The IRS released Notice 2014-55 which provides additional permitted election changes for health coverage under Code Section 125 cafeteria plans. This notice provides two specific situations in which a cafeteria plan participant may wish to revoke, during a plan year, the employee's election for employer-sponsored health coverage under the cafeteria plan in order to purchase a Qualified Health Plan through a Marketplace.
Showing posts with label IRS. Show all posts
Showing posts with label IRS. Show all posts
Monday, September 22, 2014
Tuesday, August 5, 2014
IRS Increases ACA's Affordability Percentages for 2015
On July 24, 2014, the IRS released Revenue Procedure 2014-37 to index the Affordable Care Act's (ACA) affordability percentages for 2015 under the employer mandate. The IRS also adjusted upward the income level under which employees are exempt from the ACA's individual mandate.
Employer Mandate Adjustment
An applicable large employer's health coverage will be considered affordable for plan Years beginning in 2015 under employer mandate if the employee's required contribution to the plan does not exceed 9.56 percent of the employee's household income for the year, up from 9.5 percent. This increase also applies to the three safe harbors that the IRS created in the regulations.
The reason for the increase is that the employer mandate was originally meant to take effect in 2014 but was subsequently delayed until 2015 or 2016, depending on employer size.
Individual Mandate Adjustment
Revenue Procedure 2014-37 also adjusts the affordability percentage for the exemption from the individual mandate for individuals who lack access to affordable minimum essential coverage. For plan years beginning in 2015, coverage is unaffordable for purposes of the individual mandate if it exceeds 8.05% of household income (as opposed to 8% originally).
This change stems from the requirement that the IRS must adjust the affordability percentage to reflect the excess of the rate of premium growth over the rate of income growth for the preceding calendar year, with each subsequent plan year being adjust accordingly.
For a copy of Revenue Procedure 2014-37, please click on the link below:
http://www.irs.gov/pub/irs-drop/rp-14-37.pdf
Employer Mandate Adjustment
An applicable large employer's health coverage will be considered affordable for plan Years beginning in 2015 under employer mandate if the employee's required contribution to the plan does not exceed 9.56 percent of the employee's household income for the year, up from 9.5 percent. This increase also applies to the three safe harbors that the IRS created in the regulations.
The reason for the increase is that the employer mandate was originally meant to take effect in 2014 but was subsequently delayed until 2015 or 2016, depending on employer size.
Individual Mandate Adjustment
Revenue Procedure 2014-37 also adjusts the affordability percentage for the exemption from the individual mandate for individuals who lack access to affordable minimum essential coverage. For plan years beginning in 2015, coverage is unaffordable for purposes of the individual mandate if it exceeds 8.05% of household income (as opposed to 8% originally).
This change stems from the requirement that the IRS must adjust the affordability percentage to reflect the excess of the rate of premium growth over the rate of income growth for the preceding calendar year, with each subsequent plan year being adjust accordingly.
For a copy of Revenue Procedure 2014-37, please click on the link below:
http://www.irs.gov/pub/irs-drop/rp-14-37.pdf
Monday, June 30, 2014
Health Reform Questions - Reimbursing Individual Market Premiums
Question: Can an employer reimburse its employees for premiums on a pre-tax basis for purchasing individual market medical coverage?
Answer: No. In IRS Notice 2013-54 & Technical Release 2013-3, the IRS and DOL prohibit the reimbursement of premiums for individual medical policies from health reimbursement arrangements and premium only plans.
Recently, the IRS issued a Frequently Asked Questions (FAQ) list that reiterates earlier guidance disallowing pre-tax employer reimbursements for employee health care premiums. The FAQ also calls attention to the $100 per day, per employee penalty for non-compliance.
Answer: No. In IRS Notice 2013-54 & Technical Release 2013-3, the IRS and DOL prohibit the reimbursement of premiums for individual medical policies from health reimbursement arrangements and premium only plans.
Recently, the IRS issued a Frequently Asked Questions (FAQ) list that reiterates earlier guidance disallowing pre-tax employer reimbursements for employee health care premiums. The FAQ also calls attention to the $100 per day, per employee penalty for non-compliance.
Monday, May 5, 2014
Administration announces proposal to clarify availability of Health Insurance Marketplace coverage to workers eligible for COBRA
On May 2, 2014, the Obama administration announced updates to model notices informing workers of their eligibility to continue health-care coverage through the Consolidated Omnibus Budget Reconciliation Act. The updates make it clear to workers that if they are eligible for COBRA continuation coverage when leaving a job, they may choose to instead purchase coverage through the Health Insurance Marketplace.
“In many cases, workers eligible for COBRA continuation coverage can save significant sums of money by instead purchasing health insurance through the Marketplace,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. “COBRA continues to play an important role in helping workers and families maintain coverage after a job loss, and it is important that workers know that in some cases there is a Marketplace option as well.”
“In many cases, workers eligible for COBRA continuation coverage can save significant sums of money by instead purchasing health insurance through the Marketplace,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. “COBRA continues to play an important role in helping workers and families maintain coverage after a job loss, and it is important that workers know that in some cases there is a Marketplace option as well.”
Wednesday, February 12, 2014
Employer Mandate Delayed for some Employers
On February 10th, 2014, the Obama administration announced that it would postpone enforcement of a federal requirement for medium-size employers to provide health insurance to employees and allow larger employers more flexibility in how they provide coverage.
The "employer mandate," (also known as the “Play or Pay” requirements) which was originally supposed to take effect last month, had already been delayed to January 1st, 2015, and now the administration says that employers with 50 to 99 employees will not have to comply until 2016.
In addition, the requirement would be put into effect gradually for employers with 100 or more employees. Employers in this category will need to offer coverage to 70 percent of full-time employees in 2015 and 95 percent in 2016 and later years, or they will be subject to tax penalties.
Please review the attached Health Care Reform Hot Topic for more information.
Highlights:
The "employer mandate," (also known as the “Play or Pay” requirements) which was originally supposed to take effect last month, had already been delayed to January 1st, 2015, and now the administration says that employers with 50 to 99 employees will not have to comply until 2016.
In addition, the requirement would be put into effect gradually for employers with 100 or more employees. Employers in this category will need to offer coverage to 70 percent of full-time employees in 2015 and 95 percent in 2016 and later years, or they will be subject to tax penalties.
Please review the attached Health Care Reform Hot Topic for more information.
Highlights:
- No mandate for small group employers (2-50) is scheduled at this time.
- Compliance for medium-sized group employers (50-99) is delayed until 2016.
- Compliance for large-sized group employers (100+) is still delayed until 2015.
- Certain 2014 transition relief is extended, including relief for non-calendar year plans.
- The requirement to offer coverage to 95 percent of full-time employees will be phased in over two years.
- Full-time status is clarified for certain groups.
Friday, January 24, 2014
IRS to propose rules clarifying ACA penalties
The Internal Revenue Service has drafted a collection of proposed regulations that could determine whether some taxpayers will owe fines for failing to get health coverage.
The individual mandate section in the Patient Protection and Affordable Care Act requires some taxpayers who fail to own a minimum amount of major medical coverage, or “minimum essential coverage,” to pay the fines.
Some sections in the proposed IRS regulations will exempt some people in limited-benefit government programs from paying the fines.
Those affected include state programs for the medically needy, Medicaid pilot programs, and two programs that give people some access to military health care services.
The IRS assumes many enrollees are confused.
The individual mandate section in the Patient Protection and Affordable Care Act requires some taxpayers who fail to own a minimum amount of major medical coverage, or “minimum essential coverage,” to pay the fines.
Some sections in the proposed IRS regulations will exempt some people in limited-benefit government programs from paying the fines.
Those affected include state programs for the medically needy, Medicaid pilot programs, and two programs that give people some access to military health care services.
The IRS assumes many enrollees are confused.
Monday, January 20, 2014
Rules on equal coverage delayed
WASHINGTON (Reuters) - The Obama administration is delaying enforcement of a provision of the new healthcare law that prohibits employers from providing better health benefits to top executives than to other employees, the New York Times reported on Saturday.
Tax officials said they would not enforce the provision this year because they had yet to issue regulations for employers to follow, according to the Times.
Internal Revenue Service spokesman Bruce Friedland said employers would not have to comply until the agency issued regulations or other guidance, the newspaper reported.
The IRS was not immediately available to confirm the Times story.
The rollout of the Affordable Care Act, known as Obamacare, has been marked by a number of delays in implementing certain parts of the law. In November, the administration announced a one-year delay in online insurance enrollment for small businesses.
Tax officials said they would not enforce the provision this year because they had yet to issue regulations for employers to follow, according to the Times.
Internal Revenue Service spokesman Bruce Friedland said employers would not have to comply until the agency issued regulations or other guidance, the newspaper reported.
The IRS was not immediately available to confirm the Times story.
The rollout of the Affordable Care Act, known as Obamacare, has been marked by a number of delays in implementing certain parts of the law. In November, the administration announced a one-year delay in online insurance enrollment for small businesses.
Friday, November 1, 2013
Treasury modifies "use-it-or-lose-it" provision to allow a limited rollover of Health FSA funds
On 10/31/2013, the Department of Treasury issued a press release and informational fact sheet announcing a major policy change relating to flexible spending accounts (FSAs) that has many positive implications for all FSA employers and participants. The Department of Treasury has modified its FSA “use-it-or-lose-it” provision to allow a limited rollover of FSA funds (up to $500).
Details are as follows:
Monday, September 30, 2013
Animation Explains Changes Coming for Americans Under the Affordable Care Act
2014 is coming--are you ready for Obamacare? Join the YouToons as they walk through the basic changes in the way Americans will get health coverage and what it will cost starting in 2014, when major parts of the Affordable Care Act, also known as "Obamacare," go into effect.
Courtesy: The Henry J. Kaiser Family Foundation.
Friday, September 27, 2013
Explanation of Guidance on HRAs, Health FSA- Clarification?
It appears that the pre-tax reimbursement of individual premiums under a premium only plan (POP) (under Code Section 125) is directly at odds with the prohibition against any annual limit on the dollar amount of essential health benefits under the Affordable Care Act (Act).
On Friday, September 13, the Departments of Labor, Treasury and Health and Human Services provided guidance on the application of certain provisions of the Affordable Care Act (Act) on health reimbursement arrangements (HRAs), certain health flexible spending arrangements (Health FSAs) and employee assistance programs (EAPs). It was clear from the initial reading of the guidance that individual premiums could not reimbursed by HRAs. In a further reading of the guidance, there appears to be more serious consequences.
On Friday, September 13, the Departments of Labor, Treasury and Health and Human Services provided guidance on the application of certain provisions of the Affordable Care Act (Act) on health reimbursement arrangements (HRAs), certain health flexible spending arrangements (Health FSAs) and employee assistance programs (EAPs). It was clear from the initial reading of the guidance that individual premiums could not reimbursed by HRAs. In a further reading of the guidance, there appears to be more serious consequences.
Monday, September 16, 2013
DOL Releases Guidance on HRAs, Health FSAs and Certain Other Employer Healthcare Arrangement Options
On Friday, September 13, 2013, the DOL and the IRS issued guidance on how the annual limit and preventive services rules in the Affordable Care Act (ACA) apply to HRAs.
IRS Notice 2013-54 and DOL Technical Release 2013-03 provided much-awaited answers to questions about what types of HRAs comply with these ACA rules. The guidance also addressed Employee Assistance Programs (EAPs). The Notice and Technical Release mirror each other. The guidance applies to plan years starting on or after January 1, 2014. Additional regulatory guidance will be forthcoming.
IRS Notice 2013-54 and DOL Technical Release 2013-03 provided much-awaited answers to questions about what types of HRAs comply with these ACA rules. The guidance also addressed Employee Assistance Programs (EAPs). The Notice and Technical Release mirror each other. The guidance applies to plan years starting on or after January 1, 2014. Additional regulatory guidance will be forthcoming.
Tuesday, August 27, 2013
Health Care Reform & Group Imposed Waiting Periods for group insurance coverage
The Patient Protection and Affordable Care Act (PPACA) provides that for plan years beginning on or after Jan. 1, 2014, a group health plan or health insurance issuer offering group health insurance coverage shall not apply any waiting period that exceeds 90 days. A waiting period is defined by the Public Health Service Act as a “period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective.”
An employer whose waiting period exceeds 90 days may be subject to penalties under Code 4980H, beginning in 2014, for every month the employer does not offer coverage if any employee obtains coverage through an exchange and is eligible for a premium tax subsidy.
Some employer plans provide that employees will become eligible for insurance coverage on the first of the month after 90 days (or longer). IRS guidance indicates that this plan design is not acceptable as it would typically exceed the 90-day limit. In these circumstances, employers would need to change their eligibility to the first of the month after 60 days or any other shorter waiting period that does not exceed 90 days to avoid penalties.
An employer whose waiting period exceeds 90 days may be subject to penalties under Code 4980H, beginning in 2014, for every month the employer does not offer coverage if any employee obtains coverage through an exchange and is eligible for a premium tax subsidy.
Some employer plans provide that employees will become eligible for insurance coverage on the first of the month after 90 days (or longer). IRS guidance indicates that this plan design is not acceptable as it would typically exceed the 90-day limit. In these circumstances, employers would need to change their eligibility to the first of the month after 60 days or any other shorter waiting period that does not exceed 90 days to avoid penalties.
Thursday, July 25, 2013
PCORI Fees & HRA's
Plan sponsors with calendar-year HRA plans must remit PCORI fees applicable for the 2012 plan year by July 31, 2013.
For the July 1, 2013 payment deadline the fee is $1.00 per HRA-covered employee (dependents excluded). Fees for plan years ending before 1/1/2013 are due by 7/31/2013. If a plan ends after 1/1/2013 and before 10/1/2013, the fee is still $1.00, but not payable until 7/31/2014.
The Regulations indicate that the reporting and payment of PCORI fees cannot be delegated to your HRA TPA. The fees should be reported on Form 720 (Quarterly Federal Exercise Tax Return Form).
Please review the attached Health Care Reform Hot Topic for more information.
For the July 1, 2013 payment deadline the fee is $1.00 per HRA-covered employee (dependents excluded). Fees for plan years ending before 1/1/2013 are due by 7/31/2013. If a plan ends after 1/1/2013 and before 10/1/2013, the fee is still $1.00, but not payable until 7/31/2014.
The Regulations indicate that the reporting and payment of PCORI fees cannot be delegated to your HRA TPA. The fees should be reported on Form 720 (Quarterly Federal Exercise Tax Return Form).
Please review the attached Health Care Reform Hot Topic for more information.
Monday, July 8, 2013
U.S. relaxes health law income - Health markets to employ honor system
As reported by the Washington Post:
The Obama administration announced Friday that it would significantly scale back the health law's requirements that new insurance marketplaces verify consumers' income and health insurance status.
Instead, the federal government will rely more heavily on consumers' self-reported information until 2015, when it plans to have stronger verification systems in place.
The delay comes after a Tuesday announcement that the federal government would postpone for one year a requirement that employers with 50 or more full-time workers provide health coverage.
"I think that Health and Human Services is doing the best that it can under the circumstances," said Sara Rosenbaum, a health policy professor at George Washington University.
The verification systems are meant to determine who qualifies for new benefits under the Affordable Care Act. The law includes tax subsidies to purchase health insurance for Americans who earn less than 400 percent of the poverty line, about $45,000 for an individual.
Those earning less than 133 percent of the poverty line - about $15,000 - will qualify for Medicaid coverage in the District and 23 states that have decided to expand the program.
The federal government also needs to know who receives health insurance coverage from an employer. Consumers who receive affordable health insurance from their company under a policy that costs less than 9.5 percent of their income do not qualify for tax credits under the Affordable Care Act.
The Obama administration announced Friday that it would significantly scale back the health law's requirements that new insurance marketplaces verify consumers' income and health insurance status.
Instead, the federal government will rely more heavily on consumers' self-reported information until 2015, when it plans to have stronger verification systems in place.
The delay comes after a Tuesday announcement that the federal government would postpone for one year a requirement that employers with 50 or more full-time workers provide health coverage.
"I think that Health and Human Services is doing the best that it can under the circumstances," said Sara Rosenbaum, a health policy professor at George Washington University.
The verification systems are meant to determine who qualifies for new benefits under the Affordable Care Act. The law includes tax subsidies to purchase health insurance for Americans who earn less than 400 percent of the poverty line, about $45,000 for an individual.
Those earning less than 133 percent of the poverty line - about $15,000 - will qualify for Medicaid coverage in the District and 23 states that have decided to expand the program.
The federal government also needs to know who receives health insurance coverage from an employer. Consumers who receive affordable health insurance from their company under a policy that costs less than 9.5 percent of their income do not qualify for tax credits under the Affordable Care Act.
Wednesday, July 3, 2013
Employer Mandate Delayed Until 2015
Bloomberg: Health-Law Employer Mandate Said to Be Delayed to 2015
Businesses won't be penalized next year if they don't provide workers health insurance after the Obama administration decided to delay a key requirement under its health-care law, two administration officials said. The decision will come in regulatory guidance to be issued later this week. It addresses vehement complaints from employer groups about the administrative burden of reporting requirements, though it may also affect coverage provided to some workers (Dorning and Wayne, 7/2).
The Washington Post: White House Delays Employer Mandate Requirement Until 2015 The Obama administration will not penalize businesses that do not provide health insurance in 2014, the Treasury Department announced Tuesday. Instead, it will delay enforcement of a major Affordable Care Act requirement that all employers with more than 50 employees provide coverage to their workers until 2015 (Kliff, 7/2).
What’s not changing as a result of these delays:
Please review the attached Health Care Reform Hot Topic for more information.
Businesses won't be penalized next year if they don't provide workers health insurance after the Obama administration decided to delay a key requirement under its health-care law, two administration officials said. The decision will come in regulatory guidance to be issued later this week. It addresses vehement complaints from employer groups about the administrative burden of reporting requirements, though it may also affect coverage provided to some workers (Dorning and Wayne, 7/2).
The Washington Post: White House Delays Employer Mandate Requirement Until 2015 The Obama administration will not penalize businesses that do not provide health insurance in 2014, the Treasury Department announced Tuesday. Instead, it will delay enforcement of a major Affordable Care Act requirement that all employers with more than 50 employees provide coverage to their workers until 2015 (Kliff, 7/2).
What’s not changing as a result of these delays:
- The Exchanges/Marketplaces
- The individual mandate
- Individuals’ access to premium tax credits
- Any other PPACA provision
Please review the attached Health Care Reform Hot Topic for more information.
Wednesday, June 12, 2013
IRS Determines that the PCOR Fees are Deductible Business Expenses
On May 31, 2013, the IRS released an update memorandum that found that fees paid by issuers of certain health insurance policies and plan sponsors of certain self-insured health plans to fund the Patient-Centered Outcomes Research Trust Fund (PCOR) were ordinary and necessary business expenses, and, thus, deductible business expenses under Section 4375-77 Excise Tax on Certain Insurance Policies.
To view the complete IRS Memo: http://www.irs.gov/pub/irs-utl/AM2013-002.pdf
To view the complete IRS Memo: http://www.irs.gov/pub/irs-utl/AM2013-002.pdf
Thursday, May 30, 2013
Final Rules on Employment Based Wellness Programs Released
On May 23, 2013, the DOL, Treasury and HHS finalized the HIPAA Nondiscriminatory Wellness Programs Regulations that were proposed in November 2012, clarifying what will work and what will not work for 2014 and beyond.
The accompanying news release stated that the “final rules ensure flexibility for employers by increasing the maximum reward that may be offered under appropriately designed wellness programs.”
Thursday, April 25, 2013
Departments Issue FAQ on Summary of Benefits & Coverage Changes
On Tuesday, April 23, 2013, HHS, Treasury and the DOL published Part XIV of their FAQs on the Affordable Care Act, focusing on revisions to the Summary of Benefits and Coverage (SBC).
The seven-question FAQs introduce two primary changes, which take effect for plan years starting on or after January 1, 2014:
- A statement indicating whether a plan provides minimum essential coverage (MEC)
- A statement answering whether the plan's share of the total allowed costs of benefits meets applicable minimum value (MV) requirements (i.e., at least 60 percent of allowed charges for covered services, also known as bronze level coverage)
Plans may provide this information by either updating their SBCs or providing it in a cover letter. The departments provided sample language in the FAQs. In addition, the SBC template has been updated as well as the sample completed SBC. The uniform glossary remains unchanged.
In a previous notice, the departments indicated that more wholesale changes would be likely for 2014, including revisions and additions to the coverage examples. However, these FAQs confirm that the MEC and MV statements are the only required changes. Also, much of the transition relief provided in 2013 has been extended to 2014. See Q/A-5 in the FAQs for additional details.
Original article courtesy of Infinisource: http://newsroom.infinisource.com/post/2013/04/25/Departments-Issue-FAQ-on-Summary-of-Benefits-Coverage-Changes.aspx
Friday, April 5, 2013
New fact sheets answer questions about Health Reimbursement Arrangements
An FAQ issued by the Department of Labor on January 24, 2013 stated that stand-alone HRAs used to buy an individual policy is not considered combined employer-sponsored coverage that follows the annual dollar limit requirement. If employees are offered an HRA and employer-sponsored coverage and turn down the employer-sponsored coverage, the stand-alone HRA will violate the law. The FAQ does allow amounts already in a stand-alone HRA before January 1, 2014 to be drawn on after that time if certain standards are met.
Anthem HRA Fact Sheet
Anthem HRA Fact Sheet
Tuesday, April 2, 2013
Obamacare credits could trigger surprise tax bills
Overview: The new health care law will offer subsidies to help people buy private health insurance on state-based exchanges, if they don't already get coverage through their employers. The subsidies are based on income.
What happens if you or your spouse gets a raise and your family income goes up in 2014? You could end up with a bigger subsidy than you are entitled to. If that happens, the law says you have to pay back at least part of the money when you file your tax return in the spring of 2015.
That could result in smaller tax refunds or surprise tax bills for millions of middle-income families.
Article: Obamacare credits could trigger surprise tax bills
What happens if you or your spouse gets a raise and your family income goes up in 2014? You could end up with a bigger subsidy than you are entitled to. If that happens, the law says you have to pay back at least part of the money when you file your tax return in the spring of 2015.
That could result in smaller tax refunds or surprise tax bills for millions of middle-income families.
Article: Obamacare credits could trigger surprise tax bills
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