by admin | Jul 27, 2022 | Human Resources
The United States, like some other countries around the world, including the United Kingdom and China, are facing an inflation crisis in this post-pandemic era. Inflation has great influence on Human Resources because it can cause the need for wage stagnation and budget cuts. The biggest disappointment during times of high inflation is the possibility of layoffs.
First, HR professionals should fully grasp inflation, which is the general rise in the prices of all consumer goods and services. The United States turns to the Consumer Price Index (CPI), which is measured by the U.S. Bureau of Labor Statistics, to gauge inflation, according to the Guardian. In fact, the United States is experiencing a 40-year high in inflation. Prices rose 8.5% year over year in March 2022.
Understand Inflation
There is no one root cause for inflation. Over the past few years, the world economy experienced a perfect storm that included a once-in-a-century pandemic and necessary stimulus, continuous lockdowns in China that have damaged supply chains, and a war in Europe between Ukraine and Russia that costs money to fight but is also hurting the world’s food and gas supplies.
In the United States, HR leaders are facing these challenges like everyone else. But they have one other issue with which to contend: the Great Resignation. (Some refer to it as the Great Reshuffle.) People are continuing to leave their jobs to seek better employee experiences, benefits, and compensation packages. In fact, 4.4 million people voluntarily quit, and companies doled out a record low 1.2 million layoffs in April 2022, according to CNBC. In addition, employers had 11.4 million job openings.
Some experts are saying it is the tightest job market on record. What seems like good news for the economy can actually mean that the country is headed for recession. If people have well-paying jobs and money to spend, demand goes up and so do prices. When this happens and supply is short, inflation skyrockets. Eventually, wages can not keep up with inflation, and people start cutting back on spending. Then, recession can begin.
Obviously, if the economy enters recession, companies will be tightening their belts. As a result, they may have to cut down on labor costs and do more with less. This often leads to layoffs and other budget cuts.
What’s Happening Now?
While some sectors, such as tourism, are bouncing back after the pandemic, others are slowing down. All those tech companies that earned boosts during the lockdowns saw drops in sales. Technology companies are already experiencing some hiccups in the job market. Uber, Microsoft, Twitter, Wayfair, Snap, and Meta (parent company of Facebook) are either slowing down hiring or putting hiring freezes in place. Netflix, Peloton, and Carvana laid off employees.
Still, these are the exceptions and not the rule. Most companies are still facing a shortage of labor, and unemployment remains historically low. Job candidates and employees have all the leverage despite concerns about a looming recession.
The Consequences
However, there are some signs that the tide may turn. First, the job market has to cool, which means fewer jobs can be available, for inflation to go down. Full employment, when everyone who wants a job has one, will make inflation rise. At some point, especially with gas and groceries costing as much as they do, individuals will not be able to walk away from jobs as easily. In addition, the companies will get leaner and do more with less, so they will stop hiring as much.
Some organizations have pumped up their hiring to meet the post-pandemic consumer demand, and they may then have to lay off their employees in response to a downturn in the economy. At that point, there may be another shift that gives leverage to the employer again. The question remains whether the transformation in treatment of employees, compensation and benefits, and work-life balance initiatives will endure in a recession.
If HR professionals must lay off their employees, they should have a plan and be kind. Those who have laid off people via Zoom or with harsh words have lived to regret it in the age of social media, when people share everything. Unfortunately, layoffs happen. It’s how HR leaders handle them that separates the professionals from the amateurs.
By Francesca Di Meglio
Originally posted on HR Exchange Network
by admin | Jul 18, 2022 | Compliance
By way of background, the Affordable Care Act (ACA) created the Patient-Centered Outcomes Research Institute (PCORI) to study clinical effectiveness and health outcomes. To finance the Institute’s work, a small annual fee—commonly called the PCORI fee—is charged on group health plans. Grandfathered health plans are not exempt.
Most employers do not have to take any action because employer-sponsored health plans are commonly provided through group insurance contracts. For insured plans, the carrier is responsible for calculating and paying the PCORI fee and the employer has no additional duties.
However, employers that sponsor self-funded group health plans are responsible for calculating, reporting, and paying this fee each year.
The PCORI fee applies for each plan year based on the plan year end date. The fee is an annual amount multiplied by the number of plan participants.
$2.66 per year, per participant, for plan years ending between October 1, 2020 and September 30, 2021.
$2.79 per year, per participant, for plan years ending between October 1, 2021 and September 30, 2022.
Payment is due by July 31st in the following calendar year in which the plan year ends. Because the due date in 2022 falls on Sunday, you may file the return on the next business day. This year, payment is due on Monday, August 1, 2022. Use IRS Form 720, Quarterly Federal Excise Tax Return.
Does the PCORI fee apply to all health plans?
The fee applies to all health plans and HRAs, excluding the following:
Plans that primarily provide “excepted benefits” (e.g., stand-alone dental and vision plans, most health flexible spending accounts with little or no employer contributions, and certain supplemental or gap-type plans).
Plans that do not provide significant benefits for medical care or treatment (e.g., employee assistance, disease management, and wellness programs).
Stop-loss insurance policies.
Health savings accounts (HSAs).
The IRS provides a helpful chart indicating the types of health plans that are, or are not, subject to the PCORI fee.
Which quarter do self-funded employers report on by August 1st?
For the purposes of the 2022 PCORI obligations, this would be the 2nd Quarter of 2022. So, when completing Form 720 be sure to fill in the circle for “2nd Quarter.”
Caution! Before taking any action, confirm with your tax department or controller whether your organization files Form 720 for any purposes other than the PCORI fee. For instance, some employers use Form 720 to make quarterly payments for environmental taxes, fuel taxes, or other excise taxes. In that case, do not prepare Form 720 (or the payment voucher), but instead give the PCORI fee information to your organization’s tax preparer to include with its second quarterly filing.
If I have multiple self-insured plans, does the fee apply to each one?
Yes. For instance, if you self-insure one medical plan for active employees and another medical plan for retirees, you will need to calculate, report, and pay the fee for each plan. There is an exception, though, for “multiple self-insured arrangements” that are sponsored by the same employer, cover the same participants, and have the same plan year. For example, if you self-insure a medical plan with a self-insured prescription drug plan, you would pay the PCORI fee only once with respect to the combined plan.
What about hybrid plans such as level-funded or partially self-funded?
The terms “level-funded” or “partially self-funded” are not defined by law, so it can mean different things to different carriers, vendors, and employers. In most cases, the terms are intended to refer to a self-funded group medical plan sponsored by an employer who has assumed all financial risk, other than protection under stop-loss insurance. However, this is not absolute. If your hybrid plan is in fact self-funded plan, then the employer is responsible for the paying the PCORI fee. If unsure, check with the state’s insurance commissioner or legal counsel.
Does the fee apply to HRAs?
Yes. The PCORI fee applies to HRAs, which are self-insured health plans, although the fee is waived in some cases. If you self-insure another plan, such as a major medical or high deductible plan, and the HRA is merely a component of that plan, you do not have to pay the PCORI fee separately for the HRA. In other words, when the HRA is integrated with another self-insured plan, you only pay the fee once for the combined plan.
On the other hand, if the HRA stands alone, or if the HRA is integrated with an insured plan, you are responsible for paying the fee for the HRA.
What about QSEHRAs? Does the fee apply?
Yes. A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is special type of tax-advantaged arrangement that allows small employers to reimburse certain health costs for their workers. Although a QSEHRA is not the same as an HRA, and the rules applying to each type are very different, a QSEHRA is a self-insured health plan for purposes of the PCORI fee. The IRS provides guidance confirming that small employers that offer QSEHRAs must calculate, report, and pay the PCORI fee.
What about ICHRAs and EBHRAs? Does the fee apply?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is a new type of tax-advantaged arrangement, first offered in 2020, that allows employers to reimburse certain health costs for their workers. The IRS has not provided specific guidance regarding ICHRAs and the PCORI fee, but it appears the fee applies since an ICHRA is a self-insured health plan.
An Excepted Benefits Health Reimbursement Arrangement (EBHRA) also is a self-insured health plan, but it is limited to “excepted benefits,” such as dental and vision care costs. So, the PCORI fee does not apply to EBHRAs.
Can I use ERISA plan assets or employee contributions to pay the fee?
No. The PCORI fee is an employer expense and not a plan expense, so you cannot use ERISA plan assets or employee contributions to pay the fee. (An exception is allowed for certain multiemployer plans (e.g., union trusts) subject to collective bargaining.) Since the fee is paid by the employer as a business expense, it is tax deductible.
How do I calculate the fee for a self-funded plan?
Multiply $2.66 or $2.79 (depending on the specific date the plan year ended in 2021) times the average number of lives covered during the plan year. “Covered lives” are all participants, including employees, dependents, retirees, and COBRA enrollees.
You may use any one of the following counting methods to determine the average number of lives:
- Average Count Method: Count the number of lives covered on each day of the plan year, then divide by the number of days in the plan year.
- Snapshot Method: Count the number of lives covered on the same day each quarter, then divide by the number of quarters (e.g., four). Or count the lives covered on the first of each month, then divide by the number of months (e.g., 12). This method also allows the option — called the “snapshot factor method” — of counting each primary enrollee (e.g., employee) with single coverage as “1” and counting each primary enrollee with family coverage as “2.35.”
- Form 5500 Method: Add together the “beginning of plan year” and “end of plan year” participant counts reported on the Form 5500 for the plan year. There is no need to count dependents using this method since the IRS assumes the sum of the beginning and ending of year counts is close enough to the total number of covered lives. If the plan is employee-only without dependent coverage, divide the sum by 2. (If Form 5500 for the plan year ending in 2021 is not filed by August 1, 2022, you cannot use this counting method.)
Note: For an HRA, QSEHRA or ICHRA, count only the number of primary participants (employees) and disregard any dependents.
How do I report and pay the fee for a self-funded plan?
Use Form 720, Quarterly Excise Tax Return, to report and pay the annual PCORI fee. Report all information for self-insured plan(s) with plan year ending dates in 2021 on the same Form 720. Do not submit more than one Form 720 for the same period with the same Employer Identification Number (EIN), unless you are filing an amended return.
The IRS provides Instructions for Form 720. Here is a quick summary of the items for PCORI:
- Fill in the employer information at the top of the form.
- In Part II, complete line 133(c) and/or line 133(d), as applicable, depending on the plan year ending date(s). If you are reporting multiple plans on the same line, combine the information.
- In Part II, complete line 2 (total).
- In Part III, complete lines 3 and 10.
- Sign and date Form 720 where indicated.
- If paying by check or money order, also complete the payment voucher (Form 720-V) provided on the last page of Form 720. Refer to the Instructions for mailing information.
Summary
If you self-insure one or more health plans or sponsor an HRA, you may be responsible for calculating, reporting, and paying annual PCORI fees. The fee is based on the average number of lives covered during the health plan year. The IRS offers a choice of different counting methods to calculate the plan’s average covered lives. Once you have determined the count, the process for reporting and paying the fee using Form 720 is fairly simple. For plan years ending in 2021, the deadline to file Form 720 and make your payment is August 1, 2022.
By Erin DeBartelo
Originally posted on Mineral
by admin | Jul 14, 2022 | Hot Topics, Human Resources
American workers are notorious for being workaholics. In fact, The Center for Economic and Policy Research has gone so far as to call the U.S. the “No Vacation Nation.” Deciding you need a vacation may feel indulgent but in reality, it is a crucial key to our overall health.
Why do you need to take a vacation?
Simple.
As much as we all need to work and do our jobs, the mind and body also need to be refreshed.
So put down your phone, tuck away your laptop and enjoy these five reasons why vacations are necessary for your health:
Decrease in Heart Disease – Going on a vacation gives you overall health benefits that can impact your life for years to come. Taking regular vacations could help reduce the risk for metabolic syndrome – a cluster of health issues including high blood sugar, high blood pressure, excess belly fat and abnormal cholesterol levels. All of these symptoms raise the risk for heart disease, stroke and type 2 diabetes.
Relieves Stress – Stress can have a negative effect on all aspects of your health–physically, mentally and emotionally. Headaches, back pain, anxiety, irritability, lack of concentration and frustration are just a few of the harmful effects of stress. Taking a vacation helps relieve the built-up anxiety, which can lower your blood pressure, help you sleep better and build up your immune system. Holidays will not only help you relieve stress but can help you manage it better when you get back to the real world.
Increases Productivity – It may seem counterintuitive to leave work and take a relaxing vacation to increase your productivity, but it’s surprisingly effective. Numerous studies reveal taking vacations is closely linked to productivity. Employees who take long, regular vacations return more energized, productive, and positive.
Enriches Your Personal Life – U.S. children with working parents report that their parents are bringing their work-related stress home with them. Additionally, kids have significant stress of their own. Vacations offer all family members time to relax, decompress, and the opportunity to connect with one another.
Quality of life is dependent on how you appreciate yourself and those who are around you. It could be with yourself, family or friends; but only vacations from a busy schedule can offer you time to appreciate the people around you.
Builds Your Immune System – A busy life wears you down. You can fight it all you want, but eventually everything will be too much and exhaustion will set in. When you’re tired and stressed from work and your home life, you’re more susceptible to catching the cold and flu. Vacations help relieve stress, allowing your immune system to build back up.
It is important to be selfish sometimes. As the old saying goes, “all work and no play makes Jack a dull boy.” Getting out of your comfort zone and experiencing something new is good for your body, mind and those around you.
by admin | Jul 5, 2022 | Human Resources
Payroll works the same way in almost every full-time job. Employees earn money by working, and they all receive their earnings on a set date: payday. However, in an era of same-day shipping, on-demand movies, and unlimited mobile access, individuals are increasingly expecting prompt access to nearly anything they need. For employees, this also means getting quicker access to their paychecks.
What is On-Demand Pay?
On-demand pay, or earned wage access (EWA), is an employee payment method in which employees can access wages already earned and owed before the traditional bi-weekly or monthly paycheck.
As Americans face rising costs for everyday essentials, health care and other needs, on-demand pay provides employees with more control over their finances. Did you know that fewer than four in 10 Americans could afford an unexpected $1,000 expense? And we all know that expenses don’t occur on a neat two or four-week cycle!
Growing Payroll Trend
Financial wellness is the new “must-have” employee benefit . According to recent data, 64% of Americans are living paycheck to paycheck. Financial stress can lead to unproductive, disengaged or absent employees. On-demand pay can offer employees access to some or all of their earned wages to help pay bills on time and better manage their living expenses. Additionally, Millennials and Gen Zers are asking for on-demand pay and they’re willing to limit their job searches to employers that offer that option.
Financial Wellness
People show up to work each day because of their desire for long-term financial wellness. Often, financial wellness has been approached with contributions to a 401(k) plan and other benefit-related compensation. But what about everything between now and retirement? Things go wrong. Cars break down, houses need repairs and there are unexpected medical bills. For many workers, waiting 2 weeks or more to get their paychecks leaves them in a bind. In the past, employees have turned to credit cards and payday loans to make ends meet when needed. However, these options are notorious for having high interest rates and hefty fees.
In today’s fast-paced culture – where Americans can get anything with the click of a button – it’s not surprising that on-demand pay appeals to many workers who don’t have savings to handle unexpected expenses. On-demand pay is projected to grow quickly. Three years ago, very few companies had even heard of it. Today, it’s not a question of whether a company will adopt the benefit but when.
On-Demand Pay Execution
Of course, this means that companies might need to update their payroll infrastructure because on-demand pay would require some changes with the payroll department. However, there are various automated solutions that offer systems that can easily integrate with most payroll software. These solutions enable employees to check how much they have earned and withdraw a percentage of their earnings without putting stress on the payroll team. When employees access their net pay before their regular pay date, the wages they access are deducted from the total earnings they’d receive on pay day.
Methods to Provide On-Demand Pay:
- Direct Deposits – Employers provide immediate wages to an employee’s bank account.
- Prepaid Debit Cards – Employers provide a prepaid or payroll card for employees who wish to avoid banks.
In tough economic times, the companies that take the best care of their employees are the ones that emerge stronger. While on-demand pay is a newer concept, it’s one that is worth serious consideration – especially because it shows all signs of staying around for the long haul.
by admin | Jun 30, 2022 | Human Resources
As HR leaders work hard to retain talent during a historic labor shortage, they are trying to show employee appreciation. At the HR Exchange Network Employee Engagement and Experience online event, Mary Shelley, Chief People Officer at Tango Card, shared best practices for rewarding employees to inform them of their value to the organization.
In the session, 5 Questions to Ask When Building an Employee Appreciation Strategy to Last, Shelley admitted there are challenges to creating a rewards program. In fact, a poll revealed that 31% of audience participants feel their inadequate budget is an obstacle. Nearly 30% said no organizational engagement was prohibitive when trying to launch a rewards program. Other problems included being time intensive (12.1%), too complicated (13.8%), or something else (13.8%).
Discover how to launch an employee appreciation program:
Start Small
Shelley suggests HR leaders come up with one thing they can do right now to move the needle. For instance, they could talk to employees to determine what kinds of rewards would motivate individuals on the team. The reward should be meaningful or else it won’t produce that sense of incentive.
“Learn about what each person finds motivating,” says Shelley.
Balance Informal and Formal Recognition
Sometimes people mistakenly believe that they have to invest a lot of money or time into offering a reward. But there are simpler ways to recognize colleagues for their hard work and dedication. For instance, some companies leave thank you cards out in the office, so peers can write them and deliver them to each other’s desk. It’s a small cost in time and money, and it can reap great rewards as Shelley, who has done this, attests.
Diversify Rewards
Offer different kinds of rewards to appeal to a larger group of people. To keep people engaged in the process, there should be different prizes to try and attain. As companies diversify rewards options, however, they should also be transparent.
“Employees and managers should know how to give and receive rewards,” says Shelley.
In other words, they should know exactly what is expected of them if they want to win rewards XYZ. Employees should also know how they could offer recognition to a colleague who has impressed them with their work.
Build in Anticipation
“Anticipation is everything,” says Shelley. In fact, some employees say the anticipation can be greater than the reward itself, she adds. Talk about what it will be like if a team or individual achieves the requirements to win the reward. Discuss the experiences of those who have won before to help others dream about it.
Automate
Automation is a great way to integrate rewards programs in hybrid and remote workplaces. For example, some companies have a “givekudos” Slack channel, where teammates can give shout outs to those who have done well or helped them, and they automatically get a $10 gift card.
Avoid Pitfalls
HR leaders can easily fall into common traps when doling out rewards. A big mistake is to just hand out rewards as a means of “checking the box,” warns Shelley. After all, people realize when something is given to them ingenuously.
Another error is making the program overcomplicated. Shelley shared the story of a colleague who created a rewards program with different levels and lots of qualifications. It was too cumbersome, and no one understood how to give or receive rewards. So, they had to pare it down and simplify.
Being one-dimensional without giving thought to all the possibilities is a pitfall that HR leaders can avoid by thinking outside the box. Overcompensating to make up for low appreciation scores is another way to defeat the purpose of a rewards program. Employees should feel special and appreciated.
Finally, employers should assess whether they are rewarding the correct behaviors. Shelley shares the story of a previous employer, who handed out awards to hard workers who had been burning the midnight oil. But the company included a value about maintaining work-life balance. It didn’t match with their mission, and it sent the wrong message.
By Francesca Di Meglio
Originally posted on HR Exchange Network
