The document discusses establishing a workplace wellness program, the repeal of the 1099 tax reporting requirement, properly classifying workers, and using an employee assistance program to help employees with financial difficulties. It provides tips for starting a wellness program, details around the repeal of the 1099 requirement, the importance of proper worker classification, and how an EAP can incorporate financial services to assist struggling employees.

1. SECOND QUARTER
2011
IN THIS ISSUE
Congress Repeals Getting Your Misclassifying Helping Employees
1099 Requirement Workplace Workers through Financial
Wellness Program Difficulties
PAGE 1, 2 Started PAGE 2, 3
PAGE 3
PAGE 1, 2
Getting Your Workplace
Congress Repeals Wellness Program Started
Workplace wellness can lower health care costs, increase productivity,
1099 Requirements decrease absenteeism and raise employee morale. And because
On April 5, 2011, the Senate voted to repeal the employees spend many of their waking hours at work, the workplace is
Form 1099 tax reporting requirement that was an ideal setting to address health and wellness issues. But where do you
start?
included in last year’s health care reform law.
The Senate passed the Comprehensive 1099 Gain Support from Management
Support from all levels of management is a key to the success of your
Taxpayer Protection and Repayment of
wellness program. To ensure the support of management, inform
Exchange Subsidy Overpayments Act of 2011 managers about the program early on and encourage them to
(H.R. 4) by a vote of 87-12, showing participate. Communicate clearly and often the goals and benefits to
overwhelming support for the repeal. The House the company and participants.
of Representatives previously passed H.R. 4 on Designate a Coordinator
March 4, 2011, by a vote of 112-15. The repeal The level of success for the wellness program is often linked to the
measure was supported by the White House and coordinator’s time and ability. It is essential that some or all of the
is expected to be signed by President Obama. coordinator’s time be dedicated to the wellness program. If this isn’t
possible, then the company may want to consider contracting with an
The repeal of this unpopular provision is the first outside party to provide programming. Local health care organizations
successful effort to roll back part of the health and YMCAs often provide this service. Check with your local contacts
care reform law. Business groups opposed the to see if this is an option.
requirement and its expected administrative CONTINUED ON PAGE 2
burden, which led to both Republicans and
Democrats targeting the provision for repeal.
CONTINUED ON PAGE 2

2. SECOND QUARTER, 2011
Congress Repeals 1099 Requirements, cont.
Background
Getting Your Workplace
The Form 1099 tax reporting requirement was created by
Wellness Program Started, cont. Section 9006 of the Patient Protection and Affordable
Care Act (PPACA). Although not directly related to health
Analyze Your Needs
Complete a worksite environmental assessment and care, it was originally designed to raise money for the
conduct an employee interest survey to collect information health care reform plan as well as improve tax compliance.
on the topics that would be of most interest to the staff. Specifically, the mandate required businesses to file a Form
This type of prior planning and analyzing can help you get 1099 for any company from which it bought more than
the most for your investment. Plan activities and $600 in goods or services in a single year. This requirement
initiatives, and set program priorities based on the results was scheduled to go into effect in 2012. It was anticipated
of these assessments. to increase both paperwork and accounting costs for
Develop an Action Plan businesses and landlords. Repeal of this tax provision is
This should include specific goals and objectives, strategies now expected to save time, money and resources.
to meet these goals, a timeline, a budget and an evaluation
plan. If your goals are clearly identified, it will be easier to Covering the Cost
evaluate the effectiveness of your wellness program. Although both parties have been trying to repeal the Form
Invest Accordingly 1099 provision for several months, previous attempts were
Monetary costs can fluctuate widely, depending on unsuccessful because Congress could not agree on how to
whether the employer pays all costs, the employees pay all pay for the repeal. Eliminating the Form 1099 reporting
costs or the costs are shared. The Wellness Council of requirement is estimated to cost $22 billion in lost revenue.
America estimates the cost per employee to be between Congress has agreed to make up for the shortfall by
$100 and $150 per year for an effective wellness program
that produces a return on investment of $300 to $450. adjusting health insurance tax subsidies for middle-income
Keep in mind that the return on investment will likely be individuals provided by PPACA. H.R. 4 will now require
greater with more comprehensive programs, so the higher greater repayment of subsidy amounts for families whose
cost will also generate a greater return on investment due income unexpectedly exceeds applicable thresholds.
to lower health care costs and less absenteeism.
Implement and Communicate the Plan
You need an effective communication strategy to help put
your plan into motion, to get employees to buy in and
Misclassifying Workers
encourage participation. Be sure to include plenty of The relationship between the employer and the worker is
education so employees understand why you’re not always straightforward, but despite the possible
implementing a wellness program, and the benefits they discrepancies, it is extremely important to properly classify
can gain as a result of participating. your workers. The tax implications vary depending on the
type of worker, and the penalties for misclassifying a
After you’ve laid the groundwork to develop a wellness
worker can be huge. For example, a Florida-based
program, take the time to plan the components that will
company with locations across the U.S. recently agreed to
result in a quality program. Following these steps and not
pay more than $754,000 in overtime back wages after the
rushing the planning process will ultimately make your
U.S. Department of Labor found that the company had
program more successful.
incorrectly classified workers under the Fair Labor
Standards Act. All of the fines were preventable had they
properly classified their workers.
Flood and Peterson
Jim Sampson, REBC, RHU, ChFC, CLU
Phone: (970) 266-7132
Jim.Sampson@fpinsurance.com

3. SECOND QUARTER, 2011
Classifying Workers • Risk management and insurance
Before determining how to treat payments your company • Budget and cash management
makes for services, you must categorize the business
• Estate and gift planning
relationship that exists between your company and the
person performing the services. Is the worker an employee • Retirement
or a type of independent contractor? Workers may be EAP Financial Service Benefits
categorized as one of four types: employees, statutory • Provides employees with much needed financial
employees, statutory non-employees or independent assistance and advice
contractors. • Enhances the awareness of benefits that you offer
Because not every worker can be easily classified in one • Attracts potential employees and retains existing ones
category, it is important to take the entire working • Assists in the work/life balance struggle by providing
relationship into account. Consider the extent of the right a service at work
to direct and control the services of the worker. And after • Allows employees to make sound financial decisions
you’ve classified the worker, document each of the factors • Enhances your compensation package and its value to
used to determine how you came to your classification your employees
decision.
Promoting Your EAP
Consider contacting a tax adviser if you are uncertain To promote the use of financial assistance through your
about a worker’s status. Or, Form SS-8, Determination of EAP, consider the following actions:
Worker Status for Purposes of Federal Employment Taxes • Periodically remind your employees that you have an
and Income Tax Withholding (www.irs.gov/pub/irs- EAP in place to assist them with all facets of their
pdf/fss8.pdf) can be filled with the IRS. The IRS will lives. Send out an email or newsletter highlighting its
review the facts and circumstances and officially determine features.
the worker’s status.
• Consider developing a partnership with a nonprofit
organization in your area devoted to assisting
individuals with financial trouble. Incorporate their
Helping Employees tools into your EAP and offer a direct connection for
through Financial Difficulties your employees to those professionals.
Most people go through financial heartache at some point • Find ways at your office to help employees save
or in their lives. Whether it’s paying back student loans, money, such as starting a green campaign. Suggest that
paying high mortgage payments or affording steep gas employees fill up water bottles instead of buying
prices, sometimes staying financially afloat can be a very bottled water, turn off lights at home, open windows
difficult. instead of using the air conditioner, etc. Ask that
employees work these behaviors into both their work
If your employees find themselves struggling financially, and home lives.
there are things you can do to help them resolve these The information contained in this newsletter is not intended as legal or medical
issues. You may already have the tools in place – your advice. Please consult a professional for more information.
Employee Assistance Program (EAP). By incorporating © 2011 Zywave, Inc. All rights reserved.
financial assistance into your current EAP, you will be able
to help your employees resolve their struggles with
resources you can easily provide.
Typical Financial Services in an EAP
• Tax planning and management
• Investments
Flood and Peterson
Jim Sampson, REBC, RHU, ChFC, CLU
Phone: (970) 266-7132
Jim.Sampson@fpinsurance.com