By Compliance on 10/31/2014 1:30 PM

The IRS has announced that the pre-tax maximum monthly elections for qualified transportation benefits will be the same for 2015 as they have been for 2014. The pre-tax maximum amounts will continue at $250 per month for parking benefits and $130 per month for transit benefits.

Under Code Section 132, the IRS allows an employer to offer a Transportation Plan to its employees. Through the plan, the employees have the right to elect or be paid for pre-tax parking and/or transit benefits. The employer can also provide employer paid bicycling benefits to those employees that do not elect parking and transit benefits.

By Compliance on 7/30/2014 12:07 PM

The IRS has published 4 draft forms to be used under the Play or Pay provisions of health care reform.

By Compliance on 7/22/2014 2:53 PM

In separate cases, two Circuit Courts or Appeal reached different decisions about the ability of individuals to be provided subsidies from federally facilitated exchanges. What’s next?

By Compliance on 7/21/2014 3:30 PM

IRS guidance provides steps to take for an individual seeking a tax refund on cost of coverage for a same sex spouse incurred prior to changes in federal tax law.

By Compliance on 7/11/2014 8:38 AM

Experts say the use of HRAs to comply with Health Care Reform and a new measure passed by the city will restrict an employer’s ability to use an HRA to satisfy the city’s health care spending law.

By Compliance on 7/9/2014 9:16 AM

Do you owe a PCOR fee for your group health plan or arrangement? If so, it’s due by July 31st and the IRS’ overview can assist with the calculation of the fee and payment.

By Compliance on 7/7/2014 11:33 AM
HHS is requiring health plans to obtain a unique Health Plan Identifier (HPID). Large plans need the HPID by November 2014. Does this apply to your health plan and are you ready?
By Compliance on 6/25/2014 1:51 PM

The Department of Labor has announced a proposed change in the application of FMLA for same-sex legally married spouses.

By Compliance on 6/10/2014 11:23 AM

Employers, brokers and insurers need to know that the Medicare Secondary Payer rules apply to same-sex spouses.

By Compliance on 6/9/2014 7:54 AM

Employers, insurers and brokers need to begin planning for how to provide benefits to same-sex couples based on the court’s ruling.

By Compliance on 5/27/2014 9:48 AM

Employers that owe the PCOR fee for their 2013 HRA or non-excepted health FSA can use the recently revised Form 720 for payment by July 31, 2014.

By Compliance on 5/19/2014 12:25 PM

The Q&As provide answers to key questions on how the Play-or-Pay provisions apply to large employers.

By Compliance on 5/14/2014 7:52 AM

HHS has provided an additional special enrollment opportunity for individuals eligible for or enrolled in COBRA to purchase coverage through the Health insurance Marketplace to July 1, 2014.

By Compliance on 5/8/2014 10:10 AM

Employers and COBRA administrators will need to revise notices that are currently being used.

By Compliance on 4/30/2014 3:29 PM

If you have a high deductible health plan (HDHP), you’ll want to understand the difference between the maximum out-of-pocket (OOP) limits set by the IRS for an HDHP versus the maximum OOP limits set by HHS for a compliant health plan for 2015 and beyond.

By Compliance on 4/28/2014 2:58 PM

IRS letter ruling provides further insight on the federal tax consequences for providing HRA coverage to non-dependent domestic partners.

By Employee Benefits Corporation News on 4/25/2014 10:52 AM
Starting in 2015, the IRS will raise the annual maximum contribution limit for Health Savings Accounts (HSA) and the minimum deductible and maximum out-of-pocket (OOP) limits for high deductible health plans (HDHP) to adjust for inflation. 
By Compliance on 4/23/2014 3:27 PM

You’ll want to know what the limits for 2015 are as you make decisions regarding health plan design and possible integration with an HRA.

By Compliance on 4/15/2014 3:53 PM

If you think the only ACA penalty you could pay is the Play-or-Pay penalty, you need to think twice!

By Compliance on 4/10/2014 8:32 AM

Are you aware of the steps that a cafeteria plan sponsor or TPA can take to correct health FSA reimbursement errors?

By Compliance on 3/31/2014 10:41 AM

The IRS' guidance provided for applying the rollover (carryover) of health FSA funds when HSAs are involved is welcome relief.

By Employee Benefits Corporation News on 3/28/2014 1:42 PM
The passing of the "Protecting Access to Medicare Act of 2014" through the House of Representatives on Thursday brought lawmakers one step closer to reforming certain provisions in the Affordable Care Act.
By Compliance on 3/27/2014 3:58 PM

This could be good news for small employers looking to keep health insurance premiums down.

By Compliance on 3/25/2014 7:24 AM

Insurers issuing health plans in states that do not recognize same-sex marriages will be required to offer coverage for same-sex spouses no later than as those plans renew in 2015, if the plan covers spouses and if the employer requests such coverage.

By Compliance on 3/13/2014 2:14 PM

To assist with long term planning, HHS has set the fee for 2015 at $44 per covered life.

By Compliance on 3/6/2014 3:21 PM

If an employee earns reportable wages in a state that does not recognize same sex marriage, the employer may still have to impute income for benefits provided for the same sex spouse for state tax purposes.

By Compliance on 3/5/2014 4:19 PM

Individuals and small employers are granted further relief to renew health plans that do not comply with Health Care Reform.

By Compliance on 2/28/2014 9:40 AM

Since pre-existing condition clauses are prohibited under health care reform, do you still need to provide a HIPAA certificate of creditable coverage for an individual that is losing coverage under your health plan?

By Compliance on 2/25/2014 9:14 AM

Do you fully understand the maximum 90-day waiting period rules?

By Compliance on 2/18/2014 9:28 AM

Are you aware of the excise tax consequence if you offer a health FSA but you don’t offer a medical plan?

By Compliance on 2/10/2014 4:13 PM

If you have more than 50 employees, you’ll want to be aware of the relief provided by the new guidance for 2015.

By Compliance on 1/20/2014 3:46 PM

Were you aware that a premium subsidy is available from federally-facilitated Marketplaces (Exchanges)?

By Compliance on 1/15/2014 9:42 AM

You’ll want to know how this guidance could impact the design of your medical plan.

By Compliance on 1/14/2014 1:48 PM

Were you aware of the HHS guidance exempting retiree-only plans from the fee?

By Compliance on 12/23/2013 4:17 PM

Have you made your list and checked it twice?

By Compliance on 12/17/2013 4:51 PM

You’ll be interested to know how the IRS guidance provides for tax-free benefits for same-sex spouses.

By Employee Benefits Corporation News on 12/10/2013 4:08 PM
The Internal Revenue Service just issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for medical purposes. Beginning on January 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) driven for medical purposes will be $0.235 per mile.
By Employee Benefits Corporation News on 12/9/2013 10:10 AM
With 2014 just around the corner, it’s time to take a look at your Flexible Spending Account (FSA) balance so you can take advantage of your entire election amount before it expires and the “Use-it or Lose-it” rule comes into play. Here are some last minute ways to use your FSA money before the end of the year.
By Employee Benefits Corporation News on 12/5/2013 12:09 PM
The December edition of Spotlight Newsletter is available now!
By Compliance on 12/2/2013 2:58 PM

Although the online enrollment for SHOP Plans is delayed to 2015 coverage, the tax credit for SHOP plan coverage is available for many small employers.

By Compliance on 11/18/2013 4:59 PM

Obama administration is held to its word that …if you like your health plan, you can keep it.

By Compliance on 11/12/2013 8:45 AM

Employers need to know if any employees are enrolled in non-excepted health FSAs to be fully compliant with the preventive services mandate of the ACA.

By Employee Benefits Corporation News on 11/7/2013 9:47 AM
As we wrote late last week, the US Department of the Treasury and the Internal Revenue Service changed the “Use-it or Lose-it” rule for Health Care Flexible Spending Accounts (FSAs). How will this change affect your participants?
By Compliance on 11/1/2013 1:55 PM

Make sure you know what the 2014 maximums are for these pre-tax benefit plans.

By Compliance on 10/31/2013 4:03 PM

Cafeteria Plans can allow a health FSA roll over of up to $500.

By Employee Benefits Corporation News on 10/31/2013 3:10 PM
The US Department of the Treasury (DOT) and Internal Revenue Service (IRS) have relaxed the rules for health flexible spending accounts (FSAs) today effectively changing the 30-year old “use-it or lose-it” rule to allow participants to carryover $500 to the next plan year. 
By Compliance on 10/31/2013 7:42 AM
Can an employer still reimburse employees for individual plan premiums through a health reimbursement arrangement (HRA) or Section 125 cafeteria plan?
By Compliance on 10/25/2013 10:31 AM

Renewing your health plan early? Don’t forget to amend your cafeteria plan.

By Compliance on 10/21/2013 11:46 AM
Planning to renew your health plan early? You should know the COBRA consequences.
By Compliance on 10/17/2013 1:30 PM

The Transitional Reinsurance Program Fee (TR fee) was not postponed due to the compromise deal to reopen the government.

By Compliance on 10/16/2013 10:45 AM

How will Section 132 Transportation Plans be affected if Congress does not pass a Transit Parity Act?

By Compliance on 10/8/2013 11:25 AM
Are you a small employer struggling with the cost of health insurance premiums?
By Employee Benefits Corporation News on 10/8/2013 7:23 AM
We knew there would be big differences in health insurance premium costs found in the online health insurance marketplaces across states throughout the nation, but new information suggests that there will also be big differences within the same state, at the county level. 
By Compliance on 9/19/2013 3:25 PM
Although earlier guidance left open to conjecture how some Health Care Reform provisions apply to health reimbursement arrangements (HRAs) and flexible spending arrangements (FSAs), IRS Notice 2013-54 clearly indicated that FSAs are not subject to the annual or lifetime limit prohibition but HRAs that are not integrated with an employer’s group medical plan are subject to the limit unless the HRA covers only excepted HIPAA benefits, such as dental- or vision-only expenses, or is an HRA that covers only inactive employees, such as a retiree-only HRA.
By Compliance on 9/12/2013 12:22 PM

Curious about how the Supreme Court’s decision on same-sex marriage affects federal taxation?

By Employee Benefits Corporation News on 9/10/2013 2:53 PM
Earlier this summer, the Supreme Court struck down Section 3 of the Defense of Marriage Act (DOMA) which had defined “marriage” for federal purposes as a legal union between one man and one woman. The term “spouse” was considered to mean an opposite-sex husband or wife.

So what does this mean for same-sex couples when it comes to taxes?
By Compliance on 9/9/2013 12:12 PM
Regulators side on "state of celebration."
By Compliance on 8/19/2013 9:31 AM

Curious about how changes in DOMA could affect your benefit plans?

By Compliance on 8/6/2013 10:02 AM

Did you know that small employers in Wisconsin can purchase insurance plans with deductibles that exceed the ACA cap of $2,000 for single and $4,000 for family?

By Compliance on 7/31/2013 11:28 AM
If you receive an MLR Rebate from your health plan insurer, do you know what to do with it?
By Compliance on 7/26/2013 9:07 AM

Before renewing your health plan early, you may want to think again!

By Compliance on 7/3/2013 7:45 AM
Obama administration won't enforce Play-or-Pay provision until 2015.
By Employee Benefits Corporation News on 6/28/2013 9:47 AM
In a landmark victory to the gay rights movement, a divided Supreme Court handed down two important decisions this past Wednesday. Section 3 of the Defense of Marriage Act (DOMA) was overturned in a 5-4 decision. This means the federal government must provide the same benefits to married gay couples as to married heterosexual couples. In the second case, the appeal on Proposition 8 was dismissed, effectively rejecting the Californian ban on same-sex marriage altogether, in another 5-4 ruling. 
By Compliance on 6/26/2013 12:23 PM
What impact will this have on benefit plans?
By Compliance on 6/13/2013 1:05 PM
Did you know that employees who believe they have been retaliated against due to their activity regarding Health care Reform can blow the whistle on their employers?
By Compliance on 6/11/2013 8:37 AM
If you owe the PCOR fee this is good news!
By Compliance on 6/6/2013 7:44 AM
If your health plan, HRA or Health Care FSA is subject to the PCOR fee, you need to use the the revised Form 720.
By Compliance on 5/24/2013 9:05 AM

Two more bills introduced in Congress that would affect how HSAs and health FSAs work.

By Compliance on 5/20/2013 11:56 AM
Did you know that the House and Senate now both have bills to consider eliminating the forfeiture of unused FSA dollars?
By Compliance on 5/15/2013 9:37 AM

What’s in a name? Did you know the government now refers to the public Exchange as the Health Insurance Marketplace?

By Compliance on 5/10/2013 12:38 PM
The Department of Labor (DOL) issued Technical Release 2013-02 on May 8th which provides the Model Notice to Employees of Coverage Options related to the Health Insurance Marketplace (referred to in the statute as the Exchange) as well as a revision to the COBRA Model Notice of Election to include information about the coverage options, in addition to COBRA, that may be available through a Health Insurance Marketplace.
By Compliance on 5/7/2013 10:19 AM
The inflation adjusted limits for qualified HDHPs and contributions into an HSA that were announced for calendar year 2014 will affect health plan designs and communication to employees regarding their HSAs.
By Compliance on 5/3/2013 11:15 AM
Mistakes in providing proper COBRA notices can be costly.
By Compliance on 4/29/2013 2:29 PM
New SBC needed for 2014 to reflect key Health Care Reform provisions.
By Compliance on 4/23/2013 11:58 AM
The Bill would exempt Health FSAs from the cafeteria plan requirement that unused funds be forfeited to the employer.
By Compliance on 4/17/2013 7:41 AM
Are you aware that non-calendar year cafeteria plans have been provided transition relief for coverage change elections due to the Exchanges?
By Compliance on 1/17/2013 2:25 PM
Generally, once an election is made and the plan year has begun, a permitted election change event must occur to allow a participant to change or revoke the election. However, our Plan Document allows the Administrator to change employee elections if they determine that it is necessary in order to pass Nondiscrimination Testing.  This employee election change becomes more difficult the closer to the end of the plan year it is made, so for year-end tests, it generally becomes more of a burden to employ this option than it is worth. Final Proposed Treasury Regulation § 1.125–2(a) provides the rules related to making and revoking pre-tax elections. Essentially, an election for the new plan year must be made before the plan year begins ((a)(2)(ii)). Once the plan year has begun, an election can be changed if a permitted election event occurs ((a)(4)).

However, under IRS guidance, the plan administrator (the employer) can allow a change in the election, outside of a permitted election change event occurring,...
By Compliance on 1/14/2013 8:38 AM
Good news!  The American Taxpayer Relief Act (ATRA) provides parity for 2013 between qualified parking and transit passes.  Thus, for 2013, the monthly maximum pre-tax transportation benefits allowable are: $245 for qualified parking benefits and $245 for transit passes.
By Compliance on 12/10/2012 12:46 PM
Last Friday, the Supreme Court decided to hear two of the ten petitions pending before it on the issue of same-sex marriage, one of which impacts federal benefits.

First, Proposition 8.  In 2008, Californians went to the polls and approved a ban on same-sex marriage after the state Supreme Court ruled that same-sex couples have a constitutional right to marry.  The ban amended the state’s constitution to provide that “only a marriage between a man and a woman is valid or recognized in California.” 

The Supreme Court will hear arguments on “whether the Equal Protection Clause of Fourteenth Amendment prohibits the State of California from defining marriage as the union of a man and a woman.”  Generally, cases are brought to court under this clause when a state grants a certain class of individuals the right to engage in an activity, yet denies other individuals of a different class that same right.  Currently, 30 states have written same-sex marriage bans into their constitutions.  Since voters...
By Compliance on 12/6/2012 1:23 PM

The 2013 medical mileage rate has been released.  In 2013, medical mileage is reimbursable at a rate of 24 cents per mile.  This is a penny increase from the 2012 medical mileage rate of 23 cents per mile.

By Employee Benefits Corporation News on 11/29/2012 11:37 AM
The Internal Revenue Service recently issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for medical purposes. Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) driven for medical purposes will be 24 cents per mile.
By Compliance on 11/7/2012 2:11 PM
The 2013 monthly maximum pre-tax transportation benefits are unchanged from 2012: $125 for transit benefits; $240 for parking benefits; and $20 for bicycling benefits multiplied by the number of qualified commuting months in the year. Internal Revenue Code Section 132 provides three separate monthly pre-tax transportation benefit amounts that are subject to change each tax year. For 2013, the monthly pre-tax maximum that applies to:

Transit benefits, on a combined basis, for commuter highway vehicle (Vanpool) and/or transit passes (e.g., high-speed rail, ferry, bus, subway, etc.) is $125; Parking benefits for expenses to park the employee’s car at a location from which the employee takes transportation to work or at a location near the employee’s workplace – either cash reimbursement, parking or parking employer provided -  is $240; and Bicycling benefits – for expenses related to the purchase, maintenance of or accessories for a bicycle is $25 for any month that transit and parking...
By Employee Benefits Corporation News on 9/20/2012 10:07 AM

Consumer-driven health plans (CDHPs) have surpassed health maintenance organizations (HMOs) to become the second most common plan design offered by U.S. employers, according to new survey findings from Aon Hewitt.

By Compliance on 9/14/2012 1:32 PM
Guest Contributor: Peter Antonie The issue: Is an HSA the same as a high deductible health plan (HDHP)?

The short answer: An HSA is an individual account established to receive contributions to disburse as reimbursement of future medical care expenses. An HDHP is a health plan that satisfies specific IRS design requirements that allows the individual to make or receive HSA contributions if other eligibility criteria are also satisfied. An HSA is not an HDHP and an HDHP is not an HSA. They are separate benefits.

The compliance answer: IRS Code section 223 provides the rules for health savings accounts (HSAs), including the criteria that an individual must satisfy to make or receive HSA contributions. An individual is eligible to make or receive contributions for a month if he/she satisfies the following criteria on the first day of that month:

1.      Cannot be claimed as another person’s tax dependent

2.      Is not enrolled in any Part of Medicare (not entitled to Medicare)

By Compliance on 8/24/2012 12:13 PM
Guest Contributor: Peter Antonie The issue: What happens when an employee or ex-spouse does not timely notify their employer or us that their divorce has been finalized? The short answer: Under COBRA, a covered employee or qualified beneficiary (ex-spouse) is responsible for notifying their plan administrator within 60 days of a divorce. If so, COBRA continuation is offered to the ex-spouse for 36 months with the qualifying event date being the date of the divorce – even if the ex-spouse was dropped from the employee’s coverage in anticipation of the divorce. When notice is made late (not within 60 days), the ex-spouse is not offered COBRA and is sent a notice of unavailability explaining that COBRA continuation is not available due to the late notice of the divorce. The compliance answer: Federal COBRA regulation separates qualifying events into two categories – those for which the employer is held accountable for making timely notice (e.g., termination of employment or death of the employee)...
By Compliance on 7/13/2012 12:46 PM
COBRA requires plans to determine the applicable premium that will be charged to participants for COBRA coverage.  All plans must calculate and fix the applicable premium (or premiums) in advance for a 12-month period called the “determination period.”  Premiums can be changed during the determination period in very limited circumstances.  

Internal Revenue Code (IRC) §4980B(f)(4)(C) governs COBRA’s determination period and states “the determination of any applicable premium shall be made for a period of 12 months and shall be made before the beginning of that period.”  While the IRC, part of the United States Code, contains laws – what you’re supposed to do, the Code of Federal Regulations contains regulations – how you’re supposed to do it. 

Treasury Regulation §54.4980B-8 (part of the Code of Federal Regulations) builds upon IRC §4980B by spelling out a few basics of the 12-month determination period.  Under Treasury Regulation §54.4980B-8, Q/A-2(a), “the applicable premium for each determination period must be computed and fixed by a group health plan before the determination period begins.  A determination period is any 12-month period selected by the plan, but it must be applied consistently from year to year.  The determination period is a single period for any benefit package. Thus, each qualified beneficiary does not have a separate determination period beginning on the date (or anniversaries of the date) that COBRA continuation coverage begins for that qualified beneficiary.”  ...
By Compliance on 7/6/2012 11:54 AM
Guest Contributor: Peter Antonie How does an active employee’s Medicare entitlement prior to retirement affect the COBRA continuation period for the retiree and any family members? Essentially, when the Medicare entitled employee retires, the retiree is offered COBRA for an 18-month period. The retiree’s spouse and any dependent children are offered COBRA for either 18-months from the retirement loss date or 36-months counted from the Medicare entitlement date whichever produces the longer COBRA period after retirement of the employee. Treasury Regulation §54.4980B-4, Q/A – 1(a) provides six triggering events that require an offer of COBRA if that triggering event causes loss of the group health plan coverage for a qualified beneficiary (QB). Termination of employment is one of the triggering events and allows for an 18-month COBRA continuation period from the loss of coverage date. Consequently, the retiree is offered COBRA for 18-months.

Before COBRA was enacted in the mid-1980s, employees...
By Employee Benefits Corporation News on 3/14/2012 9:39 AM

Employers, employees, insurers and the courts have wrestled with this topic for years. At issue is whether various voluntary plans are subject to ERISA and COBRA; or whether the plans are only subject to state insurance law. Insurance plans that employees purchase on their own and pay for outside of work are clearly voluntary plans. Once the employer enters the picture, however, the issue gets murkier. Even if an employee pays the entire cost of an insurance plan through the employer, the plan may still not be voluntary.

By Employee Benefits Corporation News on 3/8/2012 11:27 AM

According to a new employer survey, most U.S. companies plan to increase the dollar value of the incentives they offer employees to participate in health improvement programs in 2012. The survey found that nearly three-fourths of companies (73%) use incentives to engage employees in health improvement programs. In 2011, the average incentive value was $460, up from an average of $430 in 2010, and nearly twice as much as the 2009 average, $260. And that $460 figure is expected to climb in 2012 for the majority of employers.

By Compliance on 2/23/2012 9:00 AM

The IRS lowered the Medical Mileage rate from 23.5 cents per mile to 23 cents per mile, effective January 1, 2012 to December 31, 2012.

Participants can use their BESTflex Plan – Health Care FSA to be reimbursed for mileage costs associated with traveling to and from doctor’s visits, dental appointments, eye exams and to pick up prescription medications as long as the primary purpose of travel is for and essential to obtaining medical care.

By Compliance on 2/23/2012 8:57 AM
There are four types of leaves of absences: (i) Paid Leave of Absence; (ii) Unpaid Family and Medical Leave Act (FMLA) Leave of Absence; (iii) Non-FMLA Unpaid Leave of Absence; and (iv) Uniformed Services Employment and Reemployment Rights Act (USERRA) Unpaid Leave of Absence. Each type of leave is subject to different regulations and will affect a participant’s benefits differently.

Paid Leaves of Absence are easy. A participant on a Paid Leave of Absence, regardless of whether the leave is covered by FMLA, is regarded as being employed throughout the leave because they are still receiving a paycheck. Thus, because the participant has not lost eligibility for the Plan, the participant may NOT make any changes to their cafeteria plan election amounts.

Enacted in 1993, FMLA was one of the first major pieces of legislation that President Bill Clinton signed into law. FMLA protects individuals from losing their jobs and benefits while taking leave from work for their own serious medical condition...
By Compliance on 2/23/2012 8:55 AM
Participants can make mid-year election changes to their Health Care FSA due to a status change for the employee, their spouse or dependents. See Treas. Reg. §1.125-4. When a status change event occurs, such as a spouse gaining or losing employment or eligibility for their employer’s plan, our participant is allowed to make changes to their Health Care FSA that are on account of and consistent with the event.

When a participant’s spouse gains employment or becomes eligible for benefits, our participant can MAINTAIN, DECREASE, or DROP their Health Care FSA election – all of which would be consistent with their spouse gaining employment or becoming eligible for benefits.

When a participant’s spouse loses employment or loses eligibility for their employer’s plans, our participant can MAINTAIN or INCREASE their current election or ELECT a Health Care FSA – all of which would be consistent with their spouse losing employment or losing eligibility for benefits.

By Compliance on 2/23/2012 8:53 AM
2011 certainly kept us busy with health care reform taking up the bulk of our efforts. As we kickoff 2012, I thought I would highlight some of the upcoming issues affecting the benefits world.

Supreme Court & Health Care Reform – The Supreme Court will hear challenges to health care reform just as the presidential election swings into high gear. Expect oral arguments in March 2012 and a possible decision in June. W-2 Reporting – Beginning with tax year 2012, employers who file more than 250 Form W-2s must report the aggregate cost of applicable employer-sponsored health coverage on W-2s provided to employees (using Box 12 and code DD). Employers who file less than 250 Form W-2s get a pass until the IRS issues further guidance. See IRS Notice 2012-9 ( $2,500 Limit on Health Care FSA Salary Reductions – Although the limit is effective beginning in tax year 2013, non-calendar year Health...
By Employee Benefits Corporation News on 2/9/2012 11:15 AM

This week, the United States Senate Committee on Finance approved legislation that would reverse cuts to the monthly pre-tax transit benefits available to commuters who use public transportation and vanpools. If approved by Congress, the bill will restore the monthly amount that can be set aside for public transportation expenses to $240 a month, rather than $125, saving commuters annual costs of up to an additional $550 this year.

By Compliance on 12/7/2011 9:55 AM
Q.  Employer: We’ve had a question come up a couple of times at our meetings this week regarding dependent care.  One of the points on our slides is that the employee and spouse must either be working or full time students to be able to use the dependent care account.  Are there a minimum number of hours that they need to be working? 

A.  No.  Under the regulations, there is not a minimum hourly requirement that an employee and spouse need to be working to be eligible for reimbursement from the Dependent Care FSA. 

Dependent care expenses must be incurred in order to allow an employee and spouse to work or look for work, hat is, “to be gainfully employed.”  See Code §§129(e) and 21(b)(2).  Work can on a full-time or part-time basis.  The regulation considers one hour of work in a day as a day of work.

So, commonly, a part time employee works each day, but not the full day (e.g., 4 hours per day). If the day care provider charges for a full day, the participant can claim the entire expense,...
By Compliance on 12/2/2011 12:32 PM
The issue

With open enrollment season upon us, we’ve received several questions regarding anticipatory elections.  We also receive calls throughout the year on the related topic of election changes based on an anticipatory election that did not come to fruition. 

The short answer

A certain amount of risk is inherent and unavoidable with elections for the Health Care FSA and Dependent Care FSA because of the irrevocability rule and the use or lose rule.  In order to balance the risk associated with anticipatory elections, participants may consider a number of options. 

The compliance answer

All elections under a cafeteria plan are irrevocable during the period of coverage.  See Prop. Treas. Reg. §1.125-2(a).  The irrevocability rule is fundamental to the qualified status of a cafeteria plan and therefore, its tax-advantaged status. 

The use-or-lose rule can be found in the 2007 proposed cafeteria plan regulations, but is derived from Code §125.  See Prop. Treas. Reg....
By Compliance on 11/11/2011 11:00 AM
On Friday November 4, 2011 Wisconsin Governor Scott Walker signed into law legislation that adopts the federal income tax treatment of employer-provided health coverage of adult children who have not attained age 27 as of the end of the tax year for Wisconsin state income tax purposes.   Prior to this recent change, Wisconsin was the only remaining state that had not adopted the federal income tax treatment.  The change is effective retroactive to January 1, 2011. 

Federal Income Tax Treatment

Effective March 30, 2010, under health care reform, the value of employer-provided health benefits for employee’s dependents that have not attained age 27 as of the end of the tax year is excluded from the employee’s gross income. 

What does this mean for administration of the BESTflex Plan and EBC HRA?

·         Reimbursement from a Health Care FSA or EBC HRA for expenses incurred by an eligible child, are excluded from the employee’s gross income for Wisconsin state income tax purposes, retroactive...
By Compliance on 10/31/2011 12:44 PM
Remember that a cafeteria plan is a plan that offers employees a choice between taxable benefits and qualified benefits.  Only qualified nontaxable benefits can be offered under a cafeteria plan. IRC §125(f)(1) defines the types of benefits that can be offered under a cafeteria plan.  Under Code §125(f)(1) a qualified benefit is “any benefit which . . . is not includable in the gross income of the employee by any reason of an express provision of this chapter (other than section 106(b) [medical savings accounts], 117 [qualified scholarships], 127 [ educational assistance programs] or 132 [fringe benefit programs])."

What does “not includable in the gross income by any reason of an express provision of this chapter” mean?  “This chapter” means Chapter 1 (addressing normal taxes and surcharges) of Subtitle A (income taxes) of the Code.  “Express provision[s] of this chapter” refers to certain items, excludable from gross income, found in Code §§101 through 138. 

Thus, qualified benefits under a cafeteria plan include the following:

By Compliance on 10/21/2011 10:07 AM
The Uniform Coverage Rule requires that “the maximum amount of reimbursement from a health FSA must be available at all times during the period of coverage (properly reduced as of any particular time for prior reimbursements for the same period of coverage).”  Prop. Treas. Reg. §1.125-5(d)(1).  Under the regulations, the maximum amount of reimbursement at any particular time during the coverage period cannot relate to the amount that has been contributed to the FSA at any particular time prior to the end of the plan year.  Thus, once the employee makes an election, the employee has uniform coverage of the entire amount, including the employer’s contribution as well. 

Essentially, the Uniform Coverage Rule causes the health FSA to operate like insurance, with the employer bearing risk similar to an insurance company that provides full coverage for a premium.  However, sometimes employers try to reduce their risk by limiting reimbursements to the amount of contribution or requiring repayment of excess reimbursements...
By Compliance on 10/3/2011 8:26 AM
The IRS released their project plan for 2011-2012.  The plan includes items that the IRS and Treasury would like to address.  Here are some of the items in the plan that impact employee benefits:

Finalize the 2007 proposed cafeteria plan regulations under §125;

 Guidance on the $2,500 annual limit on salary reduction contributions to cafeteria plan health flexible spending arrangements under §125(i);

Guidance under §132(f) on the use of smart cards, debit cards and credit cards in providing qualified transportation fringe benefits;

Address comparable contributions rules for HSAs, especially those relating to the cafeteria plan exception;

Regulations on the Medicare Tax for 2013.

By Compliance on 9/9/2011 1:19 PM
According to Investment News, health savings account (HSA) balances and the number of HSAs jumped this past summer as employers continued to implement high deductible health plans (HDHPs).  Health care reform and the lagging economy seem to be impacting interest in HDHPs and consequently, HSAs.  In light of such interest, a quick review of HSAs and a comparison to other common benefit offerings – health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs) – is in order. 

An HSA is a tax favored medical savings account that can be contributed to by, or on behalf of eligible individuals who are covered by certain HDHPs.  The account may reimburse certain medical expenses of eligible individuals, their spouses and tax dependents.  Because the individual owns their HSA and the account is not tied to an employer or to employment status, the account is transferrable and amounts will not be forfeited. 

Eligible individuals must meet several criteria.  For any month that an individual...
By Employee Benefits Corporation News on 8/31/2011 4:44 PM

September 1, 2011, not only marks the beginning of a new month, but the end of the federal COBRA subsidy, which covered 65 percent of COBRA premiums for eligible individuals.

By Employee Benefits Corporation News on 8/23/2011 3:38 PM
The IRS has announced that, effective July 1, 2011, the medical mileage reimbursement rate will increase to 23.5 cents per mile. This is a 4.5-cent increase from the rate the IRS originally set for 2011 and stems from recent rises in gas prices.
By Employee Benefits Corporation News on 8/19/2011 12:00 PM
Health Savings Accounts were created in 2003, under the Medicare Prescription Drug, Improvement and Modernization Act. Since then, they've competed with Health Reimbursement Arrangements as the go-to spending account option for employers that implement a high-deductible health plan. In part one of our series on Health Savings Accounts, we explain how the accounts work and who can participate.

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