Recently there have been multiple regulatory announcements regarding Section 125 Cafeteria Plans, Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs). Please be mindful that not every announcement applies to every plan type, nor to all configurations of a given plan type.
On May 4, 2020 Internal Revenue Service (“IRS”) and Employee Benefits Security Administration (“EBSA”) issued a final ruling regarding the extension of certain COBRA timeframes during the COVID-19 National Emergency in its “Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak” notice. The intent of this ruling is to provide relief that is immediately needed to preserve and protect the benefits or participants and beneficiaries in all employee benefit plans across the Unites States during the National Emergency.
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Manual Claim Reimbursement: these can be submitted electronically either by uploading information through the participant portal, using the camera feature with our mobile application or faxing to our secure fax viewer.
Monthly Administrative Service Fee Invoices Payments: communications have been sent to all AP contacts for each organization. Within the communication, we identify alternative methods of payment.
COBRA and Direct Billing: If you are currently receiving your remittances by check we ask that you sign up for ACH. Please reach out to firstname.lastname@example.org.
As we continue to monitor developments and consider American Benefits Group’s response and contingency plans in the context of the coronavirus developments, our priority is the safety of our employees and ensuring our ability to continue to service our clients’ needs.
Our Critical Response Group is composed of leaders and subject matter experts across our business lines. This group is meeting daily to assess the impact across our business and in our communities, advise the executive management, develop and deploy actions.
American Benefits Group CEO and Founder Bob Cummings Reelected as President of NAPBA May 28th 2019 - Bob Cummings has been reelected to serve as President of The National Association of Professional Benefits Administrators (NAPBA). A NAPBA Trustee since 2007, Cummings was first elected NAPBA president in 2015, and has been an instrumental force in the emergence of the Consumer Directed HealthCare industry over the last 20 years, orchestrating the growth of NAPBA as the primary compliance standards and best practice organization for third party employee benefits administrators serving the consumer directed healthcare industry.
On April 26, 2018, the IRS announced (through Rev. Proc. 2018-27) that the 2018 HSA maximum family contribution is reverting back to the original $6,900. As reported in March the IRS had previously announced a decreased limit of $6,850 (Rev. Proc. 2018-18).
In restating the original limit of $6,900, the IRS shared many reasons for the decision, including taxpayer complaints that the $50 limit reduction imposed “numerous unanticipated administrative and financial burdens” for those that had already maxed out their contributions before the reduction was announced, and administrators who had to modify their systems to reflect the reduction. Most interestingly, some stakeholders had pointed out the fact that Section 223 of the IRC requires the IRS to publish the annual inflation adjustments by June 1 of the preceding calendar year.
As a result of the new announcement, HSA eligible individuals with family coverage may now contribute up to $6,900 for 2018. Employers wanting to take advantage of the increased limit will need to make the appropriate adjustments in their payroll and benefits administration systems, if they had previously change the systems to reflect the $6,850 limit.
A further complication comes with the new announcement: Some employees had already maxed out the $6,900 before the March 5, 2018, reduction announcement. To help the employees avoid the 6 percent excise penalty tax for excess contributions, the employers already completed the corrective action of distributing the excess $50. Now, with the limit back at $6,900, that $50 is no longer considered an excess contribution. If the $50 was associated with employer contributions or employee pretax contributions, it would now be considered a nonqualified distribution, subject to a 20 percent excise penalty tax (plus income tax). To avoid the tax, the employees will need to work with the employer and HSA bank/trustee to repay the $50 to the HSA. The repayment will need to take place by April 15, 2019. Again, this last complication only applies to those employees who maxed out their contribution prior to March 5, 2018, due to employer or employee pretax contributions and whose employers had already refunded the excess $50 to them.
On March 5, 2018, the IRS released Rev. Proc. 2018-18 (as part of Bulletin 2018-10). Due to changes made in the Tax Cuts and Jobs Act (2017 tax reform), certain adjustments needed to be made to inflation amounts. One of those adjustments is to the annual family contribution for HSA's in 2018. The family max contribution is decreased from $6,900 to $6,850. The single contribution limit remains unchanged at $3,450.
Similar to action taken a few weeks ago in response to Hurricane Harvey, the IRS and DOL both recently published guidance containing certain relief for those individuals and businesses in Hurricane Irma’s path.
The IRS and DOL both recently published guidance containing some relief for those individuals and businesses in designated Texas counties that have been impacted by Hurricane Harvey. Specifically, the IRS offered extensions for certain tax filing deadlines that applies automatically to any individual or business who resides with the affected Texas counties (as outlined in the notice). As a result, if a form was due on or after Aug. 23, 2017, the form is now due on Jan. 31, 2018. The relief would apply to those employers that may have previously applied for a Form 5500 filing extension (either automatically or via Form 5558), as well as for any quarterly payroll/employment/excise tax filings due. Employers should work with their broker and/or professional accountant (or outside tax counsel) when it comes to appropriately filing extensions.
The new Congress and particularly the House Ways & Means Committee continue work on legislation to simplify and reform the tax code. One potential provision could be the elimination of the Commuter Benefit (IRC Section 132(f)). The threat of eliminating the parking and transit benefit is real and the consequences are significant.
On Dec. 7, 2016, the US Congress passed HR 34, called the “21st Century Cures Act” (Cures Act). The Cures Act legislation will permit small employers (those with fewer than 50 full-time employees during a calendar year who are not subject to the employer mandate) who do not offer a group health plan to provide a qualified small employer health reimbursement arrangement (QSEHRA).
On October 26, 2016, the IRS announced the 2017 annual inflation adjustments, which included increased limits for Health Flexible Spending Accounts (FSAs) under an IRC §125 cafeteria plan. The Parking and Transit limits for 2017 remain the same.
Although many provisions of the Affordable Care Act (ACA) have already been implemented, a few major ones are still to come. None are as far-reaching as the proposed ‘Cadillac tax’ on employer-sponsored health benefits.
Originally scheduled to take effect in 2018, the Cadillac-tax implementation was recently pushed off to 2020. If implemented, the IRS will impose a 40%, non-deductible excise tax on certain employer-sponsored health benefits that exceed a dollar threshold of $10,200 for an individual and $25,500 for a family. Health-insurance companies and self-insured plan sponsors will have to pay the tax on excess dollar amounts for benefits provided above this threshold. After 2020, the limits are to be adjusted for future changes in the consumer price index.
For many employers, their first challenge with the Affordable Care Act (ACA) may be compliance with the new reporting requirements.
Under the ACA, the Internal Revenue Code added IRS Section 6056, which requires ‘applicable large employers’ to file information returns with the IRS and provide statements to their full-time employees about the health-insurance coverage that the employer offered. Under the terms of the ACA, an applicable large employer generally means an employer that had 50 or more full-time employees (including full-time equivalent employees) in the preceding calendar year.