Status Report on WIB Legislative Priorities

With the end of the 2015-2016 legislative session in sight, we want to update you on our lobbying efforts. By way of background, our public policy priorities for 2016 are:

Phase-Out of Wisconsin’s Personal Property Tax
More Accountability and Integrity to the Worker’s Compensation Program
Tougher Penalties for UI Benefit Fraud
Improve the State’s Tax Administration Process
Create a More “Small Business-Friendly” State Regulatory Process

Phase-Out of Wisconsin’s Personal Property Tax

2015 Assembly Bill (AB) 750 would phase-out Wisconsin’s personal property tax over a four-year period beginning in 2016. AB 750 will not receive any further consideration this year. While there is bipartisan support for the elimination of the state’s personal property tax, that support is contingent upon at least some state reimbursement to local governments to offset their loss of personal property tax revenues. At this time, Wisconsin’s current fiscal condition and budget outlook are positive, but there is not enough money available to provide so-called “hold harmless” payments to local governments.

More Accountability and Integrity to the Worker’s Compensation Program

On March 2, Governor Walker gave final approval to an omnibus package of amendments to the state’s Worker’s Compensation law. The “small business-friendly” provisions included in 2015 Wisconsin Act 180 are:

a) no recovery of indemnity or death benefits when an employee violates the employer’s drug and/or alcohol policy and where there is a direct causation
between the violation of the drug and/or alcohol policy and the workplace injury;

b) denial of temporary disability when an employee is released to light duty work and is suspended or terminated due to misconduct or substantial fault as defined under the state’s Unemployment Insurance law;

c) apportionment of permanent disability resulting from accidental injuries will be based on causation;

d) reduction in the statute of limitations for traumatic injuries from 12 years to six years; and

e) funding for the Wisconsin Department of Justice to investigate and prosecute worker’s compensation fraud committed by employees, employers, insurance
carriers and providers.

Tougher Penalties for UI Benefit Fraud

2015 Assembly Bill (AB) 212 creates a seven-year period of ineligibility for UI benefits if the UI claimant commits two acts of concealment or impersonation in two consecutive benefit years. By way of background, the term concealment means to intentionally mislead the DWD by withholding or hiding information or making a false statement or misrepresentation. AB 212 was approved by the Wisconsin State Assembly. As of this writing, the Wisconsin State Senate has not taken final action on AB 212.

2015 Assembly Bill (AB) 533 revises the criminal penalty for a person who knowingly makes a false statement or representation to obtain UI benefits. The bill revises the penalty from a misdemeanor, with a fine between $100 and $500 and incarceration up to 90 days, to a specific penalty structure that ranges from a Class A misdemeanor to a Class G felony, depending on the dollar value of the benefits obtained. AB 533 was approved by the Wisconsin State Assembly. As of this writing, the Wisconsin State Senate has not taken final action on AB 533.

Improve the State’s Tax Administration Process

By law, the Wisconsin Department of Revenue (DOR) may disallow tax deductions, credits and exemptions as well as impose financial penalties on taxpayers who fail to produce tax records within a specified period of time (generally speaking 60 days) for purposes of a state tax audit.

On March 2, Governor Walker signed into law 2015 Act 218 which eases this compliance burden. Under this new law, a taxpayer is subject to the aforementioned penalties if the taxpayer fails to comply with a request by DOR to produce records or documents that support information on a tax return and fails to comply in good faith with a summons issued by DOR seeking the records or documents.

Create a More “Small Business-Friendly” State Regulatory Process

2015 Assembly Bill (AB) 80 creates an expedited procedure to eliminate obsolete and unnecessary regulations – a process we believe can lead to the elimination of existing regulations in a matter of months, not years. 2015 Assembly Bill (AB) 251 creates a new opportunity for small businesses to inform state government agencies of their concerns with a proposed regulation at the front-end of the regulation-making process; and a new mechanism for lawmakers to receive economic analysis of a proposed regulation that fairly and objectively accounts for the compliance costs. AB 80 and AB 251 have been approved by the Wisconsin State Assembly. As of this writing, the Wisconsin State Senate has not taken final action on AB 80 or AB 251.

The last day for the Wisconsin State Legislature to take final action on legislation during the 2015-2016 Legislative Session is April 7. While we do not believe that the State Senate or State Assembly will come back in before that date, we must continue to advocate for our legislative priorities until the very end.

A Positive Report on the State’s UI Program

Earlier today, the Unemployment Insurance Advisory Council (UIAC) received a briefing from the Wisconsin Department of Workforce Development (DWD) on the financial condition of the state’s Unemployment Insurance (UI) Trust Fund and the Department’s ongoing UI fraud detection and prevention efforts. There is plenty of good news to share. Outlined below are the highlights:

1. For calendar year 2015, the total dollar amount of UI benefits paid (federal and state) to eligible UI claimants was $605.5 million – down 17% from 2014;

2. At the start of 2015, the balance in the state’s UI Trust was $215.8 million. The year-end balance in this account was $742.9 million. As a result, the UI
employer tax burden will decline by an estimated $97 million for tax year 2016;

3. Fraud against Wisconsin’s UI program is down – both in terms of actual dollars ($13.3 million in 2015 compared to $20.4 million in 2014) and in terms of a
percentage of total unemployment claims (2.2% in 2015 compared to 2.8% in 2015);

4. In 2015, DWD staff identified 9,793 cases of UI benefits obtained by fraud and recovered more than $20.7 million in fraudulently paid UI benefits. There is
often a lag time between the detection and the subsequent recovery of fraudulent UI payments; and

5. In 2015, DWD referred 115 cases of UI fraud for potential criminal prosecution by the Wisconsin Department of Justice – up from just 19 cases in 2014.

Over the past five years, WIB has successfully lobbied for new laws as well as changes in existing laws which provide DWD with more “tools” to detect and prevent UI fraud. We are pleased these tools are being put to good use.

For more information, here is a copy of the Department’s 2016 UI Fraud Detection and Prevention Report.

Federal Health Care Law Update

Yesterday, the Wisconsin Office of the Commissioner of Insurance (OCI) provided guidance to insurers who write health insurance in Wisconsin.

According to the guidance document, OCI will allow insurers to renew, at their option, non-ACA (Affordable Care Act) compliant individual and small group coverage if coverage has been continuously in effect since December 31, 2013. Policies may continue to be renewed on or before October 1, 2017, provided that the policy will terminate by December 31, 2017. Insurers may early renew coverage or issue coverage for periods less than one year if a policy terminates prior to December 31, 2017, and the consumer or employer desires coverage to the end of the calendar year.

The OCI guidance notes that coverage must have been in force on December 31, 2013, to continue use of a transitional policy. Insurers electing to extend non-ACA compliant plans have the following options for individual and employer-sponsored group outreach and enrollment:

a) An insurer may permit individuals and employer-sponsored groups currently enrolled in the insurer’s non-ACA compliant plan to continue to renew their
coverage; or

b) An insurer may provide an additional opportunity to renew coverage in its non-ACA compliant plan to an individual or employer-sponsored group who is
currently enrolled in the insurer’s non-ACA compliant plan but who has indicated their intent to non-renew at the end of the plan year.

Consistent with Wisconsin insurance laws and regulations, the individual or small employer may change their plan options from one non-ACA compliant plan to another non-ACA compliant plan and renew that coverage provided:

a) Coverage was in force for the individual or small employer before December 31, 2013; and

b) The new plan was available for purchase prior to December 31, 2013.

Insurers opting to renew non-ACA compliant plans must provide disclosure to their enrollees including notice that an enrollee’s premium may be affected either on the date of renewal or in advance of the date on which the premium change will be affected.

Insurers choosing to offer individual and group insureds the option for auto-enrollment must provide the insured a notice at least 30 days in advance of the renewal date that the insured will be automatically renewed in the new plan unless the insured exercises his or her right to choose any plan from any insurer and will receive coverage that is guaranteed.

We sincerely hope you find this e-publication to be a valuable member service. Let us know what you think and how we can make it better by contacting the editor, Brian Dake, at
John Gard
Wisconsin Independent Businesses