The Future of the Patient Protection and Affordable Care Act May be Uncertain… But HIPAA is Here to Stay

While the future of the Patient Protection and Affordable Care Act and any potential replacement legislation is still in question, the Office for Civil Rights (“OCR”) within the U.S. Department of Health and Human Services (“HHS”) has clarified through its recent actions that the HIPAA privacy, security, and breach notification rules contained at 45 C.F.R. Parts 160 and 164 (the “Administrative Simplification Rules”) are here to stay. Audits initiated by OCR and investigations resulting from reported violations reveal that HIPAA compliance continues to be a governmental priority under the new administration. Indeed, nine representative resolution agreements have been released by HHS thus far in 2017 (the latest being released earlier this week) assessing a range of penalties from $31,000 to $5.5 million for a covered entity’s failure to comply with various aspects of HIPAA (including but not limited to failure to conduct a thorough and accurate risk analysis, failure to have a business associate agreement in place, failure to have comprehensive policies and procedures in place and implemented, and failure to protect protected health information (“PHI”) from improper use and disclosure). Thus, it is as important as ever for employer-sponsored group health plans to ensure that they are complying with HIPAA’s encompassing and technical requirements. As the various resolution agreements detail, failure to do so can have dire financial consequences on the group health plan (and correspondingly on the sponsoring employer).

HIPAA’s Administrative Simplification Rules require covered entities and their business associates to protect the confidentiality, integrity, and availability of PHI from improper use and disclosure. A group health plan falls within the definition of “covered entity.” Third parties who create, receive, maintain and/or transmit PHI for or on behalf of a covered entity are generally considered “business associates.” See 45 C.F.R. 160.103. Complying with HIPAA’s Administrative Simplification Rules can be a daunting task for group health plans and the employers sponsoring them. For example, administratively, group health plans are required to create, maintain, implement, and periodically review and update several written documents. The following provides a “checklist” approach of some important documents that group health plans need to have in place in order to comply with the Administrative Simplification Rules. Please keep in mind, however, that merely having the documents in place is insufficient from a HIPAA compliance standpoint; group health plans (and plan sponsors) also need to ensure that they are actually implementing, adhering to, and periodically reviewing the substance of the documents. Thus, it is imperative for employer-sponsored group health plans to continually evaluate their HIPAA compliance position with experienced HIPAA legal counsel. Even minor deficiencies can result in substantial penalties.

1. Business Associate Agreements

A covered entity may permit a business associate to create, receive, maintain or transmit PHI on its behalf only after it obtains satisfactory assurances in the form of a written business associate contract that the business associate will appropriately safeguard the information. See 45 C.F.R. sections 164.502, 164.504, and 164.314. A business associate agreement is a cornerstone HIPAA requirement that is commanding more and more scrutiny by the government.

For example, a resolution agreement released on April 20, 2017, demonstrated that a covered entity’s failure to have a business associate agreement in place with a third party vendor that had access to the covered entity’s PHI was a $31,000 mistake.  Interestingly, the compliance review of the covered entity was initiated by OCR following OCR’s investigation of the business associate. The two-year corrective action plan associated with the $31,000 fine required, among other things, that the covered entity revise its HIPAA policies and procedures to require: (1) the designation of one or more individual(s) who are responsible for ensuring that the covered entity enters into a business associate agreement with each of its business associates prior to disclosing PHI to the applicable business associate; (2) the creation of a standard template business associate agreement; (3) a process for assessing current and future business relationships to determine whether each relationship is with a “business associate;” (4) a process for negotiating and entering into business associate agreements with business associates prior to disclosing PHI to the business associate; (5) a process for maintaining documentation of business associate agreements for at least six years beyond the date of when the business associate relationship is terminated; and (6) a process to limit disclosures of PHI to business associates to the minimum necessary amount of PHI that is reasonably necessary for business associates to perform their duties.

The government’s demand for the creation of a standard template business associate agreement is of particular note for employers sponsoring group health plans for some important reasons. First, HIPAA’s Administrative Simplification Rules contain detailed provisions that must be included in a business associate agreement; variations from these strict regulatory requirements can make the agreement noncompliant. If a group health plan has a template business associate agreement in place prepared by experienced HIPAA legal counsel, it can be assured that the agreement is HIPAA compliant. When the document has been prepared by another party (such as the business associate), the group health plan should have the agreement carefully reviewed to ensure each of the regulatory provisions are correctly stated. Second, like any contract, business associate agreements can be drafted in a one-sided manner. A group health plan will want to have its standard business associate agreement prepared to adequately address, among other items, reporting time limits and indemnification requirements in the group health plan’s favor. While the HIPAA Administrative Simplification Rules set forth minimum requirements, keep in mind that additional information can be included within the agreement. Thus, each contract should be reviewed to ensure that the additional provisions are in fact desirable to be included from the group health plan’s perspective.

2. Security Policies and Procedures

A covered entity is required to implement reasonable and appropriate written policies and procedures to comply with the standards, implementation specifications, and other requirements of the security rules. See 45 C.F.R. 164.316. This requires the covered entity to implement administrative, physical, and technical safeguards to protect the confidentiality and integrity of electronic PHI (“EPHI”). Various resolution agreements highlight the need: (1) for comprehensive security policies and procedures; (2) to train workforce members on the policies and procedures; and (3) periodically evaluate the scope of the policies and procedures.

One of the cornerstones of a covered entity’s security policies and procedures is its security management process. This requires the covered entity to: (1) periodically conduct an accurate and thorough risk analysis of potential risks and vulnerabilities to the confidentiality, integrity, and availability of EPHI held by the covered entity; (2) implement security measures sufficient to reduce the detected risks and vulnerabilities to a reasonable and appropriate level; (3) apply appropriate sanctions against workforce members who fail to comply with the security policies and procedures; and (4) implement procedures to regularly review records of information system activity, such as audit logs, access reports, and security incident tracking reports.

Indeed, two April 2017 resolution agreements demonstrate the need to conduct a thorough and accurate risk analysis to assess the potential risks and vulnerabilities to the confidentiality, integrity, and availability of EPHI and to implement security measures sufficient to reduce those risks and vulnerabilities. In an April 24, 2017 resolution agreement, the covered entity’s HIPAA deficiencies resulted in a $2.5 million settlement. A resolution agreement released April 12, 2017 resulted in a $400,000 settlement. Among other things, the corrective action plan in both cases requires the covered entity to conduct and provide the results of a comprehensive risk analysis to HHS. Thereafter, the covered entity is required to review the risk analysis annually (or more frequently, if appropriate) and promptly update the risk analysis in response to environmental or operational changes affecting the security of EPHI. Thus, through its resolution agreements, HHS is emphasizing the fluid need to ensure that electronic systems adequately safeguard EPHI and that covered entities are appropriately minimizing risk.

3. Privacy Policies and Procedures

Pursuant to 45 CFR 164.530, a covered entity is required to implement written policies and procedures with respect to PHI that are designed to comply with the HIPAA privacy rules and breach notification rules. A limited exception to this requirement is available under 45 CFR 164.530(k) for certain fully-insured group health plans that maintain a “hands off” status (i.e., the group health plan does not create or receive PHI except for certain summary health information and/or enrollment/disenrollment information). Among other items, the privacy policies and procedures must address how a covered entity may use and disclose PHI. They also must address an individual’s rights with respect to his or her PHI and which employees will be granted access to PHI. One May 2017 resolution agreement resulted from a covered entity’s improper disclosure of PHI to the media and various public officials without proper authorization. Another May 2017 resolution agreement resulted from a covered entity’s improper disclosure of PHI to his workplace. The corrective action plans associated with the resolution agreements required the covered entity to develop/review, maintain, and revise as necessary written policies and procedures (which relevantly would set forth the permissible uses and disclosure of PHI), to distribute such policies and procedures to the workforce, and to assess, update, and revise, as necessary, the policies and procedures at least annually. Thus, implementation of comprehensive privacy policies and procedures is deemed a necessity by HHS.

4. Notice of Privacy Practices

Pursuant to 45 CFR 164.520, an individual has a right to adequate notice of the uses and disclosures of PHI that may be made by the covered entity and of the individual’s rights and the covered entity’s legal duties with respect to PHI. The notice of privacy practices is essentially a summary of the covered entity’s privacy policies and procedures. The plan sponsor is obligated under the privacy rules to ensure that the notice is prepared and timely and appropriately distributed to plan participants, except in the case of certain fully-insured group health plans that maintain a hands off status, in which case the insurer has the duty. The content and distribution requirements for notices of privacy practices are strict. Thus, it is imperative for plan sponsors to ensure legal compliance.

5. Plan Sponsor Certifications

A group health plan may disclose PHI to the plan sponsor for plan administration functions only after: (1) the plan document has been amended to incorporate various regulatory requirements related to the plan’s use and disclosure of PHI, and (2) the plan sponsor has certified to the plan, in writing, that the plan has been amended and that the plan sponsor agrees to the restrictions contained in the amendment. See 45 C.F.R. 164.504 and 164.314. Plan sponsors must ensure that their plans have been appropriately amended and that proper written certification is in place.

6. Workforce Training

A covered entity is required to provide training to all members of its workforce on its HIPAA policies and procedures, as necessary and appropriate for the members of the workforce to carry out their functions within the covered entity. Various resolution agreements stress the necessity of conducting and documenting comprehensive training. For example, two May 2017 resolution agreements indicate that training must be reviewed at least annually, and, where appropriate, updated to reflect changes in the law, issues discovered during internal or external audits, and other relevant developments. Thus, plan sponsors must continually evaluate the need for workforce training and tailor such training to their internal structure.

These are just some of the written documentation requirements that group health plans must adhere to under HIPAA’s Administrative Simplification Rules. Regulatory provisions must be reviewed in conjunction with the group health plan’s administrative practices when drafting these documents. The resolution agreements released this year reaffirm the notion that employer-sponsored group health plans must evaluate their HIPAA compliance position with experienced HIPAA legal counsel. Deficiencies can result in substantial penalties. Please feel free to contact us with any questions you may have with respect to your HIPAA compliance endeavors.

Copies of the resolution agreements are available by clicking HERE.

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, Attorney Fraser TrebilcockElizabeth 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.

ACTION REQUIRED BEFORE YEAR-END: Disability Plans Claims and Appeals Procedures

Employers who sponsor disability plans have work to do with respect to their claims and appeals procedures prior to year-end. Final regulations were recently released by the Department of Labor (“DOL”) revising the existing claims and appeals procedures regulations under ERISA for employee benefit plans providing disability benefits. According to the DOL, the intent of the final regulations is to strengthen the current procedures by adopting some of the additional procedural safeguards and protections for disability plan claims that are already in place for group health plan benefits pursuant to the Patient Protection and Affordable Care Act.

The newly issued final regulations took effect on January 18, 2017 and will apply to all disability benefits claims filed on or after January 1, 2018. Accordingly, it is imperative for employers to work with their disability plan insurance carriers, third party administrators, and attorneys to ensure that all underlying disability plans and associated documentation (including any ERISA wrap plans, Code section 125 cafeteria plans, and claims denial forms) are reviewed and updated to ensure legal compliance with the requirements for claims filings beginning January 1, 2018.

The final regulations are lengthy, comprehensive, and require detailed review and analysis. Some highlights of the final regulations for employers, plan sponsors, carriers, and administrators to consider, include the following:

  1. Independent and Impartiality to Avoid Conflicts of Interest. Claims and appeals must be adjudicated in a manner designed to ensure independence and impartiality of the persons involved in making the benefit determination. Decisions regarding hiring, compensation, termination, promotion, or similar matters with respect to any individual (such as a claims adjudicator, medical expert, or vocational expert) cannot be made based upon the likelihood that the individual will support the denial of benefits. For example, the preamble to the final regulations notes that a plan cannot provide bonuses based on the number of denials made by a claims adjudicator.
  2. Improvements to Disclosure Requirements.  Benefit denial notices must contain specified information, including but not limited to:
    1. A complete discussion of why the plan denied the claim and the standards applied in reaching such decision. Such discussion must include the basis for disagreeing with or not following: (i) the views of health care professionals and vocational professionals who treated/evaluated the claimant; (ii) the views of medical or vocational experts whose advise was obtained on behalf of the plan in connection with a denial (without regard to whether the advice was relied upon in making the determination); or (iii) a disability benefit determination made by the Social Security Administration. Thus, under this standard, merely stating that the plan or a reviewing physician disagrees with the treating physician is insufficient.
    2. If the denial is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination (applying the terms of the plan to the claimant’s medical circumstances), or a statement that such explanation will be provided free of charge upon request;
    3. Either the specific internal rules, guidelines, protocols, standards or other similar criteria of the plan relied upon in denying the claim, or a statement that such rules, guidelines, protocols, standards or other similar criteria of the plan do not exist; and
    4. A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.
  3. Right to Review and Respond to Additional Information Prior to Final Determination. A claimant must be given timely notice of his or her right to access his or her entire claim file and other relevant documentation. A claimant must also be guaranteed the right to present evidence and testimony in support of his or her claim during the review process. Further, a claimant must be given notice and a fair opportunity to respond before denials on review are based on new or additional evidence or rationales. More specifically, the claims procedures must require that: (a) plans provide claimants, free of charge, with any new or additional evidence considered, relied upon, or generated by the plan, insurer, or other person making the benefit determination (or at the direction of the plan, insurer or such other person) during the pendency of the appeal in connection with the claim; and (b) before the plan can issue a denial on review based on a new or additional rationale, that the plan provides claimant, free of charge, with the rationale. Any rationale/evidence must be provided as soon as possible and sufficiently in advance of the date on which the notice of denial upon review is required in order to give the claimant a reasonable opportunity to respond prior to that date.
  4. Deemed Exhaustion of Claims and Appeals Processes. Plans cannot prohibit a claimant from seeking court review under ERISA section 502(a) of a denial based upon a failure to exhaust administrative remedies under the plan if the plan failed to comply with the claims procedures requirements, unless the violation was (a) the result of a minor error; (b) non-prejudicial; (c) attributable to good cause or matters beyond the plan’s control; (d) in the context of a good-faith exchange of information; and (e) not reflective of a pattern or practice of non-compliance. Additionally, denial notices on review, among other information, must describe any applicable contractual limitations period that applies to the claimant’s right to bring an action under ERISA section 502(a), including the calendar date on which the contractual limitations period expires for the claim.
  5. Coverage Rescissions. The final regulations clarify that certain rescissions of coverage must be treated as adverse benefit determinations triggering the plan’s appeals procedures.
  6. Culturally and Linguistically Appropriate Notices. Required notices and disclosures issued under the final regulations must be written in a culturally and linguistically appropriate manner. If a claimant’s address is in a county where 10% or more of the county population are literate only in the same non-English language, notices of denials to the claimant must include a statement prominently displayed in the applicable non-English language clearly indicating how to access language services provided by the plan. Additionally, the plan must provide a customer assistance process with oral language services in the non-English language and provide written notices in the non-English language upon request.

This alert serves as a general summary of the lengthy and and comprehensive final regulations, which can be found by clicking HERE. Please feel free to contact us with any questions you may have regarding getting your plans into compliance with the newly issued regulations prior to January 1, 2018.

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, Attorney Fraser TrebilcockElizabeth 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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Detroit Updates Its Jock Tax

In March of this year, the City of Detroit officially codified its jock tax and released new income tax guidelines which clarify how professional athletes should apportion their income to Detroit for purposes of its city income tax, as well as guidance for teams on how to allocate income. Continue reading Detroit Updates Its Jock Tax

If It Doesn’t Say So, it Aint So: Michigan Supreme Court Holds For-Profit Schools Entitled to Property Tax Exemption

A unanimous Michigan Supreme Court decision this week will have big implications for for-profit schools and colleges – and even for-profit laboratories, research and development facilities, and test centers. Continue reading If It Doesn’t Say So, it Aint So: Michigan Supreme Court Holds For-Profit Schools Entitled to Property Tax Exemption

Representing the Professional Athlete: The Importance of Personal Counsel

As a former sports agent, I am often asked what it takes to become an agent. Many people assume you have to have a law degree, but while being a licensed attorney or having a law degree would be helpful, they are not prerequisites. Continue reading Representing the Professional Athlete: The Importance of Personal Counsel

Lessons of March Madness as Applied to the Real World

Photo of BasketballCabulous plays, amazing game-ending shots, stifling defense, dominating offense, collaborative teamwork. We have just observed another installment of March Madness.

Whether you are a die-hard sports fan, a casual observer or a novice, it is hard not to get caught up in the excitement and drama of March Madness. As you watch your favorite team win or lose, root for the underdog or just enjoy the overall experience of the tournament, we can all learn from the various attributes and elements of what it takes for each team to get the opportunity to participate on the biggest stage of college basketball.

Success is not easy and does not happen overnight. The teams that had the opportunity to participate in March Madness share many of the same attributes and characteristics, in varying degrees.

These attributes and characteristics can lead to success in any endeavor, job or profession, including the practice of law, and include the following:

Preparation (individually and as a team). There is a saying that athletes develop individually in the off-season, and teams improve during the season. Preparation is achieved through continuing improvement of your skills, practice and repetition.

Similarly, as an attorney, you need to continuously prepare to be successful. Preparation may be through participation in continuing legal education, mentoring or being mentored, or practice and preparation in advance of your big trial, transaction, meeting, or other project or presentation. This preparation must occur prior to your time to shine.

Discipline. Success in sports requires a certain level of discipline: discipline to work hard, to prepare, to practice (especially on your own when no one is watching); discipline to do what it takes to achieve your goals, and thereby success. This discipline is equally necessary to realize your goals and success in any role, job or profession.

Experience. Experience can have a direct correlation to the level of success achieved by a basketball team. Experience is essential to understanding what it takes to compete and be successful at the highest levels. Seniors (in this era of “one and done”) provide crucial mentoring and leadership, on and off the floor, to the younger phenoms who must learn quickly for a team to achieve success.

To appreciate the value of experience, you need not look any further than the Wolverines and Spartans this season. Due to injuries, MSU had no seniors actively participating at the end of the season, and U-M relied on such senior leadership to win the Big Ten Tournament title and make a run to the Sweet 16.

Experience is equally valuable and important in any job setting, including the legal profession. Experienced attorneys understand what it takes to be successful in the practice of law in general, and with regard to success in the courtroom, transaction, or in any other legal setting and discipline. I encourage all senior attorneys to mentor younger attorneys when the opportunity presents itself, after all they represent the future of our profession.

Similarly, I strongly recommend younger attorneys to seek and take advantage of all opportunities to observe and learn from more senior experienced attorneys.

Teamwork. Despite the individual talents of athletes on teams throughout the country, the most successful teams understand the importance of working together, buying into the offensive and defensive philosophies of the program/coach, learning that the achievements and success of the team must be put before the individual accomplishments of the athletes; in other words, each collective group of talent from the coaches, to the starters, to the bench players, to the team managers, and beyond, all must learn to operate, cooperate and perform as part of a TEAM. Every participant must accept his or her role, and everyone has a role to play to contribute to the ultimate success of the team.

Success in any business or profession, including success in the practice of law, requires working collaboratively and successfully with your colleagues, assistants, co-workers, and all those who are part of, and contribute to, your team.

During the next March Madness, as you cheer on your team, or root for the underdog, or just enjoy the talent and teamwork being displayed, and that is required to be a national champion, the pinnacle of sports success, consider how what you observe may be transferred or applied to your own job or profession, and contribute to the success of your company or firm.

Fraser Trebilcock Attorney Mark E. Kellogg

Fraser Trebilcock Attorney Mark E. Kellogg chairs Fraser Trebilcock’s Business and Tax Law practice, and 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. He is the current President of the Ingham County Bar Association. Contact Mark at 517.377.0890 or mkellogg@fraserlawfirm.com.

Loss of Value Insurance May Prove Valuable for Athletes

According to CBS Sports, former Notre Dame linebacker Jaylon Smith recently collected on a loss of value insurance policy. Smith was projected to be a high first-round NFL draft pick but dropped to the second round, the 34th pick overall, after suffering a devastating knee injury in the 2016 Fiesta Bowl. His policy payout is believed to be $700,000.

A loss of value insurance policy protects an athlete’s future contract value from decreasing below a predetermined amount due to a significant injury or illness suffered during the term of the policy. If an athlete signs a professional contract which falls below that threshold which was a direct result of an injury or illness, the insurance company must pay the difference between the contract’s actual value and the policy’s predetermined value.

CBS Sports reports that Smith’s insurance policy covered him for a loss of value if he did not receive an NFL contract that was at least $7.2 million for four years. The contract Smith eventually signed with the Dallas Cowboys was for $6.495 million over four years. Thus, resulting in the reported $700,000 payout.

Payment for Smith’s loss of value premium was $55,000, according to CBS Sports. How this amount was paid has not been reported. The NCAA allows its member institutions to use the NCAA Student Assistance Fund to purchase a loss of value policy for a student-athlete. In addition, a prospective draft pick may take out a loan against their future earnings to pay the loss of value policy premium.

Prior to Smith, only three players have been able to collect on their loss of value insurance policy after filing a claim. For this reason, the NCAA does not directly offer loss of value insurance. Indeed, merely purchasing the insurance does not guarantee protection and it can often prove extremely difficult to demonstrate an athlete’s drop in the draft was “solely and directly” related to an injury. Keep in mind, all loss of value policies will include exclusions for pre-existing injuries, drug and alcohol use, criminal acts and/or psychological disorders and others. More unpredictable factors can also affect whether a loss of value claim is paid, including off-field issues, poor performance during the season or at pre-draft workouts and changes in professional team’s needs.

Not all professional prospects need loss of value policies. Given the difficulties in proving loss of value claims, only the very highest of draft picks would seem to benefit from purchasing the insurance. For Jaylon Smith, the loss of value policy proved valuable.

To learn more, contact an attorney at Fraser Trebilcock at 517.482.5800 or by clicking here to fill out this form on our website.

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.

Fraser Trebilcock Attorney Mark E. Kellogg

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.