Fraser Blog | Fraser Trebilcock Blog

Now is the Time to Optimize Your Tax-Planning Strategies for 2022 and Beyond

With year-end quickly approaching, reducing taxes is on many people’s minds. It’s been a tumultuous few years, with many changes to people’s individual circumstances and tax laws at state and federal levels. Now is the time to focus on your year-end taxes and engage in estate and income tax planning opportunities.

At Fraser Trebilcock, our tax attorneys have made sure you don’t have to start your preparations from scratch with year-end tax considerations.

Estate and Gift Tax Planning

The IRS recently announced that, due to inflation, the estate tax exemption will be increased to $12.92 million for individuals in 2023 ($25.84 million for married couples), up from $12.06 million in 2022. Currently, the lifetime gift tax exemption amount tracks the federal estate tax exemption for decedents of $12.06 million (and $12.92 for 2023). Keep in mind, however, that the lifetime estate and gift tax exemption amount is set to be cut in half at the start of 2026.

If you’re thinking about beginning an annual gifting program, or want to continue a program you’ve already started, there are some things you should know. From an estate and gift tax planning perspective, the most commonly used method for tax-free giving is the annual gift tax exclusion. This method allows you to give up to $16,000 for 2022 (increasing to $17,000 in 2023) to each donee, without reducing your estate and lifetime gift tax exclusion amount. It’s also important to note that there is no limit to the number of people to whom you may make such gifts, and that the annual gift tax exclusion is applied on a per-donee basis.

Additionally, you and your spouse could choose to combine your exemptions into a single gift from either of you. By sharing in the gift of one spouse, married donors may double the amount of the exclusion to $32,000 in 2022, or $34,000 next year. This method of transfer could help you save family income taxes, where income-earning property is given to family members in lower income tax brackets, who are not subject to the “kiddie tax.”

Have children in college? Qualifying tuition payments may also be made or continued, in addition to medical payments. These amounts do not count against the annual exclusion limit.

Another thing to remember is that if you’re required to submit a written valuation in connection with your annual gifting program, you might be able to utilize a single valuation, for gifts made in December of 2022 and January of 2023.

Income Tax Planning

Since we know that everyone would love to potentially reduce their overall tax liability for 2022, it’s important to consider various income tax planning techniques before years’ end. When evaluating appropriate planning techniques, you should review the overall impact of any such planning for the two-year period of 2022 and 2023.

Traditional income tax planning options include the postponement of income until 2023, as well as accelerating deductions into 2022. This strategy might allow you to claim larger deductions, credits, and other tax breaks for 2022 that are phased out over varying levels of adjusted gross income (AGI). If there’s a chance you might be in a lower tax bracket next year, it may be advantageous to try to arrange with your employer to defer a bonus that you may be entitled to until 2023.

With regard to accelerating deductions, consider using a credit card to pay deductible expenses before the end of the year, including charitable contributions. This can increase your 2022 deductions, even if you don’t pay your credit card until after the end of the year. If you expect to owe state and local income taxes when filing your return next year, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before the end of the year, so that you might deduct those taxes for 2022.

Other common elements of income tax planning may also include selling capital assets (such as stock investments) for the purpose of generating a capital loss to offset any capital gains that you have already realized for the year. When considering year-end tax planning moves, it is also important to take into account the potential impact of such planning on the alternative minimum tax for 2022, so be sure to consult with your tax attorney.

If you’re on the higher end of income earners, be wary of the additional 0.9% Medicare tax that applies to individuals receiving wages with respect to employment in excess of $200,000 ($250,000 for married couples filing jointly and $125,000 for married couples filing separately).

Retirement Planning for 2022

It’s never the wrong time to put a little extra focus on your retirement planning, especially towards the end of the year as tax-saving opportunities continue. As a taxpayer, you still have the ability to convert funds in a traditional IRA (including SEPs and SIMPLE IRAs), §401(a) qualified retirement plans, §403(b) tax-sheltered annuities or §457 government plans into a Roth IRA. You also might want to consider converting money which is currently invested in depressed stocks (or mutual funds) into a Roth IRA if you are eligible to do so.

These are just a few of the year-end tax planning considerations that you can make before the calendar turns to 2023, so make sure to consider your options while you still have time. And don’t forget that your taxpayer circumstances are unique, so not all of these suggestions will benefit everyone. To ensure that your specific needs are considered, discuss any techniques with a qualified tax advisor before making any changes.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Elizabeth M. Siefker is an attorney at Fraser Trebilcock in the trusts and estates practice group focusing on estate planning, elder law, and business planning. You can reach her at esiefker@fraserlawfirm.com, or at 517.377.0801.

Five Stories that Matter in Michigan This Week – November 4, 2022

IRS Announces 2023 Cost-of-Living Adjustment for Retirement and Health and Welfare Benefit Plans

The Internal Revenue Service recently announced 2023 cost-of-living adjustments for retirement and health and welfare benefit plans. The significant adjustments reflect the increase in inflation over the last year. The adjustments are detailed in IRS Notice 2022-55. For example, the contribution limit for a Simple 401(k) will increase to $15,500 in 2023 from $14,000 in 2022, and for a Health FSA, limits will increase to $3,050 in 2023 from $2,850 in 2022.

Why it Matters: Business owners and employers should be aware of these adjustments and share this information with employees as we approach the new year. If you have any questions regarding these adjustments, please contact our Employee Benefits team.

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Viridis North, LLC Can Proceed with Lawsuit Against CRA

In November 2021, the CRA (formerly known as the MRA), issued its largest ever marijuana recall because of concerns over safety tests conducted by two companies, Viridis Laboratories, LLC, and Viridis North, LLC. These two companies filed a lawsuit against four individuals who were employed by the CRA in their individual capacities. Last week, U.S. District Court Judge Paul L. Maloney granted an order in part motion to dismiss all claims alleged by Viridis Laboratories, LLC, and Viridis North, LLC, except for, “Plaintiff Viridis North’s claim for violation of its substantive due process rights.” Viridis Labs. v. Kluytman, 1:22-cv-283, 12(W.D. Mich. Oct. 27, 2022).

Why it Matters: The decision by the Court allows Viridis North LLC to proceed with its lawsuit in determining whether or not there was a violation of their substantive due process rights stemming from the November 2021 marijuana recall. Fraser Trebilcock attorneys will monitor the situation as developments continue.

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Year End Gift Tax Planning Perspective

Why it Matters: The method allows you to give up $16,000 without reducing your estate and lifetime gift tax exclusion amount. It’s also important to note that there is no limit to the number of people to whom you may make such gifts, and that the annual gift tax exclusion is applied on a per-donee basis.

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Department of Labor Issues New Proposed Rule on Independent Contractors

The U.S. Department of Labor recently issued a Notice of Proposed Rulemaking that, if adopted, would change the standard for analyzing a worker’s classification as either an employee or independent contractor.

Why it Matters: Employers who misclassify employees can face severe financial consequences. That’s why it is important that organizations remain diligent in analyzing their workers’ classifications. Learn more on the subject.

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EV Company Relocating to MI Recipient of Funds from MSF

A Utah-based electric vehicle company that is set to relocate their headquarters to southeastern Michigan, received a $2.5 million Michigan Business Development Program performance-based grant from the Michigan Strategic Fund to aid in the move.

Why it Matters: Officials in Michigan have been working hard to grow Michigan’s economy, and these programs are an incentive for businesses that are looking to relocate or expand their footprint in the state.

Related Practice Groups and Professionals

Five Stories that Matter in Michigan This Week – October 28, 2022

Governor Whitmer Signs Bipartisan Election Bills

Governor Whitmer recently signed a package of election law bills which impact how clerks process ballots, including those coming from members of the military overseas. Michigan Public Act 195 permits clerks to pre-process absentee ballots two days prior to Election Day, changes requirements for ballot drop boxes to increase security, and requires clerks to more frequently review and update qualified voter files to remove dead voters. Public Act 196 allows military members serving overseas to submit ballots electronically.

Why it Matters: Polling shows that voters are highly energized and polarized leading up to the midterm elections. These laws are meant to address certain voting-related issues, such as ballot box integrity, that have led to controversy in the past. If you have questions about these bills, or election law issues in general, please contact a member of our election law team.

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Department of Labor Issues New Proposed Rule on Independent Contractors

Why it Matters: Employee misclassification can result in severe financial consequences. Businesses and employers should remain diligent in analyzing their workers’ classifications. Learn more on the subject.

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Michigan Court of Claims Rules in Prevailing Wage Policy Case

Judge Douglas Shapiro of the Michigan Court of Claims recently ruled in favor of the state’s Department of Technology, Management, and Budget (DTMB), when it implemented its prevailing wage policy. The Associated Builders and Contractors of Michigan (ABC) in July 2022 filed a preliminary injunction claiming that due to the 2018 repeal of Michigan’s prevailing wage law, that the state cannot require the wage rate, which the Court denied and agreed that DTMB did not violate separation of powers when implementing its prevailing wage policy.

Why it Matters: October 31 is the deadline for ABC to appeal the decision. If this decision stays, this signals changes to the way organizations do business with the state of Michigan. Learn more on DTMB’s prevailing wage.

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New CRA Director Vows to Crack Down on Black Market Sales

This week, Brian Hanna, the Cannabis Regulatory Agency’s acting director, spoke to media and highlighted the agency’s focus on cracking down on cannabis that is continuing to illegally enter Michigan’s market.

Why it Matters: Though official numbers have not been confirmed, it is known that illicit cannabis is continuing to enter Michigan’s medical and adult-use cannabis markets, causing widespread effects on prices and profits for legal and law-abiding businesses.

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State Court Administrative Office Proposes New Landlord-Tenant Rules

The State Court Administrative Office unveiled new proposed rules that if enacted, would alter the way eviction cases are handled for both landlords and tenants. Rules such as a requirement that tenants be served in person if a landlord wants an immediate default judgement, and the ability for tenants to get an automatic stay if they have applied for rental aid.

Why it Matters: If enacted, these rules would allow commercial and residential tenants more time to pay their landlords if they fall behind on payments, however landlords are against the new proposed rules as they believe it will make the process of finding new tenants more difficult.

Related Practice Groups and Professionals

Election Law | Garett Koger
Labor, Employment & Civil Rights | David Houston
Cannabis Law | Sean Gallagher
Real Estate | Jared Roberts

Department of Labor Issues New Proposed Rule on Independent Contractors

The US Department of Labor recently issued a Notice of Proposed Rulemaking that, if adopted, would change the standard for analyzing a worker’s classification as either an employee or independent contractor. The new rules are a reversion to prior tests, which consider certain “economic reality factors;” factors that were originally set out in a pair of cases before the Supreme Court of the United States in 1947 (See United States v. Silk, 331 U.S. 704, and Rutherford Food Corp. v. McComb, 331 U.S. 722).

The six non-exhaustive and unweighted factors flowing from those cases and included in this new rule are:

The worker’s opportunity for profit or loss depending on managerial skill;
The relative investment of the worker and the employer in the equipment, materials, or helpers required for their task;
The degree of permanence of the work relationship
Nature and degree of control – whether the employer has the right to control the manner in which the work is to be performed;
The extent to which the work performed is an integral part of the employer’s business;
Whether the service rendered requires a special skill or initiative.

These proposed rules are open for public comment until November 28, 2022.

Relatedly, the Internal Revenue Service recently “streamlined” its various “20 Factor” and other tests for independent contractor determination. See, IRS Publication, Topic No. 762. The Service now groups the prior multiple factors into three topics. The IRS Publication states the employer in making its determination, “must examine the relationship between the worker and the business. You should consider all evidence of the degree of control and independence in this relationship. The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control, and Relationship of the Parties.” We add, however, that this “restatement” of IRS policy allows consideration of the prior “20 Factors,” or any others. While worker classification is likely to resolve similarly under DOL and IRS rules, the employer of course must consider both, lest it fall short in one regulatory arena or the other.

We all know that employee misclassification can result in severe financial consequences. Businesses and employers should remain diligent in analyzing their workers’ classifications and consult an experienced attorney with any questions. The attorneys at Fraser Trebilcock Davis & Dunlap, PC will continue to monitor these developments and stand ready to guide clients in their compliance with any new regulation.

Fraser Trebilcock Shareholder Dave Houston has over 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.

Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients with a focus on corporate structures and compliance, licensing, contracts, regulatory compliance, mergers and acquisitions, and a host of other matters related to the operation of small and medium-sized businesses and non-profits. You can reach him at 517.377.0848 or at bburgee@fraserlawfirm.com.

Five Stories that Matter in Michigan This Week – October 21, 2022

IRS Establishes New Income Tax Brackets for 2023

The IRS this week announced higher federal income tax brackets and standard deductions for 2023, which will apply to tax year 2023 for returns filed in 2024. The standard deduction for 2023 will rise to $27,700 for married couples filing jointly, up from $25,900 in 2022, and $13,850 for single filers, an increase from $12,950.

Why it Matters: These increases are in response to soaring inflation, which continue to impact the economy and government policy. Last week, it was announced that Social Security and Supplemental Security Income benefits will increase 8.7% in 2023.

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Final Rule Issued for Corporate Transparency Act: What Businesses Need to Know

On September 29, 2022, FinCEN issued its Final Rule, and a corresponding Fact Sheet. These rules set forth the requirements for certain businesses to disclose information regarding the individuals who own or control the business.

Why it Matters: The Corporate Transparency Act is intended to deter activity such as money laundering, financing terrorism, and tax fraud, among other things. Failure to disclose the necessary information may subject businesses to significant civil and criminal penalties. Learn more on the subject.

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Scholarship Program Poised to Assist Michigan’s Middle Class

The new Michigan Achievement Scholarship program will help Michigan families reduce the costs of attending various post-high school education programs. Public university students who are selected will receive up to $5,500 a year for five years, independent university students will be able to get up to $4,000 a year for five years, private trade school students $2,000 a year for two years and community college students $2,750 a year for up to three years.

Why it Matters: The Michigan Achievement Scholarship program is projected to double the number of the recipients who receive financial aid through the state’s various programs. And the new program seeks to reduce or eliminate the need for student loans for families across the state.

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Records Cannabis Sales in September Reports CRA

Cannabis sales in Michigan drew in $212 million in September, setting a record in terms of cannabis sales per month. The Cannabis Regulatory Agency has reported that more than 90% of sales came from adult-use recreational cannabis purchases.

Why it Matters: Michigan breaks another record, set earlier this year, in cannabis sales per month. As product continues to enter the market causing prices to drop, many licensees are asking the Cannabis Regulatory Agency to stop issuing licenses in fear of profit losses.

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House Bill Proposes to Establish a Version of the Telephone Consumer Protection Act in Michigan

The federal Telephone Consumer Protection Act seeks to stop unwanted telephone solicitation. Michigan House Bill 6307, the Michigan Telephone Solicitation Act (the “MTSA”), would enact similar restrictions on a state level.

Why it Matters: If enacted, Michigan would follow in the footsteps of other states, such as Florida, Oklahoma, and Washington, who have implemented similar protections for residents. The MTSA would exempt certain solicitation calls, such as those made with express authorization and those to existing customers. Violations, especially knowing violations and those impacting vulnerable individuals, would be subject to stiff civil penalties. The bill also proposes to establish a private cause of action for impacted individuals.

Related Practice Groups and Professionals

Business & Tax | Paul McCord
Business & Tax | Robert Burgee
Cannabis Law | Sean Gallagher
Energy, Utilities & Telecommunication | Michael Ashton

Final Rule Issued for Corporate Transparency Act: What Businesses Need to Know

As we previously addressed in 2021, Congress passed the Corporate Transparency Act (“CTA”), which requires certain business entities to report the “beneficial ownership” of an entity to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCen”).

The CTA is intended to deter activity such as money laundering, financing terrorism, and tax fraud, among other things. Failure to disclose the necessary information may subject businesses to significant civil and criminal penalties.

On September 29, 2022, FinCEN issued its Final Rule, and a corresponding Fact Sheet. These rules set forth the requirements for certain businesses (“reporting companies”) to disclose information regarding the individuals who own or control the business (“beneficial owners”). The CTA is a complex statute, and non-compliance with its reporting requirements can subject businesses to significant penalties, so it’s important to consult with a business attorney to understand your business’s reporting obligations.

Here are some of the key takeaways from the Final Rule.

Who Must Report

The CTA applies to a “reporting company” which includes:

Domestic Company: a corporation, limited liability company (LLC), or any entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe.
Foreign Company: a corporation, LLC, or other entity formed under the law of a foreign country that is registered to do business in any state or tribal jurisdiction by the filing of a document with a secretary of state or any similar office.

Several types of entities are exempt from reporting requirements, including:

Companies with 20 or more full-time U.S. employees, more than $5 million in federal income tax revenue, and have an operating presence at a physical office within the United States;
Issuers registered with the Securities and Exchange Commission;
Banks, bank holding companies, savings and loan holding companies, credit unions, financial market utility entities, and money services businesses registered with FinCEN;
Registered Commodity Exchange Act entities, registered investment companies or investment advisers, broker-dealers, and registered venture capital fund advisers;
Insurance companies or state-licensed insurance producers;
Accounting firms;
Public utilities;
Certain pooled investment vehicles;
Tax-exempt entities or entities that exist solely to assist a tax-exempt entity; and
Certain inactive companies.

Defining Beneficial Owners

Under the Final Rule, a “beneficial owner” includes any individual who, directly or indirectly, either (i) exercises substantial control over a reporting company, or (ii) owns or controls at least 25 percent of the ownership interests of a reporting company.

Filing Beneficial Ownership Information Reports

The Final Rule requires that when filing beneficial ownership information reports with FinCEN, the reporting company must identify itself and report the following four pieces of information for each of its beneficial owners:

Full legal name,
birthdate,
residential address, and
a unique identifying number from either an unexpired passport, state identification document, or driver’s license, and an image of that document.

Timing for Reports

The effective date for the Final Rule is January 1, 2024. Reporting companies created or registered before January 1, 2024, will have one year from that date to file their initial reports, while reporting companies created or registered on or after January 1, 2024, will have 30 days after receiving notice of their creation or registration to file their initial reports. Furthermore, a reporting company will need to update their prior report within 30 days of any change to a beneficial owner’s information

What to do Next

The foregoing is a summary of some of the important provisions of the Final Rule. The CTA and Final Rule are lengthy and complex and there is much more to know. Businesses should consult with their attorney to understand their obligations.

This is a brief summary and does not constitute legal advice. For assistance, please contact Robert D. Burgee.

Five Stories that Matter in Michigan This Week – October 14, 2022

Lawsuit Challenges New Election Challenger/Poll Watcher Guidance

The Michigan GOP and the Republican National Committee filed a lawsuit seeking to rescind new instructions for election challengers and poll watchers issued by the Michigan Bureau of Elections. Among issues raised in the lawsuit is a new requirement having challengers obtain a credential using a form from the Michigan Secretary of State’s Office.

Why it Matters: There were many lawsuits filed in the wake of the 2020 election, and it’s likely that there will be many more arising from this November’s hotly contested races. Fraser Trebilcock’s election law team provides proactive guidance for political campaigns and causes, and representation in connection with election-law disputes.

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Student Loan Forgiveness Will Not Be Taxed

Earlier this month with legislative bipartisan support, it was announced that Michigan will not collect taxes as revenue on the federal student loan forgiveness or the state’s Public Service Loan Forgiveness program. Individuals who are eligible can receive up to $20,000 of their student loans forgiven.

Why it Matters: In August, Fraser Trebilcock reported on President Biden’s announcement on student loan forgiveness of up to $20,000. This latest news comes as a relief for those who are participating in the loan forgiveness program.

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Changes Could Be Coming for Sales Tax on Automobiles

Pending a final vote, Michigan drivers will save some money when they purchase a vehicle. Previously, car buyers would be taxed the state’s 6% sales tax on the list price, but now under the proposed bills, it would now tax the amount the buyer purchased it for.

Why it Matters: The legislation could be another change for automobile owners in Michigan. If the bills pass, the sales tax would now have to consider the manufacturer incentives that may be present for certain cars.

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State Fines and Suspends Detroit-based Medical Marijuana Business

The Cannabis Regulatory Agency has suspended for 30 days and fined $75,000 a Detroit-based medical marijuana business for improperly handling marijuana products by not having the required identification tracking numbers on the products.

Why it Matters: In the highly regulated medical and recreational marijuana industry, businesses can face high fines and lengthy suspensions for failing to abide by the rules set forth by the Cannabis Regulatory Agency. Marijuana businesses are required to follow video surveillance rules in Michigan.

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October 14 Deadline: Medicare Part D Notice of Creditable (or Non-Creditable) Coverage

Why it Matters: Failure to provide notice can result in a late enrollment penalty to those persons who go 63 days or longer without creditable coverage. Learn more here.

Related Practice Groups and Professionals

Election Law | Garett Koger
Business & Tax | Paul McCord
Cannabis Law | Sean Gallagher
Employee Benefits | Robert Burgee

Five Stories that Matter in Michigan This Week – October 7, 2022

Michigan Legislature Allocates $846 Million for Economic Development Projects

Michigan legislators recently approved $846.1 million to support economic developments projects in the state. The funding will be administered through the state’s Strategic Outreach and Attraction Reserve (SOAR) fund.

Why it Matters: As the economy slows, these funds will inject a needed boost for business and entrepreneurship in Michigan. In 2021, $1 billion in SOAR funds were distributed to aid corporations planning major projects.

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Lawsuit Emerges as City of Detroit’s Adult-Use Marijuana Ordinance is Challenged Again

A new lawsuit challenging the City of Detroit’s adult-use marijuana ordinance was filed recently in the U.S. District Court for the Eastern District of Michigan alleging that the revised ordinance the Detroit City Council passed still has the same issues as the original ordinance that led to multiple lawsuits.

Why it Matters: In August, a judge threw out two lawsuits that claimed the revised ordinance gave an unfair advantage to certain residents and that the new law would signal the end for existing medical marijuana facilities already in the area. Fraser Trebilcock cannabis attorneys will continue to monitor the situation for updates.

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New Legislation Will Allow Preprocessing of Absentee Ballots

A package of bills recently passed by the Michigan legislature with bipartisan support would allow local clerks two days to preprocess absentee ballots prior to election day. Additionally, enhanced security measures will go into effect, such as routinely removing deceased voters from the Qualified Voter File, and requiring a chain of custody logs for ballots placed in drop boxes. The recent changes are effective now, leading up to the November election.

Why it Matters: The legislation before us would remove the sunset to allow clerks to again use this tool to efficiently and securely process absentee ballots,” said Senate Elections Chair Committee Chair Ruth Johnson.

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New Scholarship Program Aimed at Helping Michigan’s Middle Class

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Importance of Signing an Operating Agreement for Your LLC

It happens more often than individuals think and something small businesses should heed is the need to adopt an operating agreement at the start of your LLC. It may seem like an unnecessary step when you are starting out but waiting until the time is right or until you get big enough can often lead to forgetting about it completely.

Why it Matters: Failure to sign an operating agreement for your LLC may lead to issues for your small business that would otherwise be avoided. Learn more from a Fraser Trebilcock attorney on this topic.

Related Practice Groups and Professionals

Business & Tax | Klint Kesto
Cannabis Law | Sean Gallagher
Election Law | Garett Koger

Five Stories that Matter in Michigan This Week – September 30, 2022

House Bill Proposes to Establish a Version of the Telephone Consumer Protection Act in Michigan

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October 14 Deadline: Medicare Part D Notice of Creditable (or Non-Creditable) Coverage

Why it Matters: Failure to provide notice can result in a late enrollment penalty to those persons who go 63 days or longer without creditable coverage. Learn more here.

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FDA Appoints Birenbaum as Senior Public Health Advisor on Cannabis Research and Regulatory Actions

The U.S. Food and Drug Administration (the “FDA”) recently hired Norman Birenbaum, former cannabis program director for the state of New York, to serve as its senior public health advisor on cannabis research and regulatory actions.

Why it Matters: The appointment of Norman Birenbaum signals a turn for cannabis and cannabis-based products on the federal level. He brings experience in policy analysis as a founding president of a national cannabis regulatory association, and is anticipated to expand the FDA’s relationship with the healthcare community and patient advocate groups, as they look to gather more data on cannabis.

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General Motors Co. Reverses Return to Office Plan Following Backlash

Top executives from GM reportedly reversed course from last week’s reported plan to require salaried employees to return to company offices for at least three days a week, which would go into effect later this year.

Why it Matters: Following the outcry from employees who felt the plan was ushered in too quickly, executives have backed off the three-day in-office requirement this calendar year and instead continued to practice the “Work Appropriately” philosophy first adopted in 2020.

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Michigan Car Insurance Rates Drop Nationally

With the introduction of new out-of-state car insurance companies into Michigan, the state has dropped from the nation’s top spot in cost of car insurance, to fourth. The 2019 auto insurance reform bill that passed is believed to be the major factor in reducing costs.

Why it Matters: Reduced costs for automobile owners is a positive sign for Michiganders. Elected officials are working towards providing consumers with a choice for their automobile insurance, which will help reduce costs for citizens.

Related Practice Groups and Professionals

Client Alert: October 14 Deadline: Medicare Part D Notice of Creditable (or Non-Creditable) Coverage

Medicare Part D notices (of either creditable or non-creditable coverage) are due for distribution prior to October 15th.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires entities who offer prescription drug coverage to notify Medicare Part D eligible individuals whether their prescription coverage is creditable coverage. With respect to group health plans including prescription coverage offered by an employer to any Medicare Part D eligible employees (whether or not retired) or to Medicare Part D Medicare-eligible spouses or dependents, the employer must provide those individuals with a Notice of Creditable or Non-Creditable Coverage to advise them whether the drug plan’s total gross value is at least as valuable as the standard Part D coverage (i.e., creditable). Medicare Part D notices must be provided to Medicare-eligible individuals prior to October 15th of each year (i.e., by October 14th).

The initial notices were due by November 15, 2005 and have been modified numerous times. The newest model notices and guidance were issued for use after April 1, 2011. Therefore, any notices you send from this point forward must conform to the new guidelines. Use of the former model notices will not suffice.

Downloads to the updated guidance and various notices can be found on the CMS website HERE and HERE.

As a reminder, there are five instances in which such notice must be provided:

Prior to an individual’s initial enrollment period for Part D;
Prior to the effective date of enrollment in your company’s prescription drug coverage;
Upon any change in your plan’s creditable status;
Prior to the annual election period for Part D (which begins each October 15); and
Upon the individual’s request.

Providing the notice above is important as a late enrollment penalty will be assessed to those persons who go 63 days or longer without creditable coverage (for example, if they enroll in an employer’s prescription plan which is not as valuable as the Part D coverage instead of enrolling directly in the Medicare Part D coverage).

If your plan does not offer creditable prescription drug coverage and if the Part D eligible person enrolls in your plan instead of the Part D plan for at least 63 days, a permanent late enrollment penalty of 1% of the premium is added to the Medicare premium for each month the person does not enroll in Part D.

Please contact us if you need assistance with your Notice of Creditable (or Non-Creditable) Coverage.

Reminder: Submit Medicare Part D Notice to CMS

As discussed above, employers offering group health plans with prescription drug coverage are required to disclose to all Part D-eligible individuals who are enrolled in or were seeking to enroll in the group health plan coverage whether such coverage was “actuarially equivalent,” i.e., creditable. (Coverage is creditable if its actuarial value equals or exceeds the actuarial value of standard prescription drug coverage under Part D.) This notice is required to be provided to all Part D eligible persons, including active employees over age 65.

The regulations also require group health plan sponsors with Part D eligible individuals to submit a similar notice to the Centers for Medicare and Medicaid Services (“CMS”). Specifically, employers must electronically file these notices each year through the form supplied on the CMS website.

The filing deadline is 60 days following the first day of the plan year.

At a minimum, the Disclosure to CMS Form must be provided to CMS annually and upon the occurrence of certain other events including:

Within 60 days after the beginning date of the plan year for which disclosure is provided;
Within 30 days after termination of the prescription drug plan; and
Within 30 days after any change in creditable status of the prescription drug plan.

The Disclosure to CMS Form must be completed online at the CMS Creditable Coverage Disclosure to CMS Form web page HERE.

The online process is composed of the following three step process:

Enter the Disclosure Information;
Verify and Submit Disclosure Information; and
Receive Submission Confirmation.

The Disclosure to CMS Form requires employers to provide detailed information to CMS including but not limited to, the name of the entity offering coverage, whether the entity has any subsidiaries, the number of benefit options offered, the creditable coverage status of the options offered, the period covered by the Disclosure to CMS Form, the number of Part D eligible individuals, the date of the notice of creditable coverage, and any change in creditable coverage status.

For more information about this disclosure requirement (instructions for submitting the notice), please see the CMS website for updated guidance HERE.

As with the Part D Notices to Part D Medicare-eligible individuals, while nothing in the regulations prevents a third-party from submitting the notices (such as a TPA or insurer), the ultimate responsibility falls on the plan sponsor.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Aaron L. Davis works in employee health and welfare benefits. He is also Chair of the firm’s labor law practice and serves as Firm Secretary. He has litigation experience in a diverse range of employment matters, including Title VII, the Age Discrimination and Employment Act, the Americans with Disabilities Act, the Family Medical Leave Act, and the Fair Labor Standards Act. You can reach him at 517.377.0822, or email him at adavis@fraserlawfirm.com.