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Welcome to the Benefits, Inc. Newsletter!
Thank you for being part of Benefits, Inc. The landscape of the business world is changing every day. This newsletter is provided in order to inform you of up to date and accurate information regarding federal and state legislation, HR trends, compliance, and benefit strategies.
We appreciate your business and if you have any questions please feel free to contact us at 615-446-3303.
Sincerely,
Tim White & Kevin Smith
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Compliance Corner
HIGH DEDUCTIBLE HEALTH PLAN AND HEALTH SAVINGS ACCOUNT
President George W. Bush in December of 2003 signed into law the Medicare Modernization Act which included Health Savings Accounts (HSA). This Act improved the previous Medical Savings Account law by expanding allowable contributions and employee participation. The reason this is noteworthy is that since HSA's were created in Washington, they likely will survive Healthcare Reform.
HIGH DEDUCTIBLE HEALTH PLAN
The one point of entry in participating and funding a H.S.A. is the requirement to have a High Deductible Health Plan (HDHP). The term High Deductible Health Plan can be misleading in that many medical plans have high deductibles. The intent is that the medical plan not have first dollar benefits such as copayment features with the exception of preventative services and preventative prescription drugs.
The IRS indexes minimum deductible and maximum out-of-pocket limits annually:
Calendar Year 2014 Calendar Year 2015
Minimum Deductible
Self-only $1,250 $1,300
Family $2,500 $2,600
Maximum Out-of-Pocket
Self-only $6,350 $6,450
Family $12,700 $12,900
Even though a participant in a High Deductible Health Plan is not required to have a Health Savings Account, when offered as an option, the combination will help both a consumer with high claims as well as an individual with few claims seeking a low cost alternative. Health Savings Account balances may be used post retirement to pay for Medicare premiums and long-term care premiums tax free. Withdrawals from a Health Savings Account not used for a qualified expense will be taxed as ordinary income but will not be penalized if the withdrawal occurs after age 59 ½.
HEALTH SAVINGS ACCOUNTS
An individual funding a Health Savings Account must be enrolled in a High Deductible Health Plan, not enrolled in Medicare, or claimed as a dependent on someone else's tax return. There are other possible factors not covered here so be sure to consider all variables before establishing an account.
IRS indexed contribution limits:
Calendar Year 2014 Calendar Year 2015
Self-only $3,300 $3,350
Family $6,550 $6,650
Catch-up Ages 55+ $1,000 $1,000
Contributions into a Health Savings Account are tax-free, the interest accumulates tax-free and distributions for qualified medical expenses are tax-free. Establishing a Health Savings Account in the middle of a calendar year generally does not result in a pro-ration of the funding limits. However, mid-year loss of eligibility to fund an HSA generally does result in a pro-ration of the annual funding contribution limits (1/12 per month).
Qualified expenses included medical, dental, and vision expenses that are not covered by insurance, and are subject to your deductible. See IRS Publication 502 for more complete listing.
Couple of common considerations:
- Spousal catch-up contributions may not be made in an employee account. A separate HSA must be established by each individual for catch-up.
- Eligibility for a Health Savings Account and a High Deductible Health Plan may be different for a dependent child. A HDHP allows a child to maintain coverage to age 26. Eligibility of a child to contribute to a HSA is tied to dependent status from an income tax basis. A dependent child over the IRS dependent age limit may still be insured by an employee on a family HDHP. However, this individual may be able to establish their own HSA with a separate funding limit.
If you have additional questions concerning High Deductible Health Plans or Health Savings Accounts and how they could be used as part of your company's benefit package please call your Benefits, Inc. representative at 615-446-3303.
Grady Hester
Broker
Benefits, Inc.
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ACA Affordability Percentages Increased for 2015
The Internal Revenue Service (IRS) has increased required contribution percentages for 2015 that are used to determine whether coverage is affordable under the Affordable Care Act's employer shared responsibility provisions ("pay or play") and whether individuals are eligible for an affordability exemption from the individual shared responsibility provisions (the "individual mandate").
Pay or Play Affordability Rises to 9.56%
Starting in 2015, employers subject to pay or play may incur penalties if they do not offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents), and any full-time employee receives a premium tax credit for purchasing individual coverage on the Health Insurance Marketplace (Exchange). Employers with 100 or more full-time employees (including full-time equivalents or FTEs) are generally subject to the requirements for 2015, while those with 50 to 99 full-time employees (including FTEs) do not need to comply until 2016 if they meet certain criteria.
An employer-sponsored plan is considered "affordable" if the portion of the annual premium an employee must pay for self-only coverage does not exceed 9.5% of his or her household income. This percentage is increased to 9.56% for plan years beginning in 2015.
Individual Mandate Affordability Rises to 8.05%
The individual mandate requires every individual to have minimum essential health coverage for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return. One such exemption applies when the individual cannot afford coverage because the minimum amount he or she must pay for the premiums is more than 8% of the individual's household income. This percentage is increased to 8.05% for plan years beginning in 2015.
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IRS Responds to Conflicting Court Rulings Regarding ACA Tax Credits
The Internal Revenue Service (IRS) has released guidance for individuals receiving advance payments of the health insurance premium tax credit enacted by the Affordable Care Act. The information responds to conflicting federal appeals court opinions regarding the legality of such credits in federally-facilitated Health Insurance Exchanges (Marketplaces).
Conflicting Rulings
The District of Columbia Circuit Court of Appeals and the Fourth Circuit Court of Appeals reached conflicting outcomes after considering whether the premium tax credits are limited only to individuals who enroll in qualified health plans through state-based Health Insurance Exchanges. The DC Circuit ruled that the tax credits are limited to individuals who enroll in state-based Exchanges, while the Fourth Circuit upheld IRS rules that also include individuals enrolled in federally-facilitated Exchanges. A final resolution of the issue has not yet been reached.
IRS: Nothing Has Changed
According to the IRS, at this time, nothing has changed regarding the tax credits and the credits remain available. Whether enrolled in coverage through a federally-facilitated or state-based Health Insurance Exchange, individuals do not need to take any additional action or make any changes in response to the court rulings.
The IRS will provide any updates regarding this matter on IRS.gov/aca.
Visit our Premium Tax Credit for Individuals section for additional information.
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Proposed Rule Requires Certain Federal Contractors to Submit Equal Pay Report
The U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) has issued a proposed rule to require certain federal contractors and subcontractors with more than 100 employees to submit an annual Equal Pay Report.
The proposed rule generally requires covered entities to electronically submit the following information:
- The total number of workers within a specific EEO-1 job category by race, ethnicity and sex;
- Total W-2 wages, defined as the total individual W-2 wages for all workers in the job category by race, ethnicity and sex; and
- Total hours worked, defined as the number of hours worked by all employees in the job category by race, ethnicity and sex.
OFCCP is proposing a reporting window of January 1 to March 31st. The data in this report would be based on W-2 earnings for the prior calendar year for all employees included in the contractor's EEO-1 report
You may click here to read the proposed rule in its entirety. FAQs are also available.
Our Compliance Assistance for Federal Contractors page features the latest news updates affecting federal contractors and subcontractors.
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Social Security Requirements for Employee Name Changes
It is critical for each employee's name and Social Security Number (SSN)--as shown on his or her Social Security card--to match employers' payroll records and year-end Forms W-2, as the earnings information from the Form W-2 is the basis for determining an employee's future eligibility and benefit amount for certain Social Security programs. But what should employers and employees do when an employee changes his or her name?
Employers
If an employee legally changes his or her name because of marriage, divorce, court order or any other reason, employers should continue to use the old name and tell the employee to contact Social Security to obtain an updated card. Employers should change their payroll records only after the employee obtains an updated Social Security card with the new name. Using a new name before the employee updates Social Security's records may prevent the posting of earnings to the employee's earnings history.
Employers can use Social Security's free Social Security Number Verification Service (SSNVS) to match employees' names and SSNs at the time they are hired, or before the employer prepares and submits employees' Forms W-2.
Employees
Employees must take the following three steps in order to obtain a corrected Social Security card:
- Show the required documents, including proof of identity. See Learn What Documents You Need for more information. (Under the heading "Type of Card," select "Corrected" for a list of the documents needed);
- Fill out and print an Application for a Social Security Card; and
- Take or mail the application and documents to a local Social Security office.
An employee cannot apply for a card online. There is no charge for a Social Security card--this service is free. For complete instructions, please click here.
Our section on Social Security features helpful information regarding benefits and other issues.
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Proposed Rules to Expand ACA's Contraceptive Mandate Accommodation
Federal agencies have proposed rules soliciting comments on how to extend--to certain closely held for-profit entities--the same accommodation to the Affordable Care Act's (ACA) "contraceptive mandate" that is currently available to non-profit religious organizations. The contraceptive mandate generally requires non-grandfathered group health plans to provide coverage for contraceptive services without cost-sharing.
Guidance Issued in Response to Supreme Court Case
The rules come as a response to the June 2014 U.S. Supreme Court decision, which held that the contraceptive mandate violates the Religious Freedom Restoration Act as applied to closely held for-profit corporations with sincerely held religious beliefs against certain contraceptives.
Two Alternative Approaches Proposed
The proposed rules describe two alternative approaches for defining closely held for-profit entities:
- Under one approach, the entity could not be publicly traded, and ownership of the entity would be limited to a certain number of owners.
- Under an alternative approach, the entity could not be publicly traded, and a minimum percentage of ownership would be concentrated among a certain number of owners.
Under the proposal, these entities would not have to contract, arrange, pay or refer for contraceptive coverage to which they object on religious grounds. The rules solicit public comment on, among other things, how to define a qualifying entity.
Additional Notification Option for Non-Profit Religious Organizations
Interim final rules were also released, which establish another option for certain non-profit religious organizations to avail themselves of the accommodation to the contraceptive mandate. The interim final rules are effective as of August 27, 2014.
A Fact Sheet, which includes information on the contraceptive mandate, the proposed rules, and the interim final rules, is also available.
Be sure to visit our section on Preventive Services for additional information.
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About Benefits, Inc.
Benefits, Inc. is a full service employee benefits agency. However we also offer Business Insurance, Work Comp, and Risk Analysis. Contact us today at 615-446-3303 for more information. |
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