Did you know?

Did you know Winthrop & Gray Company, sells Auto, Home and Commercial insurance to individuals and businesses? In fact we sell all forms of property and casualty insurance.

Our purpose is to provide the very best protection that covers all of your needs.

Business and commercial insurance includes contractor liability, workers comp, commercial auto, business interruption, garage liability, general liability, disability, rental, restaurants and convenience stores.

We provide personal insurance that includes homeowners, automobiles, boats, flood and wind storm, life and disability.

For your vehicles we have auto, SUV, pick-ups, vans, boats, jet skis, RV's and motorcycles.

This includes liability, PIP/PD full coverage, collision, comprehensive and discounts for safe drivers.

We strive to develop a professional and personal relationship that best meets the needs of yourself, your family, and/or your business.

Winthrop & Gray Company can provide you with the insurance that you need for peace of mind if the unexpected happens, 800-258-1598.

Call us today for more information.  Our friendly staff will be waiting to assist you.  Always a free quote.  Call today at 800-258-1598.  We will handle all of your insurance needs.

Payroll Deduction IRAs Are a No-Cost Benefit

If you've considered setting up a retirement plan for your employees and decided it was too costly, or too much trouble, there is an alternative. No matter how big or small your business is, your employees can participate in a Payroll Deduction IRA, at virtually no cost to you.

Here's how a Payroll Deduction IRA works:

 Each employee who wants to participate establishes a traditional or a Roth IRA with his or her own bank, and authorizes you, the employer, to make payroll deductions. Your only responsibility is to forward the money withheld to the financial institution.

Sound easy? It is. In fact, it is the simplest retirement plan available for businesses to institute. There are no plan documents to adopt and no reports to file.

There is little difference between the Payroll Deduction IRA and an IRA that an employee might establish and contribute to on his own. The real benefit is for staff members who need to save for retirement but find it hard to set aside the money for regular contributions on their own.

Employees are responsible for establishing their own IRAs with their own financial institutions.

Only the employee contributes to the account through payroll deduction.

Employers make no contributions and have no filing requirements.

The employer receives no tax deductions.

Participant loans are not permitted.

Assets may not be used as collateral.

Withdrawals are subject to income tax and a 10 percent   penalty if the participant is under age 59 1/2.

Eventually, your business may decide to establish a retirement plan that includes employer contributions and discontinue the Payroll Deduction IRA. If that day comes, Winthrop & Gray Company can help you make that switch.

The IRS Announces Tax Relief for Misclassified Workers

On September 21, 2011, The IRS announced a new voluntary compliance program that will allow employers to reclassify workers on a prospective basis with reduced penalties and back payroll taxes. This program, the Voluntary Classification Settlement Program (VCSP), was designed to limit fines for employers who had previously classified workers as independent contractors, rather than employees.






The Problem

• There are many reasons that employees are misclassified as independent contractors. These include:
• The worker is being hired on an infrequent or trial   basis
• The worker is being hired for a one time   occurrence
• The worker is being paid a flat fee
• The worker chooses to be treated as an independent   contractor
• The employer believes it is too   expensive to treat the worker as an employee

Unfortunately, the above excuses do not justify misclassifying workers. Correcting the misclassification is very costly, and can cause employers to continue on an incorrect path, rather than reclassifying workers.

The Solution

The IRS's new program will allow an employer to properly classify a worker as an employee for future tax periods for a very small payment. The VCSP is offered to tax-exempt organizations, private employers, and government entities. To be qualified for the program, an applicant must:
Consistently have treated the workers in the past as   nonemployees;

Have filed all 1099s for all independent contractors for the   previous three years; and

Not currently be under audit by the IRS, the Department of   Labor, or a state agency concerning the classification of the workers under   consideration.
According to IRS Commissioner Doug Shulman, "This settlement program provides certainty and relief to employers in an important area. This is part of a wider effort to help taxpayers and businesses to help give them a fresh start with their tax obligations."

How to Apply

Employers apply by filing Form 8952, Application for Voluntary Classification Settlement Program. The new form must be completed at least 60 days before the employer want to begin treating the workers as employees. The two-page form asks for basic information about the employer and a description of the workers. In addition, a calculation on the form assesses the amount due on the reclassification. This number is derived from the wages received during the most recent tax year and is the equivalent of roughly 1.3% of the wages paid, a huge savings over the previous options before this program. After the form is completed, the IRS will first verify the taxpayer's eligibility. If eligible, the IRS will contact the taxpayer or its representative to complete the process. The IRS retains the right to reject any taxpayer from the VCSP, including taxpayers that otherwise meet the basic eligibility criteria.

A taxpayer participating in the VCSP agrees to treat the workers as employees for all future tax periods. In exchange, the taxpayer will pay approximately 1.3% of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.

To read more about the Voluntary Classification Settlement Program click here.

Re-enforcement

The Department of Labor, the IRS, and several state governments have launched a joint enforcement effort to identify and crack down on employers misclassifying employees as independent contractors. By collaborating and sharing information of suspected misclassification, the joint enforcement effort increases the risk of substantial fines.
In the past, a state agency would penalize the employer for misclassifying employees. Under the joint enforcement effort, the state will share the findings with the IRS and Labor Department. These agencies can then go after the employer for fines and penalties for federal wage violations.
The following states have already signed onto the joint enforcement effort: Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah, and Washington. New York and Illinois have also indicated they will join the effort.

Questions Answered on the Smoker Surcharge

Question:

My client wants to encourage its employees to quit smoking.  For 2012, he wants to charge smokers a greater premium for health coverage.  Is it possible to charge smokers a greater premium without violating the requirements of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA")?

Answer: 

Yes. HIPAA generally prohibits a plan from discriminating among similarly situated individuals based on their health status. This means, among other things, that plans usually cannot charge individuals different premiums or impose different costs (i.e., through deductibles or co-pays) based on the presence or absence of a health factor. However, HIPAA also affirmatively recognizes that the nondiscrimination provisions were not meant to prevent a group health plan or an insurer from establishing premium discounts, surcharges  or reduced co-payments or deductibles in return for "adherence to programs of health promotion and disease prevention," as provided under Code §9802(b)(2); ERISA §702(b)(2); PHSA §2705(b)(2). Thus, certain programs of health promotion or disease prevention (referred to as "wellness programs") are an exception to HIPAA's general nondiscrimination requirement.

In order to penalize smokers, any surcharge must be provided under a standard-based wellness program. Standard-based wellness programs that condition eligibility for a reward upon a participant's ability to meet a standard related to a health factor are permissible only if they meet the specific requirements set forth in 71 Fed. Reg. 75014 (Dec. 13, 2006).

Standard-based wellness programs must satisfy each of the following five requirements:

·       The reward or penalty must be no more than 20% of the cost of coverage (30% starting in 2014);

·       The program must be designed to promote health or prevent disease;

·       The program must give individuals an opportunity to qualify for the reward at least once a year;

·       The reward must be available to all similarly situated individuals; and

·       The plan must disclose that alternative standards (or waivers) are available.

For a full explanation of each of the requirements, please review Field Assistance Bulletin No. 2008-02.  A link to this bulletin is provided by clicking here

News in the Health Care Reform Law

The Obama administration and challengers of the Affordable Care Act (ACA) have accelerated their filings to the U.S. Supreme Court and are submitting preliminary arguments ahead of formal deadlines, making it even more likely the justices will take up the case this term. Twenty-six states and the National Federation of Independent Business are among those who have filed lawsuits claiming the health care reform law is unconstitutional, chiefly because of the individual mandate to buy insurance.

With federal court decisions on the constitutionality of the law split, the Supreme Court is expected to decide the issue. It is possible, however, that the Supreme Court could "punt" or put off a decision for years if it determines that the Anti-Injunction Act, which says that Americans have to pay a tax before it can be challenged in court, applies to the health law.


The Court could decide in just a matter of weeks whether to add the case to the agenda for the current term, which ends in June 2012. In court papers filed last week, the administration is asking the Court to limit its review of the health care overhaul and not consider two of the issues raised by the states -- expansion of Medicaid and penalties for failing to offer adequate insurance. While the Justice Department wants the high court to uphold the constitutionality of the health care law, the states and NFIB want the court to strike down the entire law, not just the individual mandate.

New health care exchange called: MI Health Marketplace

MICHIGAN: Legislation has been introduced to set up a health care exchange called the MI Health Marketplace. It is estimated that as many as 520,000 individuals who are uninsured or who come from other plans would come onto the MI Health Marketplace in its initial year of operation, and another 500,000 would be Medicaid eligible. Participants could total more than 1 million participants in the first year. The exchange, which would be established as a nonprofit, will serve individuals and small businesses. The nonprofit would be governed by a board, to be appointed by the Governor, and have the ability to appoint an executive director. Federal funds will pay for the operation of the exchange through 2014, and the bill would require insurers to be assessed moving forward. No budget has been spelled out, leaving an open question as to how much the exchange will cost. The Snyder administration expects to pass an exchange bill by the end of November. Many in our industry are working with the sponsors of the bill on amendments.

It is our opinion that health insurance companies, will provide the required medical plans within the exchange, (Gold, Bronze and Platinum) yet for those who qualify provide another set of plans outside the exchange in a free market setting, allowing for lower premiums and more competitive product selection. Much of the same is already happening in Massachusetts and Utah where the federal “health care reform law” was passed and modeled after. Currently in Michigan, if you can not qualify for a medically underwritten medical plan, your only choice would be to purchase health care insurance at an increased rate, from a non-profit, such as Blue Cross and Blue Shield of Michigan or apply for Medicaid. For those of you reading this, what changed with the passage of the new federal health care reform law?

In other news Federal:

Week of October 10, 2011

Long-awaited recommendations concerning "essential health benefits" under the Affordable Care Act (ACA) were released last week (see below). The Institute of Medicine (IOM) recommendations will be used by the Department of Health and Human Services (HHS) to help guide the process of determining what should be included in an essential health benefits package starting in 2014. America's Health Insurance Plans (AHIP) released a statement on the recommendations and the need to strike a balance between cost of coverage and comprehensive coverage.

In other news, a special edition of Health Affairs was released last week with a number of articles that shed more light on the problem of racial and ethnic disparities in health care. Among the findings are that health plans have made considerable progress in the collection of data on race and ethnicity to enable efforts to reduce disparities. Aetna was an early adopter of data collection efforts and made the special Health Affairs edition possible with support through the Aetna Foundation.

IOM's highly anticipated report on the development of the “essential health benefits” package was released last week. The report comes in response to a request made last November by Health and Human Services (HHS). HHS requested that the IOM convene a study committee to advise the Secretary on the criteria and methodology for determining the essential health benefits package. Importantly, the 297-page report doesn’t actually say what the essential health benefits should be. It just recommends the methodology HHS should use to determine the package. The two big take-aways from the IOM recommendations: benefits should be based on the “typical” small employer plan, and states should have some flexibility to determine what is essential. The report further states that only medically necessary services for individuals should be included as essential. And, in defining the essential health benefits, HHS should first set a cost target before filling in benefits to meet that goal. The IOM has recommended that HHS should have the initial benefit package by May 1, 2012, and it should be as specific as possible.

The U.S. Supreme Court opened its new term last week with a case concerning whether individual providers and beneficiaries have the right to legally challenge the adequacy of Medicaid payments in California. The case, Douglas v. Independent Living Center of Southern California, involves providers and patients who claim California cut Medicaid reimbursement rates so low in 2008 and 2009 that they violated federal requirements that payments be sufficient to avoid disrupting patient access to care. Many of the questions from the justices focused on the HHS process for enforcing Medicaid requirements in the states. HHS issued a rule earlier this year that, for the first time, requires Medicaid reimbursements be “sufficient to enlist enough providers so that care and services are available.” That rule was issued, in part, to try to dissuade the Supreme Court from taking up the Douglas case.

Your comments and suggestions are welcome. Contact Winthrop & Gray Company at 800-258-1598 or email us at www.winthrop@winthropgray.com

Payroll and Compensation, Your Time or Their Time?

The time that employers must pay for isn't always clear. To help make sense of the confusion, here are answers to some frequently asked questions about when companies have to pay employees based on Labor

What States Require

Most states have labor regulations similar or the same as federal labor regulations. Click here to see what your state labor department requires.

The Supreme Court Weighs In

The Supreme Court took up the issue of compensable time in a case involving employees of meat production and poultry plants who were required to put on protective gear and walk to the production floor at the start of each day. At the end of the day, they had to walk back to the locker room and take off the gear.

The issue before the Court was whether the time walking to and from the production floor should be paid time. The Court held the time to actually "don" and "doff" the gear was compensable, under the Fair Labor Standards Act.

The employees asserted that their workday began once they put on the gear. The employers maintained that the walking time was a commute or a break.

The Justices applied the "continuous workday" principle, which states that compensable time begins with the first principal activity of the day and ends with the last principal activity.

Because wearing the equipment was mandatory, the court ruled that the first and last principal activities were donning and doffing the gear. Time in between was work time that had to be paid for.

   

However, the court ruled against the employees on another issue: Sometimes employees would have to wait until protective gear was available. Applying the same "continuous workday" principle, the court ruled that because "wait time occurred before the first principal activity, the employer wasn't obliged to pay for that time. (IBP, Inc., vs. Gabriel Alvarez, et al, No. 03-1238, Nov. 8, 2005)

Department regulations:

Q.

Do We Have to Pay Employees On Call?

Yes, your company is required to pay employees if you require them to remain on your premises while they wait for an assignment (for example, firefighters waiting for an emergency call). If this is the case, they are considered to be working and must be paid, even if they are doing other things, such as playing cards.

No, you don't have to pay employees if you allow them to go home and they are free to leave messages saying where they can be reached. In most cases like these, the employees are not considered to be working.

Yes, you must pay employees if you allow them to leave but restrict their activities, (such as requiring them to remain close to the workplace or not drink alcohol while on call).

Q.

Do We Have to Pay for Travel Time?

No, you do not have to pay employees for the time they spend commuting back and forth from home.

Yes, you have to pay for travel time if you have maintenance employees who use their own cars every day to travel to your branch offices in neighboring cities. You pay for time between locations.

Q.

Do We Have to Pay for Meal Time and Rest Breaks?

Yes, you do have to pay if the employee continues working during lunch or rest breaks. For example, if your receptionist spends her lunchtime at her desk, answering the phone as usual and has not been relieved of her duties, you do have to pay her for the time. What if she works during lunch breaks against your instructions? It's up to you to enforce the rules.

State laws regulate break periods, including the minimum time required for meals and rest breaks and whether the time must be paid. But even states that don't require paid breaks do require employers to pay employees if job duties are performed during long breaks, such as lunch or rest periods during long shifts.

Q.

Do We have to Pay for Sleep Time?

Yes, you must pay for sleep time if employees sleep less than five hours or are on duty for less than 24 hours. They are considered to be working for those hours, even if they are allowed to sleep or engage in other personal activities during non-busy times.

No, you don't have to pay if your employees work 24 hours or more and you have an agreement that their work hours will exclude bona fide regularly scheduled sleep periods for not more than eight hours - as long as you provide sleeping facilities and they can generally sleep uninterrupted.