Irs Delays New w-2 Reporting Requirement (12/10)

The Internal Revenue Service (IRS) recently delayed the new W-2 reporting requirements imposed by the massive health care reform law, the Patient Protection and Affordable Health Care Act of 2010.  Under the Act, employers are required to report the cost of health care coverage under an employer-sponsored plan on employees’ Form W-2.  (As a reminder, employers are required to provide the Form W-2, Wage and Tax Statement, to each employee every year by January 31.  The form details how much compensation the employee earned and the income, Social Security, and Medicare taxes withheld.)  The provision was supposed to take effect for taxable years beginning on or after January 1, 2011, meaning that W-2s issued for 2011 earnings would be affected (the W-2s due by January 31, 2012).      According to the IRS’s announcement, Notice 2010-69, the IRS and Treasury Department determined that employers need additional time to make necessary changes to their payroll systems and procedures to comply with this new requirement.  Further, these agencies indicated that they will be issuing additional guidance on the requirement by the end of this year.  (You can find a copy of the IRS Notice 2010-69 online at http://www.irs.gov/pub/irs-drop/n-2010-69.pdf.)  The IRS also has provided a draft W-2 for 2011 that includes instructions on reporting the employer-provided health care costs that employers may use voluntarily (available online at http://www.irs.gov/pub/irs-utl/draft_w-2.pdf).  The draft form indicates that the costs will be reported in section 12 of the form, using code “DD” and that the reporting is intended for informational purposes since employer-provided health care currently is not taxable.        Tax experts suggest the purpose of the reporting requirement is so that the IRS can verify that individuals have health care coverage as required beginning in 2014 under the 2010 Act.  The reporting requirement also will make it easier for the IRS to impose the 40% “Cadillac tax” required by the Act that takes effect in 2018 on employer-provided  health insurance benefits that cost more than  $10,200 for individual coverage and $27,500 for family coverage.

Gina Final Regulations Finally Issued (12/10)

Almost a year after the GINA statute took effect, the EEOC has at long last issued final regulations to implement the law.  Find out what your obligations are to avoid collecting, or using, genetic information in employment decisions.

The Equal Employment Opportunity Commission (EEOC) recently issued its final regulations to implement the protections of the Genetic Information Nondiscrimination Act (GINA).  The GINA, which was first passed in May 2008 and took effect November 21, 2009, prohibits employers and health insurers from making decisions based on an employee’s, or insured’s, genetic makeup.  The EEOC initially released proposed regulations in March 2009 and issued the final regulations November 9, 2010, with an effective date of January 10, 2011.  The final regulations largely adopt the requirements of the proposed regulations, but with some noteworthy additions. Employment Discrimination Protections and Definitions The GINA, like Title VII of the Civil Rights Act and the Americans with Disabilities Act (ADA), applies to employers with 15 or more employees.  It prohibits covered employers from refusing to hire an applicant, or from discriminating against any employee, with respect to the compensation, terms, conditions, or privileges of employment because of “genetic information.”  It also prohibits retaliation against any individual who has opposed any unlawful act under the GINA or because an individual has participated in any investigation, hearing, or proceeding under the law.  Further, comments to the final regulations indicate that the EEOC considers the GINA to prohibit harassment based on genetic information.        “Genetic information” is defined to mean, with respect to any individual, information about the individual’s genetic tests, the genetic tests of family members of the individual, and the manifestation of a disease or disorder in family members of the individual.  The term also includes a request for or receipt of genetic services (such as genetic tests and genetic counseling) or participation in clinical research involving genetic services.  The term does not include information about the individual’s sex or age or about race or ethnicity if the information is not derived from a genetic test.      “Family member” is defined by the Act to include a dependent of the individual, which according to the final regulations includes any person who is a dependent of the individual because of marriage, birth, adoption, or placement for adoption.   Further, family members include “any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative” of the employee or applicant.  Although the Act does not define these terms, the final regulations do.  A first-degree relative includes parents, siblings, and children; a second-degree relative includes half-siblings, grandparents, grandchildren, aunts, uncles, nephews, and nieces; a third-degree relative includes first cousins, great-grandparents, great-grandchildren, and great uncles and aunts; and a fourth-degree relative includes great-great grandparents, great-great grandchildren, and first cousins once-removed.      “Genetic test” is defined by the Act to mean an analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detects genotypes, mutations, or chromosomal changes.  The final regulations give several examples of genetic testing including a test to determine if someone has the BRCA1 or BRCA2 variant evidencing a predisposition to breast cancer; carrier screening for adults using genetic analysis to determine the risk of conditions such as cystic fibrosis or sickle cell anemia; amniocentesis and other evaluations used to determine the presence of genetic abnormalities in a fetus during pregnancy; and DNA testing to detect genetic markers that are associated with information about ancestry.  Testing that is not considered genetic testing includes a medical examination that tests for the presence of a virus that is not composed of human DNA, RNA, chromosomes, proteins, or metabolites; a test for infectious and communicable diseases that may be transmitted through food handling; and complete blood counts, cholesterol tests, and liver-function tests.  The final regulations also clarify that testing to determine the presence of alcohol or drugs is not a genetic test, although a test to determine an individual’s predisposition to alcoholism or drug use is.   Protections Against Collecting Genetic Information The GINA also prohibits employers from requesting, requiring, or purchasing genetic information about an applicant or employee or their family members.  The final regulations explain that this prohibition means that “request” includes conducting an Internet search on an individual in a way that is likely to result in the employer obtaining genetic information and making requests for information about an individual’s current health status in a way that is likely to result in the employer obtaining genetic information, such as requesting the information as part of a medical examination.        There are six exceptions to this general rule: 1.     If the employer “inadvertently” requests or requires the information. Examples from the final regulations illustrate what activities would be considered inadvertent, including if a manager overhears a conversation discussing an individual’s genetic information; when a third-party provides unsolicited genetic information to a manager; when an individual volunteers the information as part of a request for medical information to support a request for leave or accommodation; or when a manager learns about the genetic information from a social media platform that the manager has been authorized to access by the employee (such as on Facebook as a “friend” of the employee).      However, the final regulations also impose a new notice requirement on employers to prevent the acquisition of genetic information.  Specifically, if an employer requests medical information lawfully and it receives genetic information as part of that request, the receipt will not be considered inadvertent unless the employer has directed the health care provider or other individual not to provide genetic information with the requested information.  So, for example, if you request information from an employee’s health care provider to support the need for medical leave under the Family and Medical Leave Act (FMLA), then you should provide a written statement to the provider that she should not include any genetic information to support the medical certification.  The final regulations provide sample language that you can use to satisfy the notice requirements:        “The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers and other entities covered by GINA Title II from requesting or requiring genetic information of an individual or family member of the individual, except as specifically allowed by this law.  To comply with this law, we are asking that you not provide any genetic information when responding to this request for medical information.  ‘Genetic information’ as defined by GINA, includes an individual’s family medical history, the results of an individual’s or family member’s genetic tests, the fact that an individual or an individual’s family member sought or received genetic services, and genetic information of a fetus carried by an individual or an individual’s family member or an embryo lawfully held by an individual or family member receiving assistive reproductive services.” 2.     For health or genetic services offered by the employer, such as in a wellness program.  This exception applies only if the individual provides prior knowing, voluntary, and written authorization that describes the type of genetic information that will be obtained and the purposes for which it will be used and explains the restrictions on disclosure of genetic information.       The final regulations also clarify that an employer can offer financial inducements to employees to participate in a wellness program, but you may not specifically offer financial inducements so that employees will provide genetic information.  Accordingly, you may offer financial inducements for completion of health risk assessments that include questions about family medical history or other genetic information, provided you make it clear, in language reasonably likely to be understood by those completing the health risk assessment, that the inducement will be made available even if the participant does not answer questions regarding genetic information.  The regulations provide the following example to illustrate this principle:  If the employer offers $150 to employees who fill out a 100-question health risk assessment, and the last 20 questions address family medical history and other genetic information, it must provide the $150 to any employee who fills out the first 80 questions (minus the 20 family medical history questions) and state that it will do so in the questionnaire.      In addition, the final regulations allow you to offer a financial inducement to employees who have voluntarily provided genetic information that indicates they may be predisposed to a certain condition (such as a family history of high blood pressure) to participate in a disease management or healthy lifestyle program.  However, you must also offer the same inducement to other employees who have the same health condition currently or are at risk for the condition because of lifestyle choices.  As an example, an employer complies with the GINA requirements if it offers $150 to employees who voluntarily disclose a family history of diabetes, heart disease, or high blood pressure and also to employees who have current diagnoses of these conditions to participate in a wellness program designed to encourage healthy lifestyles and weight loss. 3.      In order to comply with the medical certification provisions of the FMLA for leave to care for a seriously ill family member if the employer is requesting family medical history.  Similarly, if the employer is not covered by the FMLA, it may ask for family medical history pursuant to a policy that permits the use of leave to care for a sick family member and that requires all employees to provide information about the health condition of the family member to substantiate the need for leave. 4.     If the employer purchases documents that are commercially available that have the information, such as newspapers, books, and magazines, but not court records or medical databases.  The final regulations clarify that public information available through television, movies, and the Internet also are included in the exception.   5.     Where the employer is monitoring the effect of toxic substances on employees and follows certain procedures, including providing notice of the monitoring and getting employee consent for it. 6.     Where the employer conducts DNA analysis for law enforcement purposes as a forensic laboratory or for purposes of human remains identification and requests or requires genetic information from employees. This exception only applies if the genetic information is used for analysis of DNA identification markers for quality control to detect sample contamination and maintained in a manner consistent with such use.         Even if genetic information is collected as allowed by the above exceptions, employers still may not use the information to discriminate and must keep the information confidential (as discussed below). Confidentiality Provisions Allow Limited Disclosure The GINA also contains provisions requiring employers to keep any genetic information gathered in separate, confidential files.  The law indicates that employers that comply with the ADA’s medical record confidentiality requirements will be in compliance with the GINA provisions as well.  The final regulations also indicate that any genetic information collected in an employee’s file prior to November 21, 2009 (the effective date of the Act) does not have to be removed.  However, employers still may not disclose or use that information in any way that violates the Act.  Further, disclosure of any collected genetic information generally is prohibited, although there are six limited circumstances when disclosure is allowed.  Genetic information may be disclosed: 1.     To the individual (employee or family member) about whom the information pertains, upon written request; 2.     To an occupational or other health researcher if the research is conducted in compliance with regulations issued by the federal Department of Health and Human Services addressing medical research on human subjects (found in 45 C.F.R part 46); 3.     In response to a court order, but limited to the genetic information specifically requested by the order; 4.     To government officials investigating compliance with the GINA regulations and the information is relevant to the investigation; 5.     To support an employee’s need for medical leave under the FMLA, for example when a supervisor provides the information to a human resources professional responsible for processing leave requests; and  6.     To federal, state, or local public health officials in connection with a contagious disease that presents an imminent hazard of death or life-threatening illness, if the individual is notified of the disclosure. Four Tips for Implementing the GINA Regulations The GINA final regulations do not provide employers with much time to learn about their requirements before they take effect on January 11, 2011.  Accordingly, you should take the following four steps immediately to ensure compliance: 1.     Make sure that your employment policies incorporate the genetic nondiscrimination provisions.  In particular, your equal employment opportunity, hiring, medical procedures, and leaves of absence policies should incorporate the GINA requirements.   2.     Review your application and interview questions to ensure you are not asking for any sort of medical information.  If you are in compliance with the ADA, which prohibits all preemployment medical inquiries, these forms should be up-to-date.  But, you still need to watch out for casual questions by interviewers about an applicant’s health or family medical history that may reveal genetic information. 3.     Create new notification forms to provide to health care providers and other individuals whom you may contact for health information to remind them not to provide genetic information.  You can use the model language provided by the GINA final regulations (discussed above).  Be sure to provide these forms each time you request medical certification for FMLA leaves or for ADA accommodation requests.  4.     Train managers and supervisors about the GINA requirements.  Explain the law’s prohibitions, limited exceptions, and confidentiality requirements.