Our payroll services clients – and all the business owners in Indiana – are paying more than the norm according to the Federal Unemployment Tax Act (FUTA). In fact, as was explained in an earlier post, this year businesses will pay 2.1% of the first $7,000 EACH employee earns. The norm is approximately .6%!
When it comes to processing employee’s payroll with multiple garnishments, there is an established hierarchy of which one takes precedence. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was signed into law on April 20, 2005 and enacted on October 17, 2005. Prior to this law, Chapter 13 bankruptcy orders took priority over other garnishments. There was no limit to this federal deduction. Along with consideration for the type of order issued is the date on which it was issued. Date order, earliest to latest, establishes when the set amount begins coming out of employees’ paychecks. If you’re unsure of the pecking order, here’s an overview of some of the most common types of garnishments. (more…)
Even though the state of Indiana has been designated one of the best states for business regarding taxes, one area that doesn’t play out is with the FUTA. That’s the Federal Unemployment Tax Act. Employers pay a tax on employees’ wages to cover the state’s unemployment insurance program.
Indiana is one of several states in the position of having an outstanding loan to the federal government. In fact, according to the Congressional Research Service report dated Sept. 20, 2012, Indiana owed the federal government $1,994,007,775.40. And that means the state is designated a FUTA Credit Reduction State. (more…)
For the past few years, the Department of Homeland Security has been cracking down on employers who hire illegal immigrants. Therefore, it’s important that your company has all of its employee paperwork in order. And, this includes having an Employment Eligibility Form (I-9) completed for all new hires. (more…)
Sponsors of group health plans that provide prescription drug coverage must notify Medicare-eligible participants and beneficiaries as to whether the drug coverage offered is “creditable” or “non-creditable” prior to October 15th. Note that the rule is to provide the notice to both participants and beneficiaries (ex. spouses), so unless the plan sponsor is 100% certain that no individual on the plan, either subscriber or member, is eligible for Medicare, we recommend providing this notice to all employees on an annual basis (prior to Oct. 15) and include it in the Summary Plan Description or wrap document given to new hires.
Medicare Part D is a federal program to subsidize the cost of prescription drugs for Medicare beneficiaries. If the employer-sponsored prescription drug plan is expected to pay out as much as standard Medicare drug coverage it is considered “creditable” coverage, and if it is expected to pay out less than it is “non-creditable” coverage. This is an important distinction for the newly eligible, for they need to be aware of the options available in order to enroll in the appropriate plan; they will choose the employer-sponsored coverage if it is creditable or enroll in a Medicare Advantage plan that covers prescription drug services if employer-sponsored coverage is non-creditable.
Individuals can sign up for Medicare Part D coverage when they become eligible for Medicare Part A and Part B, or during the open enrollment period. The open enrollment period for Medicare Part D is October 15th to December 7th. Employers must distribute notices to Medicare-eligible plan participants and beneficiaries so that these individuals can make prudent choices regarding their prescription drug coverage. If an individual does not join Medicare Part D when initially eligible, and does not have creditable coverage and enrolls at a later date, the premium he or she will pay will include a penalty payment for late enrollment. This penalty is cumulative over time.
The Centers for Medicare & Medicaid Services (CMS) provides model notices for employers – click here.
Employers are encouraged to send the notice via first-class mail, by hand, or post electronically if all plan participants have easy access to computers.
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