December 2020: California Small Business Tax Credit Enrollment Now Open

What happened?
Senate Bill 1447 was enacted on September 9, 2020, and allows a small business hiring credit against California state income taxes or sales and use taxes to certain California qualified small business employers that receive a tentative credit reservation.

What are the details?
Starting December 1, 2020, the California Department of Tax and Fee Administration (CDTFA) will begin accepting applications for tentative small business hiring credit reservation amounts through an online reservation system. The credit reservations will be allocated to qualified small business employers on a first-come, first-served basis. The reservation system will be available from December 1, 2020 at 8:00 a.m., through January 15, 2021. Please note, this credit only applies to California small businesses that meet the following qualifications:

  • Employed 100 or fewer employees as of December 31, 2019, and
  • Suffered a 50 percent decrease or more in income tax gross receipts (generally, all income less returns and allowances), when comparing second quarter 2020 to second quarter 2019.

Small businesses may receive up to $100,000 in tax credits. An employer can be eligible for up to $1,000 for each net increase in qualified employees. This is calculated by subtracting the average monthly fulltime equivalent qualified employees employed during the three-month period (April 1, 2020 through June 30, 2020) from the average monthly full-time equivalent qualified employees employed during the five-month period (July 1, 2020 through November 30, 2020).

The CDTFA website hosts all the information available about this tax credit and has the link to the web portal where small businesses may apply. It can be found here.

Note: This is separate from the $500 million small business stimulus package that Governor Newsom has mentioned recently. The Office of the Small Business Advocate is still working out the details. A communication will be sent out separately about that stimulus package once more is known.

What do employers need to do?
Employers should review the information on the website and contact their HR representatives if they have any questions.

Benefits at a Glance: 2021 Employee Benefits

Young female physician consults female patient

COVID-19 has certainly impacted businesses worldwide in more ways than one. From business infrastructure (i.e., remote work) to operations (i.e., virtual processes, reliance on technology, on-premises safety protocols), businesses have had to revamp their processes or close their doors to business. One impact that has certainly changed in the face of COVID is healthcare benefits.

Explore how COVID has changed the trajectory of 2021 benefits, the final rule on healthcare transparency, employee benefits plan limits for 2021, and how the Biden administration may impact overall healthcare benefits.

How COVID Has Changed the Trajectory of 2021 Benefits

From addressing remote workplace policies and worst-case scenarios, such as an employee testing positive for COVID, general well-being of individuals and families alike has been the top priority for most employers. As employers continue to navigate the public health crisis, here are some interesting benefits trends that may be implemented into 2021 benefits healthcare packages.

According to Mercer, the most common changes to employee benefits that companies are considering include:

  • Expanding virtual or telehealth services (32%)
  • Strengthening mental health assistance, such as employee assistance programs or additional services (25%)
  • Boosting cost-sharing programs for medical expenses, such as deductibles, premiums, and co-pays (20%)
  • Increasing or improving voluntary benefits (16.5%)
  • Expanding expensive claims management services, including specialty pharmaceutical claims (13.5%)

2021 Final Rule on Health Care Transparency

The U.S. Department of Labor, Health and Human Services Department, and the Treasury Department issued a final rule requiring transparency on group health plans and health insurers.

The final rule requires plans and insurers to publish:

  • Price and cost-sharing information to participants, beneficiaries, and enrollees upon request:
  • A list of 500 shoppable services made available through the Internet for plan years beginning on or after January 1, 2023.
  • All remaining items and services must be available for plan years beginning on or after January 1, 2024.
  • In-network provider-negotiated rates and historical out-of-network allotted amounts on their website:
    • Detailed pricing information made public for plan years beginning on or after January 1, 2022.

The final rule also allows issuers that share savings with consumers to report the shared savings payments in medical loss ratio calculations.

2021 Employee Benefits Plan Limits

Most healthcare benefits are subject to annual dollar limits that are frequently updated to reflect inflation by the Internal Revenue Service (IRS). The dollar limits that will apply for the next calendar year are announced well in advance of the beginning of that year to allow employers an opportunity to update their plan designs and ensure compliance. While some plan limits will increase for 2021, most of the limits remain the same.

For plan years beginning on or after January 1, 2021, the following limits have increased:

  •  Health savings account (HSA) contributions:
    • Single coverage—$3,600 (up $50)
    • Family coverage—$7,200 (up $100)
  • High deductible health plan (HDHP) out-of-pocket maximum limit:
    • Single coverage—$7,000 (up $100)
    • Family coverage—$14,000 (up $200)
  • Tax exclusion for adoption assistance benefits—$14,440 (up $140)

The following limits will not change for 2021:

  • Flexible spending account (FSA) salary reduction contribution limit
  • HDHP minimum deductible
  • 401(k) contribution limit
  • Transportation fringe benefits monthly limits

How a New Presidential Administration May Change 2021 Benefits

As with any new presidential administration, new legislation will likely be passed changing current regulations on many benefits-related programs. Here are some of the benefits-related programs that may change 2021 benefits.

  • Affordable Care Act (ACA): Depending on the outcome of a Supreme Court case, President-elect Joe Biden supports utilizing ACA’s infrastructure to expand a public health option similar to Medicare. Under this proposed model, everyone would have access even if employers offer qualified health plans. For small business owners, this may offer a cost-savings opportunity by having employees opt for public health coverage instead of funding it themselves.
  • Medicare: Biden is looking to expand Medicare by proposing a lower eligibility age (60, down from 65). This allows eligible workers to start retiring earlier.
  • Paid Leave: Biden is an advocate for increasing paid family and medical leave to 12 weeks. To expand that effort, the Family and Medical Insurance Leave Act would expand the qualified reasons for taking paid leave and extend eligibility to more workers. While Biden supports several elements of this Act, there will likely be some iteration of this legislation early in his administration.
  • Cannabis Legalization: While there may not necessarily be direct support or endorsement for cannabis legalization, Biden has expressed decriminalization. Outside of federal government regulations defining it as illegal, many states have allowed for medical and/or recreational use of cannabis. Recently, five states legalized the use of cannabis: Arizona, Montana, and New Jersey (recreational only), Mississippi (medical only), and South Dakota (both recreational and medical).

Healthcare is a complex topic that requires frequent auditing for compliance and unique language that is oftentimes confusing for members. If you’re looking for a way to adequately educate your employees, find better benefits, and proactively approach 2021 with a benefits plan, contact VensureHR. Our team of benefits specialists can equip you with the latest compliance updates, address any benefits enrollment and administration questions or concerns, and offer industry-leading resources and tools to safeguard your employees’ well-being.

 

Sources:
Society for Human Resource Management
Gusto


Benefits Buzz
CMS 9915-F
HR Insights: How a Biden Administration Might Impact HR and the Workplace

December 2020: Michigan Small Business Grants

The Michigan Strategic Fund approved a $10 million grant program (Pure Michigan Small Business Relief Initiative) to assist small businesses impacted by the COVID-19 virus. Eligible small businesses could receive upwards of $15,000.

Eligibility Requirements*

  • For-profit entity
  • Not filed for bankruptcy in the last 10 years
  • At least two employees, fewer than 50 employees
  • 2019 annual gross revenue exceeds $25,000

Applications for the grant will open on December 15, 2020 at 9:00 a.m. EST.

We have also provided employer resources, such as Frequently Asked Questions regarding employment laws to quickly address any issues you may have experienced already amid the COVID-19 crisis. Work from Home and Workplace Compliance guides for employers to utilize.

We continue our commitment to open communication with our clients, employees, and partners and ask that we continue to support each other in these challenging times.

Review the full grant details here.

*View full eligibility requirements.