Fees at A Glance

ACA News Update

Dear Vensure Client:

We wanted to take a moment to make sure you understand the details of the mandatory ACA fees for employers.

Associated with the new ACA compliant plans, there are a couple of mandatory fees (TRF and PCORI fees) which are deemed the responsibility of the Employer. The determination of which fee(s) may apply will depend upon employee utilization.

Embedded in the Patient Protection and Affordable Care Act (ACA), you will find the PCORI fee, which is explained below:

FEE AT A GLANCE

Patient – Centered Outcomes Research Institute(PCORI) Fee:
A fee placed upon issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI). The institute will assist through research, patients, clinicians, purchasers and policy-makers in making informed health decisions by advancing the quality and relevance of evidence-based medicine. The institute will compile and distribute comparative clinical effectiveness research findings.

The PCORI fee is attached to both the Minimal Essential Coverage (MEC) plan and MV plan, and is $2.08 in 2015. This fee is not applicable to the indemnity plan if your employees elect this coverage.

Another fee that is only tied to the MV plan is the Transitional Reinsurance Program Contribution Fee(TRF). Under the (ACA), your group health plan is also required to pay the TRF on plan years from 2014 – 2016. This fee is paid to the government directly by you and is in addition to, the PatientCentered Outcomes Research Institute (PCORI) fee that began for plan years that ended in 2012(continuing until 2019). See explanation below.

FEE AT A GLANCE

Transitional Reinsurance Program Contribution(TRF) Fee:
A fee to help stabilize premiums for coverage in the individual market during the years 2014 – 2016. The statute requires all health insurance issuers and third-party administrators on behalf of self-insured group health plans to make contributions under this program to support payments to individual market issuers that cover high-cost individuals. Regulations proposed by the Department of Health and Human Services to implement the Reinsurance Program specify that self-insured group health plans are liable for the contributions, although a plan may utilize a third-party administrator or administrative-servicesonly(ASO) contractor for transfer of the contributions.

This fee is $44.00 per employee in 2015. This fee is not applicable to the MEC Plan or the Indemnity Plan.

Both the PCORI and the TRF will be pro-rated throughout the year to match your company’s deduction schedule. Detailed information on how these fees are billed will be in next week’s ACA News Update, issued on February 3, 2015.

NEXT WEEK’S TOPICS

  • How the PCORI/TRF fees are billed
  • Premium billing options

CONTACTS

  • Ryan Scott – ryan.scott@vensure.com
  • Anna Hoebing – anna.hoebing@vensure.com

CONTACTS

  • Ryan Scott – ryan.scott@vensure.com
  • Anna Hoebing – anna.hoebing@vensure.com

FUN FACTS

We know that ACA is not the most interesting of subjects, so with that being said, we thought we would end with a few facts that we DO find interesting!

  • In 1972, a group of scientists reported that you could cure the common cold by freezing the big toe.
  • The human brain cell can hold five-times as much information as the Encyclopedia Britannica.

Does The Overtime Exemption Apply To Inside Sales?

Most companies are aware of the “outside sales” exemption to the requirement to pay overtime, but they may not be aware that the Fair Labor Standards Act also provides an exemption to overtime for some “inside sales” employees. When an employee sells a big ticket item, the inside employee exemption is used, providing it meets the following three conditions.

  • The retail business or service employing the individual must be recognized as an establishment in which 75% or more of the annual dollar amount of sales are retail sales in the retail or service industry represented, and are not for resale.
  • The regular rate of employee pay must be greater than one and one-half times minimum wage for each hour the employee worked during a week when overtime hours are worked.
  • The total earnings of the employee must consist of more than 50% in commissions earned.All three conditions must be met for the exemption to apply, and if the employee worked over 40 hours, he or she must be paid overtime wages.

Regular Rate Calculations
Meeting the rate of one and one-half times the minimum wage is less restrictive for the employer than the normal overtime requirement. To determine if the criterion is met, divide the number of hours worked into the employee’s total earnings, which include commission, a draw on future commissions, and any supplemental payments to increase employee earnings to the required level.

Hotels, motels, and restaurants imposing mandatory charges on customers, which are paid to employees in part or in full, may count the payment as a commission. This allowance is made due to the direct relationship to the goods and services sold by the establishment and applies to a precise percentage of the consumer’s bill. The tips customers give employees are not to be considered commissions.

There is no requirement to calculate the regular rate every week when an employee’s earnings are consistently one and one-half times the minimum wage in a week when the employee worked over 40 hours. When there is uncertainty about an employee’s earnings in some weeks, it is necessary to calculate the regular rate. When there is a question pertaining to the hourly rate, the Wage and Hour Division will evaluate the facts and determine if the regular rate requirement is being met.

Representative Period
When measuring a representative period for commissions, the time used can be as short as a month and no longer than a year. The representative period of time must be defined in your records, and failure to designate the time period is a direct violation of the record-keeping requirement and can be grounds for the exemption being denied.

If there is reasonable expectation that there will be no difference in compensation when compared to other members of the sales group, a newly hired employee may be treated as meeting the exemption from the beginning of employment.

Commission Payments
If the employee is paid entirely by commission or the commission payments are always greater than salary or hourly wages, it is determined that more than half of the employee’s earnings come from commissions. When this is not the case, the commissions and other compensations during the representative period must be totaled separately. Commission totals must exceed other compensation totals in order to qualify for the exemption. If a department or store manager is paid commissions based on sales, the payments can count as commissions. Although other employees made the actual sales, manager functions contributed to the sales.

Conclusion
Now that you’ve learned how to determine an inside sales overtime exemption, you’ll be able to make more informed decisions moving forward. Casual Friday is a great way for everyone to enjoy the last day of the work week. Comfortable jeans and a nice shirt make finishing up the week’s work fun. Change the style occasionally and have a Hawaiian or beach themed Friday.