Where: Gallery Overlook (upper level) Room A & B Moderator: Stan Moore, Senior Extension Educator, MSU Extension, Bellaire, MI

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1 Great Lakes Fruit, Vegetable & Farm Market EXPO December 10-12, 2013 DeVos Place Convention Center, Grand Rapids, MI Labor Wednesday morning 9:00 am Where: Gallery Overlook (upper level) Room A & B Moderator: Stan Moore, Senior Extension Educator, MSU Extension, Bellaire, MI 9:00 am Agricultural Labor Shortage and Immigration Reform Ryan Findlay, National Legislative Counsel, Michigan Farm Bureau, Lansing, MI 9:40 am Managing for Excellence: Maximizing on the Talents of Family and Key Employees for Your Farm s Success Lori (Lennard) Culler, AgProvise, Ida, MI 10:20 am Affordable Care Act Issues for Agricultural Employers and Preparing for :00 am Session Ends Nancy Farnam,

2 12/1/2013 Lori (Lennard) Culler AgProvise, Ida, MI Who We Are Managing for Excellence Maximize Talent of Family & Employees Great Lakes Expo 2013 Management consulting for farms & agri-businesses People & performance: Leadership / Management Coaching Roles & Expectations Recruitment Performance Mgmt Family Farm Third generation 8,500 ac 2 locations Family Leadership LEADERSHIP AT THE TOP: A.K.A FAMILY Vision Plan on paper is everything Strategy sessions Top down Everyone in agreement Lead by example Goals & benchmarks Cultivate high performance Over communicate Healthy debate 1

3 This image cannot currently be displayed. 12/1/2013 Lori (Lennard) Culler AgProvise, Ida, MI Corporate mindset Mentality for Constant Improvement Weekly meetings Understanding one another DiSC Profiles Outside perspective Family Communication Watch for False theories Individually smart, collectively Do your homework Quantifiable Priority Perspective Difficult Conversations 1. Can only control yourself 2. Focus on the goal 3. Force logic and not emotion 4. KEEP IT SAFE 5. Check your emotions 6. Add to the pool of ideas Defined roles at the top : Family Roles Can t have all quarterbacks Right number of management layers Step 1 Step 2 Step 3 Business Needs Individual Strengths Weaknesses Interests Determine Right Fit : Org Chart 1) Blank sheet 2) Forget history forget current roles TALENT MANAGEMENT 3) Business needs today and in future 4) Draw new chart 5) Determine gaps 6) Make action plan 2

4 12/1/2013 Lori (Lennard) Culler AgProvise, Ida, MI 4Keys to Maximize Talent Identify Talent: Inherent Traits Identify Talent Communicate Candidly Set Expectations Manage Performance Identify Talent Identify Talent: Only the Best Create the all-star line-up Be EXTREMELY selective Look outside of ag Don t hire you Candidates shop companies Importance of website Why your operation Set Expectations Policies & Procedures Handbook / work policies Standard Operating Procedures Safety procedures Onboarding/training Job Expectations Job descriptions Routine tasks Behavior expectations Goals Identify Talent Set Expectations Set Expectations Manage Performance How to assign and manage daily tasks or projects Who s accountable Set deadline or daily goals Ensure have resources, knowledge to do task Quick follow-ups Feedback Critical Tools SOPs Technology Wipe boards Keeper s Test Manage up or out Spend time on top performers Performance reviews MBO Competency Based Reward based on results Set Expectations Manage Performance 3

5 12/1/2013 Lori (Lennard) Culler AgProvise, Ida, MI Candid Communication Communication: The Talk Upfront expectation to employees Communicate often, be precise, be frank Constant feedback employees want & need to know where they stand Prepare Formal setting time and place Clear with examples Future expectations Follow-up Be ready for their response Communicate Candidly Communicate Candidly Final Take-Away Evaluate the family leadership efforts Evaluate yourself Evaluate your team do you have all-stars? Practice and progress 4

6 Important Notice: This presentation has been prepared by Varnum LLP for informational purposes only and does not constitute legal advice. Copyright 2010, Varnum LLP. All NANCY L. FARNUM Affordable Care Act AFFORDABLE CARE ACT ISSUES FOR AGRICULTURAL EMPLOYERS PREPARING FOR 2014 Presented by: Nancy L. Farnam Varnum Law Novi, MI / rights reserved. 2 Affordable Care Act Overview 2014 Most individuals will be required to have health coverage Individuals, employers, insurers and the government will all play a role On January 1, 2014 Most individuals must: have health care coverage that meets certain requirements ( minimum essential coverage ) be exempt from the coverage requirement or pay a penalty when they file their 2014 tax return in 2015 Individuals have until March 31, 2014 to purchase coverage for No penalty if have coverage that is considered minimum essential coverage government-sponsored program (e.g., Medicare, Medicaid, the CHIP program, TRICARE, veterans benefits) employer-sponsored coverage health plan offered in the individual market other health benefits coverage (e.g., State health benefits risk pool) as HHS recognizes Coverage purchased through a State Marketplace Michigan has partnered with the federal government 5 6

7 No penalty if exempt from health coverage requirement: individuals who have a gap in coverage for less than a continuous three-month period individuals whose household income does not exceed the threshold for filing a federal income tax return individuals who cannot afford coverage Required contribution exceeds 8% of household income religious conscience objectors individuals who are not U.S. citizens or nationals and who are either nonresident aliens or not lawfully present in the U.S. incarcerated individuals members of a health care-sharing ministry members of certain Indian tribes individuals who are extended a hardship exemption as determined by the Secretary of Health and Human Services 7 8 If individual doesn t have minimum essential coverage or is not exempt from health coverage requirement, he/she will pay a penalty The penalty is based on a formula For 2014, $95 per individual The penalty is the lesser of: The monthly national average bronze premium OR The greater of: Flat dollar amount Assessed for each individual, spouse or dependent that is without coverage Equal to lesser of $95 for 2014; $325 for 2015; and $695 in 2016 and thereafter (half the amount for individuals under age 18) or 300% of the applicable dollar amount Excess income amount Excess of income over filing threshold multiplied by the income percentage 1% for 2014, 2% for 2015, and 2.5% thereafter 9 10 The individual penalty is reported annually on the individual's federal income tax return If married and file a joint return, spouses are jointly liable for the penalties that apply to either or both of them An individual is responsible for the payment attributable to a dependent s lack of coverage - Premium Tax Credit Individuals may be eligible for financial assistance in the form of a premium tax credit if they purchase coverage through a State Marketplace and: are ineligible for coverage through an employer do not qualify for Medicare or Medicaid are within certain income limits generally, taxpayers with household income between 100% and 400% of the federal poverty line file a joint return, if married cannot be claimed as a dependent by another person During enrollment through the Marketplace, using information provided about projected income and family composition, the Marketplace will estimate the amount of the premium tax credit Individual must report income and family size changes to the Marketplace throughout the year 11 12

8 - Premium Tax Credit If individual is eligible for the credit, may choose to: have some or all of the estimated credit paid in advance directly to insurance company to lower monthly premiums during 2014 Must reconcile when file tax returns wait to get the credit when file 2014 tax return in Cost Sharing Reductions Some individuals and families will qualify for a cost-sharing reduction subsidy to help with deductibles and co-payments The cost-sharing reduction lowers the amount an individual pays for out-of pocket costs like deductibles, coinsurance and copayments Employer Responsibilities General Concepts Controlled group rules apply Application of various rules depends on number of employees of the employer All employees of all members of a controlled group (corporations) or entities under common control (trades or businesses) are considered as employed by a single employer Parent-subsidiary Brother-sister Combination Employer Responsibilities General Concepts Parent-subsidiary one or more chains of organizations are connected through ownership with a common parent organization 80% of the other organizations, except the common parent organization, is owned by one or more organizations in the group the common parent organization owns at least 80% of at least one of the other organizations Brother-sister a group of two or more organizations in which the same five or fewer persons own (directly and by attribution) 80% or more of each organization the same five or fewer persons own (directly or by attribution) more than 50% of each organization, but only to the extent that ownership is identical with respect to each organization Parent-Subsidiary Example Apple Corporation owns: 90% of the stock of Berry Corporation, 80% of the stock of Cherry Corporation, and 65% of the stock of Dogwood Corporation. Unrelated persons own the percentage of stock not owned by Apple Corporation Apple Corporation owns 80% or more of the stock of the Berry and Cherry Corporations; therefore, Apple Corporation is the common parent of a parent-subsidiary group consisting of Apple, Berry and Cherry Dogwood Corporation is not a member of the group because Apple Corporation s ownership is less than 80% Parent-Subsidiary Example Assume the same facts as in the previous example and assume further that Berry Corporation owns 80% of the profits interest in Elm Partnership Apple Corporation is the common parent of a parentsubsidiary group consisting of Apple, Berry, Cherry and Elm The results would be same if Apple Corporation, rather than Berry Corporation owned the 80% interest in Elm 17 18

9 Brother-Sister Example Brother-Sister Example Apple Corp and Berry Corp are owned by four shareholders, in the following percentages: Shareholder Apple Corp Berry Corp A 80% 20% B 10 % 50 % C 5 % 15 % D 5 % 15 % TOTAL 100% 100% The same five or fewer common owners must own more than 80% of stock or some interest in all members of the controlled group In this example, the four shareholders together own 80% or more of the stock of each corporation Shareholder Identical Ownership Percentage in both Corps. A 20% B 10 % C 5 % D 5 % TOTAL 40% The same five or fewer common owners must own more than 50% of each corporation, taking into account the stock ownership of each person only to the extent such stock ownership is identical with respect to each such corporation The four shareholders do not own more than 50% of the stock of each corporation, taking into account only the identical ownership in each corporation as demonstrated above Brother-Sister Example Employer Responsibilities General Concepts The following individuals each own 12% to 13% of the stock in Apple Corp and also Berry Corp Individual Percentage of Apple Corp Percentage of Berry Corp A B C D E F G H Apple and Berry Corps are not members of a brother-sister group because the same five or fewer individuals do not own at least 80% of each corporation s stock stock. 21 Attribution rules apply a corporation or person may be treated as owning an interest in a business that is not actually owned by that corporation or person attribution may result from family or business relationships 22 Employer Responsibilities General Concepts Employer Responsibilities General Concepts Generally, the ownership interests of a spouse are attributed to the other spouse The ownership interests of a child under 21 are attributed to the parent The ownership interests of a parent are attributed to a child under 21 The ownership interests of a parent are attributed to an adult child if the child owns greater than 50% of that business The ownership interests of an adult child are attributed to a parent if the parent owns greater than 50% of that business The ownership interests of a grandparent are attributed to a grandchild if the child owns greater than 50% of that business The ownership interests of a grandchild are attributed to a grandparent if the grandparent owns greater than 50% of that business. No attribution between siblings Ownership in a corporation or partnership is attributed proportionately to shareholders (owning at least 5% of corporate stock) or partners having at least 5% or more capital or profits interest Ownership in a trust is attributed proportionately to beneficiaries having 5% or more actuarial interest 23 24

10 Employer Responsibilities General Concepts Who is an employee? Common law standard person for whom the services are performed has the right to control and direct the individual who performs the services Workers hired through farm labor contractor Independent contractors Seasonal employees Non-resident alien Undocumented workers Employer Responsibilities - Small Employers Less than 50 employees Controlled group rules apply Not required to offer health coverage to employees Employer Responsibilities - Small Employers If wish to offer coverage: May be able to purchase coverage through Small Business Health Options Program (SHOP) Features: Employer controls the coverage offered and how much it pays toward employee premiums Employer may qualify for a tax credit Employer may deduct premium costs not covered by the tax credit Enrollment starts November 1, 2013 for coverage starting in January 2014 Must offer coverage to all of full time employees (30 or more hours per week) In many states, at least 70% of full-time employees must enroll Employer Responsibilities - Small Employers - Premium Tax Credit If wish to offer coverage may be able to get a tax credit for premium costs: Beginning in 2014, available only to employers purchasing coverage through SHOP Less than 25 full time employees making an average of $50,000 a year or less Employer must pay at least 50% of premium costs for full time employees Starting in 2014, tax credit is worth up to 50% of employer s contribution Beginning in 2015, large employers will be required to offer coverage to full time employees or pay a penalty tax Coverage must meet certain requirements Coverage must be affordable A large employer is an employer that employed an average of at least 50 full-time employees (and full time equivalent employees) on business days during the preceding calendar year Full-time employees are employees who work on average at least 30 hours per week 29 30

11 2014 Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Total FT / emp 12 = ( hours per week) Full-time equivalencies apply All employees who were not full-time employees for any month in the preceding calendar year are included by: Calculating the aggregate number of hours of service (but not more than 120 hours of service for any employee) for all employees who were not employed on average at least 30 hours of service per week for that month, and Dividing the total hours of service by Example: Employer has 20 full-time employees (work 35 hours per week) and 40 employees each of whom averages 90 hours per month Each of the 20 employees count as one fulltime employee The hours of the 40 part-time employees (but not more than 120) are aggregated and divided by x 90 = 3, = 30 full time equivalent The employer has 50 full-time employees Special rule for seasonal employees Defined as a worker who performs services on a seasonal basis, including, but not limited to, migrants and seasonal agricultural workers If workforce exceeds 50 full-time employees for either four or fewer calendar months (whether or not consecutive) or 120 or fewer days (whether or not consecutive) during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, not considered to employ at least 50 full-time employees Example: Employer has 40 full-time employees during each of 8 months in prior year, and 120 full-time employees during each of 4 months in prior year (counting seasonal employees) Full time Seasonal Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec A large employer must offer health coverage to all full time (30 or more hours per week) employees and their dependents (but not spouses) Coverage must provide minimum value Coverage must be affordable Employer may exclude seasonal employees because they are only employed for 4 months Employer is not a large employer 35 36

12 Special rule for variable hour and seasonal employees for determining if full time Employers will use a look back period (3 12 months) to determine in advance whether employee is full time If employee works on average at least 30 hours of service during look back period, will be treated as full-time employee for a subsequent time period and employer must offer coverage If employee does not work on average at least 30 hours of service during look back period, will not be treated as fulltime employee for a subsequent time period and employer does not have to offer coverage Coverage is affordable if the employee s required contribution for the employer s lowest cost, self-only coverage does not exceed 9.5% of the employee s household income Three optional safe harbors: Form W-2 (Box 1) Rate of pay Federal poverty line If large employer does not offer coverage, or offers coverage that doesn t meet requirements, will be subject to a penalty At least one employee must purchase coverage through the Marketplace and receive financial assistance If combined total employees meets 50 employee threshold, each separate company is subject to the shared responsibility provisions, even if has less than 50 employees Each company must offer coverage that is affordable and offers minimum value or will be subject to penalty Failure to offer coverage Treated as offering coverage if offer coverage to all but 5% of full-time employees Penalty is based on all (excluding the first 30) employees employed in given month Penalty is not deductible Penalty equals: Number of full-time employees (reduced by 30) multiplied by 1/12 of $2,000 (indexed) Offer coverage that is not affordable or doesn t offer minimum value Penalty equals: 1/12 of $3,000 (indexed) Multiplied by the number of full-time employees who are certified to the employer as having received a premium tax credit or cost-sharing reduction Employers - Group Health Plan Mandates Effective in 2014 Annual dollar limits on essential health benefits not permitted Application to health reimbursement arrangements Waiting periods may not exceed 90 days Pre-existing condition exclusions prohibited Maximum out-of-pocket and deductible limits 41 42

13 Employers Reporting and Disclosure Summary of Benefits and Coverage Annual open enrollment periods beginning on or after September 23, day advance notice of any material modifications W-2 Reporting May be required to report the value of health insurance coverage provided to each employee on Form W-2 Exception for under 250 Employers Reporting and Disclosure Employers subject to the FLSA must notify all employees about the Marketplace Virtually all employers engaged in agriculture are covered by FLSA in that they produce goods for interstate commerce Notice of Exchange Notice required on or before October 1, 2013 for all current employees After October 1, 2013, within 14 days of hire Model notices available from Department of Labor Employers New Fees Patient-Centered Outcomes Research Trust Fund Fees ACA created a new nonprofit corporation, the Patient-Centered Outcomes Research Institute, to support clinical effectiveness research Funded in part by fees paid by certain health insurers and sponsors of self-insured health plans Insured plans insurance company pays fee Self-insured plans plan sponsor pays fee Fee is $1 multiplied by the number of covered lives (IRS rules for determining) Applies to policy and plan years ending after October 1, 2012 and before October 1, 2019 Due July 31 Reported on IRS Form 720 Employers New Fees Transitional risk reinsurance program Each state that operates a Marketplace is required to establish a temporary reinsurance program for nongrandfathered plans in the individual market, to which health insurers and group health plans are required to contribute This program will be in operation from 2014 through 2016 Fee is paid by insurer for insured plans and by plan sponsor for self-insured plans Fee is estimated at $63 per enrollee in