Juliet Lucero

Charter School HR & Employee Benefits Blog

Marketplace Notices that Your Charter School needs to be Aware of

The IRS is hiring! They have hired 700 new agents this year alone to enforce the Affordable Care Act. Many employers just think that nothing will happen to them. But these new laws are being enforced and your charter school will be audited too.

So you offer health insurance to your full time staff. What is considered full time at your charter school? In years past, full time meant 40 hours. But the ACA says full time is 30 hours. Do you have variable hour employees? If those employees are working 30 hours or more, you must offer them health insurance.

julietlucero-comLet’s say an employee works 30 hours and the school only covers 80% of the cost of health insurance. This employee does some research herself and finds out that she qualifies for a subsidy on the Exchange because her income falls within the guidelines. Her cost for health insurance on the Exchange with the subsidy comes out to be less than what her payroll deduction would be at the school. So she decides to not enroll in the benefits at your school and does not complete any paperwork. She then goes to the Exchange, purchases health insurance on her own, collects the subsidy and is happy because she is paying less than through her charter school.

Well here’s the problem. She does not qualify for a subsidy on the Exchange. Why? That’s because her employer (your charter school) offered her affordable coverage. However, she marked off a wrong box on the website saying she wasn’t offered affordable coverage because it wasn’t affordable she thought. It cost less on the Exchange so the Exchange was affordable but her employer’s plan was not. Can you see how many employees will think this same way?

So since she collected a subsidy on the Exchange and the IRS knows she is employed by your charter school, the IRS is going to send your charter school a notice. This notice will include a fine. The IRS will automatically assume that you did not offer her coverage and remember, your employee did not complete any paperwork or a waiver. So you have no proof that coverage was offered to this employee. This is why it is very important to obtain a waiver form for each employee that does not enroll in the benefits.

These are the notices that you may be receiving in the mail in the next few months:

  1. Marketplace Notice

These notices come from the Marketplaces (i.e., Exchanges) and are sent to employers who have an employee that is deemed eligible for a premium tax credit or cost-sharing subsidy.  The Federally-facilitated Marketplaces have just started sending out these notices.  Covered California plans to start sending out notices in the Fall of 2016.  Other states with State-based Exchanges may have also started sending out notices.

Employers may appeal the determination.  They are not required to do so.  Not appealing will have no impact on whether an Employer Mandate penalty is assessed by the IRS.  The appeals process for Federally-facilitate Marketplaces is through HHS.  Some State-based Exchanges are also using HHS, including Covered California, but others will handle their own appeals.

  1. IRS Notice

The IRS will separately send notices to employers to inform them that they may be assessed a penalty under the Employer Mandate.  The IRS has not provided dates when these notices will start to be sent but it’s anticipated they will start in November 2016 at the earliest.  Employers will have an opportunity to respond to the notice before any Notice and Demand for Payment is issued.

To view an example of the notices that you may receive in the mail, click the download now image below.

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If you have any questions regarding these marketplace notices or need any assistance with your employee benefits for your charter school, please contact me at (760) 622-6080 or by using my Contact Form. You may also contact me through any of my social media accounts.

—Juliet Lucero

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COBRA Continuation Information for Charter Schools

It’s the end of the school year and your charter school probably has some employees who are not returning for next year. You provided them with their final paycheck and have completed their exit interview. Their health insurance coverage has been cancelled with the insurance carriers. That’s all that you have to do, right? Well that depends. If you are a charter school in California with 19 or less full time employees, then you qualify for Cal-COBRA. If you have 20 or more full time employees, then your school falls under Federal COBRA.

COBRA Continuation Information for Charter Schools

If you are a small charter school and fall under Cal-COBRA, your insurance carriers will do the majority of the work for you. Your responsibility as the Employer is to notify your insurance carriers, within 30 days, of the employee’s termination date. After you notify your insurance carriers of the termination, the insurance carriers will send out the COBRA notices to the employee. The COBRA notice will inform the employee of their rights to continue their health care coverage, the cost for the COBRA coverage, and instructions on how to enroll. Should the employee elect COBRA coverage for themselves or any previously covered family members, the insurance carrier will bill the employee directly each month for the health insurance premium.

Most charter schools are going to fall under Federal COBRA. As the employer, you still must notify your insurance carriers, within 30 days, of the employee’s employment termination. There are additional steps that must be taken to adhere to the COBRA laws. The employer can choose to send out the COBRA notices themselves. This option saves money, but requires a little more work on the Employer’s part. The other option is to hire a COBRA Administrator to send out all required notices and to handle the billing. There is typically a fee for a COBRA Administrator. The employer still has work to do on their end, even if they hire a COBRA Administrator. Let me explain.

Using a COBRA Administrator

When you hire a COBRA Administrator to handle your COBRA processing, you will need to provide the administrator with several pieces of information. They will require that you send them over copies of all of your plan descriptions and rates. If your charter school is on aged-based rating, you will need to provide the rate table for each age bracket. Additionally, the administrator will require a census of your staff that includes everyone’s home address and the dependents that are currently covered on the plans. Every year, the COBRA Administrator will ask you to update all of this information and they typically want you to complete several of their forms as well. If you are using an administrator, after you terminate an employee with your insurance carriers, you will also need to notify your COBRA administrator of the terminated employees. Many administrators have a website that you login to and complete their online form for this process.

COBRA Administration

Administering COBRA yourself

If you plan to forgo using an administrator and want to process the COBRA yourself, here is what you need to know. Every employee is required to receive a General Notice of COBRA Rights no later than 90 days after their coverage under the plan begins. You can obtain a sample of this notice on the Department of Labor’s website at:

General Notice of COBRA Rights

Upon employee’s termination, after you terminate an employee with the insurance carriers, you will need to send out the COBRA Election Notice to the former employee’s home. This notice must be sent timely, within 14 days. It is recommended that this notice be sent as promptly as possible. In this notice you will include the current rates of the insurance plans the employee was enrolled in. You can add in a 2% admin fee to the rate. Your school would keep the 2% admin fee for acting as the COBRA Administrator. You should also include a copy of the plan descriptions with the Election Notice. A sample of this notice can be found on the Department of Labor’s website at:

Election Notice

Should the former employee decide to elect COBRA coverage for themselves or dependents, the employee would return the election notice to the school with payment of their first month’s premium. Many insurance carriers will also require the completion of a COBRA enrollment form. If this is the case with your carrier, you will need to follow up with the employee to provide them any additional forms that need to be completed.

COBRA Payments

It is not the employer’s responsibility to send a bill or invoice to the COBRA participant each month. You can send a coupon booklet that the participant can use to remit payments each month. However, responsibility of the payment of the COBRA premiums falls solely on the COBRA participant. Your charter school will be billed each month on your health insurance invoice for any COBRA enrollees. It is the school’s responsibility to pay the invoice in full. The COBRA participant will mail you their payment, made out to the school, each month. If payment is not received by the last day of the month, you have the right to terminate that COBRA participant’s coverage with the health insurance carrier. If coverage has been terminated, a termination notice should be sent with the reason for coverage being terminated.

If your rates or plans change during open enrollment, any COBRA participants need to be notified of these changes. Be sure to collect any additional premiums with any rate increase your plans have taken.

COBRA Penalties

If you fail to comply with the COBRA laws or neglect to offer COBRA to any terminated employees, you could be subject to fees and penalties. These penalties for violations include:

  • Excise tax penalties of $100 per day ($200 if more than one family member is affected)
  • Statutory penalties of up to $110 per day under the Employee Retirement income Security Act (ERISA)
  • Civil lawsuits.
  • Attorneys’ fees and interest.

Remember, just by having a COBRA Administrator, you are not protected from these penalties. If the COBRA Administrator fails to send out notices, the penalties for violations still fall upon the employer.

If you have any questions regarding COBRA or need any assistance with your employee benefits for your charter school, please contact me at (760) 622-6080 or by using my Contact Form. You may also contact me through any of my social media accounts.

—Juliet Lucero

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Paid Family Leave for Charter Schools in California

California’s rules and laws regulating employment leave are, to say the least, very involved. Covering different circumstances from sickness to having a baby, the Golden State currently has seven types of employee leave. Some of them are paid, whereas other promise job reinstatement for a specific amount of time. It isn’t surprising both employees and employers have a lot of questions. I am going to talk about how these laws will affect your charter school.

Paid Family Leave for Charter Schools in California

On April 11, 2016, California’s Government Brown signed the AB 908 bill, which is going to increase the percentage of wage substitution employees should receive when they take an absence leave from work. Brown explained that globalization has placed pressure on benefits and salaries. ‘’California is currently going more in the aggregate than other states,’’ he said. ‘’We are trying to make up for the gross inequality that isn’t a concept, but it is currently bringing down a lot of people’s lives who reside in California’’. He also said that providing more help to the lowest earners in California on family leave will assist in fixing the increasing income disparity in the state. Gov. Brown delayed approving the family leave bill during his negotiations with different labor unions in California to increase the minimum wage of the state. He accepted a plan to increase the minimum wage in California to $15 per hour by the year 2022.

The leave is going to be covered by California’s Paid Family Leave (PFL) or State Disability Income (SDI) programs. Payroll taxes include these programs, so there isn’t a direct effect on employers because of this change. However, the bill is expected to have an indirect effect on employers because of increased use of leave benefits and provisions by employees. Currently, employees in California can take six PFL weeks to care for sick family members or to bond with a newly adopted child, foster child, or newborn babies. Eligibility expires one year from the date of adoption, placement in foster care, or birth.  Throughout the leave, employees are going to get a 55% wage replacement to a weekly benefit worth $1,104.00, modified every year based on the state’s average wage.

The SDI program

The State Disability Income (SDI) program is for employees that can’t work because of pregnancy, sickness, or injuries that aren’t related to their job. To qualify for the program, employees should have their disability confirmed by a medical professional. Employees approved for receiving SDI will receive 55% of their overall wages. The amount is going to be up to the maximum amount of benefits up to fifty-two weeks. Many employees and companies in California add to the fund to pay the benefits, including charter schools.

AB 908 is going to do the following, starting January 1, 2018:

  • Increase the rate of wage replacement for the Paid Family Leave (PFL) or State Disability Income (SDI) programs from 55% to:-
  • $50 per week for employees with a salary more than $929 per quarter but lower than 33% of the average quarterly wage in California.
  • 70% of wages for employees who make 33% of the average quarterly wage in California.
  • Employees who make 23.3 % or more of California’s average weekly wage.
  • Employees who make 33% or more of the average quarterly wage in California.
  • States that the weekly benefit amount of employees shouldn’t go beyond the maximum employees’ payment temporary disability guarantee weekly benefit amount set the by the Industrial Relations Department.
  • Sunset the percentage of increase during January 1, 2022.
  • Remove the one-week waiting duration for Paid Family Leave (PFL) claims.
  • Entail the Employment Development Department (EDD) to inform the Legislature by March 1, 2021, on the use of Paid Family Leave (PFL) or State Disability Income (SDI) benefits based on categories of income, the cost of the increased wage rates of replacement, and the contribution rates of SDI.
  • Entail the Employment Development Department (EDD) to conduct a cost/benefit evaluation of the one-week waiting direction for SDI claims. The EDD should then report that study’s results to the Assembly Insurance Committee, Senate Labor, and Committee of Industrial Relations.

The amounts of payroll deduction funding both the Paid Family Leave (PFL) and State Disability Income (SDI) is set by the EDD on an annual basis. It is most likely that the payroll’s deduction wage ceiling and rate can increase under the new formula for benefits. It is also most likely that the legislature is going to pass legislation to make increases in the rates of wage replacement permanent, before the sunset date of the law.

Regarding companies’ and employers’ effect, this new law is supposed to make it easier for employees to take more time to spend with a new child. Also, the law will have an insignificant effect on public school districts in California because many school districts don’t pay into the State Disability Income (SDI) program. Most of the charter schools do pay into the State Disability Income (SDI program, and those schools will most likely be affected.

Exclusions Teachingis thegreatest actof optimism.

Fathers and mothers-in-law are not included as care recipients. On July 1, 2014, the law was expanded to give time off to take care of an ill grandchild, sister, brother, grandparent, or parent in law.

An employee might not receive Paid Family Leave (PFL) insurance benefits if they are qualified or are receiving disability insurance from the state. An employer shouldn’t give time off or hold the job for an employee unless the employee qualifies for the Family and Medical Leave Act (FMLA) and the California Family Rights Act (CFRA).

My company recently conducted a webinar on California Family Leave Law. You can watch a recording of this webinar by clicking here: California Family Leave Law: Are CFRA and FMLA Finally Playing in Unison?

If you have any questions regarding family leave or need any assistance with your employee benefits for your charter school, please contact me at (760) 622-6080 or by using my Contact Form. You may also contact me through any of my social media accounts.

—Juliet Lucero

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How do you structure your employer contributions?

There are many ways to structure your employer contributions for your employee benefits. It comes down to many factors. These factors are budget, tier structure, rating structure, and your school’s philosophy.

Budget is usually the number one concern of all charter schools. Charter schools have tight budgets and receive less money than the school districts. Many schools will pick a number they think is appropriate for employee benefits. For example, a school might give $500 per employee per month to pay for medical, dental, vision and life. But is $500 enough in today’s health insurance market? For many years health insurance premiums have risen by double digits, year after year after year.MoneyPilesArrow

Let’s say the medical insurance premium for a single employee is $300 today. In just six years, with premiums increasing by an average of 10% each year, that employee’s premium has just gone to $531.47. Over your $500 employer contribution and we haven’t even factored in the dental, vision and life insurance premiums yet.

So will your budget increase year after year with the rising health insurance costs? Has this been factored into your budget? If you plan to pass these rate increases onto your employee, does that help with employee satisfaction? In turn does that translate to retaining your experienced and qualified staff? What is stopping your employee from going to the local district and getting a job where their benefits are paid for 100%?

Does your school have a contribution philosophy? I’ve met many schools over the years that have their view on how they want to purchase employee benefits or how to share the cost with the employees. Some schools only want to pay for the employee only, while other schools believe that teachers and staff don’t make enough money, so the school covers the cost of the entire family’s benefits.  I am going to review a few different methods of cost sharing and the pros and cons of each approach.

% of Premium

Covering a percentage of the premium is a very common practice among charter schools. A typical contribution for a charter school using this method is the employer pays 100% for the employee and 50% for dependents. Another example is the employer pays 80% for employees and dependents. This option is very beneficial if your school has age-based rates, meaning each employee has a different rate and the rate is based on the employee’s and their dependents age.

One of the pros to covering a percentage of premium is the percentage may not have to change in future years. Adjustments to the rate increase will automatically be factored in year after year. Another benefit is that each employee pays the same proportionate cost. If your school was offering a flat dollar amount to each employee, and you had aged based rates, the older more experienced employees would end up paying a lot more than your young teachers.

For example, let’s take the same $500 per month contribution I mentioned before. A 26-year-old employee costs about $311 for the Kaiser Gold plan in Southern California, and a 55-year-old employee costs about $677 for the same aged-based plan. The younger employee would not have to pay anything out of pocket because the $500 would cover the entire $311. However, the older employee would have to pay $177 a month out of their paycheck. If the school paid 100% for employees instead of the flat dollar amount, then both employees would have to pay $0.

There are a few cons with using a percentage of premiums for your contribution structure. If the school only covers the employee’s premium, the family premiums may be too costly for the employees to pay. If your premiums rise by too much one year, and your employee contracts indicate you will pay 100% of their benefits, you are going to be stuck paying for 100% of the rate increase. There are a few solutions to this that we can discuss another time.

Employer Flat Dollar Cap

I’ve already talked about this method in my previous examples and have alerted you to some of the cons. The employer contributes a fixed dollar amount regardless of premium or family size. As premiums rise, if the employer cap does not increase, employees will end up paying more and more each year out of their paychecks. However, this is an easy way for charter schools to know what their fixed cost is each year for benefits. Many health plans do not renew at the same time as the school’s fiscal year. Therefore, schools may not always know what their rate increase will be at the time of their budgeting meetings. So setting a fixed employer flat dollar cap for the year will ensure the benefits are staying within the budget.

Tiered Dollar

Group Of TeachersThe Tiered Dollar contribution method is when an employee contributes a fixed dollar amount based on family size, regardless of premium. For example, your employee will pay $30 for single, $150 for 2-party, or $350 for the family. The school pays the remainder of the premium. Employees usually like this type of contribution structure as it perceived as fair. However, employees do not always share the cost equally in this method. With the Affordable Care Act changes, if you have less than 100 employees then each dependent in the family could have a rate. So a family of five would cost the employer much more than a family of three.

Employee Flat Dollar

The last contribution method I am going to talk about is the Employee Flat Dollar. The Employee will contribute a fixed dollar amount regardless of premium or family size. For example, the employee pays $100, and the employer pays the remainder of premium. The Employee Flat Dollar is a simple method to explain to your staff. Everyone pays the same amount regardless of age or family size. However, your employees with large families will be receiving a much greater value than that of your single employees. As premiums increase year after year, the flat dollar amount employees are paying may not keep pace. You may need to adjust the flat dollar amount from year to year to stay within budget.

I have for you a simple to read chart that you can download that explains the pros and cons of each cost sharing method. You can download this document by clicking here.

I hope you now have a better understanding of how to structure your employer contributions for your employee benefits. Should you need any assistance in deciding what contributions method you to use at your school, feel free to reach out to me.

How are you structuring your contributions for employee benefits at your charter school? I would love to hear everyone’s contribution philosophy!

If you have any questions or need any assistance with your employee benefits for your charter school, please contact me at (760) 622-6080 or using my Contact Form. You may also contact me through any of my social media accounts.

—Juliet Lucero

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Employee Benefits for Charter Schools

What are your goals for your employee benefits package? Are you trying to compete with your local school district for teachers and students? Is your benefits package competitive? Are you using your benefits package to retain quality teachers? Please take a moment to think about these questions as it relates to your charter school.

I have been working with charter schools since 2003 providing employee benefits, insurance, and financial services solutions. During my time servicing the schools, I have met a lot of great leaders and dedicated individuals. These individuals have shown me the true meaning of public service. They are not the highest paid, but they are by far the most devoted. These charter school educators and leaders are the champions of education in this country.

Principal

These great leaders that are running our charter schools are focusing their time on the students, which is okay! After all, it’s what school is all about, educating our future leaders to the best of our abilities. But the business and human resources aspect of running a charter school is usually put on the back burner or not the primary focus. If you are a small charter school just starting out, you probably don’t have the resources to have a full-time Human Resources professional on staff. As long as you have a resource that can provide these services to you, you will be able to delegate HR functions to this person or entity and still be able to focus on providing a stellar education to your student population.

In my new blog, I am going to cover many aspects of employee benefits including some things you have never heard of before. If you have any questions along the way, feel free to leave a comment or send me an email, and I will get back to you promptly! As I dive into various topics, tell me what other topics you would like to learn about and feel free to give me suggestions.

Have you thought about the questions I asked you at the beginning of this post? Let’s take a closer look and I will give you some examples.

What are your goals for your employee benefits package?

Each charter school may have very different goals for their benefits package. Geographic location and hospital and provider availability may be a factor. The cost of set goalsbenefits is typically an enormous dilemma to tackle. Your goals can change and evolve over the years. For a charter school just starting out, the goal may be just to offer some benefits to their staff. For a more established school, the goals could be to add a wellness program or to communicate the current benefits to the staff more efficiently. Whatever your goals may be, write them down and discuss with your consultants ways in which you can attain them.

Are you trying to compete with your local school district for teachers and students?

Maybe you have the best school around, and pupils and teachers are lining up to get in. But for most charter schools, that is simply not the case. Several years ago, there were hiring freezes and budgets were so slim that districts had to give unpaid furlough days. In 2016, that has all changed. The districts are hiring again, and there are not enough teachers to go around. So you need to make your charter school stand out. Why would a teacher want to work for your school instead of the district school down the street? Do you pay a higher salary? Do you offer benefits that the district does not offer? You better come up with your sales pitch and sell your school to that math or science teacher that you so desperately need!

Is your benefits package competitive?

Do you know how your benefits package compares to other charter schools in your area or your local school districts? Each year, Keenan & Associates conducts an Employee Benefits Survey for schools throughout the state of California. The survey provides your school with information on what specific benefits other organizations of the same type are purchasing. (For example: How benefitsmany schools in this county offer a PPO?) It also identifies those insurance carriers most often utilized by other public entities. The Employee Benefits Survey is one tool that is available to your school to determine if your benefits are competitive.

Are you using your benefits package to retain quality teachers?

In Los Angeles, there is a teacher shortage. Time and time again you hear about teachers leaving charter schools to go work for LAUSD. One of the reasons is for the benefits package. LAUSD offers a very rich benefits package and covers the employees and dependents 100%. The LAUSD employees have no out of pocket costs and fairly low out of pocket when they are receiving medical services. On your exit interviews, are you asking teachers that are leaving about the benefits? If benefits were a reason for their departure, it’s time to take a closer look at your benefits package.

I want to thank you for taking the time to read my blog regarding Employee Benefits and Human Resources for Charter Schools. I hope that this first entry has sparked some thought regarding the many aspects of benefits in the charter school system. I look forward to hearing from you with any comments, questions or concerns. I’m always excited to share my knowledge and ideas with every charter school across the nation!

If you have any questions or need any assistance with your employee benefits for your charter school, please contact me at (760) 622-6080 or using my Contact Form. You may also contact me through any of my social media accounts.

—Juliet Lucero

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