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HSA Family Maximum Contribution for 2018 to Remain at $6,900

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Category: Cafeteria Plans, Compliance and Regulatory, Health Savings, HSA,

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. 

Rev. Proc. 2018-27 »

IRS Announces Change to 2018 Family HSA Contribution Limit

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Category: Cafeteria Plans, Compliance and Regulatory, HSA, IRS,

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.

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IRS and DOL Publish Guidance for Those Impacted by Hurricane Irma

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Category: CDHC, COBRA, Compliance and Regulatory, IRS,

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.

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IRS and DOL Publish Guidance for Those Impacted by Hurricane Harvey

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Category: COBRA, Compliance and Regulatory,

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.

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Fighting for Commuter Benefits in Tax Reform

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Category: Compliance and Regulatory, Parking, Transit, Transit and Parking Section 132,

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.

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Congress Passes “Cures Act” Allowing Stand-Alone HRAs for Small Employers

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Category: Compliance and Regulatory, Health Care Reform, Health Reimbursement Arrangements, HRA,

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).

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IRS Announces 2017 Health FSA and Commuter Plan Limits

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Category: Commuter, Compliance and Regulatory, Flexible Spending, FSA, Transit and Parking Section 132,

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.

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Cadillac Tax Would Have a Deep Impact on Employers

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Category: ACA, Compliance and Regulatory,

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Cadillac Tax Would Have a Deep Impact on Employers

BusinessWest on March 8, 2016 in Banking and Financial Services

New Rules of the Road

By BOB CUMMINGS

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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.

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Getting a Grasp on the New Health-benefits Reporting Rules

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Category: ACA, Compliance and Regulatory,

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Getting a Grasp on the New Health-benefits Reporting Rules

BusinessWest on January 12, 2016 in Banking and Financial Services

Delayed Reaction

By BOB CUMMINGS

tl_files/content/about/Bios/RCummings_Head.jpgFor 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.

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Getting a Grasp on the New Health-benefits Reporting Rules

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Category: ACA, Compliance and Regulatory,

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Getting a Grasp on the New Health-benefits Reporting Rules

BusinessWest on January 12, 2016 in Banking and Financial Services

Delayed Reaction

By BOB CUMMINGS

tl_files/content/about/Bios/RCummings_Head.jpgFor 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.

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Group Health Plans that Fail to Cover In-Patient Hospitalization Services

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Category: ACA, Compliance and Regulatory, HHS,

Notice 2014-69

I.  PURPOSE AND OVERVIEW

The Department of Health and Human Services (HHS) and the Department of the Treasury (including the Internal Revenue Service) (collectively, the Departments) have become aware that certain group health plan benefit designs that do not provide coverage for in-patient hospitalization services are being promoted to employers.  A plan that fails to provide substantial coverage for these services would fail to offer fundamental benefits that are nearly universally covered, and historically have been considered integral to coverage, under typical employer-sponsored group health plans. Promoters of these plans contend that the plans satisfy minimum value within the meaning of the Affordable Care Act (including section 36B(c)(2)(C)(ii)of the Internal Revenue Code (Code) and final HHS regulations under section1302(d)(2)(C) of the Affordable Care Act (referred to in this notice as minimum value or MV)), as determined through use of the on-line MV Calculator referred to in final HHS regulations and proposed Treasury regulations.

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IRS Issues Notice Setting Adjusted Applicable Dollar Amount for PCOR Fee at $2.08

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Category: Compliance and Regulatory, Health Reimbursement Arrangements, HRA,

On Sept. 18, 2014, the IRS published Notice 2014-56, setting the applicable dollar amount for plan years that end on or after Oct. 1, 2014, and before Oct. 1, 2015. As a reminder, the PCOR fee is calculated using the average number of lives covered under the plan and the applicable dollar amount for that plan year. The applicable dollar amount is $2 for plan years ending after Oct. 1, 2013, and before Oct. 1, 2014. Notice 2014-56 announces that the applicable dollar amount for plan years that end on or after Oct. 1, 2014, and before Oct. 1, 2015, is $2.08. For plan years ending on or after Oct. 1, 2015, the adjusted applicable dollar amount will be published in future Internal Revenue Bulletin guidance.

With respect to payment responsibility, if a plan is fully insured, then the insurance carrier is responsible for paying the fee. If a plan is self-insured, the plan sponsor is responsible for the fee. For this purpose, “plan sponsor” is defined as the employer for a single employer plan.

IRS Notice 2014-56

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New Optional Section 125 Midyear Qualifying Events Released by IRS

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Category: Compliance and Regulatory, Flexible Spending, Section 125 Plans,

On Sept. 18, 2014, the IRS published Notice 2014-55, which creates two new Section 125 midyear qualifying events. The two new events apply in very specific situations and – like all Section 125 events – are optional. Employers who wish to include these new Section 125 qualifying events as options in their plan design need to amend the plan document accordingly.

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Compliance Update

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Category: Compliance and Regulatory, HCSO,

The San Francisco Board of Supervisors passed an amendment to the Health Care Security Ordinance on June 17,
2014. The amendment phases in (over 3 years) a requirement that all heath care expenditures be made irrevocably and makes other changes to the HCSO. For more information, see the HCSO amendment as passed.

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One-Time Special Enrollment for COBRA participants

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Category: COBRA, Compliance and Regulatory,

On May 2, 2014, the Centers for Medicare and Medicaid Services (part of HHS) issued a bulletin to deal with Special Enrollment Periods (SEPs).

HHS is concerned that former Model COBRA Continuation Coverage Election Notices (Model Election Notices) published by the Department of Labor and other documents provided by employers did not address, or did not sufficiently address, Marketplace options for persons eligible for COBRA.

The concern? Persons eligible for COBRA and their qualified beneficiaries may have had insufficient information to understand that they cannot voluntarily drop COBRA and enroll in the Marketplace outside of Marketplace open enrollment.

As a result, in accordance with 45 CFR 155.420(d)(9), HHS is providing an additional special enrollment period based on exceptional circumstances so that persons eligible for COBRA and COBRA beneficiaries are able to select Qualified Health Plans (QHPs) in the Federally Facilitated Marketplace (www.healthcare.gov).

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