the nation's health-care system in several decades, may not be known for a year or more. Lawyers for the plaintiffs in the 6th Circuit case said they will appeal directly to the Supreme Court but acknowledged that the justices probably will not take the case right away.

Most contested provision

The health-care law seeks to extend medical coverage to 30 million uninsured Americans and make major changes in public and private health insurance. By far the most contested provision is the individual mandate, which requires most Americans to purchase at least a minimum level of health insurance starting in 2014 and imposes a tax penalty if they don't.

Like other legal challenges, the lawsuit filed by the Thomas More Law Center - a Christian-oriented law firm in Michigan - says Congress overstepped its constitutional authority to regulate commerce.

A three-judge panel of the 6th Circuit disagreed. The mandate is constitutional, Martin wrote, because "Congress had a rational basis to believe" that the provision would affect interstate commerce and that it was "essential" to the law's broader goals of reforming the health-care market.

Judge James Graham, a Republican appointee, dissented, but it was the concurrence of Sutton - a George W. Bush appointee and former law clerk for conservative Supreme Court Justice Antonin Scalia - that was most noteworthy.

Sutton wrote that "the government has the better of the arguments" and that "Congress did not exceed its power" in passing the individual mandate. But he also appeared to acknowledge that his word would not be final, writing, "The Supreme Court has considerable discretion in resolving this dispute."

And in a phrase that heartened conservative opponents of the law, Sutton questioned whether the legislation will have other, perhaps unintended, consequences. "That brings me to the lingering intuition - shared by most Americans, I suspect - that Congress should not be able to compel citizens to buy products they do not want," he wrote.

"If Congress can require Americans to buy medical insurance today, what of tomorrow? Could it compel individuals to buy health care itself in the form of an annual check-up or for that matter a health-club membership?"

Tracy Schmaler, a Justice Department spokeswoman, said that the government welcomed the ruling "and its finding that Congress acted within its authority in passing this landmark health-care reform law." She vowed that the department will continue to "vigorously defend" the law and said department officials believe that efforts to challenge it will fail.

Her words were echoed by a variety of Democrats and supporters of the law.

"Congress clearly has the authority to regulate the health insurance market, including protecting consumers from insurance industry abuses," said Ethan Rome, executive director of Health Care for America Now. "Every step of the way, the health-care debate has been polluted by partisan politics. Today's decision, made by judges appointed by both Republican and Democratic presidents, is immune to that criticism."

No 'ringing endorsement'

But Rivkin, citing some of the wording in Sutton's concurrence, said the decision is "not at all a ringing endorsement of the constitutionality of the individual mandate." And David Yerushalmi, a lawyer for the Thomas More Law Center, said that while the ruling was "disappointing," Sutton "essentially kicked this thing upstairs to the Supreme Court."

Yerushalmi said he is already drafting a petition asking the high court to hear the case, though he acknowledged that the justices will probably "put it aside" until other appellate court decisions are issued.

Two other federal appellate courts - the Richmond-based 4th Circuit and the 11th Circuit, based in Atlanta - recently heard oral arguments in lawsuits challenging various aspects of the health-care law's constitutionality, and they are expected to issue decisions in the coming weeks or months. The U.S. Court of Appeals for the District of Columbia Circuit has scheduled oral arguments for September.

Three U.S. district judges have ruled in favor of the administration on the constitutionality of the individual mandate, while two district court judges have said it is unconstitutional. Those decisions were all along partisan lines, with Democratic-appointed judges supporting the administration and Republican appointees opposing it. 

About the Americans With Disabilities Act (ADA)

Employers may need to review their policies, procedures and handbooks due to changes in the Americans with Disabilities Act (ADA), which went into effect in 2009. The changes address court and Equal Employment Opportunity Commission interpretations of the law that have, over the years, narrowed certain ADA definitions and generally made application of the ADA more restrictive than Congress originally intended.  

The "Findings and Purposes" section of the legislation cites specific U.S. Supreme Court cases that have led to lower courts "incorrectly" ruling in individual cases that people with a range of substantially limiting life impairments are not people with disabilities. The amendments do retain the ADA's definition of "disability:"
A physical or mental impairment that substantially limits one or more of the major life activities of the individual.

• A record of such an impairment.
• Being regarded as having such an impairment.

However, the amendments add language that provides a non-exhaustive list of major life activities, including routine activities such as caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating and working. They also clarify that a major life activity includes the operation of major bodily functions. Furthermore, the amendments specify that the definition of "disability" be construed "in favor of broad coverage." This means, for example, that an impairment that substantially limits one major life activity need not limit other major life activities in order to be considered a disability, and that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.

These provisions address the U.S. Supreme Court case of Toyota Motor Manufacturing of Kentucky v. Williams, which narrowly defined "major life activity" as one that is of central importance to most people's lives. The Williams case also required that, in order for an impairment to be viewed as "substantially limiting" a major life activity, it must prevent or severely limit the individual from performing the activity. The amendments clearly apply a much broader standard for ADA protection to apply.

In Sutton v. United Airlines, the U.S. Supreme Court ruled that mitigating measures, such as medication or devices, must be taken into account in determining whether a person is substantially limited in a major life activity. Under such an interpretation, for example, an individual with epilepsy was not protected by the ADA if he or she took medication that controlled the condition. The amendments specify that, with the exception of ordinary eyeglasses or contact lenses, the determination of whether an impairment substantially limits a major life activity is to be made without regard to the ameliorative effects of mitigating measures. Examples given of such mitigating measures include medication, medical supplies, low-vision devices, prosthetics, hearing aids, mobility devices, oxygen therapy equipment, and the like; use of assistive technology; reasonable accommodations or auxiliary aids or services; or learned behavioral or adaptive neurological modifications.

The amendments also remove some language from the ADA that courts had relied upon to interpret the law narrowly. For example, the original ADA included a finding that approximately 43 million Americans have one or more physical disabilities, and that "individuals with disabilities are a discrete and insular minority." In both the Williams and Sutton cases, the U.S. Supreme Court cited this language to set a strict standard for being protected by the law.

As a result of these changes, many more employees may be considered disabled under the ADA and thus fall under the law's protections, including the requirement that an employer provide reasonable accommodation. With these changes to the ADA, now would be a good time to review your company's policies, procedures and handbooks with your attorney to make sure your company is in compliance with these legal requirements.

Health Reform Weekly

MICHIGAN:  In the next couple of weeks, the state Senate is expected to vote on a $400 million paid-claims tax that would be levied on insurers and third-party administrators as proposed by Governor Snyder. 

Specifically, the bill would establish an entirely new tax on health insurance claims as a way to match federal Medicaid funding. The 1 percent on tax on all medical claims paid under health, dental, automobile and workers' compensation coverage would impact fully and self-insured business. Ultimately, the cost of the tax will be borne by the sponsor of that coverage – the employer or the individual who already pays for the coverage. As introduced, the tax would begin on October 1, 2011. 

While working with lawmakers to help them understand the impact the tax would have on constituents, Aetna has mobilized its grassroots employee network to contact their state legislators regarding the issue. The bill has a strong chance of passing, and Aetna is urging all its constituents in the state to contact the Governor’s office and legislators to express any concerns they may have about the tax.

This would be a good time to contact your local and state representatives opposing this legislation and avoiding additional increases in insurance premiums.

Week of June 6, 2011

While the Affordable Care Act's (ACA) medical loss ratio (MLR) and rate review provisions have been getting most of the media attention, a new coalition of business organizations has come together to draw attention to another important requirement of the ACA. Calling themselves Stop the HIT on Small Business, more than 25 national business organizations have joined forces to work toward repeal of new taxes the ACA would impose on private health insurance starting in 2014. Business leaders behind the effort say that small business owners, their employees and the self-employed will ultimately bear the brunt of $87 billion in additional health care costs in the first 10 years as a result of the new taxes. The group is planning Capitol Hill outreaches and grassroots efforts.

Please keep in mind, these are increases in taxes above those called for in the Health Care Reform Act already made law.

Winthrop & Gray’s Health Care Reform reminders

Winthrop & Gray’s Health Care Reform reminders, up dates and timeline.

2011

Insurance Reforms

New uniform coverage documents and standard definitions developed (applicable in 2012).

Minimum medical loss ratios required.

Medical Reforms

Medicare Advantage cost-sharing limits take effect.

Medicare beneficiaries who reach the "donut hole" get a 50 percent discount on brand-name drugs.

Primary care doctors and general surgeons practicing in underserved areas, such as inner cities and rural communities, get a 10 percent Medicare bonus.

Medicare Advantage plans begin restructuring of payments and freeze 2011 payments at 2010 levels.

Other

The voluntary long-term care insurance program starts. The program provides a cash benefit to help those with disabilities stay in their homes or pay nursing home costs. Benefits start five years after paying the coverage fee.

Increased funding for community health centers to provide care for many low-income and uninsured people.

Costs for over-the-counter drugs not prescribed by a doctor excluded from being reimbursed through an HSA or FSA.

Employers may report the value of health care benefits on employee W2 tax statements (optional for 2011 tax year; mandatory thereafter).

Start of new annual fees on pharmaceutical manufacturing sector.

2012

Health System Changes

Hospitals, doctors, and payers encouraged to join forces in "accountable care organizations."

Hospitals with high rates of preventable readmissions facing reduced Medicare payments.

2013

Taxes/Deductions

Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35 percent on earned income - up from the current 1.45 percent. A new 3.8 percent tax on unearned income, such as dividends and interest, also added.

Contributions to flexible spending accounts (FSAs) limited to $2,500 a year - indexed for inflation. And the threshold for deducting medical expenses on taxes goes from 7.5 percent to 10 percent of income.

Medical device manufacturers have a 2.9 percent sales tax on medical devices, with exemptions for some, like eyeglasses, contact lenses and hearing aids.

No more deduction for expenses allocable to Medicare Part D subsidy for employers who maintain prescription drug plans for their Medicare Part D-eligible retirees.

For more information on how Health Care Reform may impact your care or your business

contact Allen Beach at Winthrop & Gray Company 800-258-1598.