We just got our "SavingsPlus" password and user ID in the mail yesterday 12/24/2012, and what a joke this thing is. Sue wrote a recent blurb on the topic, which is reproduced below. Try not to laugh at the folly of our California lawmakers and what they are trying to foist upon us as "real solutions to real problems". It won't even pass legal muster. Here is the link to California's own website on SavingsPlus. You can read more from this Press Release dated 9/28/2012 on the SavingsPlus program. Read on:
California State Senate Bill 1234 (aka "California Secure Choice Retirement Savings Trust"): California took a tentative (and likely pointless) step toward requiring private employers to withhold 3% of their employees’ wages to give over to a State-run pension plan. The State would collect the money, invest it and eventually pay out retirement sums to the “contributing” employees.
However, the law will not go into effect unless three major hurdles are overcome, which will be very unlikely. The hurdles are:
(1) A State-created board must conduct a market analysis and conclude that the retirement system would be self-sustaining;
(2) the IRS must rule that the contributions can be made on a pre-tax basis; and
(3) the U.S. Department of Labor must rule that the law is not preempted by a federal benefits law known as ERISA.
Given the grossly optimistic assumptions that the State has used in the past to contend that existing public employee pension funds were somehow fully funded, it is likely that the State-created board will pass the 1st hurdle. However, the 3rd hurdle, ERISA preemption, is unlikely to be surmountable. ERISA law clearly provides that no State shall make any law imposing or regulating employee benefits, including pension plans.
The courts have universally applied this rule in a very broad manner, voiding laws similar to SB 1234. The chances of the Department of Labor saying that SB 1234 is not barred by ERISA are slim, at best. But even if all of these hurdles are cleared, additional legislation will be required to actually implement the program.
Tuesday, December 25, 2012
WORLD: Happy Holidays from the Waags!
This is a photo of our dog Shayna sitting in front of the living room window. This is particularly meaningful because our strange dog of 17 years, Shayna, probably will see 2013 as her last year on this earth. She had a good run for such an odd dog, and we love her and will miss her.
About the photograph: Even though we don't have any snow in San Luis Obispo, it appears that there is a pine tree and snow outside - a fortuitous deception for this photographer. Also, I photoshopped in the lights around the frame of the window by cloning a light from one on the Christmas tree. Not a deception - just advantageous art. Merry Christmas!
STATE: ObamaCare and the California Legislative Supermajority in 2013
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UPDATE 12/25/2012: To those who are still under the illusion that ObamaCare will some you some money, think again. We use a program called TASC (AgriPlan, BizPlan) to administer our Section 105 Plan for our business. After the advent of ObamaCare, TASC immediately raised their annual fee to administer our plan from $220 per year to the current rate of $395 per year. The reason for DOUBLING our plan administration fee was due to additional complexity added by ObamaCare. The complex and expensive new requirements that primarily kick in in 2014 (including the new Health Insurance Exchanges) will mark the beginning of the end for private medical insurance in this country. We'll just have to wait and see.
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ORIGINAL ARTICLE POSTED 12/25/2012
Below are 2 articles that I wrote for a recent publication. They set the stage for employers to get ready for 2013 - it'll take your breath away! I predicted we are going to go off the fiscal cliff, and it looks like that is going to happen. Anyways, here are the 2 articles.
Article 1. ObamaCare
This publication gives extensive coverage to the ever-increasing demands placed upon employers by the health mandate commonly referred to as “ObamaCare”. Thanks to our benefits attorney for covering “where we have been and where we are going” for employers that are still trying to provide affordable health care coverage to their employees. We normally do not devote this much space to coverage of a single subject, but anything that dramatically changes one-sixth of our entire U. S. economy cannot be ignored or glossed over. [Note that the article that is being referred above to is NOT posted in this blog, as it is WAY too long at 3,103 words!]
Not being health care benefit experts, we are just as anxious as our clients and friends when it comes to understanding what ObamaCare may be foisting upon us. The legislation underlying the mandates is complex, technical, and often obscure. This newsletter, unfortunately, is only able to serve as a starting point for helping you and your business to sort it out.
Democrat Supermajority in 2013
A less talked-about change of dynamics for 2013 has to do with our new Democrat supermajority in the California state Legislature. Democrats have unrestricted, unchecked power in the executive and the legislative branch, and all the responsibility (and blame) that goes with it.
Since it takes two-thirds of the California Legislature to enact a variety of important legislation, the Republicans have for years been able to easily frustrate Democrat ambitions. With Democrat victories in the November 2012 election, there is now an unfettered shift in power.
Many expect a full-out assault on the taxpayers of California, while others hope that restraint is the order of the day. Either way, Democrats will own 100% of whatever direction is taken.
Democrat leaders are facing years of pent-up desire among their grassroots supporters to roll back spending cuts, rebuild the state’s water system, amend the state’s tax code, revamp California’s governance system and more. We’ll just have to wait and see what happens. It should be an interesting year for California businesses.
Article 2. Small Employers Cope with the New Health Law: Cost and Compliance Issues with ObamaCare
With many small employers still recovering from the financial collapse of 2008, they now face certain increased cost impacts from ObamaCare on their fiscal bottom lines.
Compliance Issues Still Not Well-Defined: If small employers are uncertain about the impact to their business of the new health care reform laws, they are not alone. The simple fact is that, though the “Affordable Care Act” (“ACA”) was passed into law in March of 2010, the federal government is still trying to define the requirements for employers.
Exceeding the 50 Employee Headcount: One of the magic numbers related to ObamaCare is fifty - that’s right, as in, do I have more or less than 50 employees? As in: if I stay under 50 employees, then I might escape the requirement starting in 2014 to offer workers health insurance or pay a penalty for not providing it.
Legal Ways to Stay Under the 50 Employee Number: Many small employers are looking for possible ways to legally stay under the 50 employee threshold. The easiest and most obvious way is to simply not grow their business over that 50-employee count. Unfortunately, that may mean giving up on revenue growth targets and the additional jobs that would go with it.
Other small employers have been looking at splitting the company up into multiple pieces, each with fewer than 50 employees. However, the Internal Revenue Service already thought of that — workers who are employed in a common group of businesses must be treated as being employed by a single owner, so this will not work unless you truly divest parts of your business.
Dealing with Increased Health Costs: Even before taking into account the added expenses of the new health care law, family health insurance premiums have roughly doubled since 2002. Avoiding the associated costs and regulatory burdens of ObamaCare are not options for many larger businesses. Already operating on thin margins, many business owners feel they have to find a way to deal with the increased health costs or close down all or part of their operations.
Other business owners are exploring raising their prices if possible, or moving part of their operation overseas and out of the reach of ObamaCare, just like the “big boys” already do.
While many struggle to provide health insurance to their employees by paying the most they can afford to pay, owners worry that they will not be able to meet the “minimum essential” mandate, which requires employers to pay 60% of the total cost of the plans benefits. So the impact of ObamaCare may be that some employers who offer insurance will stop doing so.
Towards a Single-Payer Solution: Many observers also believe that the expected drop off in employer-sponsored health coverage due to onerous costs and regulatory burdens may pave the way for a single-payer health care system in the future. Note that I believe that this is exactly the result of the complex, incomprehensible and unaffordable ObamaCare. ACA will create much chaos and mayhem first before citizens finally scream for a single-payer system. The calm, rational logical for single-payer will be: ANYTHING is better than this cr*p health care plan we have now! I am predicting that it would take about 15 to 20 years of ObamaCare chaos before a change to single-payer is fully engaged.
UPDATE 12/25/2012: To those who are still under the illusion that ObamaCare will some you some money, think again. We use a program called TASC (AgriPlan, BizPlan) to administer our Section 105 Plan for our business. After the advent of ObamaCare, TASC immediately raised their annual fee to administer our plan from $220 per year to the current rate of $395 per year. The reason for DOUBLING our plan administration fee was due to additional complexity added by ObamaCare. The complex and expensive new requirements that primarily kick in in 2014 (including the new Health Insurance Exchanges) will mark the beginning of the end for private medical insurance in this country. We'll just have to wait and see.
********************
ORIGINAL ARTICLE POSTED 12/25/2012
Below are 2 articles that I wrote for a recent publication. They set the stage for employers to get ready for 2013 - it'll take your breath away! I predicted we are going to go off the fiscal cliff, and it looks like that is going to happen. Anyways, here are the 2 articles.
Article 1. ObamaCare
This publication gives extensive coverage to the ever-increasing demands placed upon employers by the health mandate commonly referred to as “ObamaCare”. Thanks to our benefits attorney for covering “where we have been and where we are going” for employers that are still trying to provide affordable health care coverage to their employees. We normally do not devote this much space to coverage of a single subject, but anything that dramatically changes one-sixth of our entire U. S. economy cannot be ignored or glossed over. [Note that the article that is being referred above to is NOT posted in this blog, as it is WAY too long at 3,103 words!]
Not being health care benefit experts, we are just as anxious as our clients and friends when it comes to understanding what ObamaCare may be foisting upon us. The legislation underlying the mandates is complex, technical, and often obscure. This newsletter, unfortunately, is only able to serve as a starting point for helping you and your business to sort it out.
Democrat Supermajority in 2013
A less talked-about change of dynamics for 2013 has to do with our new Democrat supermajority in the California state Legislature. Democrats have unrestricted, unchecked power in the executive and the legislative branch, and all the responsibility (and blame) that goes with it.
Since it takes two-thirds of the California Legislature to enact a variety of important legislation, the Republicans have for years been able to easily frustrate Democrat ambitions. With Democrat victories in the November 2012 election, there is now an unfettered shift in power.
Many expect a full-out assault on the taxpayers of California, while others hope that restraint is the order of the day. Either way, Democrats will own 100% of whatever direction is taken.
Democrat leaders are facing years of pent-up desire among their grassroots supporters to roll back spending cuts, rebuild the state’s water system, amend the state’s tax code, revamp California’s governance system and more. We’ll just have to wait and see what happens. It should be an interesting year for California businesses.
Article 2. Small Employers Cope with the New Health Law: Cost and Compliance Issues with ObamaCare
With many small employers still recovering from the financial collapse of 2008, they now face certain increased cost impacts from ObamaCare on their fiscal bottom lines.
Compliance Issues Still Not Well-Defined: If small employers are uncertain about the impact to their business of the new health care reform laws, they are not alone. The simple fact is that, though the “Affordable Care Act” (“ACA”) was passed into law in March of 2010, the federal government is still trying to define the requirements for employers.
Exceeding the 50 Employee Headcount: One of the magic numbers related to ObamaCare is fifty - that’s right, as in, do I have more or less than 50 employees? As in: if I stay under 50 employees, then I might escape the requirement starting in 2014 to offer workers health insurance or pay a penalty for not providing it.
Legal Ways to Stay Under the 50 Employee Number: Many small employers are looking for possible ways to legally stay under the 50 employee threshold. The easiest and most obvious way is to simply not grow their business over that 50-employee count. Unfortunately, that may mean giving up on revenue growth targets and the additional jobs that would go with it.
Other small employers have been looking at splitting the company up into multiple pieces, each with fewer than 50 employees. However, the Internal Revenue Service already thought of that — workers who are employed in a common group of businesses must be treated as being employed by a single owner, so this will not work unless you truly divest parts of your business.
Dealing with Increased Health Costs: Even before taking into account the added expenses of the new health care law, family health insurance premiums have roughly doubled since 2002. Avoiding the associated costs and regulatory burdens of ObamaCare are not options for many larger businesses. Already operating on thin margins, many business owners feel they have to find a way to deal with the increased health costs or close down all or part of their operations.
Other business owners are exploring raising their prices if possible, or moving part of their operation overseas and out of the reach of ObamaCare, just like the “big boys” already do.
While many struggle to provide health insurance to their employees by paying the most they can afford to pay, owners worry that they will not be able to meet the “minimum essential” mandate, which requires employers to pay 60% of the total cost of the plans benefits. So the impact of ObamaCare may be that some employers who offer insurance will stop doing so.
Towards a Single-Payer Solution: Many observers also believe that the expected drop off in employer-sponsored health coverage due to onerous costs and regulatory burdens may pave the way for a single-payer health care system in the future. Note that I believe that this is exactly the result of the complex, incomprehensible and unaffordable ObamaCare. ACA will create much chaos and mayhem first before citizens finally scream for a single-payer system. The calm, rational logical for single-payer will be: ANYTHING is better than this cr*p health care plan we have now! I am predicting that it would take about 15 to 20 years of ObamaCare chaos before a change to single-payer is fully engaged.
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