Business Requirements Document. SR Inclusion of Employer-Paid StayWell Program and EAP on the Employee W-2 for 2012

Transcription

1 Business Requirements Document SR Inclusion of Employer-Paid StayWell Program and EAP on the Employee W-2 for 2012

2 Document Information Document Attributes ID Owner Author(s) Contributor(s) Information SR83660 Payroll Coordination and Tax Services Marcia Johnson John Barrett, B. Burkart Revision istory Version Issue Date Changes 1 st Draft 03/14/2012 Revision 04/30/2012 Revision 05/28/2012 Revision 06/01/2012 Revision 06/14/2012 Revision 6/21/2012 B. Burkart started functional requirements Revision 6/22/2012 B. Burkart continued functional requirements Revision 7/3/2012 B. Burkart updates based on feedback from Baskar. Revision 7/6/2012 B. Burkart adding reporting requirements. Finalized document for posting. Revision 7/30/2012 M. Johnson - Revision 7/31/2012 B. Burkart added warning message and Functional Requirements about MO pay period end date/check date per kickoff meeting. Revision 8/1/2012 B. Burkart reviewed and accepted tracked changes from John and Jaime. Revision 8/2/2012 B. Burkart added another date assumption/constraint for year-end boundaries. Document Approvals Role Name Signature Date Controller Peggy Arrivas 2

3 Table of Contents 1 Overview Product/Solution Scope Business Services and Processes Business Rules Business Requirements Non-Functional Requirements External References

4 1 Overview Include the cost of the employer-paid StayWell program and EAP when reporting employer paid health insurance costs starting with the employee W-2 issued for tax year 2012 and beyond. 1.1 Background IRS Code Sec. 6051(a)(14) enacted as part of the Affordable Care Act (PPACA) requires employers, including federal, state, and local government entities, to calculate and report the cost of applicable employer-sponsored health insurance coverage on employees Form W-2. Per IRS Notice , this requirement is mandatory for tax years beginning after December 31, 2011 {calendar year 2012} for the W-2 that is issued in January, Release 1999 (SR83411) addressed the process for capturing the employer sponsored health insurance costs on the 2012 W-2. At the time SR83411 was completed, it was not apparent that the costs associated with Wellness and EAP programs were to be included in the W-2 reporting. Subsequently, the IRS released Notice ( IRB) that included updated guidance which state that the reporting of wellness and EAP programs premiums are required if the employer charges a COBRA premium for such coverage. It was determined that UC does charge a premium to employees who elect this optional coverage upon termination. The risk for not reporting this information is the imposition of penalties by the IRS for knowingly failing to include correct information on a tax reporting document. Therefore, it appears that UC is required by law to include the cost of these programs when reporting employer sponsored health insurance costs on the W-2 form. The cost of Wellness and EAP will only be included on a W-2 for an employee who has eligible health plan coverage, and who otherwise would be receiving a W-2. The EAP and StayWell rates may vary from year to year. 4

5 1.2 Objectives Calculate the cost of the StayWell Program and EAP to be reported on the 2012 W-2 issued in There are no separate GTNs for wellness and EAP programs, as neither the cost of StayWell nor the cost of EAP services are identified in PPS. Current Process - The cost of the StayWell Program and EAP is not currently reported on the Form W-2. Proposed Process The non-cobra cost of the StayWell Program and EAP must be reported for all eligible employees on the 2012 Form W-2 issued in For a given tax year, the process to calculate the amounts required to populate the W-2 with EAP and StayWell information will run after all the required PAR files are available (all PAR files that will contain a check date in that tax year). This will run after the last prior year compute but before W-2 production. To determine eligible months for EAP and StayWell reporting, for MO paid employees, it is recommended that the pay period end date be used instead of the check date. This is because, for monthly paid employees, there are some months in the calendar year where two checks are issued in the same month (e.g. June 1st and 29th, 2012) and no check is issued in other months (e.g. July 2012). The only month when this would not apply would be December earnings paid in January. December earnings are always reported in the next calendar year. This does not seem to be an issue for Bi-Weekly paid employees. o EAP All employees are eligible for EAP, regardless of their medical plan coverage; however, for purposes of W-2 reporting we will only pick up the EAP rate if the employee is covered by a medical plan. The reported amount should be determined by multiplying the applicable non-cobra rate by the number of months in the calendar year that an employee has medical plan deductions (e.g. an employee with a specified health GTN in the PAR with check dates between the 1 st and last day of the month would be considered covered for that month). The rates are determined by campus location. For CY 2012, the rates are as follows: UC Berkeley $3.04 UC Davis $4.04 UC Davis Med. Ctr. $2.19 UC astings $2.13 UC Irvine $1.25 UC Irvine Med. Ctr. $5.86 5

6 UC Merced $2.50 UC Riverside $1.85 UC San Diego $3.93 UC San Diego Med. Ctr. $1.83 UC San Francisco $2.17 UC Santa Barbara $2.31 UC Santa Cruz $1.61 UCLA and UCOP $1.82 It is suggested that ME_DEPT_LOC_IND from the ome Department table be used to differentiate a campus from its medical center for the purpose of picking up the correct monthly EAP rate. StayWell StayWell is available to employees and their spouse/domestic partners who are enrolled in the following medical plans: Anthem Blue Cross PLUS and PPO, Anthem Lumenos PPO/w RA, Core, ealth Net, ealth Net Blue and Gold, igh Option and Western ealth Advantage. Employees and their family members who are enrolled in Kaiser Permanente are not eligible to participate in StayWell. Since employees can change plans mid-year if they have a life-change event, the medical plan coverage codes should be reviewed on a monthly basis. The following represented employees are not eligible because participation was not agreed to during collective bargaining: BX Academic Student Employees (UAW 2865) EX Patient Care Technical (AFSCME 3299) X Residual Patient Care Professionals (UPTE-CWA) K7 Skilled Crafts UCSC (AFSCME 3299) NX Registered Nurses (CNA) RX Research Support Professionals (UPTE-CWA) SX Service (AFSCME 3299) TX Systemwide Technical (UCTE-CWA) The particular bargaining units that are included/excluded from StayWell may vary from year to year, depending upon the bargaining unit agreement. Employees enrolled in Kaiser Permanente, and/or represented by the unions mentioned above should be excluded from having StayWell reported on the W-2 form. Eligibility, 6

7 therefore, should be determined by looking at the PAR GTN s, bargaining unit code and rep code at the employee level. The StayWell rate is determined by the Medical Insurance Coverage (UAC code) in PPS for the eligible employee. The reported amount should be determined by multiplying the applicable rate by the number of months in the calendar year for which the employee has an eligible medical plan deduction. The rates for 2012 are as follows: Employee Only or Employee + Children Employee + Spouse or Family $10.88 Code U and UC $17.83 Code UA and UAC This must be implemented in time to capture the EAP and StayWell costs paid for the period beginning January 1, 2012 and ending December 31, 2012 to appear on the W-2 printed and issued to employees in January Note the special consideration for MO employees and the recommendation to look at the pay period end date (particularly November 30 th ) that is referenced above. ere is a chart outlining the Medical Plans and the eligibility for StayWell and EAP. GTN Description (Plan) EAP Staywell 303 ATM PLUS CT (BC) Yes Yes 359 BC LU CONT (BL) Yes Yes 305 ATM PPO CT (BP) Yes Yes 311 CIGNA CON (CG) Yes Yes 309 CM (BC) CONT (CM) Yes Yes 337 N B&G CONT (B) Yes Yes 313 NET EPO CON (E) Yes Yes 145 FP LT CON (G) Yes Yes 064 LT NET CON (N) Yes Yes 049 KAISER NORT (KN) Yes No 052 KAISER SOUT (KS) Yes No 321 KAISER UMB (KU) Yes No 330 KAISER MDATL (KW) Yes No 7

8 626 PSBP MDMOCN (P1) Yes Yes 628 PSBP MDPPOCN (P2) Yes Yes 316 WA CONTRIB (W) Yes Yes A warning message should be issued if the tax year in the spec card is not one year less than the current year. 1.3 Related Projects & Dependencies Release Capture Employer Provided ealth Insurance Cost W-2 Reporting 1.4 Stakeholders Acronym Description Role * Authorize as ultimate signing authority for any changes to the document R Responsible Responsible for creating this document A Accountable Accountable for accuracy of this document (e.g. project manager) S C I Supports Consulted Informed Provides supporting services in the production of this document Provides input Must be informed of any changes Name Position * R A S C I Marcia Johnson Sr. Admin Analyst X X John Barrett Director X X X X Peggy Arrivas Controller X 1.5 Proposed Strategy The proposed strategy is to run a special process as part of W-2 processing which would check the PAR records for each employee for each month to determine eligibility and costs for StayWell and EAP and place the total amounts for the tax year on the Form W-2. 8

9 This process should be part of the W-2 process and should be run one time per year. The process should produce output that can later be added to the health insurance costs that are being accumulated for each employee. The total costs (health insurance, EAP, and StayWell) can then be placed on the employee s W-2. The request to consolidate all of these costs together and report them on the W-2 will be addressed in a later BRD. 1.6 Glossary Term UCOP ITS EAP StayWell U UC UA UAC PAR Description University of California Office of the President Information Technology Services Employee Assistance Program Wellness program at UC Medical Plan coverage code for Self only Medical Plan coverage code for Self and Children Medical Plan coverage code for Self and Adult Medical Plan coverage code for Self and Family Payroll Audit Record the record of the employee s earnings and deductions for each check write. 2 Product/Solution Scope 2.1 Included in Scope Employees who would otherwise be receiving a Form W-2 for the tax year. In scope for StayWell: Employees who had medical plan deductions in the PAR, for one or more months in the tax year, for the following health care plans: Anthem Blue Cross PLUS and PPO, Anthem Lumenos PPO/w RA, Core, ealth Net, ealth Net Blue and Gold, igh Option and Western ealth Advantage. In scope for EAP: Employees who had a medical plan deduction for one or more months in the tax year. 2.2 Excluded from Scope LBNL Certain bargaining units and health plans are excluded (see Proposed Process Section). For example, employees covered by Kaiser Permanente are not eligible for StayWell; therefore, StayWell costs should not be included on their Form W-2. 9

10 2.3 Assumptions & Constraints ID Assumption / Constraint EAP and StayWell costs are not tracked in the PPS (Payroll) system. This request is for a process to approximate these costs as closely as possible, given the data that is available in the PAR. To comply with IRS regulations, UC should make a good faith effort to capture these costs, even though this is for information reporting purposes only and will not have an impact on the employee s taxable income EAP costs will only appear on the W-2 if the employee has medical plan coverage as evidenced by the presence of specific GTNs in the PAR There is a need to identify an employee as belonging to a specific campus, a medical center, or another sub-location e.g. Merced. It is assumed that the ME_DEPT_LOC_IND in the ome Department table can be used to categorize employees by location for the purpose of determining the monthly EAP rate EAP and StayWell rates may change from year to year Employee eligibility and costs should be determined on a month-by-month basis for EAP and StayWell, and then added together to calculate a total for the tax year The EAP and StayWell costs will be added to the health insurance costs being accumulated for each employee (see Release 1999 (SR83411)) and the total will be printed on the W These requirements only cover determining the EAP and StayWell costs and making them available to the W-2 process. A separate W-2 BRD will be needed to request that these amounts be put in a specific place on the Form W LBNL will be handled separately by the lab since they are not on PPS Bargaining unit participation in StayWell may vary from year to year StayWell/EAP cost calculation for employees paid on the monthly (MO) cycle must take into account that there may be some calendar months in which they receive two checks (e.g. on the first and the 30 th ) and other calendar months in which they receive no checks, due the first falling on a weekend or holiday. For the MO paid employees, if the pay period end date is in the same calendar month as the check date, then the costs should count towards the following calendar month It is important to make sure the calculation works properly at calendar year boundaries. The MO December 1st paycheck (PPE 11/30) should count towards the W2 issued for that calendar year. owever, December earnings for MO, paid after January 1st, should be included in the next year W2. (ealth care coverage costs for December 2012 earnings for an MO employee should not be counted on the 2012 W2; rather, they would be included on the 2013 Form W-2.) 10

11 2.4 Outstanding Items None 3 Business Services and Processes N/A 4 Business Rules N/A 5 Business Requirements 5.1 User Requirements N/A 5.2 Functional Requirements Req ID Requirement Type Requirement Description Priority [L/M/] R0001 igh-level requirement Create a process to allow estimated costs for StayWell and EAP (Employee Assistance Program) to appear on employees Form W-2 starting with the 2012 tax year. R0002 Eligibility The cost of StayWell and EAP should be included on the W-2 only for employees who have eligible health plan coverage, and who otherwise would be receiving a W-2. R0003 Flexibility The process should take into consideration that the EAP and StayWell rates may vary from year to year. Comments The rates in this BRD apply to the 2012 tax year. 11

12 R0004 Timing of process For a given tax year, the process to calculate the EAP and StayWell amounts should run after all the required PAR files are available (all PAR files that will contain a check date in that tax year). This will run after the last prior year compute but before W-2 production. R0005 EAP EAP costs should appear on the Form W-2 of employees who are covered by a medical plan. Medical plan coverage should be determined by the presence of health GTNs in the PAR. R0006 EAP The EAP amount to be reported on the W-2 should be calculated by multiplying the applicable non-cobra rate by the number of months in the calendar year for which the employee had medical plan deductions. For example, an employee with a specified health GTN in the PAR with check dates between the 1 st and last day of a month would be considered covered for that month. For the MO pay cycle, if the pay period end date is in the same month as the check date, that PAR record should count towards the next month for the purpose of the EAP calculations. R0007 EAP - rates The EAP rates are determined by campus location. The 2012 monthly rates are listed in the See list of GTNs in the business needs section. 12

13 Proposed Process. R0008 EAP It is suggested that the ME_DEPT_LOC_IND field in the ome Department table be used to differentiate medical center from campus employee for the purpose of picking the correct EAP rate. R0009 StayWell The employee s PAR records for each month in the tax year should be examined to see if StayWell costs should be accumulated for that month. A month is defined using the check date. For example, the month of March would be identified by check dates between March 1 and March 31 (inclusive). For the MO pay cycle, if the pay period end date is in the same month as the check date, that PAR record should count towards the next month for the purpose of the EAP calculations. StayWell costs should only be accumulated if the employee is deemed eligible for that month. The StayWell cost that appears on the employee s W- 2 should be the sum of these monthly costs. R0010 StayWell - eligibility StayWell eligibility should be determined by looking at the PAR GTNs and bargaining unit code and rep code at the This logic needs to be validated to make sure it will be a reliable way to identify an employee as belonging to a certain campus, medical center, Merced, UCOP, etc. StayWell is available to employees and their 13

14 employee level. The StayWell cost should be counted for a given month if any of the employee s PAR records meet all of the following conditions: The PAR record has one of the eligible PAR GTNs listed in the Proposed Process AND Employee-level Employee Representation Code = C and employee-level Collective Bargaining Unit not = BX EX X K7 NX RX SX TX (These bargaining units have not agreed to participate in the StayWell program, so StayWell costs should not be counted.) spouse/domestic partners who are enrolled in the following medical plans: Anthem Blue Cross PLUS and PPO, Anthem Lumenos PPO/w RA, Core, ealth Net, ealth Net Blue and Gold, igh Option and Western ealth Advantage. Note that employees enrolled in Kaiser are not eligible to participate in StayWell. R0011 StayWell - rates Once eligibility is established for an employee (based on his/her PAR records for that month), the StayWell cost should be based on the employee s Medical Insurance Coverage (UAC) code. For the 2012 tax year, the monthly rates are as follows: 14

15 $10.88 for Medical Insurance Coverage Codes U and UC $17.83 for Medical Insurance Coverage Codes UA and UAC R0012 W-2 This process should be an annual process that produces output that can be used by the W-2 process to report the total costs (health insurance, EAP, StayWell) on the W-2. R0013 StayWell Bargaining unit participation in StayWell may vary from year to year R0014 Reporting The design of this process should allow for reporting the EAP and StayWell costs that will be included on the employee s W-2 as separate entities. R0015 Errors and Warnings A warning message should be issued if the tax year in the spec card is not one year less than the current year. The W-2 process will need to add these amounts to the accumulated health insurance costs and report the totals on the employee W-2s. This functionality will be covered by a later BRD. The specific reporting needs will be detailed in a later BRD. 5.3 Reporting Requirements N/A 6 Non-Functional Requirements N/A 7 External References N/A 15

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