SECURE 2.0: Form 5500 Updates

SECURE 2.0: Form 5500 Updates

Earlier this year, the Department of Labor (DOL), Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC) issued final rules on Form 5500 and Form 5500 Short Form (SF) changes starting for 2023 retirement plan year reports. Changes are part of the final phase of Setting Every Community Up for Retirement Enforcement Act (SECURE Act). Plans that operate on a calendar year will begin using the new reports in July of 2024.

The SECURE Act was signed into law in 2019 to help more Americans save for retirement. On December 29, 2022, SECURE 2.0 was signed into law with promises of adding tens of billions of dollars to retirement savings and offering new retirement plan features over the next decade.

As noted in an RBT CPAs Thought Leadership Article, SECURE 2.0 has almost 100 different provisions phasing in between 2023 and 2033 to give employers and employees new opportunities to build retirement (and emergency) savings. “From plan rules and administration to tax credits and startup costs, SECURE 2.0 will result in a broad swath of changes for a variety of plans – including 529 plans, IRAs, 401(k)s, 401(b)s, SIMPLE plans, pension plans, employee stock ownership plans, and more. In general, small employers, non-profit organizations, and government agencies will have the opportunity to participate in plans previously available to large for-profit employers only.”

One of the changes impacts Form 5500 filings starting with the 2023 plan year. As explained on a DOL Fact Sheet related to the changes, ERISA and the IRC require covered employee benefit plans to file annual returns/reports about plans’ financial condition and operations. Form 5500 (or Form 5500 SF for small employee plans), along with required schedules and attachments, satisfies this requirement. The DOL, IRS, and PBGC use these reports for enforcement, compliance, and research. Plan participants, beneficiaries, and the public can refer to Form 5500 filings to monitor plan operations.

According to a DOL press release, key changes to annual reports will include a consolidated Form 5500 for certain defined contribution plans; an updated participant-counting methodology for plans with fewer than 100 participants; a breakout of administrative expenses paid by a plan on its financial statements; financial and funding reporting improvements by defined benefit plans covered by the PBGC; new IRC compliance questions for tax-qualified retirement plans; and technical and conforming changes as part of annual rollover forms and instructions.

Details about the Form 5500 changes, as well as changes to 403(b) multiple employer plans – including pooled employer plans, minimum required distributions, and audit requirements for certain plans – are contained in the Federal Register notices, Document #2023-02653 and Document #2023-02652.

The DOL Fact Sheet also states, “Per EFAST2’s normal annual schedule, the 2023 Form 5500 series of forms and instructions are scheduled to be released for filing as part of the EFAST2 electronic filing system on January 1, 2024. For questions about the final rule, contact EBSA’s Office of Regulations and Interpretations at 202-693-8500.”

For more information, visit the IRS’ Form 5500 Corner. For a timeline of Secure 2.0 changes through 2026, visit the American Society of Pension Professionals & Actuaries website. RBT affiliate, Spectrum Pension and Compensation, is also available to consult with you about retirement plans for yourself and/or your employees.

As always, RBT CPA professionals are also available to support all of your accounting, tax, audit, and business advisory needs, so you can focus on other aspects of your business – like your total rewards program, including opportunities to build income for retirement. To learn more about what we can do to help you succeed, give us a call today.

 

RBT CPAs do not outsource work to another country. All of our work is prepared in the United States. Also, RBT CPAs is an accounting firm – not a law firm. Should you need legal advice on your employee benefits, please consult the appropriate legal counsel.

ERISA: What to Know & Do as a Benefit Plan Fiduciary

ERISA: What to Know & Do as a Benefit Plan Fiduciary

If you are a private employer that sponsors an ERISA-covered health and/or retirement plan for employees, it’s a good idea to review your responsibilities – and deadlines – to ensure compliance.

The Employee Retirement Income Security Act of 1974 or ERISA is a Federal law that protects retirement and welfare employee benefit plan participants’ and beneficiaries’ interests. As stated on the Department of Labor website, ERISA “sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.”

Generally, ERISA applies to private employers, but not government entities, churches, or plans that comply with disability, unemployment, or workers’ compensation laws. The Department of Labor’s Employee Benefits Security Administration, the Treasury Department’s Internal Revenue Service, and the Pension Benefit Guaranty Corporation work together to enforce the law, which:

  • Requires plans to provide important information about a plan, its features and funding to participants;
  • Has minimum standards for participation, funding, benefit accruals, and vesting;
  • Defines fiduciary responsibilities for the people who manage plan assets;
  • Requires a plan to have an appeals/grievance process for participants to get benefits;
  • Allows participants to sue for benefits and fiduciary breaches;
  • For a defined benefit plan that is terminated, guarantees certain benefit payments.

Fiduciaries include people and companies with discretionary control or authority over a plan’s management, assets, administration, or investments. Overall, fiduciaries must operate a plan in the best interest of participants and beneficiaries; otherwise, they can be subject to court actions and held personally liable.

If you’re not sure if your plan is covered by ERISA or if you’re a fiduciary, the ERISA Fiduciary Advisor – developed by the Employee Benefits Security Administration – enables you to get answers by responding to a few simple multiple-choice questions. Access it by clicking here. (While you’re at it, you may want to check out the other advisor tools the DOL developed for employers, employees and small businesses.)

Among the many responsibilities fiduciaries are required to uphold, providing timely and ongoing disclosure about a plan is a big one, with regular annual deadlines. Click here to see PlanSponsor.com’s 2023 ERISA Plan Compliance Calendar. (Source: PS. 2023 ERISA Plan Compliance Calendar. December 13, 2022. PlanSponsor.com.)

If you are a plan fiduciary, it’s always a good idea to consult an ERISA attorney with any questions. For more information, the Employee Benefits Security Administration has a “Getting it Right – Knowing Your Fiduciary Responsibilities” campaign and website with a variety of resources to help promote compliance, including webinars, tools, and publications.

While you focus on ensuring you meet disclosure deadlines and other ERISA responsibilities that may apply, you can depend on RBT CPAs for accounting, tax, audit and business advisory services. We’re a leading accounting firm in the Hudson Valley and we believe we succeed when we help our clients succeed. Interested in learning more? Give us a call.

Is Technology Going Too Far, Too Fast?

Is Technology Going Too Far, Too Fast?

Originally, I was going to write about six technologies that are changing healthcare, but as I started researching the topic, I realized two things. One – I’m an accountant not a healthcare professional and no amount of research is going to ever position me to advise a doctor or a medical practice CEO on the latest in healthcare technology – the field is simply too vast and too complicated, and understanding it requires medical education, training, experience, and a lot more. And two – I think Elon Musk may be onto something.

Imagine having a Supreme Court Justice robot using AI to “hear” an important case and rendering a decision based on algorithms that helps it scour and analyze an abundance of historical data…A professional football coach robot quickly analyzes all of the data about the players and teams on a field to predict the next play, counter-play and game outcomes before the first whistle blows….An accounting robot automatically gathering data for tax season, synthesizing it, and generating your filing so it’s in your email for signing without you or any other human doing a thing. Actually, forget that last example. Just kidding, but also not kidding considering where AI is with the release of CHAT GPT, and where it may go.

Seriously, when researching health care technology trends, my heart started racing a bit and I began to give real consideration to Elon Musk’s recent call to pause artificial intelligence (AI) development until we understand it a little more and put some governance around it. What if people start querying symptoms, increasingly use it to self-diagnose, and follow outdated or wrong information?

I have learned when reading and researching topics like this that much of the talk about technology does focus on a future state that doesn’t exist yet, but may become reality sooner than we’d think or like. Even though we’ve been hearing about the potential of AI for years, at this point it feels like perhaps the pace of its development and potential is outpacing our ability to wrap our minds around such radical transformations and their broader implications.

Still, I have an article to write about technology and healthcare. Out of intellectual curiosity, I conducted a little experience. I gave CHAT GPT, the AI technology taking the world by storm this prompt: Write an article about six technologies that are changing healthcare. See below to see the results.

Without looking at the output, I continued working on the article the old-fashioned way, and after “following the story and research” found myself landing in a different place with a different discussion.

I realized there are two types of healthcare technology – one that can fall in the bucket of impacting health and outcomes, and one that falls in the bucket of running a health care related business.

As I said earlier, out of respect for health care professionals’ education, training, knowledge, abilities, and passion, I don’t even come close to being qualified to talk about healthcare technology as it relates to actual care and outcomes. It’s mind boggling to learn about things like using 3D print technology to create hearing aids or replacement joints faster and at lower costs; AR/VR to help doctors practice procedures; or smart bandages monitoring and promoting healing. I can even wrap my mind around technologies enabling collaborations, predictive analytics, data sharing, and care equity while reducing environmental impacts. However, when research starts leading to ideas about cutting out strands of DNA and things of that nature, the discussion is clearly over my head, and one better left to the experts. Still, there is a technology discussion to be had, and it falls into the second bucket: technology developments that are reshaping the business side of healthcare.

HealthcareDive.com reports, “As 2022 drew to a close, several factors suggested that technology adoption was slowing down, including a cooled landscape for digital health funding and a drop in virtual care utilization. In addition, a flurry of cyberattacks and concerns over the privacy of sensitive medical data highlighted the hazards of new technology adoption. Despite this, experts remain upbeat about the potential of technology to improve U.S. healthcare in 2023.”

The article goes onto predict that with so many individual technology solutions in the market, health care organizations are going to prioritize tech investments and strategies to focus on basics, like patient intake, revenue management, physician enablement, care coordination, patient engagement, and data security. Concurrently, there will likely be consolidation and integration among healthcare tech providers.

HealthTechMagazine reinforces a similar thought process, with predictions that 2023 healthcare technology uptakes will largely focus on security, data analytics, and workflow automation. I even came across one story talking about “robots” walking patients to exam rooms and handling the disposal of hazardous materials so medical staff can spend time on value added activities.

Now, I have to admit, after coming to this point in the thought process, I stepped back and looked at the content generated by CHAT GPT. I was pleasantly surprised by the clarity of its writing abilities. While I think it’s accurate, I’m not sure it would add much value to you – the content is pretty basic, and I fathom to guess most people reading it wouldn’t walk away with anything new. So, for now, at least, I’m going to stick to doing my articles the old-fashioned way (even if my son is telling me I’m wrong and it’s because I don’t understand prompt engineering – that’s another discussion for another day).

Now onto simpler things, like if you need accounting, tax, audit, or financial advisory services…You can continue to count on the humans at RBT CPAs to deliver an exceptional customer experience with the highest of ethics. If you’re interested, give us a call. A human will even answer the phone!

How Will the End of the Public Health Emergency Impact Your Organization and Finances?

How Will the End of the Public Health Emergency Impact Your Organization and Finances?

Is your organization ready to “unwind” from the Public Health Emergency (PHE) and address the potential impact, financial or otherwise?

Just about three years ago, the U.S. Government issued a nationwide emergency declaration due to COVID. At the end of the day, May 11, 2023, the U.S. PHE expires, along with many temporary changes to health insurance, coverage, and care. This will impact health care providers, insurers, pharmaceutical companies, pharmacies and certain retailers, employers that provide health care coverage, and individuals.

Along with the end of the PHE comes the end of Medicare coverage for free COVID tests and testing, as well as the extra 20% payment for COVID care in the hospital; Medicaid and CHP free testing and COVID treatment services with no cost-share (the latter starts the first calendar quarter one year following the end of the PHE); continuous enrollment in Medicaid (as of March 31); private health insurance free tests and testing services, as well as mandatory out-of-network coverage for both; enhanced federal funding to states (effective December 31); and more.  (For more details, see “Key Flexibilities Triggered by Major Covid-19 Federal Emergency Declarations” at KFF.org.)

In February, the American Hospital Association sent a letter to U.S. Secretary of Health and Human Services Xavier Becerra asking the administration to consider PHE implications on our health care system’s stability. It noted, “The recent decision to sunset the COVID-19 public health emergency (PHE) is a testament to the progress we have made; however, as we prepare for that transition, we should not revert to care delivery as it was prior to the pandemic. Instead let us build on the lessons we have learned and the advancements in care delivery and access we have made. Let us use this crisis to create a more effective, equitable, patient-focused and stable health care system.”

During the PHE, health plans benefited from government coverage of COVID-related expenses, and relaxed HIPPAA and COBRA rules. Before the end of the PHE, they’ll have to negotiate with plan sponsors regarding how these expenses will be covered going forward, even as some prices are still being worked out (i.e., how much pharmaceutical companies will charge for vaccines and treatments). Finally, while significant premium increases didn’t materialize in 2023, there’s concern about the impact cost-shifting to insured patients may have in 2024.

GoodRx reports: “One of the most profound effects of the PHE ending is the potential number of people who will lose Medicaid coverage (5 million to 14 million according to some researchers and nearly 18 million according to the highest estimates).” (George, Cindy. “The End of the COVID-19 Public Health Emergency: What You Need to Know.” March 10, 2023. GoodRx.com.)

The U.S. Department of Health and Human Services (HHS) issued a roadmap for transition, highlighting what will change and what won’t with the PHE’s end. Among the changes is how lab results and immunization data will be reported. Once the PHE ends, the HHS won’t have the authority to require this reporting. The Center for Disease Control is encouraging states to continue sharing vaccine data. Also, hospital reporting will continue but likely at a lesser frequency.

The unwinding is occurring as the health industry faces an uncertain economic environment, supply chain issues, and the labor shortage, leaving questions about how all of this will impact demand for care; debt, liquidity and bond ratings; provider costs, cash, and funding; and more.

No doubt, all healthcare providers, health plans, employers offering coverage, and others will be on the receiving end of patient questions – and possible hostility – about coverage and cost changes. As noted on GoodHousekeeping.com, “It’s unclear just how expensive treating or preventing COVID-19 will be for most Americans currently — but a majority can expect to face new forms of co-pay for tests, treatment and medications starting in May.” (Krstic, Zee. “What Does the End of Covid Emergency Declarations Really Mean?” February 12, 2023. GoodHousekeeping.com.)

To prepare your organization for the unwinding, there are numerous resources available:

Many variables will impact/determine the financial implications of the PHE ending on your organization. As with any legal matter, it’s always best to consult your legal counsel for advice and direction. At the same time and as part of your unwinding activities, you may want to evaluate data on hand to determine the potential financial impact. RBT is here to help guide you through the accounting and tax implications you may want to consider as part of your strategy. Give us a call today.

Don’t Miss Out on Big Company Retirement Benefits Just Because You’re Self-Employed

Don’t Miss Out on Big Company Retirement Benefits Just Because You’re Self-Employed

If you feel like you’re missing out on big company retirement benefits, check out a solo 401(k). Sometimes referred to as an individual 401(k), a solo 401(k) plan provides valuable savings and tax benefits, while enabling you to build retirement income.

Who’s eligible?

You are eligible to participate in a solo 401(k) if you are a self-employed owner of an S Corporation that has no full-time employees. Your spouse may also be eligible if he/she earns an income from your business. You do need an Employer Identification Number (EIN) to open a Solo 401(k).

What advantages does it offer?

You can benefit as both an employee and an employer.

  • As an employee, you can defer a portion of your pay before taxes (other than Social Security and Medicare) are deducted. This reduces your taxable income. Your savings are invested and grow tax-free until you retire and make withdrawals. (If you choose a Roth Solo 401(k), your contributions can be made from your after-tax pay; then, you’ll pay no taxes when these contributions are withdrawn at retirement.)
  • As an employer, you can choose to make a profit-sharing contribution to the plan; the contribution is tax deductible.

You choose how to invest contributions so they grow over time. Unlike a large employer’s 401(k) plan, no testing is required for a solo 401(k).

When do contributions have to be made?

If you are deferring a portion of your pay under the plan, it gets deducted throughout the year. For a profit-sharing contribution, you have until the tax-filing deadline for the tax year to make the contribution. So, you have until when you file taxes in 2023 to make a contribution for 2022.

When can I receive my benefits?

When you retire as long as it’s after age 59 1/2; otherwise, penalties and taxes will apply.

Where can I open a Solo 401(k)?

Brokers, mutual fund companies (i.e., Vanguard, Fidelity, or Schwab), self-directed retirement plan providers, and some banks offer solo 401(k) plans. (Visit Investopedia for recommendations.)

Why should I consider opening a solo 401(k) plan account?

A solo 401(k) offers several benefits. It provides a valuable way to set aside and grow income for retirement. It’s flexible – you can choose to open a before-tax or Roth account, and you decide how to invest your account balance. It provides tax breaks for any profit-sharing contributions your company makes to the plan. If your spouse earns income from your company, he or she can participate, too.

How much can I elect to defer from my earnings and contribute via profit sharing?

Contributions are based on your W-2 reported earnings up to a maximum annual contribution (equal to net earnings minus 50% of self-employment tax), up to an annual IRS limit ($330,000 for 2023).

For 2023, you can elect to defer up to $22,500 (plus $7,500 in catch-up contributions if you are age 50 or over). Plus, a profit-sharing contribution can equal up to 25% of W-2 earnings. In total (elective plus profit sharing) contributions are limited to $66,000 in 2023 (excluding the $7,500 catch-up contribution).

To learn more about the potential tax benefits of opening a solo 401(k) to you and your S Corp, contact RBT CPAs today. We’ve been serving clients in the Hudson Valley and beyond for over 50 years.

NYS Regents 10 Biggest Proposed Budget Items for 2023-2024

NYS Regents 10 Biggest Proposed Budget Items for 2023-2024

In December, the New York State Board of Regents outlined budget and legislative priorities for the 2023-2024 school year. Here are highlights of the 10 items requiring the biggest share of the proposed budget.

#10. $10.5 million for College and Career Pathways in support of high school opportunity and career success. This will involve consolidating Advanced Course Access (ACA), Pathways in Technology Early College High Schools (P-Tech) and Smart Scholars Early College High Schools (SS-ECHS) into one new program, called College Credit and Career Opportunity Program to help high school students earn transcripted college credit and/or pursue a career pathway.

#9. $11.1 million for Higher Education Opportunity Program (HEOP); Science and Technology Entry Program (STEP); Collegiate Science and Technology Entry Program (CSTEP); and Liberty Partnerships Program (LPP), in support of high school opportunity and career success. This will be used to enhance supports and services to students in these programs, designed to improve outcomes and opportunities for students from economically disadvantaged and underrepresented populations.

#8. $15 million to Enhance Supports and Services for Postsecondary Success of Students with Disabilities as part of the advancing equity, excellence, and access guiding principle. A $13 million increase over current spending, this will be used to provide accommodations, supports, summer college prep programs, and faculty and staff training.

#7. $16.6 million to Build Sufficient Department Staff Capacity to rebuild New York State Education Department (NYSED) capacity to serve the public. $12.9 million will support 150 new positions, including 36 in Information Technology Services. An additional $3.7 million will fund 37 positions to support key Regents initiatives.

#6. $18 million for My Brothers Keeper to support the key area of high school opportunity and career success. This would enable the program to continue at current funding levels.

#5. $21 million for Computer Based Testing (CBT) Implementation to support the advancing equity, excellence, and access guiding principle. Funds would support the transition to 100% CBT for grades 3 to 8 English Language Arts, Math, and Science assessments. Of the total, $1 million is for increasing vendor capacity, while the balance covers costs for assuming responsibility for scoring.

#4. $21.1 million for Streamlining Early Childhood Programs to support lifelong learning, academic success, and improved outcomes. This will help redesign the State Education Department’s PreK funding to provide universal access for all four-year-olds by 2030 and all three-year-olds by 2035, while reducing barriers to dual enrollment of preschool students with disabilities in inclusive PreK classrooms. Of total funds, $1.1 million is for staff and a consultant to develop a redesign implementation plan. The remaining $20 million is for a preschool inclusivity grant awarded to districts providing a continuum of services for children with mild or moderate disabilities and children with severe or multiple disabilities.

#3. $27.82 million for Capital Needs of the Indigenous and State Operated Schools to advance the equity, excellence, and access guiding principle. Of the total, $250,000 will go towards a building conditions survey and $27.57 million is for rolling capital funding to meet immediate health and safety needs, while establishing a capital planning process for five state-owned school buildings, including Tuscarora Nation School, Onondaga Nation School, St. Regis Mohawk Nation School, Rome School for the Deaf, and Batavia School for the Blind.

#2. $45 million in State Aid for the Public Library Construction Program as part of its rebuilding capacity of the NYSED to serve the public and advancing equity, excellence, and access principles. Funds will begin to address the statewide need of $1.52 billion for public library construction and renovation, and address library structural needs for adequate broadband infrastructure. For 2023-24, $45 million (an $11 million increase) is requested.

#1. $375 million for Relieving School District Mandates, as part of its rebuilding the NYSED’s capacity to serve the public. This will fund valid school district prior year state aid claims and penalty forgiveness, while a multi-agency team convenes to streamline financial reporting.

As for state aid, the Regents are asking for an additional $3.4 billion for the 2023-2024 school year, and expressed commitment to support all school districts through fully funding foundation and other state aid as provided by law; provide universal access to Career and Technical Education for all interested students; and provide options to encourage districts to expand programs and services via greater regional collaboration.

Stay tuned as Governor Hochul is scheduled to release her 2024 budget today, with final approval due April 1.

RBT CPAs is a leading accounting, tax, audit, and advisory firm that has been serving clients in the Hudson Valley and beyond for over 50 years. Known for our exceptional customer experience, professionalism, and ethics, RBT CPA staff members believe we succeed when we help you succeed. If you’re interested in learning more, give us a call.

Navigating Health Care in 2023 and Beyond: What Is the Path Forward?

The return to normal following COVID is not going to happen. Instead, economic, environmental, societal, geopolitical, and technology factors are reshaping healthcare globally and in the U.S. Understanding the forces at play can provide important insights for charting a course for 2023 and the decade ahead. The recently released World Economic Forum’s Global Risks Report 2023 identifies five newly emerging/ rapidly accelerating risks that could become a crisis by 2033 if immediate action isn’t taken – human health is one of them. It says growing financial pressure, budget cuts, revenue losses, higher costs of goods and labor, and the predicted global shortfall of 15 million health workers by 2030 are driving productivity declines and safety issues. What’s more, with medical inflation continuing to outpace GDP growth and the predicted government/insurer/employer response of limiting coverage, shifting costs, and reducing healthcare access and affordability, we may find ourselves with a “deeply entrenched” two-tier healthcare system for the haves and have nots. The report goes onto say changing this trajectory will involve public health policy and interventions; collaboration and coordination among public health agencies, healthcare providers and funders; stronger national and global health institutions and systems; and innovative care delivery, staffing and funding to prevent disease, promote early detection, and provide cost-effective care to the chronically ill. Also, opportunities exist for increasing capacity, combining virtual and in-person care, and reducing costs via technology and digital transformation. Concurrent with the risk report, the World Economic Forum completed a Global Health and Healthcare Strategic Outlook with the goal of uniting stakeholders behind a shared healthcare vision and actions to drive systemic long-term change. The vision has four strategic pillars: • “Equitable access and outcomes: Equilibrating access to determinants of health, ensuring health data is representative of the population and people with equal needs achieve equal health outcomes. • Healthcare system transformation: Structuring resilient healthcare systems to provide high-quality care under both expected and unexpected circumstances. • Technology and innovation: Cultivating an environment that supports funding, use and implementation of innovation in science and medicine. • Environmental sustainability: Reducing the healthcare industry’s environmental impact, preparing for and addressing climate change for better health and wellness.” When it comes to the U.S. healthcare, McKinsey & Company outlined challenges and opportunities that lay ahead in its Gathering Storm series. An Opportunity to Reorder the Healthcare Industry reports, “This gathering storm has the potential to reorder the healthcare industry and put nearly half of the profit pools at risk. Those who thrive will tap into the $1 trillion of known improvement opportunities by redesigning their organizations for speed, accelerating productivity improvements, reshaping their portfolio, innovating new business models to refashion care, and reallocating constrained resources.” As noted in the series’ introductory article, How Leaders Can Respond and Thrive: “Healthcare leaders, especially those in the private sector, have an opportunity to step up and invest in innovation for the betterment of healthcare. Indeed, implementing a well-known set of interventions—in care delivery transformation, administrative simplification, clinical productivity, and technology enablement—could generate a collective opportunity of more than $1 trillion and potentially up to $1.5 trillion through 2027, according to McKinsey analysis. However, to move fast enough to capture this opportunity, healthcare leaders need to rethink how they approach organizational growth and transformation. Those who act now could set themselves apart in leading transformative improvements of healthcare and accrue a sustainable competitive advantage for their organizations.” Whether you’re at the initial stages of understanding the new global and U.S. landscape for healthcare or embarking on an already formed strategic plan, remember, RBT CPAs can help. You can trust our accounting, tax, audit, and advisory services professionals to take on these responsibilities so you can reallocate resources to what’s really important – shaping the future of healthcare and your organization. Interested in learning what we can do for you? Give us a call. RBT CPAs is a leading accounting firm serving Hudson Valley businesses for over 50 years. We believe we succeed when we help you succeed. Give us a call today.

The return to normal following COVID is not going to happen. Instead, economic, environmental, societal, geopolitical, and technology factors are reshaping healthcare globally and in the U.S.  Understanding the forces at play can provide important insights for charting a course for 2023 and the decade ahead.

The recently released World Economic Forum’s Global Risks Report 2023 identifies five newly emerging/ rapidly accelerating risks that could become a crisis by 2033 if immediate action isn’t taken – human health is one of them. It says growing financial pressure, budget cuts, revenue losses, higher costs of goods and labor, and the predicted global shortfall of 15 million health workers by 2030 are driving productivity declines and safety issues. What’s more, with medical inflation continuing to outpace GDP growth and the predicted government/insurer/employer response of limiting coverage, shifting costs, and reducing healthcare access and affordability, we may find ourselves with a “deeply entrenched” two-tier healthcare system for the haves and have nots.

The report goes onto say changing this trajectory will involve public health policy and interventions; collaboration and coordination among public health agencies, healthcare providers and funders; stronger national and global health institutions and systems; and innovative care delivery, staffing and funding to prevent disease, promote early detection, and provide cost-effective care to the chronically ill. Also, opportunities exist for increasing capacity, combining virtual and in-person care, and reducing costs via technology and digital transformation.

Concurrent with the risk report, the World Economic Forum completed a Global Health and Healthcare Strategic Outlook with the goal of uniting stakeholders behind a shared healthcare vision and actions to drive systemic long-term change. The vision has four strategic pillars:

  • Equitable access and outcomes: Equilibrating access to determinants of health, ensuring health data is representative of the population and people with equal needs achieve equal health outcomes.
  • Healthcare system transformation: Structuring resilient healthcare systems to provide high-quality care under both expected and unexpected circumstances.
  • Technology and innovation: Cultivating an environment that supports funding, use and implementation of innovation in science and medicine.
  • Environmental sustainability: Reducing the healthcare industry’s environmental impact, preparing for and addressing climate change for better health and wellness.

When it comes to the U.S. healthcare, McKinsey & Company outlined challenges and opportunities that lay ahead in its Gathering Storm series. An Opportunity to Reorder the Healthcare Industry reports, “This gathering storm has the potential to reorder the healthcare industry and put nearly half of the profit pools at risk. Those who thrive will tap into the $1 trillion of known improvement opportunities by redesigning their organizations for speed, accelerating productivity improvements, reshaping their portfolio, innovating new business models to refashion care, and reallocating constrained resources.”

As noted in the series’ introductory article, How Leaders Can Respond and Thrive: “Healthcare leaders, especially those in the private sector, have an opportunity to step up and invest in innovation for the betterment of healthcare. Indeed, implementing a well-known set of interventions—in care delivery transformation, administrative simplification, clinical productivity, and technology enablement—could generate a collective opportunity of more than $1 trillion and potentially up to $1.5 trillion through 2027, according to McKinsey analysis. However, to move fast enough to capture this opportunity, healthcare leaders need to rethink how they approach organizational growth and transformation. Those who act now could set themselves apart in leading transformative improvements of healthcare and accrue a sustainable competitive advantage for their organizations.”

Whether you’re at the initial stages of understanding the new global and U.S. landscape for healthcare or embarking on an already formed strategic plan, remember, RBT CPAs can help. You can trust our accounting, tax, audit, and advisory services professionals to take on these responsibilities so you can reallocate resources to what’s really important – shaping the future of healthcare and your organization. Interested in learning what we can do for you? Give us a call.

RBT CPAs is a leading accounting firm serving Hudson Valley businesses for over 50 years. We believe we succeed when we help you succeed. Give us a call today.

Secure 2.0: Kicking Off 2023 with Thoughts of Retirement

Secure 2.0: Kicking Off 2023 with Thoughts of Retirement

While most of us were putting the final bows on holiday presents, on December 23 Congress passed the Secure 2.0 Act, with promises of adding tens of billions of dollars to retirement savings and offering new retirement plan features over the next decade. On December 29, President Biden signed the Act into law.

With nearly 100 different provisions potentially phasing in between 2023 and 2033, the new law will give employees and employers new tools and opportunities to build retirement (and emergency) savings. From plan rules and administration to tax credits and startup costs, Secure 2.0 will result in a broad swath of changes for a variety of plans – including 529 plans, IRAs, 401(k)s, 403(b)s, 457(b)s, SIMPLE plans, pension plans, employee stock ownership plans, and more.

In general, small employers, non-profit organizations and government agencies will have the opportunity to participate in plans previously available to large for-profit employers only. In fact, employers with 50 or fewer employees can get a tax credit for 100% of the cost of implementing a new retirement plan.

A number of penalties will be relaxed for certain eligible populations, while contribution and saving opportunities will increase (including catch-up contributions for participants over age 60). There are special provisions for private sector firefighters, part-time employees, seasonal employees, military spouses, survivors of domestic abuse, adoptive parents, first responders, domestic employees, and others. Administration of certain plan features will ease.

Here are highlights of just a few of Secure 2.0’s most notable features:

  • Retirement plan minimum required distribution age increases to 73 (and later to 75).
  • Lost and Found The Department of Labor must create a national, online, and searchable database enabling savers who may have lost track of vested retirement plan assets to search for plan administrator contact information.
  • Employer matching based on student loan payments Under a 401(k), 403(b) or SIMPLE IRA, an employer may make matching contributions based on “qualified student loan payments.” (The same holds true for government employers in a 457(b) or similar plan.)
  • Penalty-free early withdrawals for emergency expenses Unforeseeable or immediate financial needs relating to personal or family emergency expenses will be an exception to the 10% early withdrawal tax from tax-preferred retirement accounts.
  • New emergency savings account linked to retirement plans Non-highly-compensated employees can be automatically enrolled for up to 3% in contributions (with a $2,500 cap).
  • 529 Rollover to Roth IRA Under certain conditions, tax- and penalty-free rollovers from 529 accounts to Roth IRAs will be allowed. 529 college savings account beneficiaries will be able to rollover up to $35,000 over the course of their lifetime from any 529 account in their name to their Roth IRA, subject to Roth IRA annual contribution limits and if the 529 account was open for more than 15 years.
  • Automatic 401(k) and 403(b) enrollment for new plans Employers must automatically enroll employees at a 3% minimum contribution but no more than 10%. Employees can opt out. Employers with less than 10 employees or in business for less than three years are exempt. (Stay tuned about how this may interact with NY regulations requiring private employers to automatically enroll employees in New York State’s Secure Choice Savings Plan.)
  • Starter 401(k) Employers without a plan can offer a starter 401(k), with deferrals only, capped at $6,000.

As mentioned earlier, Secure 2.0 provisions will phase in over the next decade. You can view a complete copy here and a summary here.

RBT CPAs – and its affiliates – are available to help you understand what the new Act will mean to you, your business, and employees:

  • Our Spectrum Pension and Compensation professionals specialize in serving the retirement needs of diverse companies, especially in the Hudson Valley and all major Northeastern urban centers. As a third-party administrator for clients ranging from sole proprietors to corporate plans, Spectrum professionals can help your organization with plan design; actuarial and recordkeeping; compliance services; and participant education.
  • Our Visions Human Resources Services professionals support the entire employee life cycle and all related HR services, including benefit analysis, compliance audits, and more.
  • Your RBT CPAs contact can help you understand potential accounting, tax, and audit implications.

As is the case with any legislation, we strongly recommend you consult the appropriate legal counsel. Watch for more information and updates in the days and weeks to come.

Cyber Criminals Outsmart Higher Ed Institutions: Beware!

Cyber Criminals Outsmart Higher Ed Institutions: Beware!

$3 million. That was the asking price from cyber criminals to provide a decryption key to release the University of California, San Francisco’s data in 2020. The university paid $1.14 million. Since then, the problem has only gotten worse.

In a survey commissioned at the start of 2022 by Sophos, a global cybersecurity leader, 75% of ransomware attacks on higher education institutions succeed.  Recovery from an attack is slow, with 9% of higher ed institutions indicating it took 3 to 6 months; 31% took 1 to 3 months; and 40% took a month. It cost $1.42 million more for remediation than in other sectors.

Two-thirds of higher ed institutions that responded to the Sophos survey indicated they had been the target of an attack. Half paid ransoms to get their data back – 61% got some of their encrypted data back; only 2% got all of it back. 97% said the attack impacted their ability to operate and 96% indicated the attack caused a loss of revenue/business. Some were victims multiple times.

Cyber criminals have a higher success rate attacking higher ed than business, financial institutions, and healthcare. As reported in Forbes, the average ransom paid is around $112,000; but the total cost of recovery actually reaches around $2.7 million.

The barrage of successful attacks on higher education institutions have impacted cybersecurity insurance. Insurance companies have raised the bar on what is required to secure coverage. There are fewer insurers offering coverage. The time to secure a policy is longer; policies are more complex; and coverage is more expensive. While insurance provides some peace of mind, higher education still falls behind most other industries in shoring up their defenses.

In May, the FBI issued a warning to higher education institutions. As reported by SecurityWeek.com, on the dark web there was an increase in in offers to sell VPN login credentials, usernames and passwords, and more. Not only did this put higher ed institutions at risk, but also the individuals who use their systems could find their bank accounts drained or credit cards stolen.

In September, the FBI, the Cybersecurity and Infrastructure Security Agency (CISA), and the Multi-State Information Sharing and Analysis Center (MS-ISAC) issued another alert targeting education (with a special emphasis on K-12 schools): “The FBI and CISA recommend organizations, particularly the education sector, establish and maintain strong liaison relationships with the FBI Field Office in their region and their regional CISA Cybersecurity Advisor. The location and contact information for FBI Field Offices and CISA Regional Offices can be located at www.fbi.gov/contact-us/field-offices and www.cisa.gov/cisa-regions, respectively. Through these partnerships, the FBI and CISA can assist with identifying vulnerabilities to academia and mitigating potential threat activity. The FBI and CISA further recommend that academic entities review and, if needed, update incident response and communication plans that list actions an organization will take if impacted by a cyber incident.”

While higher education institutions may be competing for students, the war on cybercrime has brought them together in cyberspace. As reported in GovernmentTechnology.com, over 50 higher education institutions have come together “with the goal of creating a forum for educators, experts and IT security advocates to network with and share cybersecurity insights with each other.”

To free up your resources to focus on cybersecurity and other priorities for higher education, why not entrust RBT CPAs to handle all your accounting, audit, and tax requirements? We’re the largest CPA firm serving the Hudson Valley and beyond for over 50 years. We believe we succeed when we help our clients succeed. So, give us a call and let’s see what we can do for you.

How to Keep Your Medical Practice Safe from Telemedicine Fraud

How to Keep Your Medical Practice Safe from Telemedicine Fraud

Now that the Biden Administration has extended the Public Health Emergency (PHE) for another three months through January 11, Federal regulations put in place for the duration of the PHE continue, including those governing telemedicine. What’s more, certain telemedicine flexibilities will continue for five months after the PHE ends. While this may prompt a collective sigh of relief from all parties that benefit from the relaxed regulations, the need for heightened vigilance remains due to significant fraud.

As the COVID crisis escalated, so did the role of telemedicine. Patients weren’t the only ones who benefited. As reported on BenefitsPro.com, “Unscrupulous international and domestic telemarketing call centers, staffing companies, marketers, brokers and practitioners, among other individuals and entities, have recognized the potential to line their pockets, and many have done so—and continue to do so.”

In late July, the U.S. Department of Justice filed criminal charges against 36 defendants – including health care professionals, durable medical equipment (DME) companies, marketing organizations, a telemedicine company executive, and clinical laboratory owners and executives — for more than $1.2 billion in fraud, of which $1 billion related to telemedicine. At the same time, the U.S. Department of Health and Human Resources Office of the Inspector General (OIG) issued a fraud alert, encouraging medical practices and practitioners to proceed with caution.

Signs that there could be fraud involved include:

  • Patients – who are oftentimes the elderly or disabled – are solicited via the internet, TV, social media, telemarketing or sales agents, and via other channels for free or low-cost care, items or services they don’t need. For example, these patients are duped into going for cardiovascular genetic testing and prescribed products that aren’t used in their treatment.
  • The medical practitioner doesn’t have enough information or patient contact to assess medical necessity of items ordered or prescribed (i.e., prescriptions, DMEs, tests, or wound care supplies). He/she is compensated based on the number of medical records reviewed and/or volume of items or services ordered or prescribed, but is given no way to follow up with a patient or on treatment.
  • The telemedicine company only accepts Medicare, Medicaid and other federal insurance, but no private insurance; says they don’t serve Medicare/Medicaid covered individuals but then bill those programs; or only provides one product/class of products (i.e., DME), predetermining the course of treatment and limiting treatment options.

Going a step further, the OIG reviewed over 700,000 telemedicine billing records from the first year of the pandemic and identified seven red flags in billing that could indicate fraud.

The DOJ continues to prosecute providers for fraud and whistleblowers can reap significant rewards. Even senior citizens are being educated about telemedicine fraud and how to report it.

It’s evident that telemedicine is here to stay. While New York’s Governor Hochul ended the PHE in the state earlier this month, she also showed her support of telemedicine as a valuable health care delivery channel by introducing a $3 million grant program to “invest in new technologies that will improve access and adoption of telehealth in underserved communities.” The state also launched online training programs to help medical providers learn best practices for adopting telemedicine.

For more information,  please see the Special Fraud Alert: OIG Alerts Practitioners To Exercise Caution When Entering Into Arrangements With Purported Telemedicine Companies.

As you continue navigating the ever-changing healthcare landscape and regulations, RBT CPAs is here to help you navigate ever-changing accounting, audit, and tax requirements. We’re one of the largest CPA firms in the Hudson Valley, providing professional, ethical and quality services for over 55 years. We believe we succeed when we help our clients succeed. If you need a partner you can trust to handle your accounting, audit, and tax needs so you’re freed up to focus on other things like the healthcare landscape and changing regulations, give us a call.