Exam 2 Flashcards
how was worker’s comp in the last half of the 19th century
employees could sue for injuries
long process and worker were often not paid much
employers sometimes paid huge amounts
1913 California passed worker’s comp act called…
Boynton
The system for “compensation bargaining” (Boynton Act) allowed for
seed for todays worker comp system
eliminated lawsuits to resolve worker comp
employees received timely benefits
requirements for benefits to be paid for worker’s compensation
must be evidence based medical treatment
must be through an approved medical provider network
Utilization review required
treatment denials can be appealed
Benefits paid for temporary Disability are:
2/3 of gross pay
ranges from $169.26 to $1128.43 per week
requirement and limit for temporary disability (worker’s comp)
must be absent at least for three days
maximum of 104 weeks of benefits in a 5 year period
how are worker’s comp benefits determined for permanent disibility
Your disability rating (it is a %)
Date of injury
wages before you were injured
ranges from $160 to $260
amount of money paid out to death benefits (worker’s compensation)
$10,000 for burial benefit
there are no worker’s comp benefits for
pain suffering
Punitive damages
Employer Negligence (exception must prove employer is grossly negligent)
Employer’s worker’s comp responsibilities
must obtain worker’s comp at no cost to employee
or be self-insured (requires approval)
display worker’s comp poster
consequences for employer not having worker’s comp insurance:
must pay all of the employee’s medical bills
they can be sued for torts
criminal offense: fine of up to $10,000 and one year in jail
Civil fines up to $100,000
employer’s responsibility when an employee mentions an injury
provide the employee with a claim form within one day
complete employer’s report of occupational injury
return complete claim form to employee
send claim form and employers report to claims administrator
accept or deny claim within 90 days
employer must compensate injured employee by authorizing $ and transitional work toward
$10,000 (within 1 day of receipt of claim form)
light duty
common problems for worker compensation, coming from employer
under-reporting payroll
claiming employees as independent contractors
overstating employee experience
not obtaining worker’s comp insurance
examples of employee fraud in worker’s comp
injury was not related to work
exaggerated injuries
fake injuries
pre-existing injuries
FUTA and SUTA stand for
Federal Unemployment Tax Act
State Unemployment Tax Act
Who pays for FUTA and SUTA
Employer
Paying for FUTA is for
Federal administration (Federal Government monitoring the states)
Paying for SUTA is for
administration and benefits for state programs
Criteria for a “covered employer” under FUTA
EITHER
Pay wages of $1500 in any quarter
employs 1 or more people in each of 20 weeks in a row (in current or previous year)
Coverage under California SUTA required for employer
if employer pays as little as $100
examples of what UI pays out
Salaries, wages, Bonuses, Commissions,
not reimbursements or for independent contractors
How are SUTA taxes rates determined?
Experience Rated (if employer costs more UI then they get a higher rate)
California SUTA rates range from
1.5%-6.2%
This is on the first $7000 of wages for each employee
SUTA tax for new employers
3.4%
what are the two FUTA tax rates
GROSS FUTA tax rate
NET FUTA tax rate
What is gross FUTA tax rate
6% of the first $7000
What is the NET FUTA tax rate
it is the amount actually paid out by employers
how is the NET tax rate determined?
reducing the gross FUTA tax rate by two credits
what are the two credits when determining NET tax rate
credit for paying SUTA tax on time
the additional tax credit is whatever is needed to get the total tax credit to 5.4%
reasons why an employer can pay more than 0.06% in NET FUTA tax
The employer did not pay the SUTA tax on time
Employer is in a “Credit Reduction” state
penalty for not paying SUTA tax on time
The SUTA tax credit is only worth 90% of the amount paid to the state
(additional credit is not increased to offset this loss)
what happens if State UI funds run out of money
Title XII (12) Advance State borrows money but employers must pay more FUTA in order to pay back the loan (Within 1 year)
what happens for every year the TITLE XII is not paid back
the FUTA tax Rate increases 0.3%
California is expected to fully repay Title XII in what year?
2017
What is the leading cause of bankruptcy?
not having health insurance
tools for designing the right health plan for diverse groups
Flexible Spending Accounts
Cafeteria Plans
Health Savings Accounts (accumulates tax free)
what are Postpaid plans in health insurance?
paid AFTER care provided
Ex. Fee for service and indemnity plans
What are Prepaid plans in health insurance?
paid BEFORE care provided
Ex. HMO and PPO
what is prospective pricing?
a predetermined price
what is channeling in health care?
technique to move patients and employees to certain places ex. Kaiser patients must go to Kaiser
utilization review in health care is
it uses a utilization group within the department and they must give approval for the care or surgery before it takes place.
cost sharing in health plans
employee and employer share costs of with premiums, deductibles, and copayments
Process of plan design and maintenance of health plans
Design the best plan for the work group
Determine plan financing
Inform and educate employees
administer the plan
what are tiered rate structures
charging depending on the size of your family
what is COBRA
it continues healthcare after termination but allows only 18 months to stay on (29 months if disabled)
how much does employee pay for COBRA?
102% of employer’s cost
2% is for administrative fees
Penalty violation for COBRA
$100 per day per employee
how to finance retire healthcare continuation
Pay as you go
increase pension benefit
Incidental pension benefit
Voluntary Employees’s Benefit Association (similar to 401k)
types of medical plans
Basic Plan (similar to part A of medicare)
Prescription plans (similar to part D of medicare)
Major medical (similar to par B of medicare)
Catastrophic plans (high deductible plans)
Comprehensive plans (one plan that covers all of the above)
How do Fee for service/ Indemnity plans work? (how they use to be)
choose any care provider you want
annual deductible $500-$5000
after deductible you pay part of the bill
(very expensive)
How do PPOs work
Choose any provider but encouraged to choose “preferred providers”
with “preferred provider’ you pay 10% or small copayment
different care provider you pay 30% after deductible
Health Maintenance Organizations info
these are are capitations
use network providers
co-payment $15-$50
always includes manage care (need for pre approvals)
what is the insurance death spiral
Once healthy people start leaving the insurance pool premiums start to rise thus more healthy people drop out and the sick have to pay the higher premiums
What does guarantee issue mean in Obama care
insurance can’t turn away people for preexisting conditions
what is community rating in Obama care
charging one price for everyone (special exceptions such as age)
Obama care expanded eligibility to more people in medicaid (medical)
TRUE
Employers with 50+ employees and with 30+ hours/week must provide
health insurance to employees working 30+ hours
or
pay a fine of $2000 per employee per year
info about everyone having health insurance
pay a fine if you don’t
fed subsidizes if you are 4x the poverty level
must pay 2% of income or at least $50
how is the affordable care act paid for
more medicare tax on higher income earners
new medicare tax on investments
tax on insurance companies
40% tax on “Cadillac” policies (delayed until 2018)
reduction in medicare part C
tan tax
new taxes on drugs and medical devices
Reduce itemized deduction for health care
Health Insurance companies can not have margins higher than 20%
TRUE
health costs must equal what percent of premiums
80%
Medicaid (medical) will be expanded to whom?
people with incomes below 138% of poverty level
what is a problem with medicaid?
most doctors do not take medicaid
and
ACA reduces pay to medicaid providers
who qualifies for insurance through the exchange.
those who do not have employer insurance or do not qualify for medicaid/medical
the exchange allows a subside for people who are below
400% of the poverty level
$47080 for individuals
$97000 for family of four
what is the name of the California exchange?
Covered California
name the four standard plans on the exchange
Bronze (covers about 60% of the health costs)
Silver (covers about 70% of health costs)
Gold (covers about 80 % of health costs)
Platinum (covers about 90% of health costs)
Do all states have a health care exchange?
yes and no… state who do not have their own exchange must use the federal exchange
Who collects the penalty for not having health insurance.
IRS (but don’t go after you, instead they take it out of your refund)
When does coverage begin after you sign up with insurer on the exchange?
there is a delay (not immediate)
if you apply by the 15th of the month it becomes effective on the 1st the next month
(must wait at least half a month)
What is group term life insurance
it is between employer and insurance company for employee (works the same as regular term life)
characteristics of group term life insurance
set for a specific time
renewable when you want
“pure insurance” pays only death benefits (no investment or cash value)
rates depend on age
amount of insurance paid out from group term life insurance for employees are
income multiple method (most common)
Flat dollar amount
Retire group term life insurance is rare because they are often older.
TRUE
What are the conversion privileges for group term life insurance?
it can be converted into a private policy
ADEA stands for
Age Discrimination Employment Act (can’t discriminate older than 40 )
Employer premiums for group term life insurance are tax deductible up to
$50,000 of life insurance
extra insurance is taxable to Employees
How are group life insurance premiums unusually structured?
after tax deduction (then payout benefits will not be taxed)
what are pretax premiums?
premiums paid by non taxed income (benefit payouts will be taxed)
what is the purpose of disability insurance?
replaces a portion of your income (if you can’t work anymore)
NOT FOR WORK-RELATED INJURIES
examples of short-term disability insurance
worker’s compensation
State Disability Insurance (not work related)
Sick leave (employer benefit)
What are some examples of long-term disability insurance?
Social Security
Worker’s comp (if permanently disabled)
Long-term Disability Insurance
Is there underwriting for an employee benefit “group plan”
Usually no
LTD optional benefit at work provided by employer has no underwriting until
the first 30 days
there is always underwriting when purchasing
an individual plan
Common characteristics of LTD insurance
replaces 50% to 80% of income
there is a waiting period (3 months to one year)
can end at 65 or last a life time
it can be any occupation vs your own occupation
“any occupation” in LTD means
you only get benefits if you can’t do anything else
“Your own occupation” in LTD means
you get benefits is you can do something else but not your profession
employer premiums for disability insurance are
tax deductible
tax-free benefit to employees
If employee did not pay the premium then the benefits are tax deductible.
TRUE in order for the benefits to be not taxed the insurance must be paid by already after-tax withholdings
what do section 125 plans do?
allow employees to save taxes on
Dependent care costs
employee’s share of health premiums
out-of-pocket medical costs
from 125 plans, employees lower their taxes on
FIT,SIT,OASDI,HI,SDI
from 125 plans employers save taxes on
OASDI, HI, SUTA, FUTA
How do 125 plans lower you taxable income?
Dependent Care,
out of pocket medical expenses
and health insurance premiums are taken out of your gross income (gross pay)
what to do when signing up 125 plan for out of pocket medical.
enter a salary reduction agreement
limited to $2550 for the year
how to change withholding amount in trust for plan 125 plan for out of pocket medical.
family status change (being married, divorcing, having a child)
Employer must reimburse for 125 out of pocket medical even if
the withholding has not occurred yet
Do use it or lose it rules apply to plan 125 out of pocket medical?
YES
dependent children are in 125 plan for dependent care expenses until
they their 13th birthday (unless disabled)
plan 125 for dependent care expense are limited to
$5000 per year
general rule for families either better off with 125 plan for dependent care expense or child care credits.
higher income families better off with 125 plan
lower income plan is better off with child care cedits
plan 125 dependent care cannot change deduction amount unless
family status changes
use it or lose it rules apply to plan 125 dependent care
TRUE
cost for employer having 125 plan and how can it be offset?
costs of establishing the program ($5k-$10k)
costs of administering program
losses for ADVANCES for out-of-pocket medical
offset by use it or lose it rules
125 plans create significant tax savings on
FIT, SIT, OASDI, HI, SDI (State Disability Tax)
What are the employer steps for implementing a 125 plan
- Create a plan (have a legal document for the IRS)
- Educate employees
- Hold open enrollment
- Payroll withholding
- Reimburse employee
- Report to employee, IRS, Franchise Tax Court
What is the Federal Fair Labor Standards Act? (FLSA)
Set federal minimum wage ($7.25)
Overtime Laws (%)% extra if over 40 hours
Equal Pay
other work guidelines (ex. child labor laws)
What are Fair employment laws?
Non-discrimination laws
What tax form is used to report FUTA taxes?
Form 940
Form 8190 for small employers
What is California’s current FUTA tax rate?
2.7%
What would cause an employer to pay higher FUTA rates?
Employer did not pay SUTA tax on time
employer is in a credit reduction state
Names of the Federal Health Care Law
Patient Protection and Affordable Care Act
Obama Care
How many people are expected to enroll in California’s Health Insurance exchange?
2.3 million people
What are the advantages of a group plan?
it is under long-term disability insurance and there is no underwriting
What are the various features of life insurance?
there is group term life insurance
For specified period of time (1,510 years)
it is renewable
has no investment of cash value
what is “pure” insurance
only pays out death benefits
cost for employee for life insurance?
employer often pays full cost
Employees pay for additional insurance
but it varies by employer
Employer premiums for life insurance are
a tax-deductible business expense
what is the tax free benefit for employees (from life insurance)
$50,000 of life insurance
What is the Federal Minimum Wage?
What is the California Minimum Wage?
$7.25 per hour
$10 per hour
Basic elements of the IRCA?
Immigration and reform Control Act
Federal Personal Responsibility and Work Opportunity Reconciliation Act PRWORA
allows for a database for to be able to find and people who need to pay child support
Uniformed Services Employment and Employment Rights Act (USERRA)
It protects returning military members by having employers having to hire the returning veterans.
What are the basic elements for the WARN Laws?
Must warn employees of mass layoffs
Federal: 50+ workers
not included less 20 hour worker or people who have been there less than 6 months
California: 75+ employees
not including people who have been there less than 6 months
California Family Rights Act aka
and who pays for the taxes
Paid Family Leave
Basic elements of FMLA
Family Medical Leave Act
employee has the right to have time off for medical reasons (does not provide any pay)
What is the typical minimum employment period before an employee is eligible for paid vacation?
at least 3 months
How many employers allow their employees to sell back unused vacation upon termination?
about 10%
How many employers pay their employees for unused vacation upon termination?
87%
How do employers provide combined sick leave and vacation allowance to employees?
Paid Time Off (PTO)
What are the required rest and meal period in California?
10 minutes for each four hours
30 minute meal break if working 5+ hours
What happens if an employee is not provided a rest period or meal period?
they are paid an extra hour
What are the California requirements for paid sick leave?
Employer must provide written explanation of policy
advance notice or as soon as possible notice to employer
Sick leave for the absence is paid no late than the second pay period following the absence
