This material originally appeared as one of Jim’s Daily Herald columns


The next few months could get a little messy, thanks to both the coming December 1 effective date for new overtime pay rules from the U.S. Department of Labor and, if you provided healthcare insurance to employees through Land of Lincoln Health, the dissolution of that company.

Although implementation could cost angst and dollars, the new overtime rules seem to be the easier issue.

The biggest change is that the pay floor for exempt workers – salaried employees you do not have to pay overtime even though they work more than 40 hours a week – jumps from $23,660 to $47,476.  That’s not all.

Oak Park attorney Larry Grudzien points out that a higher salary “will affect benefits” such as 401(k) plans, adding that the $47,000-plus salary level is due to increase every three years beginning in 2020.

There are options to consider:

* Hire more employees, so no individual’s hours edge into overtime.

* Adjust pay levels, keeping in mind there often is a perceived status to being a salaried employee.  Employees who revert to hourly wages as you adjust your pay structure may not be happy.

You may need a good conversation with your accountant, a meeting with an employment benefits lawyer or a visit with a truly sharp HR consultant to assure you’re on the right side of the DOL.

The Land of Lincoln situation is more confusing, partly because it still is evolving.  Land of Lincoln Health was one of 23 insurance cooperatives created under Obamacare to help provide affordable healthcare coverage.  (Obamacare mandated that employers with 50 or more full-time equivalent employees offer affordable healthcare benefits to workers or pay a tax penalty.)

Backed originally by federal loans but bedeviled in part by a federal requirement to make risk adjustment payments to competitors with older and sicker customers, most of the co-ops have been unable to survive.  Land of Lincoln is the 16th to fail.

What happens next in Illinois remains somewhat uncertain.  A set of Frequently Asked Questions on the Land of Lincoln Health website last week assured that “Land of Lincoln will continue to pay the claims” of current policyholders.

Still, it’s been only about two weeks since the state moved to close Land of Lincoln, and the situation is fluid.  (Relatively few of Land of Lincoln’s 49,000 policy holders obtained coverage through their employers.  Consequently, most of the website information is aimed at individual consumers, but there is some information for employers.  Link to https://www.landoflincolnhealth.org/important-notice-members/.)

The Land of Lincoln Health website last week suggested that employers who provided coverage for employees through the co-op contact their insurance brokers – probably a good idea.  Here’s another idea, though not from the website:  Contact a benefits-knowledgeable attorney.

There is both a temporary and an already scheduled regular reenrollment period this fall, but it is unclear whether that process will benefit businesses and their employees.


© 2016 Kendall Communications Inc.  Follow Jim Kendall on LinkedIn and Twitter.  Write him at Jim@kendallcom.com.  Listen to Jim’s Business Owners’ Pod Talk at www.kendallcom.com/podcast.