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Month: March 2017
Top Trends in Business Law that You Need to Know for 2017
Macy’s and Kmart are each closing a Lansing location – but did you know that retail spending is up?
It’s easier than ever to collect customer data, but business owners beware: you need to protect that data or you could be on the hook for a breach.
And, get ready, driverless cars are definitely coming – and sooner than you might think!
In what has quickly grown into one of the most popular presentations in the Lansing Regional Chamber’s Small Business Education Series, Fraser Trebilcock business attorney Mark Kellogg joined a panel of experts for a rapid-fire session on top business trends for the coming year.
“Business owners are busy enough running their businesses,” said Tom Donaldson, Regional Director of the Capital Area for the Small Business Development Center. “It’s hard to keep up with everything going on in the world, too.”
To give business owners a snapshot of what’s happening now and what’s to come in 2017, area experts provided: a look at legal and business changes, financial forecasting, technology trends, a public policy preview, and what’s on the horizon in marketing for small businesses.
Administrative Law & Regulatory Changes
As with any changes in leadership on Capitol Hill, small business owners can anticipate a number of administrative law and regulatory changes ahead in 2017. Attorney Mark Kellogg said that while President Trump has not discussed his plans in detail, the President has said that he will “unburden” small business owners.
What exactly does this mean? From changes to labor and employment laws to key legislation like the Affordable Care Act (ACA), Mark said the only certainty we have is that change is coming.
Health Care Reform 2.0
Top of mind for many is health care reform. In January, President Trump signed an executive order titled, “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal”. Then, just last week, Republicans in Congress introduced the “American Health Care Reform Act of 2017” to overhaul the Affordable Care Act. The bill rolls back some of the ACA’s taxes, replaces insurance subsidies with tax credits, and makes big changes to Medicaid.
As the legislation evolves, Mark urged business owners to keep an eye on possible mandate changes, as the new administration modifies the Affordable Care Act. Updates are posted to our Fraser Trebilcock Employee Benefits Blog
Employee Overtime Rules
Changes once anticipated to labor and employment laws under the previous administration, may now be off the table. For instance, the rules that would have made more workers eligible for overtime is likely now to disappear altogether, said Mark. If the new administration decides to move forward with the change, he said the rules will likely be altered to include a lower salary cap than the original $47,476. This is something that our labor and employment attorneys will be watching closely.
Two-for-One Regulation Repeal
Another major change coming out of Washington, is a change to the process of how regulations are enacted. In an Executive order issued by President Trump, for every new regulation put into place, two old regulations must be repealed.
Attorney Mark Kellogg said this could have a big impact on emerging markets, such as drones rules and regulations. This is an area, he said, which will likely need more regulations as the technology evolves. However, in order to create these potential new regulations, the Federal Aviation Administration would need to repeal other rules.
Sick Leave Requirements
In the state of Michigan, changes to employee sick leave are also under consideration. Michigan lawmakers are debating a requirement for employers to give employees paid time off for sick leave. This could be especially critical for small business owners, Mark said. He shared that as a franchise owner himself, he will be watching this legislation closely as it develops in Lansing. With the current-make up of the State Legislature, this type of legislation may be difficult to advance at this time.
Businesses Succession & Sales
Expect to see more businesses for sale in 2017.
“10,000 people a day in the U.S. are turning 65,” said Mark, and as baby boomer business owners retire, we are finding that many do not have succession plans in place. Mark said that he has closed on three business sales transactions in just the last month and a half, a trend he expects to continue. He elaborates further in a recent article.
Data Security
Data breach incidents continue to make headlines, and unfortunately this is a trend not likely to go away in 2017. Any company that stories sensitive information, like customer credit card data, driver’s license numbers, or social security numbers, is susceptible to theft. Mark explained that it’s important to have a plan in place in case that data is compromised. Michigan has specific breach notification requirements under Michigan’s Identity Theft Protection Act that all businesses, regardless of size, must follow. These steps are outlined for you in a recent blog post.
Marketing Tips
Despite the security considerations, data collection is more important now than ever, added panelist Amanda Stitt of Change Media Group. Collecting and using data about customers adds to the creation of more personalized marketing, she explained. For example, companies can create ads that target returning customers and then use data to make sure only returning customers will see that ad. If you have ever put something in your online shopping cart and decided not to buy it, then been haunted by advertisements for that product elsewhere online, you have experienced this kind of targeted advertising. She said that messaging has to be more authentic and demonstrate the values of the company, pointing to the 2017 Super Bowl ads as examples. And, If you’re a fan of long-form writing, you’re in luck. Amanda said we will see a resurgence in longer videos, news articles, and even social media posts.
Public Policy Preview
Public Sector Consulting’s Chief Executive Officer Jeff Williams gave a deeper dive into upcoming public policy changes. This year, watch for major changes to come out of Washington. In the last several decades, he explained, we have seen the executive branch of government take more power; expect the legislative and judicial branches to respond with a push for a more equal division.
Next year, he believes the biggest changes for Michigan business owners will happen at the state and local levels. The state will elect a new governor, lieutenant governor, attorney general, and many new legislators, while Lansing will elect a new mayor. No matter where on the political spectrum you fall, Jeff said, it’s going to be a wild two years for all of us.
Technology: Protection is Key
Changes in technology have historically driven the evolution of business. Personal computers and the internet have forced most companies to move online, to change marketing and business strategies, and more. Now, according to Matt Scott of Dewpoint, business will begin driving changes in technology. As companies face the need to get more work done faster, more accurately, and at a lower cost, we can expect to see the tech sector working to create the products needed to make that possible.
Companies are also evolving the way they seek to solve problems. Matt believes that in 2017, more companies will look to outside tech experts to tell them how to develop new strategies, and to demonstrate what tech tools are needed to accomplish new goals. In that same vein, more businesses are looking to outsource complicated IT problems to technology specialists, instead of relying on in-house IT employees. All of these changes in technology will require small business owners to become more and more invested in technology.
Optimistic Economic Outlook
Fifth Third Bank Vice President Tom Ruis says there is a lot to be optimistic about with our current economy. Consumer confidence is up, as are retail sales and the stock market. What about big box stores closing locations? That’s all a part of the growth in online sales instead of the traditional storefront, he said, so don’t let it trick you into thinking that retails sales are down.
Tax reform that would reduce income taxes could help consumer spending increase even more, Tom said. Interest rates will probably increase slightly over the next year, and loans will get a little more expensive, he said, but he doesn’t think it will have a dramatic impact on small businesses.
One exciting innovation that’s closer to your driveway than you might think – self-driving cars.
“If you just bought a car, your next car will be almost fully automated in terms of parking and other features,” Tom said. He says virtual reality is making it much easier for automotive companies to test self-driving technology, and that will make road-ready versions available sooner than you might think. “Overall, this is a very positive, exciting time.”
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Fraser Trebilcock is proud to co-sponsor the Business Education Series, along with Fifth-Third Bank. Programs are free for members of the Lansing Regional Chamber of Commerce. Click HERE to view upcoming events.
Attorney Mark E. Kellogg has devoted his nearly 30 years of practice to the needs of family and closely-held businesses and enterprises, business succession, and estate planning. In addition, Mark is a certified public accountant. Contact Mark at 517.377.0890 or mkellogg@fraserlawfirm.com.
Alzheimer’s Legal and Financial Planning Tips
If you or someone you love has Alzheimer’s disease or another dementia, it is important to put legal and financial plans in place as soon as possible.
Fraser Trebilcock Elder Law attorney Melisa Mysliwiec says that proper planning helps to ensure that the person with the diagnosis is able to contribute to important decisions about health care and long-term care, finances and property, and deciding who will make decisions on his or her behalf if he or she becomes unable to do so.
“If plans are not made early,” she says, “it may leave the family of the Alzheimer’s patient to guess as to what their loved one would have wanted or worse, it may ultimately be up to the courts to decide.”
Melisa spoke recently to a group of Alzheimer’s and dementia caregivers during a presentation at MSU Federal Credit Union. As an attorney who also volunteers with the Alzheimer’s Association, Melisa emphasized that early planning is key.
Some of the areas where our elder law attorneys can help you include:
- Preparing Durable Power of Attorney for financial matters.
- Exploring ways to defray long term care costs.
- Assistance with Medicaid Planning and the Medicaid Application process for long term care benefits.
- Protecting against elder abuse, neglect, and financial exploitation.
- Handling various nursing home issues (payment, admissions, transfers, discharge, resident’s rights, and quality care).
- Preparing Designations of Patient Advocate for health care matters.
- Preserving assets to avoid spousal impoverishment when one spouse must enter a nursing home.
- Guardianships, Conservatorships, and Protective Orders.
- Exploring options for housing and living arrangements.
- Estate planning through use of wills, trusts and other documents.
When it comes to Alzheimer’s disease or other dementias, these decisions must be made early in the progression of the disease because, in later stages, the person with dementia may lack the legal capacity to make decisions. An elder care attorney can best assist you through the process.
Additional Resources:
- Elder Care Law
- Long-Term Care Insurance
- New Rules Make Preventative Care for Alzheimer’s, Diabetes More Accessible for Medicare Patients
- Why Your Caretaker Agreement Should Be Medicaid-Compliant, Even If You’re Not on Medicaid
- Alzheimer’s Association
If you would like to talk with an attorney about putting legal plans in place, contact attorney Melisa M. W. Mysliwiec. Melisa focuses her work in the areas of Elder Law and Medicaid planning, estate planning, and trust and estate administration. She can be reached at mmysliwiec@fraserlawfirm.com or 616-301-0800.
Employer-Sponsored Plans Take Note: The Legislative Process to Amend, Repeal, and Replace Aspects of the Patient Protection and Affordable Care Act has Begun
Employer-plan sponsors need to be ready to act as changes to the landscape of the Patient Protection and Affordable Care Act (“PPACA”) as applied to employer-sponsored group health plans are looming on the horizon.
On January 20, 2017, President Trump signed Executive Order 13765 titled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal” (the “Executive Order”). The Executive Order indicates a clear intent to repeal the PPACA in the future and in the meantime urges federal government agencies to take legally permissible leniencies in enforcing certain aspects of the PPACA: “To the maximum extent permitted by law, . . . [executive departments and agencies] . . . shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.” A copy of the Executive Order is available at: https://www.gpo.gov/fdsys/pkg/FR-2017-01-24/pdf/2017-01799.pdf
While the Executive Order serves as a general mission statement for the new administration, it does not provide an instantaneous change to the PPACA (the President cannot, by unilateral action, repeal final regulations). Furthermore, while the Executive Order provides a clear overall goal, it does not include details regarding how this goal will be achieved. Moreover, the Executive Order does not specifically mention any relief for employers or plan sponsors, nor does it discuss if and how any PPACA provisions regulating employers and employer-sponsored plans are expected to be impacted. Since the release of the Executive Order, all eyes in the benefits community have been on the status of the PPACA.
In the wake of the Executive Order, in February 2017, the IRS became the first agency to follow the Executive Order’s directive to start unwinding certain provisions of the PPACA. Specifically, the IRS released a statement indicating that individual tax returns will not be automatically rejected during processing merely because the taxpayer fails to indicate his or her health coverage status. This IRS statement appears to have loosened the IRS’ enforcement of the individual shared responsibility mandate. The IRS’ statement related to the individual shared responsibility mandate can be found at: https://www.irs.gov/affordable-care-act/individuals-and-families/individual-shared-responsibility-provision
It is important to note that the IRS statement did not indicate that the IRS would waive penalties for individuals who fail to maintain compliant health insurance coverage: “However, legislative provisions of the ACA are still in force until changed by Congress, and taxpayers remain required to follow the law and pay what they may owe.” And, again, the IRS statement does not address anything about its enforcement of the employer shared responsibility mandate or other PPACA provisions regulating employer-sponsored plans. Thus, the Executive Order and IRS statement have left the employee benefits community uncertain as to how the new administration intends to address the PPACA as it relates to employer-sponsored plans.
Yesterday, however, the House Republicans addressed this looming issue. On March 6, 2017, the House Ways and Means Committee and the House Energy and Commerce Committee each released proposed legislation to repeal and replace certain aspects of the PPACA, entitled the American Health Care Act (the “Proposed Legislation”). The Proposed Legislation provides insight into how the landscape of the PPACA may be altered with respect to employer-sponsored plans.
If enacted as drafted, the Proposed Legislation, as summarized, would dismantle certain taxes imposed under the PPACA, eliminate both the individual and employer shared responsibility mandate penalties, while keeping other portions of the PPACA in place, such as prohibiting pre-existing condition exclusions from coverage and allowing dependents to continue coverage under their parents’ health plans until the age of 26.
Other provisions of the Proposed Legislation establish a patient and state stability fund to provide states financial assistance to design programs aimed at each state’s own population and needs for affordable health care, transition Medicaid to a “per capita allotment,” increase the contribution maximums for health savings accounts (HSAs), repeal the tax on over the counter drugs, repeal the limitations of contributions to health flexible spending accounts, and assist those in the low to middle-income brackets with monthly tax credits to assist with health care costs.
A summary of the Proposed Legislation impacting employers, as prepared by the Committee on Ways and Means Majority Staff, is as follows:
“SUBTITLE _ — REPEAL AND REPLACE OF HEALTH-RELATED TAX POLICY”
“SECTION_04: SMALL BUSINESS TAX CREDIT
“This section repeals Obamacare’s small business tax credit beginning in 2020. Between 2018 and 2020, under the proposal, the small business tax credit generally is not available with respect to a qualified health plan that provides coverage relating to elective abortions.”
“SECTION_06: EMPLOYER MANDATE
“Under current law, certain employers are required to provide health insurance or pay a penalty. This section would reduce the penalty to zero for failure to provide minimum essential coverage; effectively Prepared by the Committee on Ways and Means Majority Staff March 6, 2017 repealing the employer mandate. The effective date would apply for months beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.
“SECTION_07: REPEAL OF THE TAX ON EMPLOYEE HEALTH INSURANCE PREMIUMS AND HEALTH PLAN BENEFITS
“Obamacare imposed a 40 percent excise tax on high cost employer-sponsored health coverage, also known as Cadillac plans. Under current law, the tax will go into effect in 2020. This section changes the effective date of the tax. It will not apply for any taxable period beginning after December 31, 2019, and before January 1, 2025. Thus, the tax will apply only for taxable periods beginning after December 31, 2024.
“SECTION_08: REPEAL OF THE TAX ON OVER-THE-COUNTER MEDICATIONS
“Under current law, taxpayers may use several different types of tax-advantaged health savings accounts to help pay or be reimbursed for qualified medical expenses. Obamacare excluded over-the counter medications from the definition of qualified medical expenses. This section effectively repeals the Obamacare tax on over-the-counter medications. The effective date begins tax year 2018.
“SECTION_09: REPEAL OF INCREASE OF TAX ON HEALTH SAVINGS ACCOUNTS
“Distributions from an HSA or Archer MSA that are used for qualified medical expenses are excludible from gross income. Distributions that are not used for qualified medical expenses are includible in income and are generally subject to an additional tax. Obamacare increased the percentage of the tax on distributions that are not used for qualified medical expenses to 20 percent. This section lowers the rate to pre-Obamacare percentages. This change is effective for distributions after December 31, 2017.
“SECTION_10: REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO FLEXIBLE SAVINGS ACCOUNTS
“Obamacare limits the amount an employer or individual may contribute to a health Flexible Spending Account (FSA) to $2,500, indexed for cost-of-living adjustments. This section repeals the limitation on health FSA contributions for taxable years beginning after December 31, 2017.”
“SECTION_12: REPEAL OF ELIMINATION OF DEDUCTION FOR EXPENSES ALLOCABLE TO MEDICARE PART D SUBSIDY
“Prior to Obamacare, as an incentive for employers to offer retiree drug coverage, employers who offered sufficient prescription drug coverage to their employees qualified for the Retiree Drug Subsidy to help cover actual spending for prescription drug costs. Obamacare eliminated the ability for employers to take a tax deduction on the value of this subsidy. This section repeals this Obamacare change and re-instates the business-expense deduction for retiree prescription drug costs without Prepared by the Committee on Ways and Means Majority Staff March 6, 2017 reduction by the amount of any federal subsidy. This section applies to taxable years beginning after December 31, 2017.”
“SECTION_14: REPEAL OF MEDICARE TAX INCREASE
“Obamacare imposed a Medicare Hospital Insurance (HI) surtax based on income at a rate equal to 0.9 percent of an employee’s wages or a self-employed individual’s self-employment income. This section repeals the additional 0.9 percent Medicare tax beginning in 2018.
“SECTION_15: REFUNDABLE TAX CREDIT FOR HEALTH INSURANCE
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“The program also calls for simplified reporting of an offer of coverage on the W-2 by employers. Reconciliation rules limit the ability of Congress to repeal the current reporting, but, when the current reporting becomes redundant and replaced by the reporting mechanism called for in the bill, then the Secretary of the Treasury can stop enforcing reporting that is not needed for taxable purposes.
“SECTION_16: MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAVINGS ACCOUNT INCREASED TO AMOUNT OF DEDUCTIBLE AND OUT-OF-POCKET LIMITATION
“This section increases the basic limit on aggregate Health Savings Account contributions for a year to equal the maximum on the sum of the annual deductible and out-of-pocket expenses permitted under a high deductible health plan. Thus, the basic limit will be at least $6,550 in the case of self-only coverage and $13,100 in the case of family coverage beginning in 2018.
“SECTION_17: ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS
“This section would effectively allow both spouses to make catch-up contributions to one HSA beginning in 2018.
“SECTION_18: SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF HSA
“This section sets forth certain circumstances under which HSA withdrawals can be used to pay qualified medical expenses incurred before the HSA was established. Starting in 2018, if an HSA is established during the 60-day period beginning on the date that an individual’s coverage under a high deductible health plan begins, then the HSA is treated as having been established on the date coverage under the high deductible health plan begins for purposes of determining if an expense incurred is a qualified medical expense.”
“SUBTITLE _ — REPEAL AND REPLACE OF CERTAIN CONSUMER TAXES”
“SECTION_02: REPEAL OF HEALTH INSURANCE TAX
“Obamacare imposed an annual fee on certain health insurers. The proposal repeals the health insurance tax beginning after December 31, 2017.”
For the full summary of the Proposed Legislation, please see: https://waysandmeans.house.gov/wp-content/uploads/2017/03/03.06.17-Section-by-Section.pdf and http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/documents/Section-by-Section%20Summary_Final.pdf
Please note that the American Health Care Act is proposed legislation; the changes which may be made to the PPACA through final legislation are still uncertain. The Committees for both the House Ways and Means and the House Energy and Commerce have scheduled a markup of this proposed legislation for tomorrow, Wednesday March 8th. Unless and until any legislation is finalized, employers must stay their current course, including complying with ACA employer reporting requirements and the employer shared responsibility mandate.
We will keep you posted as the legislative process progresses.
This email serves solely as a general summary of complex proposed legislation and government initiatives. It does not constitute legal guidance. Please contact us with any questions related to the Proposed Legislation and what impact finalization might have on your employer-sponsored plans.
Questions? Contact us to learn more.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.
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