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Client Alert: PCORI Payment Due July 31st

Patient-Centered Outcomes Research Institute (PCORI) Fee/Comparative Effectiveness Fee

Reminder: Plan Sponsors of Applicable Self-Funded Health Plans Must Make PCORI Fee Payment By July 31, 2019.

Please let this serve as a reminder that the PCORI fee is due by July 31st and must be reported on Form 720. The fee is used to partially fund the Patient-Centered Outcomes Research Institute which was implemented as part of the Patient Protection and Affordable Care Act.

Instructions are found here (see Part II): http://www.irs.gov/pub/irs-pdf/i720.pdf

The Form 720 itself is found here (see Part II): http://www.irs.gov/pub/irs-pdf/f720.pdf

Form 720, as well as the attached Form 720-V to submit payment, must be used to report and pay the requisite PCORI fee to the IRS. While Form 720 is used for other purposes to report excise taxes on a quarterly basis, for purposes of this PCORI fee, it is only used annually and is due by July 31st of each relevant year.

As previously advised, plan sponsors of applicable self-funded health plans are liable for this fee imposed by Code section 4376. Insurers of specified health insurance policies are also responsible for this fee.

For plan years ending on or after October 1, 2016 and before October 1, 2017, the fee is $2.26 per covered life.
For plan years ending on or after October 1, 2017 and before October 1, 2018, the fee is $2.39 per covered life.
For plan years ending on or after October 1, 2018 and before October 1, 2019, the fee is $2.45 per covered life.

See IRS Notice 2018-85. The fee is due no later than July 31 of the year following the last day of the plan year and concludes with plan years ending on or after October 1, 2018 and before October 1, 2019. For calendar year plans, the fee runs from 2012 through 2018 plan years. This means that 2018 will be the last year that the PCORI fee is assessed for a calendar year plan (and again, will be due July 31, 2019).

There are specific calculation methods used to configure the number of covered lives and special rules may apply depending on the type of plan being reported. While generally all covered lives are counted, that is not the case for all plans. For example, HRAs and health FSAs that are not excepted from reporting only must count the covered participants and not the spouses and dependents. The Form 720 instructions do not outline all of these rules.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 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.

Rucho et al v Common Cause

The United States Supreme Court today issued a long-awaited ruling in Rucho et al v Common Cause, et al that immediately highlights the value of Michigan’s recent Voters Not Politicians ballot initiative to pass Proposal 2 ending partisan gerrymandering in Michigan.

Michigan has already insulated itself from much of the harsh impact of today’s federal decision, by moving forward to adopt Proposal 2 to amend Michigan’s Constitution, which will result in the formation of a citizen’s commission to redistrict the state for the 2022 elections.

The Fraser Trebilcock election team represented Voters Not Politicians in VNP’s successful 2018 litigation winning a ruling from the Michigan Supreme Court mandating that Proposal 2 appear on that year’s ballot, and changing Michigan law in the process.

To view the full opinion, click here.

Completing the Medicaid Application: Workshop Breakdown

Maneuvering through the numerous rules and regulations of Medicaid can often be a stressful time for families. The application itself seems straightforward, but every client has their own unique needs, requiring valuable insight from an experienced attorney. It’s with that in mind that Fraser Trebilcock attorney Melisa M.W. Mysliwiec will be sharing key information with other attorneys in Michigan. The presentation, titled, “Completing the Medicaid Application: A Hands-On Workshop,” will be delivered to members of the Institute of Continuing Legal Education‘s Elder Law Certificate Program on Friday, June 28, 2019.

This seminar will provide attendees with a case study and supporting documents, in which they will be able to work through in groups from start to finish. A completed sample Assets Declaration and Medicaid Application for Patient of Nursing Facility will be given as well for attendees to review and understand what is included and why.

Melisa, along with Rosemary Howley Buhl, Arthur L. Malisow, Terrence G. Quinn, and Charles S. Ofstein, will answer questions and provide advice on each step in the process to ensure attendees walk away with a completed sample Medicaid application they’ll be able to use as a model in their practice.

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.

Attorney Brian Morley Discusses Current Criminal Legal News on Radio Show

The recent Virginia Beach mass shooting that left 12 municipal workers deceased again brought the questions surrounding workplace shootings and disgruntled employees to national headlines.

While a guest on Michigan’s Big Show with Michael Patrick Shields earlier this week, attorney Brian P. Morley discussed the shooting and whether there are any indicators or signs to prevent such events from occurring.

To hear the full interview with Brian, click here.

For more information on this blog post, or other criminal or family law concerns, contact Lansing attorney Brian P. Morley at 517.377.0873, or bmorley@fraserlawfirm.com. Brian Morley is a skilled attorney specializing in criminal defense and family law, with the added experience of nearly a decade as a certified police officer. He was recently selected by peers for inclusion once again in The Best Lawyers in America© 2019 in the field of DUI/DWI Defense.

Presentation Breakdown: New Excise Tax Imposed by Code Section 4960

Fraser Trebilcock attorney Brian T. Gallagher will be presenting on multiple panels next week at the American Bar Association Tax Section’s May Meeting in Washington, D.C. Brian’s presentations will focus on various aspects of the new excise tax imposed on excessive compensation at tax-exempt entities by Code Section 4960.

This new law, approved as part of the Tax Cuts and Jobs Act, levies an excise tax on annual remuneration in excess of $1,000,000 and excess parachute payments paid to covered employees by applicable tax-exempt organizations and related entities. The excise tax rate is equal to the corporate rate (currently 21%) and falls on the shoulders of the employer. However, it is important to note that all tax-exempt employers (even those that don’t anticipate paying compensation anywhere near the $1,000,000 mark) are affected by this new law and should begin taking proactive compliance measures immediately. For example, all tax-exempt employers subject to this new law should already be tracking their covered employees, which include the five highest paid employees for each year plus anyone who has previously been a covered employee. It is important to note that the “remuneration” used for this determination—and other Section 4960 purposes—is not simply W-2 wages.

Section 4960 is a very complex (and often times counterintuitive) tax regime, which may require many organizations to reconsider their compensation practices and organizational structures. Brian has written and lectured extensively on this topic. Any employers who have questions about how they may be impacted by Section 4960 should contact him as soon as possible, as the first excise tax returns for entities with calendar year accounting periods are due May 15, 2019.

Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Chicago Tribune Feature

Fraser Trebilcock cottage law attorney Mark E. Kellogg was interviewed by the Chicago Tribune for an article detailing the intricacies of vacation properties left behind for families, and the importance of implementing a succession plan before a family member has passed away.

You can view the full article by clicking HERE.

Mark E. Kellogg’s breadth of knowledge and experience gives his clients unique insight into the special considerations associated with the cottage law practice. If you have any questions, you can reach out to Mark at mkellogg@fraserlawfirm.com or (517) 377.0890 for assistance.

Department of Labor Weighs In On Deferral of FMLA Designation – Don’t Let Michigan’s New Paid Medical Leave Law Trip You Up!

In a recent Opinion Letter ruling, the United States Department of Labor (DOL) examined the question of whether an employer subject to the federal Family and Medical Leave Act (FMLA) could permissibly allow an employee “to exhaust some or all available paid sick (or other) leave prior to designating leave as FMLA-qualifying?” The apparent intention of the employer submitting this inquiry was to permit such employee essentially to extend “additional FMLA leave beyond the 12-week FMLA entitlement” by adding some other leave at the beginning of the leave period. Another reason an employer might consider deferring its statutory FMLA eligibility determination could be simply to avoid that exercise when the leave is otherwise covered by another leave entitlement policy of the employer, whether paid or unpaid.

Since many Michigan employers have under the recently-enacted Michigan Paid Medical Leave Act undoubtedly created or modified their sick leave policies, this ruling presents a timely opportunity for your enterprise to avoid conflicts between the two statutes.

DOL’s OPINION

The DOL concludes that an employer may not defer or delay designating leave as FMLA or not FMLA. Applicable regulations, the Department notes, “require employers to provide a written ‘designation notice’ to an employee within five business days.”

The Department concludes that “(f)ailure to follow this notice requirement may constitute an interference with … or denial of … an employee’s FMLA rights.” This conclusion may be surprising, as an effective extension of leave would seem to benefit the employee, and it is an established principle under the FMLA regulations that employers may adopt leave policies more generous than those required by the FMLA.

MICHIGAN’S PAID MEDICAL LEAVE ACT

Michigan’s new Paid Medical Leave Act requires covered employers to provide paid leave for various purposes or reasons. Those reasons generally, but not in all cases, track the reasons a leave may qualify for FMLA protection. Based on the known principle that an employer may adopt a “more generous” policy than federal law requires, many employers may assume that allowing an employee to use paid leave under the Michigan Act would be permissible and would excuse them of any obligation under the FMLA while the worker is on paid leave.

NOT!

Moreover, one of the most common FMLA errors employers make is to fail to designate an absence as FMLA-qualifying even if the absent worker does not indicate that the leave is FMLA-eligible, and even if the employee doesn’t refer to FMLA or use the words or acronym. Applicable regulations require that whenever the employer “has enough information to determine whether the leave is being taken for a FMLA-qualifying reason” according to the Letter, the FMLA designation determination and notice must be provided within the five business-days period. And, note that this standard is not limited to information provided by the employee. The designation obligation arises as long as the employer has enough information on the nature of the reason for the absence to have reason to believe that the employee’s right to an FMLA-protected leave may be implicated.

THE RULE IN BLACK AND WHITE

Always provide notice of a designation of FMLA eligibility within five business days of when you have enough information to make that determination, whether an FMLA leave is requested, and whether or not the employee is eligible for some other leave, including a paid leave under the Michigan Act.

IMPORTANT P.S.: FREE ADVICE

Savvy employers know that FMLA regulations permit them to require use of other leave concurrently with FMLA leave. The reason to adopt such policy is to prevent the employee from obtaining more leave than the 12 weeks allowed by the FMLA. Thus, a Michigan employer may adopt a written policy requiring its employees to use – and even, exhaust — paid leave provided in conformance with the Michigan Paid Medical Leave Act while employees are on an FMLA-qualifying leave.

You can view the full letter here: https://www.dol.gov/whd/opinion/FMLA/2019/2019_03_14_1A_FMLA.pdf

Contact us if we can assist you in revising or reviewing your policies.

Fraser Trebilcock Shareholder Dave Houston has nearly 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or dhouston@fraserlawfirm.com.

New License Requirements for Michigan Used Motor Vehicle Dealers

Effective March 20, 2019 the Michigan Vehicle Code was amended to include the following dealer requirements for used vehicle dealers:

All owners and officers of used vehicle dealer applicants must attend a prelicensure training program. This requirement does not apply to dealers licensed as of March 20, 2019.
Within 90 days after a Class B license is issued the dealer must select an individual that must complete the training program for each sales location. This requirement applies to existing used vehicle dealers upon renewal of their license.
A designated individual must complete the training program one time in each 24-month period.

The training programs may be conducted by the Department of State or by a trade organization approved by the Department of State.

This is brief summary of the new law. Used vehicle applicants and dealers are encouraged to review the new law in its entirety or to seek the advice of effective counsel.

Edward J. Castellani is an attorney and CPA with Fraser Trebilcock and serves as Chair of the Firm’s Auto Dealer Practice Group. He may be contacted at ecast@fraserlawfirm.com or 517-377-0845.

Michigan’s New Paid Medical Leave Act Is About To Become Effective. Are You Ready?

Paid Medical Leave Act in General

The recently enacted Paid Medical Leave Act (PMLA) requires entities which employ 50 or more individuals to provide paid medical leave for their eligible employees and family members.

Effective Date

March 29, 2019

Affected Employers

Any employer (aside from certain governments) that employs 50 or more individuals is subject to the law, regardless of where those employees work or live. However, even though the employer would be subject to the law, employees whose primary work location is outside of Michigan would not be protected by it. So if you had 55 employees with 45 working out of state, the law only applies to the 10 working in Michigan.

Eligible Employees

Significantly, eligible employees do not include individuals who are exempt from overtime requirements under the FLSA section 13(a)(1), non-public agency employees covered by CBAs currently in effect, federal or state (or political subdivision) government employees, employees in a job scheduled for 25 weeks or less (and work 25 weeks or less), employees who worked on average less than 25 hours per week during the immediately preceding calendar year, variable hour employees (as defined under Pay or Play), as well as a few other exceptions (including certain employees under the railroad unemployment insurance act, railway labor act, MI employment security act, and improvement opportunity wage act).

Family Members

The definition of family member is broad and includes:

A biological, adopted or foster child, stepchild or legal ward, or a child to whom the eligible employee stands in loco parentis.
A biological parent, foster parent, stepparent, or adoptive parent or a legal guardian of an eligible employee or an eligible employee’s spouse or an individual who stood in loco parentis when the eligible employee was a minor child.
An individual to whom the eligible employee is legally married under the laws of any state.
A grandparent.
A grandchild.
A biological, foster, or adopted sibling.

Therefore, if an employee’s brother is ill, the employee is allowed to take leave to care for his/her brother.

Basis of Accrual

The employer can provide paid medical leave on either: (1) an accrual basis (of at least one hour for every 35 hours worked – cannot be less than 40 hours in a benefit year) or (2) can front at least 40 hours of paid leave at the beginning of the benefit year (and can prorate for mid-year hires).

If the accrual basis is used, an employer is not required to allow the employee to accrue more than 1 hour per calendar week and may limit the accrual and use of paid medical leave to 40 hours per benefit year. However, the employer must allow the employee to carryover at least 40 hours of unused accrued paid medical leave from one benefit year to the next.

If the front load option (of at least 40 hours) is used, the employer is not required to allow the eligible employee to carry over any of the paid leave to another benefit year.

For new hires, an employer can require a 90 day waiting period after hire to use any accrued paid leave.

The paid medical leave must be provided at a pay rate equal to the greater of the normal hourly wage / base wage for that eligible employee or the minimum wage rate under the improved workforce opportunity wage act. An employer is not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, or gratuities in the calculation of an eligible employee’s normal hourly wage or base wage.

Use of Medical Leave

Leave can be used for personal or family health needs, domestic violence and sexual assault (documentation can be required but cannot ask details), missing work due to closed schools (to take care of children) or closed work for public health emergencies, and for issues with regard to communicable diseases. Specifically, paid medical leave is for:

The eligible employee’s mental or physical illness, injury, or health condition; medical diagnosis, care, or treatment of the eligible employee’s mental or physical illness, injury, or health condition; or preventative medical care for the eligible employee.
The eligible employee’s family member’s mental or physical illness, injury, or health condition; medical diagnosis, care, or treatment of the eligible employee’s family member’s mental or physical illness, injury, or health condition; or preventative medical care for a family member of the eligible employee.
If the eligible employee or the eligible employee’s family member is a victim of domestic violence or sexual assault, the medical care or psychological or other counseling for physical or psychological injury or disability; to obtain services from a victim services organization; to relocate due to domestic violence or sexual assault; to obtain legal services; or to participate in any civil or criminal proceedings related to or resulting from the domestic violence or sexual assault.
For closure of the eligible employee’s primary workplace by order of a public official due to a public health emergency; for an eligible employee’s need to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency; or if it has been determined by the health authorities having jurisdiction or by a health care provider that the eligible employee’s or eligible employee’s family member’s presence in the community would jeopardize the health of others because of the eligible employee’s or family member’s exposure to a communicable disease, whether or not the eligible employee or family member has actually contracted the communicable disease.

Procedural Requirements

Eligible employees must comply with the employer’s usual and customary notice, procedural and documentation requirements for requesting leave; however, the employer must give the employee at least 3 days to provide the documentation. Furthermore, the law has parameters on documentation required for domestic violence or sexual assault. If you require such documentation, you should discuss these parameters with legal counsel.

Additionally, unless the employer has a different written increment policy in an employee handbook or other benefits document, paid leave must be used in 1 hour increments.

Employers who transfer to other divisions, entities or locations but remain employed by the same employer are allowed to retain all accrued paid medical leave. However, if the employee separates from service and is rehired, the accrued paid leave may be lost. There are no requirements to reimburse employees for unused time.

Notice and Document Retention

You are required to display a poster at your place of business, in a conspicuous and accessible place, containing the amount of paid leave required, the terms under which the paid medical leave may be used, and the employee’s right to file a complaint with the department for any violation. The department will create and make said posters available at no cost.

Finally, PTO records shall be retained for not less than 1 year and are subject to inspection.

Penalties

For violations of the law, the department may impose penalties and grant an eligible employee or former eligible employee payment of all paid medical leave improperly withheld. Employers failing to provide paid medical leave are also subject to an administrative fine of not more than $1,000.00. Additionally, an administrative fine of not more than $100.00 may be imposed for each separate violation of the posting requirement.

This communication serves solely as a general summary and does not constitute legal advice, and cannot be used or substituted for legal advice.

Now is the Time to Consider Appealing Your 2019 Property Taxes

Arriving in a mail box near you is your annual property tax Notice of Assessment. Property taxes are a significant business operating expense and they are typically the second highest expense of homeowners after their mortgage. We routinely assist industrial and commercial property tax appeals for our clients. Our experience practicing before the Michigan Tax Tribunal can help you achieve significant tax savings depending on the circumstances.

Deciding whether to challenge an assessment, business and property owners should consider a variety of factors including current market value of their property, valuation methods used, and practices used by local assessing authorities. Once the decision has been made to appeal, the procedures involved are often technical, complex, and time sensitive. The legal requirements for filing an appeal are usually strictly enforced against the property owner. Experienced legal counsel is invaluable in protecting the taxpayer’s rights.

If you disagree with the valuation on the Notice of Assessment, you can reach out to your local assessor to gain either a better understanding of the factors used. In some communities this process is required as an “assessor’s review.” If you can’t reach an understanding or an agreement with the assessor’s office, the next step is to protest to the Board of Review.

For most industrial and commercial property owners, a protest to the local Board of Review is not a requirement. There are, however, certain types of property tax claims that do require a Board of Review protest, even for industrial and commercial property owners. Although it does not happen often, there are instances where a taxpayer protests an assessment and the Board is made aware of something, typically a factual matter, that provides some relief. Other times, the assessor may notice a discrepancy on closer examination that may actually cause the assessment to increase.

If the Board of Review denies your protest, you can always proceed to the Michigan Tax Tribunal. The Michigan Tax Tribunal is an administrative tax court that has authority over assessment disputes relating to both property and non-property tax matters. While most property tax reductions are obtained through the process of negotiation, on occasion, however, formal hearings or court action are necessary to achieve the desired result.

Procedural matters in the Tax Tribunal is perhaps where many property owners go wrong. While the Tax Tribunal is not a court in the formal sense, many taxpayers fail to appreciate that the Tribunal nevertheless has its own procedures, formalities, and timelines. For a number of reasons, the Tax Tribunal is rather strict in the application of its rules and is rather unforgiving regarding its deadlines. Substantial compliance is an argument one never wants to have to make.

Another area where taxpayers tend to go astray is in appreciating how the Tax Tribunal approaches property tax claims and evaluating evidence. Property owners have a sense of what their property is worth, what features, in their subjective knowledge, add and/or detract from its value, and a feel for the local market. A valuation, for property tax purposes, must meet a certain evidentiary threshold, and involves an expert appraiser that comes in and gives an exact value on the property based on a greater number of factors that a property owner in a general sense may not be aware of or able to articulate. The Tax Tribunal looks and evaluates the valuation evidence much the same way.

All of this being said, it is important to consult with professionals, a tax attorney, qualified appraiser and other experts to evaluate if an appeal is in your best interest and to properly guide you through the process. And now is the time to consider this with your Notice of Assessment arriving in the mail soon.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.