The Benefits Academy
  • Home
  • Products
  • WA State Long Term Care
    • The TBA Alternative
    • More LTC Info
    • LTC Calculator
  • Our Story
    • Fan Page
  • Blog
  • Contact
  • Agent Login

Benefits Bites

UPDATE!  Washington State’s New Leave Requirement – Get Ready

11/14/2018

1 Comment

 
Picture
Washington's new Paid Family & Medical Leave requires employers to collect premiums starting 1/1/19.  After attending Employment Security Department webinars, updates have been made to our blog.  See these updates in red text.  More employers will need to pay premiums into the state program than you may have thought.
There are already a number of leave laws that businesses in Washington State need to comply with. As of January 1, 2019, there will be yet another. This one, Paid Family & Medical Leave (PFML), is an insurance program that will be run by the state’s Employment Security Department (ESD). It will be funded by premiums collected via payroll deduction. For employers with more than 50 employees (per average calendar quarter), the premium is shared between employers and employees. Even though benefits won’t be available until 2020, premium assessments need to begin with the first payroll of 2019. Are your clients ready to comply? For the purpose of this blog, I am going to concentrate on what employers need to deal with in the very near future. Future blogs will focus on other intricacies of the program.

Which Employers Need to Comply
Just about all Washington-based employers, and any other employer with at least one employee working in Washington State, must comply with this new insurance program. The only exceptions:
  • Federal government – their employees won’t be eligible, nor assessed premiums
  • Federally-recognized Tribes – although they can opt in
  • Self-employed – although they can opt in (this includes sole proprietors, independent contractors, partners and joint ventures)
Note that a company that provides employees on a temporary basis to its customers is considered the employer for purposes of this new law. 

Employers whose headquarters are out-of-state can file an application for a premium waiver for any employee of theirs working in Washington State. But, only if the employee is physically based outside of the state, is employed in Washington State on a limited or temporary work schedule and is not expected to be employed in Washington for 820 or more hours in a qualifying period (4 calendar quarters). The application has to be signed by both the employer and the employee. If the employee ends up working 820 or more hours in a qualifying period, then the waiver expires and the employee and employer are responsible to pay back premiums.

Employer Requirements
As of the first paycheck on or after 1/1/2019, employers will need to deduct the PFML insurance premium from every Washington employee’s paycheck. This applies to all employees, including part-time, seasonal, and temporary workers. Owners and officers of the employer must also pay PFML premiums if they receive wages.

​If the employee’s first paycheck of the new year includes pay applicable for 2018, those dollars will still need to be included in the premium calculation since the payroll payment is being made in 2019 (this is the same way as Unemployment Premium reporting).

The first quarterly payment of these premiums (and hours reporting) will be due to the ESD by the end of April, 2019. Again, any hours paid in 2019 for work done in 2018 will need to be included in this first quarterly reporting. For ease, salaried exempt employees will be reported at 40 hours per week, regardless of actual hours worked. Employment records must be retained for a minimum of six years. 

Of important note, employers will not be allowed to charge premiums for a particular pay period during any other pay period. That means that if an employer is not set up, and does not deduct employee premiums timely, the employer, not the employee, will be on the hook for paying the employee portion of the premiums.

PFML Premiums
There are two parts to this program – Family Leave and Medical Leave. There are also potentially two payors into the program – employees and employers (those with 50+ employees during average calendar quarters). When remitted to ESD, these premiums will be held in separate “buckets.” For 2019, the premium is 0.4% of wages.  There is a cap on wages charged the premium and (thankfully) it mirrors the Social Security wage cap ($132,900 in 2019).

Ready for some math? 37% of the premium will be earmarked for Family Leave while the other 63% will be collected for Medical Leave. The employee will pay 100% of the Family Leave premium and 45% of the Medical Leave premium. Employers with 50+ employees during average calendar quarters will pay the other 55% of the Medical Leave premium. Employers with fewer than 50 employees during average calendar quarters are not required to pay the employer portion; those premiums remain uncollected and are not charged to the employee.  

Let’s break this down with an example. 
Assume an employee has earned $2500 gross pay, and the PFML premium is 0.4% (2019 rate).
  • First, calculate the total premium                          $2500 x .004 = $10.00
  • Second, calculate the employee premium
    • Employee share of Family Leave               $10.00 x .3333 = $3.33
    • Employee share of Medical Leave             $10.00 x .3000 = $3.00
    • Total Employee Premium                             $6.33
  • Third, calculate the employer premium              $10.00 x .3667 = $3.67
                                                                                    These factors were taken directly from the ESD’s website

An employer, regardless of size, can elect to pay all or some of the employee’s portion of these PFML premiums. If an employer with fewer than 50 employees during average calendar quarters elects to pay the employer premiums, they would be eligible to apply for small business assistance grants (which are available to employers with fewer than 150 employees during average calendar quarters). These grants can help small businesses cover some costs of hiring temporary workers when an employee uses PFML. 

​Employer Size
Every year, on September 30th, ESD will calculate each employer’s average number of employees per average calendar quarter, using the prior 4 calendar quarters of reported data. Since there is no data collected for 2019, ESD will use the actual number of employees reported by the employer for 2019, Q1. For the employer’s 2020 employee count, the ESD will average the number of employees reported over the first two quarters of 2019.

​Important:  Employee count is a true headcount, with every employee included on the quarterly report equaling one employee (including part-time, temporary, seasonal, etc). Even if an employee reported on the quarterly report worked just one hour during the quarter, they are counted as one toward your quarterly headcount.  This will greatly affect employee counts for employers who have turnover - since the leaving employee and their replacement may both have worked at least one hour during the same quarter:  each will count as one toward the quarterly headcount.  

If the employer is reporting 50 or more employees in 2019, Q1, the employer will need to pay the employer premium during all of 2019, regardless of whether their employee quarterly headcount shrinks during the year.   


​Penalties & Damages
Willful failure to file the required reports is subject to penalties, starting with the second occurrence. 
  • $75       2nd occurrence
  • $150     3rd occurrence
  • $250     4th occurrence and each thereafter
In addition, the employer will be charged a penalty equal to the entire balance of premiums not remitted plus interest. This is in addition to also having to pay the actual balance and interest. 

​The Bottom Line
Make sure your clients are ready for this new program. Here’s a list of what they should be focusing on now:
  1. Prepare to withhold premiums as of the first payroll in 2019
  2. Determine if employer will pay any portion of the employee premium
  3. If the employer expects to be < 50 employees during all of 2019's 1st quarter, determine if will pay the employer portion of the premium
  4. Have a process set up to tabulate wages and hours data for reporting that will start in April of 2019
  5. Out of state employers may want to file for waivers if applicable
  6. Watch for more guidance from the ESD regarding how to remit the first payment in April
I’ll delve into two other areas of the rules, the actual employee benefits as well as the option of a voluntary program, in future blogs! 

Our Benefits Bites Newsletter delivers pertinent, timely benefits industry information in your inbox twice a month. Subscribers receive carrier and regulatory updates as well a free resources and first access to time saving tools. Subscribe now!
1 Comment
Mark Nygren link
11/16/2018 07:08:43 pm

Sandy is really, really helpful for businesses trying to navigate through the maze that is being a small business in WA state!

Reply



Leave a Reply.

    This section will not be visible in live published website. Below are your current settings:


    Current Number Of Columns are = 1

    Expand Posts Area =

    Gap/Space Between Posts = 10px

    Blog Post Style = card

    Use of custom card colors instead of default colors =

    Blog Post Card Background Color = current color

    Blog Post Card Shadow Color = current color

    Blog Post Card Border Color = current color

    Publish the website and visit your blog page to see the results

    About Sandy

    I love numbers.  I'm a math geek. I read benefits industry articles and periodicals for relaxation (but, honestly, I'm still a fun gal).  I also like to share what I've learned and you'll find it all here.

    View my profile on LinkedIn

    Archives

    September 2022
    July 2022
    December 2021
    November 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    November 2016
    October 2016
    September 2016
    August 2016
    June 2016
    May 2016

    Categories

    All
    2017
    2018
    2019
    2020
    2021
    2022
    2023
    ACA
    ACA Lawsuits
    ACA Reporting
    ADA
    Aetna
    Age-banded Rates
    AHP
    Ambetter
    Association Health Plans
    Associations
    Asuris
    Balanced Billing
    Benefit Bites
    Benefits Coordination
    Biden Administration
    Bridgespan
    Bridge Span
    Busy Season
    Carrier Corner
    Carrier Exit
    Cascade Care
    CMS
    COBRA
    Community Health Plan
    Community Rated Plans
    Compliance Notices
    Continuation
    Conversion
    Coordinated Care
    Coronavirus
    Cost Sharing Programs
    Cost Sharing Reduction
    Data Match
    Dependents
    Direct Primary Care Programs
    Disability Insurance
    Domestic Partners
    EIDL
    Executive Order
    Facility Fees
    Facility Scope Creep
    FAIR Health
    FFCRA
    FSA
    Group Health
    Group Life
    HDHP
    Health Alliance NW
    Healthnet
    Health Savings Account
    Heart Health
    HRA
    HSA
    ICHRA
    Individual
    Individual Coverage Health Reimbursement Arrangement
    Individualized Medicine
    Individual Mandate
    Individual Penalty
    IRS
    Kaiser
    Kaiser NW
    Kaiser WA
    Life Insurance
    Lifewise
    Long Term Care
    Long Term Care Services And Support Trust Act
    Mandate
    Medicaid
    Medicare
    Medicare For All
    Micro Group
    Moda
    Molina
    Monthly Freebies
    Networks
    Nondiscrimination Testing
    Notice Requirements
    Paid Family & Medical Leave
    Pandemic
    Part D
    Partnership
    PCT Updates
    Penalties
    PFML
    Pharmacogenomics
    Plan Comparison Tool
    Portability
    PPO Networks
    PPP
    Premera
    Prescription Assistance Programs
    Pre-Tax Premiums
    Providence
    PTO
    Public Option
    QSEHRA
    Rates
    Referenced Based Pricing
    Regence
    Regence OR
    Reinsurance
    Renewals
    Repeal
    Risk Adjustment
    Risk Corridor
    Rx Copay Accumulator Programs
    S-Corp
    Section 105(h)
    Section 125
    Section 79
    Self Funded
    Self-funded
    Short Term Medical Plans
    Single Payer
    Small Employer Health Credit
    Small Group
    Social Distancing
    Stimulus
    Subsidies
    Tax Credits
    Trump
    Trust Plans
    Uninsured
    United Hea
    United Healthcare
    Vetted Vendor
    WA Cares
    WA LTC
    WA OIC
    Washington State
    Wellness Program

    RSS Feed

Services

Products
Resources

Company

Our Story
Blog
​Fans

Support

Contact
​Agent Login
© COPYRIGHT 2020. ALL RIGHTS RESERVED.
  • Home
  • Products
  • WA State Long Term Care
    • The TBA Alternative
    • More LTC Info
    • LTC Calculator
  • Our Story
    • Fan Page
  • Blog
  • Contact
  • Agent Login