Viewing posts from: October 2014

IRS Announces 2015 Changes – Increases to HCFSA, Parking and Transit Remain the Same

Posted October 30, 2014 by PHaynes

IRS-logoWhile IRS Revenue Procedure 2014-61 contains a great deal of information (in its 22 pages), the most pertinent information to health and welfare benefit plans is as follows:

  • Increase to the maximum deferral for a HCFSA (Health Care Flexible Spending Account) is now $2,550

 

Also, of note:

  • Cafeteria Plans – For the taxable years beginning in 2015, the dollar limitation under §125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is $2,550
  • Qualified Transportation Fringe Benefit. For taxable years beginning in 2015, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $130. The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $250.

If you’re looking for good summaries of new tax brackets, etc., you can’t do much better than the update from Forbes, linked below.

Links:

Corporate Benefits Enrollment Strategies

Posted October 29, 2014 by ABlume

administrationBenefits enrollment and administration strategies must be intelligent, adaptable, and accessible to succeed. Our system is rules-based, very powerful, and extremely user-friendly. While building the system we focused our energies and resources on perfecting the back-end, ensuring that our eligibility transmissions to carriers would be processed flawlessly every time.

Features of the system include:

  • The ability to accommodate virtually any benefit plan
  • Online tracking of the employee’s beneficiary information
  • Centralized tracking of dependent children’s full-time student status
  • Rules-based logic which permits employees to see only the benefits for which they are eligible
  • Customized links to benefit guides, SPDs, carrier web sites and any other information, at the client’s option

Using this system, HR departments can access all of the benefit information stored on the system. HR can have access to view individual employee records as well as website reports of who has enrolled or not enrolled. Other reporting tools in this system allow your business to run quick counts by plan and other criteria, enabling you to track changing enrollment patterns and shifts in your employee demographics. To learn more about benefits enrollment and benefits administration strategies, contact us.

2015 401(k) Limits Announced by the IRS – Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015

Posted October 23, 2014 by PHaynes

IRS-logo

IRS Announces 2015 Pension Plan Limitations

IR-2014-99, Oct. 23, 2014

WASHINGTON — The Internal Revenue Service today announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. Highlights include the following:

  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,500 to $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $5,500 to $6,000.
  • The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, up from $60,000 and $70,000 in 2014. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $183,000 and $193,000, up from $181,000 and $191,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  • The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014. For singles and heads of household, the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  • The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,000 for married couples filing jointly, up from $60,000 in 2014; $45,750 for heads of household, up from $45,000; and $30,500 for married individuals filing separately and for singles, up from $30,000.

Below are details on both the adjusted and unchanged limitations.

Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost‑of‑living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

Effective Jan. 1, 2015, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $210,000. For a participant who separated from service before January 1, 2015, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2014, by 1.0178.

The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2015 from $52,000 to $53,000.

The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2015 are as follows:

The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $17,500 to $18,000.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii) is increased from $260,000 to $265,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $170,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5‑year distribution period is increased from $1,050,000 to $1,070,000, while the dollar amount used to determine the lengthening of the 5‑year distribution period remains unchanged at $210,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $115,000 to $120,000.

The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased from $5,500 to $6,000. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased from $2,500 to $3,000.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost‑of‑living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $385,000 to $395,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) is increased from $550 to $600.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $12,000 to $12,500.

The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $17,500 to $18,000.

The compensation amount under Section 1.61‑21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation remains unchanged at $105,000. The compensation amount under Section 1.61‑21(f)(5)(iii) is increased from $210,000 to $215,000.

The Code also provides that several retirement-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2015 are as follows:

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $36,000 to $36,500; the limitation under Section 25B(b)(1)(B) is increased from $39,000 to $39,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $60,000 to $61,000.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $27,000 to $27,375; the limitation under Section 25B(b)(1)(B) is increased from $29,250 to $29,625; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $45,000 to $45,750.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $18,000 to $18,250; the limitation under Section 25B(b)(1)(B) is increased from $19,500 to $19,750; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $30,000 to $30,500.

The deductible amount under Section 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,500.

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $96,000 to $98,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $60,000 to $61,000. The applicable dollar amount under Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $181,000 to $183,000.

The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $181,000 to $183,000. The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $114,000 to $116,000. The applicable dollar amount under Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.

The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under Section 430(c)(2)(D) has been made is increased from $1,084,000 to $1,101,000.

Link to 2014’s Limits:  if you are interested in reviewing what changed, etc.

Transitional Reinsurance Fee Roundup: That $63 per head fee, Delayed. Now Due 12/05/2014

Posted October 22, 2014 by PHaynes

Pay_dot_govUpdate, Sunday, Nov 16, 2014:  The Department of Health and Human Services has received requests for an extension of the deadline for contributing entities to submit their 2014 enrollment counts for the transitional reinsurance program contributions under 45 CFR 153.405(b). The deadline has now been extended until 11:59 p.m. on December 5, 2014. The January 15, 2015 and November 15, 2015 payment deadlines remain the same.

 

What is it?

The Reinsurance Assessment is a fee applicable to insured and self-funded major medical plans for calendar years 2014 through 2016. It will primarily be used to help cover the cost of high-dollar claims occurring within the individual market. The 2014 fee is $63 per person, which the updated regulation proposes to collect in two installments: $52.50 in January 2015, and $10.50 late in the fourth quarter of 2015. (Reports due 11/15/2014, HHS’ bill comes 12/15/2014, bills due in installments; typically from your ASO-claims payer to HHS).  For 2015, the proposed fee is $44 per person.   See our prior guidance (and details) on this topic from March 6, 2013 and Dec 13, 2012.

When is it due? And, can HHS offer any help?

HHS just released their Until then, I wanted to make sure that everyone saw that HHS has released the Annual Enrollment and Contributions Submission Form Manual (64 pages) and a Supporting Documentation Job Aid Manual (14 pages) in anticipation of the release of the form (now expected to be Thursday, October 24, 2014).   **See this handy list of FAQs – this will assist you in completing your filing! 

In light of the fact that the November 15th deadline is a Saturday in 2014, HHS states (in an FAQ) that self-funded plans (aka contributing entities) may submit their enrollment count by Monday, November 17th this year. Of course no one will wait that long because Pay.gov is bound to experience bottleneck-issues as the deadline approaches.

Does my plan year matter?   No, it does not.  This is a calendar year fee (tax) on all self-funded plans.

Pay_dot_gov_calendarPlease discuss any questions, comments or concerns you may have with your Account Manager or Sales Executive. Thank you.

 

 

New Links

Prior guidance/postings on this topic:

Popular Benefits Consultation and PPACA Blogs

Posted October 22, 2014 by ABlume

Many legislative updates for IRS, DOL, and other regulatory bodies have come about in the last few months. Ensuring that your organization stays on top of these updates and their potentially far-reaching effects is paramount. Read some of our most popular legislative and consultative blogs to find out more:

To learn more about these and other important updates, contact us, view our recorded webinars, and return to our blog soon!

Webinar: 15 Critical Mistakes to Avoid In Your Next Open Enrollment

Posted October 16, 2014 by ABlume

consultingBrokerageJoin Crawford Advisors Senior Counsel, Patrick Haynes as he reviews 15 critical mistakes to avoid in your next open enrollment. With the increased challenges and scrutiny impacting enrollment, employers must ensure these critical, and often overlooked errors are avoided. Attorney Haynes will discuss the many nuances of these common errors. Here are a few of the top 15 to be analyzed in this complimentary 35 minute webinar:

  • Ineffective Communications (brochures, customer service, etc.)
  • Not using OE to reinforce or drive wellness campaigns in place
  • Not fully understanding your salary definition prior to sending salary file updates for OE
  • Not verifying dependents before the due date
  • Overage student verification process for dental and vision not being clearly understood/communicated

Webinar Date: Thursday, Oct 23, 2014 12:00 PM – 12:35 PM EDT
Use this link to register: https://www1.gotomeeting.com/register/335239392
Open to all HR professionals – but not brokers, agents, TPAs, PEOs

Limitations on Cost-Sharing Under the Affordable Care Act

Posted October 10, 2014 by ABlume

Public Health Service (PHS) Act section 2707(b), as added by the Affordable Care Act, provides that a non-grandfathered group health plan shall ensure that any annual cost-sharing imposed under the plan does not exceed the limitations provided for under section 1302(c)(1) of the Affordable Care Act. Section 1302(c)(1) limits an enrollee’s out-of-pocket costs.(1)

For plan or policy years beginning in 2015, the annual limitation on an individual’s maximum out-of-pocket (MOOP) costs in effect under Affordable Care Act section 1302(c)(1) is $6,600 for self-only coverage and $13,200 for coverage other than self-only coverage.(2) Beginning with the 2015 plan or policy year and for plan or policy years thereafter, the annual limitation on out-of-pocket costs is increased by the premium adjustment percentage described under Affordable Care Act section 1302(c)(4).

Previous FAQs provided guidance on the MOOP requirements under PHS Act section 2707(b).(3) The FAQs clarified that if a plan includes a network of providers, the plan may, but is not required to, count an individual’s out-of-pocket spending for out-of-network items and services toward the annual limitation on cost sharing. The FAQs also addressed reference-based pricing in non-grandfathered large group insurance market and self-insured group health plans,(4) under which the plan pays a fixed amount for a particular procedure (for example, a knee replacement), which certain providers will accept as payment in full.(5) In the FAQ, the Departments explained that reference-based pricing is designed to encourage plans to negotiate treatments with high-quality providers at reduced costs. At the same time, the Departments expressed concerns that such a pricing structure could be a subterfuge for the imposition of otherwise prohibited limitations on coverage, without ensuring access to quality care and an adequate network of providers.

The FAQ further stated that, until guidance was issued and effective, with respect to a large group market plan or self-insured group health plan that utilizes a reference-based pricing design, the Departments would not consider a plan or issuer as failing to comply with the MOOP requirements of PHS Act section 2707(b) because the plan or issuer treats providers that accept the reference amount as the only in-network providers, as long as the plan or issuer uses a reasonable method to ensure that it offers adequate access to quality providers. The FAQ also solicited comments on the application of the MOOP requirements to such benefit designs, indicating a particular interest in standards that plans or issuers using reference-based pricing should be required to meet to ensure that individuals have meaningful access to medically appropriate, quality care.

The Departments received a range of comments and questions on the application of the MOOP requirements to various provider network benefit designs. Many comments suggested that plans and issuers should be permitted to limit counting an individual’s out-of-pocket costs exceeding the reference price towards the MOOP only with respect to certain types of services (such as non-emergency services or routine procedures). Other comments suggested network adequacy and quality standards or procedures that a plan or issuer should be required to meet if the plan or issuer wants to utilize a network design under which less-than-full credit is given against the MOOP for non-preferred providers. Many of these comments also suggested that plans establish an exceptions process in certain circumstances to allow an enrollee’s full cost sharing for non-reference based providers to count toward the MOOP. Additional comments addressed disclosure issues, to ensure that individuals had timely and adequate information to make informed treatment decisions.

Based on comments received, set forth below is an additional FAQ regarding the MOOP requirements. This FAQ addresses only group health plans’ and group health insurance issuers’ obligations under section 2707(b) of the PHS Act. For non-grandfathered health plans in the individual and small group markets that must provide coverage of the essential health benefit package under section 1302(a) of the Affordable Care Act, additional requirements apply.

Compliance with section 2707(b) of the PHS Act is not determinative of compliance with any other provision of law, including PHS Act section 2713, relating to coverage of preventive services, and PHS Act section 2719A, relating to choice of a health care professional and benefits for emergency services (incorporated by reference into the Employee Retirement Income Security Act (ERISA) section 715 and Internal Revenue Code (Code) section 9815) and implementing regulations.

To learn more, contact Crawford Advisors. To read the full article, click here.

The US Supreme Court Denies Review of Marriage Cases, Bringing the Freedom to Marry to Five States

Posted October 8, 2014 by PHaynes

From Freedom to Marry

Today, October 6, the U.S. Supreme Court denied review of five cases seeking the freedom to marry, leaving standing marriage victories in three federal circuits and opening the door to the freedom to marry in many more states, while deferring for another day the national resolution that Freedom to Marry, businesses, elected officials, and families across the country had urged now.

The Court’s decision not to review the rulings means that soon, as many as 60% of the American people will be living in freedom-to-marry states, with a majority of the states soon (30) having the freedom to marry for all.

Evan Wolfson, president of Freedom to Marry, released the following statement:

“Today’s decision by the Supreme Court leaves in force five favorable marriage rulings reached in three federal appellate courts, ensuring the freedom to marry for millions more Americans around the country. The Court’s letting stand these victories means that gay couples will soon share in the freedom to marry in 30 states, representing 60% of the American people. But we are one country, with one Constitution, and the Court’s delay in affirming the freedom to marry nationwide prolongs the patchwork of state-to-state discrimination and the harms and indignity that the denial of marriage still inflicts on too many couples in too many places. As waves of freedom to marry litigation continue to surge, we will continue to press the urgency and make the case that America – all of America — is ready for the freedom to marry, and the Supreme Court should finish the job.”

With the Supreme Court’s decision not to review the cases, favorable marriage rulings in the 10th Circuit, the 7th Circuit, and the 4th Circuit will soon go into effect. Marriage bans in every state within those circuits will be invalidated, adding Colorado, Kansas, Oklahoma, Utah, Wyoming,scotusdeniescert North Carolina, South Carolina, Virginia, West Virginia, Indiana, and Wisconsin to the list of freedom to marry states. As a result of the Court’s decision, an additional 51 million Americans will live in a freedom to marry (state).

In total, 41 federal and state courts in the past year have ruled in favor of the freedom to marry for same-sex couples with only one federal and one state ruling going the other way. Five of these marriage wins were before the Supreme Court for possible review.

Join the Benefits News and Compliance LinkedIn Group

Posted October 6, 2014 by ABlume

The purpose of the Welfare Compliance & Benefits Forum is to discuss important healthcare regulatory issues including PPACA, HIPAA, COBRA, ERISA, and more. Staying informed regarding healthcare reform legislation can prove challenging and costly. Leveraging professional networks with experts and like-minded organizations can greatly improve your ability to steer your company down a successful path. This group is open to human resources, finance, and senior executives from businesses with 50 or more participating plan employees. To join, click here.

Final Regs: Excepted Benefits (Dental, Vision, EAP and LTC)

Posted October 3, 2014 by PHaynes

DEPTSFederal regulators have released some long-overdue guidance on benefits that many HR professionals and their brokers/consultants have long categorized by the catch-phrase “excepted benefits”. With the release of these final regulations (from the IRS, DOL and HHS) there are some minor changes to those self-insured dental, vision, LTC (Long-Term-Care) and EAP (Employee Assistance Plan) plans as to when they will be treated as “excepted benefits”.

What is an excepted benefit?

Excepted benefits are exempt from certain group plan mandates under:

  • HIPAA’s portability rules (like the HIPAA Special Enrollment periods);
  • PPACA reforms (requirements under the Affordable Care Act, such as requiring coverage for dependents to age 26 without regard to student or marital status, full coverage for preventive services, annual dollar limitations, etc.);
  • Federal Mental Health Parity requirements (particularly with regard to EAP coverages);

Excepted benefits do not:

  • Relieve employers of their shared-responsibility penalties
  • Satisfy the individual mandate coverage requirements
  • Disqualify someone from received exchange-premium-subsidies

Here are the most important changes that are worth noting and reviewing.

1 Bundling coverage and Free Coverage – clarifications.

Under the prior regulations (from 2004) we knew that self-insured dental, vision and LTC coverage was an excepted benefit if plan participants could waive the coverage and they must have been charged something for the coverage. Under the final regulations there is no longer a requirement that there be a charge for the coverage. However, participants must still be able to (a) waive the coverage or (b) claims must be administered under a contract separate from claims administration of any other benefits offered by the plan.

Some notes:

  • The final regs do not change the rules for insured coverages here—they will continue to be an excepted benefit if they are offered under a separate policy of insurance, without regard to participant contributions.
  • Employers/Plan Sponsors that don’t offer any medical coverage can still treat their dental coverage as an excepted benefit.
  • HCFSAs and HRAs (Health Care FSAs and Health Reimbursement Arrangements) are still exempt if they only reimburse dental or visions expenses and meet the regs’ requirements.

2 EAPs – How can they be excepted benefits?

EAPS can be excepted benefits if they meet the following four (4) conditions:

  1. EAP benefits are not coordinated with benefits under another group health plan;
  2. the EAP does not provide significant benefits in the nature of medical care (“significant” will mean and take into account the amount, scope and duration of any covered services into account; so, E.g., the likelihood that a three (3) consultations plan will be deemed “significant” is small, but the Departments (IRS/DOL/HHS) still have time to issue guidance in this regard);
  3. there are no employee contributions (required in order to enroll or benefit from the EAP); and
  4. the EAP contains no cost-sharing provisions.

In order to meet the first condition above (a) participants must not be required to exhaust EAP benefits before being eligible for benefits under the other plan and EAP eligibility cannot depend on participation in another plan.

Some notes:

  • These regulations reject the suggestions to treat wellness programs as excepted benefits by including them in an EAP.
  • The proposed regulations contained a provision that the EAP could not be financed by another group health plan, and, the final regulations do not contain that provision].

When can I rely upon these regulations?

These regulations apply for plan years beginning on or after 01/01/2015. Until then, the Departments will treat dental, visions, EAP and LTC benefits as “excepted” if they meet the conditions of the proposed or final regulations.

Links: