SCM has relocated from Pasadena to a beautiful 12,000 square foot office in Downtown Los Angeles!  The move will provide the firm the opportunity to serve clients more efficiently, with regard to convenience and available resources in the middle of a business district.

With continued growth, SCM is seeking to add more brokers, account executives, account managers, as well as claims and loss control staff. 

The new office is located at:

550 South Hope Street, Suite 1000, Los Angeles,  CA 90071                                                  P: 213.233.0400    F: 213.892.1593

SCM has recently partnered with the Institute for Real Estate Management (IREM).   Over the past few months, SCM has participated in numerous IREM speaking engagements, with a specific focus on ADA Compliance and current solutions available to property owners.  Chad Lupia, a Property/Casualty Consultant in SCM’s Real Estate Division, is also scheduled to speak at the 2013 Leadership and Legislative Summit in April.  Over 800 people are expected to attend theWashington,D.C.event.

SCM has been participating in the 2013 PIHRA Annual Legal Update at the Garden Grove, Los Angeles, Ontario and Burbank conferences held January 22 – 31.  Hunt Turner, a vice president in SCM’s Pasadena office, is sharing the stage with Marilyn Monahan, an employee benefits and insurance corporate and regulatory lawyer at Monahan Law Office.

Turner and Monahan are discussing “What HR Absolutely Needs to Do to Comply with Health Care Reform.”  Highlights of their presentation include:

• Shared responsibility rules or “Pay or Play” options and how to avoid penalties
• How the California Health Exchange will impact your organization and employees
• New ACA taxes, penalties and reporting requirements
• Employer requirements for the Summary of Benefits and Coverage (SBC) and other new notice requirements
• Employer responsibility of the 2013 Medicare Tax

Turner possesses over 16 years of employee benefits experience and has held positions in management and sales on both the carrier and broker sides of the business.  Monahan has extensive experience counseling human resource and insurance industry professionals on compliance obligations under federal and state employee benefit and insurance laws and regulations.

Exchange Notice Requirements Delayed

The Affordable Care Act (ACA) requires employers to provide all new hires and current employees with a written notice about ACA’s health insurance exchanges (Exchanges), effective March 1, 2013.

On Jan. 24, 2013, the Department of Labor (DOL) announced that employers will not be held to the March 1, 2013, deadline. They will not have to comply until final regulations are issued and a final effective date is specified.

This update details the expected timeline for the exchange notice requirements.

In general, the notice must:

• Inform employees about the existence of the Exchange and give a description of the services provided by the Exchange;
• Explain how employees may be eligible for a premium tax credit or a cost-sharing reduction, if the employer’s plan does not meet certain requirements;
• Inform employees that if they purchase coverage through the Exchange, they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of this employer contribution may be excludable for federal income tax purposes; and
• Include contact information for the Exchange and an explanation of appeal rights.

This requirement is found in Section 18B of the Fair Labor Standards Act (FLSA), which was created by the ACA. The DOL has not yet issued a model notice or regulations about the employer notice requirement.

When do Employers have to Comply with the Exchange Notice Requirements?

Section 18B provides that employer compliance with the notice requirements must be carried out “[i]n accordance with regulations promulgated by the Secretary [of Labor].” Accordingly, the DOL has announced that, until regulations are issued and become applicable, employers are not required to comply with the exchange notice requirements.

The DOL has concluded that the notice requirement will not take effect on March 1, 2013, for several reasons. First, this notice should be coordinated with HHS’s educational efforts and IRS guidance on minimum value. Second, the DOL is committed to a smooth implementation process, including:

• Providing employers with sufficient time to comply; and
• Selecting an applicability date that ensures that employees receive the information at a meaningful time.

The DOL expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.

On Jan. 1, 2013, when the terms of the Budget Control Act of 2011 take effect, the United Stateswill face what has been referred to as the “fiscal cliff.” In general, this refers to widespread tax increases and spending cuts that will occur if the tax cuts put in place by former President George W. Bush expire as scheduled.

Congress is working to negotiate a deal to avoid the fiscal cliff but faces significant challenges in reaching a compromise. If a deal cannot be reached, the economy could be significantly impacted:  the U.S. could face another recession, unemployment rates could skyrocket and many individuals and businesses could suffer the effects. However, reaching the fiscal cliff would cut the federal deficit and some sources say negative effects would be gradual and could be addressed after Jan. 1.  

The following information is an overview of the fiscal cliff and how it could affect you and your organization.

EFFECTS OF THE FISCAL CLIFF

If Congress does not agree on a solution to the fiscal cliff issue, a number of tax changes will go into effect Jan. 1, 2013, including: 

• Across-the-board individual income tax rate increases (ranging between 3 and 5 percent);
• Dividend tax rate increase to ordinary tax rates (15 percent increased to 39.6 percent);
• Increase in capital gains tax rates (15 percent increased to 20 percent);
• Expiration of Alternative Minimum Tax (AMT) patch so that more households will pay the AMT; and
• Increase in estate tax rates and decrease in exclusions (35 percent with $5 million exclusion increased to 55 percent with $1 million exclusion);

New tax rates provided for by the health care reform law are set to take effect on Jan. 1, 2013, as well, whether the fiscal cliff is resolved. These include an additional 0.9 percent payroll tax on income for high wage-earners ($200,000 for individual filers and $250,000 for joint filers) and an additional 3.8 percent tax on investment income.

In addition to the tax increases, $1.2 trillion in automatic spending cuts are set to begin. These cuts would be spread out over a 10-year period and are divided between defense and non-defense federal spending. Programs affected would include overseas defense operations and weapon systems as well as housing assistance and energy subsidy programs. Certain programs, such as Medicaid, are exempt from the cuts. 

POSSIBLE SOLUTIONS

Both political parties have stated that they want to avoid the fiscal cliff. Aside from letting the tax increases and spending cuts take place as scheduled, Congress has two options on how to solve the fiscal cliff issue. They could reach a comprehensive agreement to address the deficit issue—a bargain that would include a combination of revenue increases and spending reductions. Or they could implement stop-gap measures that would patch the problem until a more permanent agreement can be reached (or until a new patch is needed). 

If Congress allows the scheduled policies to take effect, it is projected that gross domestic product (GDP) will decrease by four percent and unemployment will increase by one percent in 2013. If a full-scale extension of the expiring tax cuts is granted, without any spending modifications, it is projected that the economy would not be negatively affected, but the deficit would continue to grow to unmanageable levels.

If Congress reaches a compromise that allows some taxes to increase and some spending cuts to take effect, it would likely be a short-term solution, but could significantly decrease the deficit, and avoid another recession. Any fiscal cliff negotiations could also potentially impact the implementation of the health care reform law, with premium subsidies, Medicaid expansion and the implementation schedule potentially on the bargaining table.

Until Congress reaches a decision, it will not be clear how these changes will affect you. There is speculation, however, that the lack of resolution will cause individuals and businesses to hold off on scheduled or potential spending in anticipation of the changes. Because of this, GDP could be reduced by up to half a percentage point in the second half of 2012.

SCM will continue to monitor the fiscal cliff situation and provide information on important developments to you.

The Internal Revenue Service recently announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2013.

 Below is a summary:

 Deferral Limit Changes

• The elective deferral limit for employees who participate in 401(k), 403(b) and most 457 plans is increasedfrom $17,000 to $17,500
• The catch up contribution limit for employees age 50 and over who participate in 401(k), 403(b) and most 457 plans remains unchanged at $5,500

 Benefit Limit Changes

• The limitation for defined contribution plans is increasedfrom $50,000 to $51,000
• The limitation on the annual benefit under a defined benefit plan is increased from $200,000 to $205,000
•  Highly Compensated & Key Employee Definition Changes
• The definition of a highly compensated employee remains unchanged at $115,000
• The definition of a key employee in a top-heavy plan remains unchanged at $165,000

See a full chart outlining the 2013 limits:

http://www.sullivancurtismonroe.com/files/2013%20IRS%20Pension%20Plan%20Limits%20SCM%201112.pdf

ADA Compliance Plus, exclusively offered by SCM, now provides a means to combat non-compliance issues. The program not only reimburses business owners for legal expenses associated with ADA non-compliance, whether legitimate or frivolous, it also provides a platform to safeguard the insured from future claims.

Serial plaintiffs and shake-down attorneys are a serious threat to business owners. Our data reveals that over the last few years, property owners/operators have been hit with over 60,000 accessibility-related claims nationally.

 Our data indicates three types of claim scenarios:

• Short settlements whereby there is no discovery period, the average settlement is $4,000 to $8,000
• Claims carried through discovery whereby legal defense is involved range from $15,000 to $25,000
• When claims are pushed through trial, the out-of-pocket expense can easily exceed $100,000

 * These figures do not include statutory fines and noncompliance penalties*

  Core points of ADA Compliance Plus:

• Provides corporate-office training on current compliance codes and ordinances – offered by ADA Compliance Professionals, Inc.
• Supplies two hours of free legal consultation with an attorney that specializes in ADA compliancy defense – provided by Sedgwick LLP
• Includes a 30% discount on all building inspections focused on ADA compliancy/CASp certification inspections – performed by ADA Compliance Professionals, Inc.
• Includes Tenant Discrimination coverage
• Provides $1M Limit with Zero Deductible and No Coinsurance (subject to underwriting), including choice of legal counsel
• Premiums based on gross leasable square footage

SCM’s top-tier team of experts is dedicated to creatively servicing the unique needs of business owners through cost-effective and comprehensive property and casualty programs.

SCM team members, Jeannine Coronado, Anne Marie Frederick, Michele Anctil and Michelle Ronan, attend United Health Group’s Innovation Day Expo on October 23rd. The event showcases United Health Group’s latest innovations, as they work to improve the health care system.

SCM is pleased to announce the arrival of Christopher Warren, property casualty consultant, to our Irvine Office.  Chris joins us from Georgetown Insurance Service, Inc., where he was a Business Development Associate.  Chris holds the designation of Certified Builders Insurance Agent and his experience as a trusted advisor/consultant to contractors will serve him well in SCM’s Construction Division.  Chris obtained a B.S. in Business Administration from Salisbury University, Perdue School of Business and an M.B.A. from University of Maryland University College.

Randall Mitchell joins SCM from Bank of Manhattan, N.A., where he held the position of Vice President / Relationship Manager.  Prior thereto, he was with Northern Trust Bank, N.A. and 1^st Century Bank, N.A.  Randall’s eight years of experience in the banking industry provides a strong foundation for his position at SCM, where he will have a dual concentration in building out the firm’s Real Estate and Food Divisions.  Randall attended the University of Southern California, Marshall School of Business, where he earned a Bachelor of Science degree in Business Administration, with a concentration in Finance.