Information letters are furnished by the Internal Revenue Service’s (IRS) National Office in response to requests for general information by taxpayers, by congresspersons on behalf of constituents, or by congress-persons on their own behalf. The release of information letters has increased and is intended to increase public confidence that the tax system operates fairly and in an even-handed manner with respect to all taxpayers. A recently released information letter addresses the interaction of COBRA and Medicare. Specifically, the information letter addressed the circumstances under which a covered spouse is entitled to extended COBRA continuation due to the covered employee’s Medicare entitlement prior to termination of employment. The letter provides that a covered employee becomes “entitled to Medicare benefits upon the effective date of enrollment in either part A or B, whichever occurs earlier.” Background Under the Consolidated Omnibus Budget Reconciliation Act (COBRA) a qualified beneficiary who loses group health plan coverage due to a qualifying event can be eligible to continue that coverage for a specific period of time. A qualified beneficiary is an employee, the employee’s spouse and/or dependent. There are six events that if their occurrence causes a loss of coverage will trigger COBRA continuation. They are: termination of employment, a reduction in hours, death, divorce, loss of dependent status, and entitlement to Medicare. The general rule is that continuation coverage, which is paid for by the qualified beneficiary, is available for a period of 18 months. However, there are limited situations where coverage may be extended for up to 29 or 36 months. Medicare and COBRA Even though the rules provide that “entitlement to Medicare” is a reason for continuation coverage, this language often causes confusion. As a reminder, the Medicare entitlement must cause a loss of coverage. An employer that is subject to COBRA continuation, i.e. one that has 20 or more employees in the current or preceding calendar year, is also subject to another federal law governing a health care plan, and that is the Medicare Secondary Payer rules (MSP). The MSP rules provide that an employee (or spouse) that becomes entitled to Medicare cannot be terminated from the plan due to that entitlement. Therefore, just becoming Medicare eligible, such as by turning 65 years old, is not a reason for terminating an employee’s or spouse’s health care coverage. However, Medicare entitlement will become an issue if there is a loss of coverage for an employee due to the qualifying event of a reduction in hours or termination of employment. The issue will be whether the employee becomes Medicare entitled before the qualifying event or after the qualifying event. The information letter explains that the covered spouse of an employee can receive COBRA continuation coverage for 36 months if that employee became entitled to Medicare benefits before termination of employment or a reduction in hours. The 36-month period begins to run after the date the covered employee became entitled to Medicare coverage. If the employee becomes entitled to Medicare after the termination of employment or reduction in hours, then the spouse will be limited to a maximum COBRA continuation period of 18 months. As a reminder, an employee who experiences a loss of coverage due to a qualifying event is always limited to a maximum COBRA continuation period of 18 months. Conclusion The information letter is not breaking new ground but serves as a reminder of one of the ways the maximum period of COBRA continuation coverage can be affected by a covered employee’s Medicare entitlement. As noted, information letters are often released relating to requests on general information. As always, an employer should consult with its counsel and trusted advisors to ensure that it is complying with the various laws when providing employee benefits.From Tracie Witter, PPL Electric Utilities Regional Affairs Director
Well here we are in January and February – the coldest time of the year! They’re months of short days, long nights, snow, wind and ice. While these months do have their charm, we all know they can be tough to get through sometimes.
For people who are struggling with personal challenges, like illness or the loss of a job, life can seem even bleaker at this time of year. Bills loom larger, and things we once took for granted suddenly become constant sources of concern.
Fortunately, help is at hand, even in the darkest hours.
Since starting at PPL this fall, I have learned about a program called Operation HELP. It’s an energy assistance fund founded by PPL Electric Utilities in 1983. Since then, it has helped 94,000 families – including some in our area – by making their financial challenges a little lighter.
It works like this: Income-eligible customers can apply for grants that help pay any type of energy bill. The grants go directly to the customer’s utility. Community agencies across PPL Electric Utilities’ 29-county service area administer the program.
Help is available year-round as funding permits – though, since winter is a peak time of year for energy use, demand is likely to be especially high around this time.
Operation HELP is funded by the company, our employees, retirees, and generous customers. We’ve done everything from holding golf tournaments to selling cookbooks to build support for the program over the years, and we thank those who have donated in the past.
In February, PPL Electric Utilities will hold its annual Operation HELP fundraising drive. You’ll receive information with your monthly statement. I hope you’ll consider giving, if you’re able to. You can also donate online.
If you believe Operation HELP can help you with your energy bills, you have a few choices. You can visit online to learn more about the program and find the name of an agency that administers the program in your area (The agency may be able to refer you to other programs that can help, as well).
Or, you can call PPL at 1-800-DIAL-PPL (342-5775), and we’ll help guide you. If other PPL customer assistance programs can help, we’ll tell you about those as well.
We appreciate any support you can give. It will make a difference in helping someone else get through these long, cold months, or another period of personal need.
Just how much difference can it make? Here are some comments from customers in our area who have benefited from the program.
“I wanted to thank you for helping me to get my power restored in my home. Because of your act of kindness, I am able to celebrate my daughter’s birthday tomorrow and my son’s birthday. I am also now able to provide my children with Christmas this year. ‘Thank you’ isn’t enough to say but I’m very appreciative of the help you provided for my children and myself.”
“I know we will get out of this situation we are in now with my losing my job. However, your help has been such a positive boost for our family in this difficult time we are having. Thank you so very much.”
From Chambers for Innovation and Clean Energy
In an effort to help develop and maintain solar jobs and manufacturing in Pennsylvania, new bipartisan legislation was recently passed and signed into law to do just that. Act 40 is designed to keep solar energy jobs within the Keystone State instead of sourcing them to neighboring states, as has been practice in recent years.
Additionally, $30 million in grants and loans is now available through the Solar Energy Program (SEP) to businesses that manufacture solar equipment, or generate or distribute solar power. The goal is to support Pennsylvania’s efforts to strengthen its position in the clean energy space.
“The Solar Energy Program is vital in our efforts to make Pennsylvania a leader in clean energy,” Governor Tom Wolf said. “Developing new renewable energy sources including solar is critical to ensuring Pennsylvania has a balanced and diverse energy mix that maintains our position as a major energy producing state.”
Many local Pennsylvania chamber member businesses can benefit from the SEP as it provides financial assistance in the form of grant and loan funds to promote the use of solar energy in Pennsylvania.
If your organization is interested in applying for a SEP loan or grant, please visit the PA Dept. of Community and Economic Development page.
Member News
- Marley’s Brewery and Grille will hold a launch party for its special new brew, Cheat Day Pale Ale, tonight, Jan. 3, from 5-7 p.m. $1 from every pint sold will be donated to the Bloomsburg Area YMCA’s youth scholarship fund, which helps support the YMCA’s efforts to offer free or reduced memberships to youth in the Bloomsburg community. This beer will also be served at the Chamber Business After Hours that is being hosted by the Bloomsburg Y on Jan. 17.
- The Bloomsburg Area YMCA will hold the first meeting of its new Healthy Fit Club this Saturday, Jan. 6 from 9-11 a.m. at its downtown Bloomsburg building. This free 11-week club will help kids in the community develop healthy habits through activities focused on fitness and nutrition. The Northern Columbia Community & Cultural Center will also begin holding a Healthy Fit Club in Benton this Saturday, with meetings from 9:30-11:30 a.m. For more information, visit this Facebook event page.
- The Danville Borough winter 2018 newsletter is now available. In it, read a year in review article from the borough council president that recaps all of the borough’s efforts and activities from 2017, and also meet the three new councilmen, get up to speed on upcoming events in the borough and the curbside recycling collection schedule.
- Wesley United Methodist Church has been hosting the community friendship meal since 2002. Guests in need are able to be served a warm and nutritious meal every Saturday morning from 10:30 a.m. – 12:30 p.m., free of charge. Volunteer groups are needed to keep this meal going in the future. If you have a group that is interested in volunteering for a few hours on a Saturday morning during the year, please visit the church’s website and click on “community friendship meal.” For questions, please contact Katy Miller at 570-441-2850. Please note that beginning this Saturday, Jan. 6, the community friendship meal will be held at St. Matthew Lutheran Church, 123 N. Market St., Bloomsburg, while the Wesley UM Church kitchen goes through a renovation that may last 8-12 weeks.
The Pennsylvania Department of Labor & Industry’s Bureau of Workers’ Compensation Health & Safety Division will offer a series of free webinars on workplace safety throughout the month of January. Titled PATHS (PA Training for Health and Safety), these webinars will cover subjects such as safe driving in inclement weather, dealing with angry people, snowblower safety, safety incentive programs, mold awareness, ADA compliance, social media safety and much more. Each webinar lasts approximately one hour depending on course material and viewer participation.
For more information, to register, and for a complete listing of each webinar, visit the PATHS training calendar.
Keystone Innovation Zone (KIZ) tax credits for 273 early-stage companies totaling $15 million were announced by Governor Tom Wolf on Dec. 28, 2017. Included are 11 companies located within the Greater Susquehanna Keystone Innovation Zone, which includes portions of Bloomsburg, Danville, Lewisburg, Sunbury, and Selinsgrove.
The Keystone Innovation Zone Program is designed to support and encourage entrepreneurship in and around Pennsylvania’s colleges and universities by providing young Pennsylvania companies with vital working capital to meet critical needs, including covering capital expenditures, workforce expansion, operational expenses, and making companies more attractive to venture investment.
Run out of the PA Department of Community & Economic Development, the program provides tax credits for companies that have been in operation for less than eight years, whose gross revenues have increased over the previous year, are located in a Keystone Innovation Zone, and are operating within a targeted industry sector such as information technology or advanced manufacturing/diversified materials.
“By providing these tax credits, we’re helping to reduce the burden placed on companies as they go through the early stages of growth, thereby helping new ideas take root while pushing both our economy and the thriving tech sector forward,” said Governor Wolf.
For more information about the KIZ program, contact the Rural Business Innovation office in Bloomsburg at 570-245-0096.
In conjunction with the 2019 fiscal year Community Health Needs Assessment, Geisinger and its partners, Allied Services and Evangelical Community Hospital, invite you to join with other regional community partners for conversation about our research findings from the CHNA, the impact and challenges of health needs in our community and how we can increase collaboration to address community health needs.
Partner Forums will be held on six dates across the region. Please register for the session nearest to your community using the links below.
- Register: Tues., Jan. 9, 8:30-11am in Camp Hill (Cumberland County)
- Register: Wed., Jan. 10, 8:30-11am in Kulpmont (Northumberland County)
- Register: Fri., Jan. 12, 8:30-11am in Lewistown (Mifflin County)
- Register: Tues., Jan. 16, 8:30-11am in Lewisburg (Union County)
- Register: Thurs., Jan. 25, 2-4:30pm in Dickson City (Lackawanna County)
- Register: Wed., Jan. 31, 2-4:30pm in Wilkes-Barre (Luzerne County)
Agenda:
- Welcome and refreshments
- Presentation of research findings from the FY2019 CHNA, in progress
- Large and small group facilitated dialogue to discuss asset mapping, high need populations, community health priorities and collaboration
- Closing discussion: Making collective impact
Your participation and input will help guide regional community health improvement planning and identify opportunities for local collaboration.
We encourage you to share this invitation with your colleagues and others who may be interested in attending. There is no fee to attend, but registration is required.
We look forward to continued collaboration with our community partners in this essential work! For more information about the CHNA, please visit https://www.geisinger.org/about-geisinger/in-our-community/chna or contact Allison Clark, Geisinger Community Benefit Coordinator, at aclark1@geisinger.edu.
From PA Chamber of Business & Industry
With 2017 drawing to a close and the legislature recessed until after the New Year, now is a great time for the PA Chamber to assess our accomplishments on behalf of our membership this year and look toward our ongoing goals for 2018.
We were happy to see a lot get accomplished in 2017 that will help to bolster business investment and job growth and move our economy forward – including a budget that didn’t impose the up to $1 billion in new tax hikes that were proposed during a months-long impasse. One of the PA Chamber’s top priorities also got addressed this year, with a public pension reform law that is a great first step to putting the state and public school employees’ retirement plans back on the track to sustainability. And we’ve seen success on the education front, too – first, with a new law that replaces an antiquated, seniority-based system for teacher furloughs with a performance-based model in order to keep the highest quality educators in the classroom; and second, with a $10 million boost to the popular and effective Educational Improvement Tax Credit program that allows businesses to contribute toward scholarships to help students in low-performing school districts attend schools that better suit their academic needs.
As much as we have to celebrate, a lot of work still lies ahead. One of our major goals in 2018 will be implementing a workers’ compensation drug formulary, in which doctors writing prescriptions that are not FDA-approved or otherwise demonstrated to be effective must at least explain why the prescription is needed for the patient. This legislative action is especially necessary as the state finds itself in the middle of an opioid abuse crisis. In fact, in a recent 25-state study, Pennsylvania ranked third compared to other states for opioid use among injured workers between the years 2012-2014, measuring 78 percent higher than the median study state. Formularies are a proven way to combat this problem. For example, in the three years after Ohio implemented its formulary in 2011, the number of opioid prescriptions declined by 38 percent and the number of workers’ compensation patients considered opioid dependent was reduced by half. The bottom line is this – Pennsylvania needs a drug formulary to help combat opioid abuse among injured workers and get them healthy and back to work as soon as we can (Note: The Columbia Montour Chamber formally supports this proposed legislation).
We also continue to monitor ongoing calls from some legislators to enforce an additional tax on the natural gas industry. This issue, which we continue to lead a coalition against because another severance tax would hurt Pennsylvania’s business climate and drive jobs and economic opportunities to other states in the shale play, was a major point of contention in the House in the waning days of 2017. It’s an issue we expect to be hotly debated as 2018 – a gubernatorial election year – approaches. Voters will see a marked difference between Gov. Wolf’s stance on this issue (he’s been calling for a severance tax since he first campaigned in 2014) and the four Republican gubernatorial candidates, one of whom he’ll ultimately face off against in the fall. There’s no doubt that the governor will call for a severance tax yet again when he gives his budget address in February, and rest assured that we’ll stay vigilant in our efforts to fight against it.
We will also be continuing our workforce efforts to address the growing jobs skills gap in the Commonwealth. In 2018, we are pleased to feature several workforce related events – including three new webinars that will take a deeper look at programs offered by the state; as well as innovative solutions created by various private sector companies to ensure there is a pipeline of qualified candidates ready for the in-demand jobs across the Commonwealth (Note: The Columbia Montour Chamber is also planning to roll out several workforce development initiatives in 2018).
These are just a few of the many issues we will be closely monitoring over the next year. For more information on our legislative agenda and our workforce efforts, visit our website at www.PAChamber.org.
From ChamberChoice and Small Business Pittsburgh
There are numerous employee benefits laws requiring compliance. Staying on top of compliance can be daunting, and it’s easy for something to fall through the cracks.
As you gear up for the New Year, take some time to review the pitfalls of employee benefits plan administration.
Smart Business spoke with Frances Horn, employee benefits compliance officer at JRG Advisors, about what to watch for with employee benefits compliance.
What’s the first step to compliance?
As employers gear up for 2018, they need to set some time aside to review their employee benefits plan administration. An employer may not be subject to every law, due to size or type of benefit offered, but no employer is not subject to any of the laws.
The major laws are the Employee Retirement Income Security Act of 1974 (ERISA), Consolidated Omnibus Budget Reconciliation Act (COBRA), Health Insurance Portability and Accountability Act of 1996 (HIPAA), Internal Revenue Code (IRC) Section 125, Family and Medical Leave Act of 1993, Medicare and the Affordable Care Act, with many having several compliance provisions.
How is failing to properly communicate with the plan participants a pitfall?
Under ERISA, plan administrators have disclosure and reporting requirements. Every plan may not be subject to these requirements, due to size or type of plan funding, but every plan subject to ERISA has disclosure or communicating requirements, such as distribution of a Summary Plan Description, Summary of Benefits and Coverage and numerous other notices.
Under COBRA, many administrators don’t recognize that there are several more notices required than just an election notice. These include, but are not limited to, an initial notice, notice of early termination and notice of unavailability of COBRA coverage.
Other communications that remain the plan administrator’s responsibility are the Medicare Part D notice, HIPAA Special Enrollment Rights, Women’s Health and Cancer Rights Act notice and the Children’s Health Insurance Program Reauthorization Act of 2009 notice.
Where else do employers go wrong with plan administration?
Understanding who is actually the plan administrator can be another pitfall. With most laws governing employee benefits plans, the responsibility for compliance rests with the plan administrator, which is the person usually designated in the plan documents. If no such designation exists, the administrator role defaults to the plan sponsor, i.e. the employer.
While the plan administrator is responsible for disclosures to participants, plan document preparation and penalties for any noncompliance, many employers incorrectly feel these requirements fall with either the insurer or the insurance broker. Even for a self-insured plan, the third party administrator rarely agrees to be the plan administrator, but may assist with an employer’s documentation responsibility.
The pre-taxing of an employee’s premium contribution share is another pitfall. Many employers require that employees pay a portion of the premiums, particularly medical, dental and vision insurance coverage. To assist employees with these contributions, an employer will take the premium out of an employee’s compensation before applying taxes, thus the term pretax. An employee’s taxable wages for the Federal Insurance Contributions Act, federal withholding and state withholding are then reduced. This practice is often referred to as being a tax-favored treatment for employees.
The capability to pre-tax benefits comes under Section 125 of the IRC. The code requires that an employer establish its pretax plan, often referred to as a cafeteria plan, Section 125 plan or a premium-only-plan, in writing. Not meeting this requirement means a Section 125 plan doesn’t exist and that the employer is more than likely improperly taxing its employees’ benefits.
Numerous laws govern employee benefit plans. Ultimately the employer is responsible for complying with these laws and can be subject to costly penalties for noncompliance. As the year draws to a close, employers should review the governance of their benefits plans and determine if they need assistance to climb out of any pitfalls.
From PA Chamber of Business & Industry
The week prior to Christmas was an important one – not only in the world of politics, but for employers and workers across the nation. Congress passed a sweeping tax reform measure, the Tax Cuts & Jobs Act, that makes the first substantial changes to America’s tax code since 1986.
This is great news for our country in terms of our future prospects for economic growth. The soon-to-be-new law – which awaits the president’s signature – aims to simplify the Tax Code, making it easier to understand and comply with (which means less time that business owners have to take out of their day filing company taxes). Also included are provisions to lower the federal corporate tax rate to a far more competitive 21 percent and move to a territorial tax system so that businesses are only taxed on income earned within the U.S.’s borders, among other pro-growth changes.
These changes have been a long time coming. It’s hard to believe that 31 years had passed since any meaningful reforms had been made to what business leaders around the world had long called, onerous and uncompetitive tax code; and nearly unfathomable to conceive of the billions of dollars our economy must have lost out on over the decades to countries with better business climates.
With these tax reforms in place, it’s not only large businesses who will see economic opportunities skyrocket, but small ones too – all of which means more jobs, lower taxes and bigger paychecks for American families. This includes relief for small businesses who would benefit from a new, lower tax rate up to a certain level of their net business income and lower taxes on small business investment.
Right out of the gate, the U.S. Chamber championed the legislation due to the far-reaching positive implications it promised for our economy and America’s future competitiveness; and led a broad-based coalition of business advocates (including the PA Chamber) in supporting its passage in Congress. During the course of negotiations, our organization signed letters to federal lawmakers, and had this opinion editorial published in several news outlets statewide to make the case for long overdue federal tax reform. It’s been more than three decades since 1986 – and it was long past time for this great country to adopt the types of reforms that will now lead to the strong economy our hard-working population deserves.
You can learn more about how federal tax reform will impact Pennsylvania at www.TaxReformforAmerica.com.