Volume 12, Issue 2	June 25, 2014
COMPLIANCE CORNER
New Guidance Related to ACA Implementation The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury collectively, and individually, have issued new guidance related to Affordable Care Act (ACA) implementation. Here are the highlights:   Certain Employer Health Care Arrangements   The Internal Revenue Service (IRS) issued further guidance related to certain health care arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy. Notice 2013-54 makes it clear that such arrangements cannot be integrated with individual policies to satisfy the market reforms. Therefore, such arrangements fail to satisfy the market reforms and may be subject to a $100 per day excise tax per applicable employee (which equals $36,500 per year, per employee) under Code Section 4980D. According to the IRS, HHS will soon issue concurring guidance.   Special Marketplace Enrollment for COBRA Participants   Concerned that individuals eligible for or currently enrolled in COBRA may not have realized the health coverage options available to them through the Federally-facilitated Marketplace, HHS announced a 60-day special enrollment period to provide more time for coverage consideration. This enrollment period began on May 2, 2014 and ends July 1, 2014. HHS also encouraged State-based Marketplaces to adopt similar special enrollment periods. Covered California, for example, issued its own special enrollment period from May 15, 2014 to July 15, 2014.   Updated Model Notices   The DOL released a new model General Notice and a model Election Notice for providing COBRA notices to employees, and a related notice of proposed rulemaking to eliminate these notices from the appendices of its regulations and, instead, publish updates directly in DOL guidance. The agency also released an updated model notice regarding premium assistance under the Children’s Health Insurance Program Reauthorization Act (CHIPRA). All updated notices now specify the special enrollment rights available through the Health Insurance Marketplace.   Group health plans are not required to use the model notices. However, a plan administrator’s use of these notices, when appropriately completed and adjusted, is considered a "safe harbor" and good faith compliance standard.   Health FSA Carryovers and Excepted Benefits   In published frequently asked questions (FAQs), the agencies noted that health flexible spending accounts (FSA) are generally treated as excepted benefits — not subject to ACA requirements — as long as an employer also offers a group health plan not limited to excepted benefits and does not make employer contributions exceeding certain limits. Furthermore, the agencies clarified that health FSA carryover amounts (up to $500 in unused amounts carried over to the next year) should not be included when determining if the health FSA satisfies the maximum benefits payable limit under excepted benefits guidance. Inflation Adjusted Amounts for 2015 HSAs In Revenue Procedure 2014-30, the IRS announced the 2015 inflation adjustments to health savings account (HSA) contribution limits as well as high deductible health plan (HDHP) limits. Both the maximum contributions to HSAs and the minimum annual deductibles for HDHPs will increase $50 for individuals and $100 for families beginning January 1, 2015: • $3,350 HSA maximum annual contribution limit for individuals with self-only coverage under a HDHP, up $50. • $6,650 HSA maximum annual contribution limit for individuals with family coverage under a HDHP, up $100. • $1,300 minimum HDHP annual deductible limit for individuals with self-only coverage, up $50. • $2,600 minimum HDHP annual deductible limit for individuals with family coverage, up $100. Additionally, the maximum HDHP out-of-pocket expense will increase next year to $6,450 for self-only coverage, up $100, and to $12,900 for family coverage, up $200. Small Group Deductible Restrictions Removed Enacted this spring, the Protecting Access to Medicare Act of 2014 contains an important provision related to the Affordable Care Act (ACA) for small group market employer health plans. Previously, Section 1302(c)(2) of the ACA had limited deductible amounts offered by small group plans to $2,000 for individuals and $4,000 for families. However, Section 213 of the law now eliminates the deductible limits. Basically, a small group market plan is a plan with up to 100 employees on average or up to 50 employees on average for those states that adopted that lower threshold. Eliminating deductible limits aids small group market plans in two significant ways: • It allows for more flexibility in plan designs. • It helps to cover higher deductibles with the inclusion of account-based plans such as health savings accounts (HSAs), health reimbursement arrangements (HRAs), and flexible spending accounts (FSAs) that are often coupled with high deductible health plans. Additional Insight Released on Health FSAs Two legal memoranda released by the IRS provide additional details regarding health flexible spending accounts (FSAs). One addresses how a health FSA carryover affects the eligibility for a health savings account (HSA), and the other addresses the correction procedures for improper health FSA payments. As background, the IRS issued Notice 2013-71 late last year, which permits (but does not require) employers to amend their health FSA plans so their participants may carry over up to $500 of unused funds to be used for qualified medical expenses incurred in a following plan year. What remained unclear until Memorandum 201413005 was how health FSA carryovers affected HSA eligibility since contributions to HSAs are not allowed for employees enrolled in general-purpose FSAs, including those in FSAs resulting only from a carryover balance. The memorandum describes the options available to employers for preserving employees’ HSA eligibility. In Memorandum 201413006, the IRS instructs using its guidelines for unsubstantiated debit card purchases under a cafeteria plan to correct improper health FSA payments. This involves deactivating a participant’s FSA debit card until the unsubstantiated card transactions are resolved through one of these correction procedures: • The participant repays the FSA plan. • The unresolved amount is withheld from the employee's pay. • Unsubstantiated card purchases are offset with manual claims. The memorandum also states that employers may apply the above procedures in any order as long as they’re followed consistently. For further details on correcting improper health FSA payments or the three options available to preserve employees’ HSA eligibility, see our Compliance Update. Bay Area Employers Must Offer Commuter Benefits San Francisco Bay Area employers with 50 or more "covered" employees are now required to offer their employees one of four Commuter Benefit Program options by September 30, 2014. This program, authorized by Senate Bill 1339, will launch as a pilot program and run through December 2016. Covered employees are those who performed at least an average of 20 hours of work per week within the previous calendar month within the 9 counties covered by the ordinance. Companies that already offer commuter benefits will not have to expand their program, but they will be required to file an annual report. Along with San Francisco's Family Friendly Workplace Ordinance (which took effect January 1, 2014) and Fair Chance Ordinance (effective August 13, 2014), the Commuter Benefits Program is one of several new laws affecting employers that operate in the Bay Area. The intent of this latest law is to reduce air pollution and auto congestion by encouraging employees to use some form of public transportation for commuting other than driving alone. Plus, employees who enroll in a commuter benefits plan can save money by using pre-tax dollars to pay for qualified work-related transit and parking expenses. Learn more about the many advantages of offering commuter benefits from one of our sales representatives. CONEXIS specializes in administering these benefits, making participation a snap for both employers and their employees. Plus, unlike other pre-tax plans, employees can join or leave a commuter benefits plan each month. This flexibility typically provides higher participation than other types of pre-tax plans, meaning greater savings for your organization.
NEWS AND TRENDS
IRS Issues Updated Fringe Benefit Guide The 2014 version of Publication 5137 Fringe Benefit Guide is now available on the IRS website. While written primarily for federal, state, and local governments, the guide provides important information to assist all employers in understanding the various fringe benefits and their tax treatments. This is especially helpful since certain fringe benefits subject to IRS special rules are classified as nontaxable, partially taxable, or tax-deferred. Employers can use this guide to ensure the proper exclusion from income by employees or the proper inclusion, withholding, and reporting in the cases where fringe benefits are taxable. Consumers Using More Health Care Services According to an industry report, medical utilization saw its first increase in three years in 2013. The report, from research firm IMS Institute for Healthcare Informatics, detailed how consumer visits to doctors’ offices and hospitals rose in 2013, as did prescription drug spending. Prescription drug spending alone grew 3.2 percent last year to more than $329 billion. And that’s following a 1 percent drop in 2012. Put another way, consumers filled more than 12 prescriptions on average in 2013, up 2 percent from 2012. While increased health care usage and spending is good news for the industry, any subsequent increase in health care costs would be a blow to consumers. Most are already paying more out of pocket for their health insurance through high deductible health plans (HDHPs). The report notes that 38 percent of employer-sponsored insured workers now have a deductible of more than $1,000. That’s why pairing an HDHP with an account-based plan, such as a health savings account (HSA), is a great way to combat the high costs of health care. It allows employers to continue providing their employees traditional health insurance coverage — along with a plan that reimburses for eligible expenses like doctor’s visits, prescription drugs and more. Plus, employers that provide account-based plans generally see their premium costs go down and their savings go up. Contact us for details. Spousal Benefits Still Important to Employees A Harris Poll conducted this year for a leading staffing company confirmed what benefit professionals most likely already know. Workers are making their personal lives, their relationships, and their families their top priorities. And their priorities play a big part in where they choose to work, or even stay at work. Spherion’s "WorkSphere" survey of employed U.S. adults revealed that most workers (70 percent) believe it’s more important for them to prioritize their personal life over their career. For example, more than half of workers (55 percent) would not delay or decide not to go on vacation for the sake of their career. But what’s particularly interesting is the survey’s insights into the importance of spousal benefits to today’s workforce: • Nearly three out of four survey respondents (73 percent) whose employer extends benefits to their spouse or partner are more likely to stay with the organization because of these benefits. • More than three in four employees (78 percent) who don’t receive spousal benefits would be more likely to stay at their company if such benefits were offered. • Almost three-quarters of workers who receive spousal benefits (72 percent) said they are more satisfied with their job because their employer offers these benefits. • And 77 percent of respondents who do not receive spousal benefits would be more satisfied if their employer provided them. With employers looking for ways to save costs by possibly eliminating spousal benefits from their group health plan, these insights might just be cause for pause. See Spherion’s press release about the survey for more information.
BEHIND THE SCENES
Mentoring for Success To maintain our service of unequalled excellence, we strive to continuously grow and develop the leaders within our organization. One way we do this is through the CONEXIS Mentorship Program. The program enhances career and professional growth and the development of individuals (mentees) with leadership potential through paired relationships with mentors. Each year begins a new six-month mentorship cycle although many lasting relationships develop during this time. "Once mentees are selected, we challenge each individual to 'drive' the relationship with their mentor by providing clear developmental goals and a plan for growth opportunities," said Carol White, vice president of client services and mentorship program co-chair. "This is important because the role of the mentor is to support, challenge, and motivate the mentee towards achieving the mentee’s goals," she emphasized. Sherry Emery, assistant vice president of client services and the other mentorship program co-chair, agreed. "It’s within this dynamic process where both mentees and mentors learn to respect and trust each other’s commitment, expertise, and individuality that we’ve seen the most success," she said. Client services manager Stephanie Holbert experienced this as a mentee with great results. "Thanks to my mentor, not only did I gain tremendous insight into the CONEXIS way of doing business, but I was able to get in front of key individuals who helped make me, my team, and my department even more successful for our clients," said Stephanie. Achieving positive outcomes that benefit our clients is exactly what our mentorship program is designed to do. CONEXIS Welcomes Newest RVP of Sales CONEXIS welcomes Joe Bittner as our newest regional vice president of sales. Joe, with over 25 years in the employee benefits field, is responsible for managing as well as enhancing sales for organizations with 2,000 or more employees within the south and central regions of the U.S. Before joining CONEXIS, Joe spent 12 years running a benefits brokerage firm and 13 years prior to that, in sales management with Guardian Life Insurance Company of America. He also worked as an independent business consultant for many years. "I’ve been aware of CONEXIS since its beginning and know its outstanding reputation in the marketplace. The position of RVP in the same region as the CONEXIS home office is a remarkable opportunity," said Joe. "Plus, in just my short time here, I’ve been greatly impressed by our commitment to security, compliance, service, and value. It’s unmatched in the industry." Joe received his Bachelor of Arts in Economics from the University of Wisconsin, Madison and currently holds CLU (Chartered Life Underwriter), ChFC (Chartered Financial Consultant) and RHU (Registered Health Underwriter) designations. He is a past president of the Dallas Association of Health Underwriters and a past president of the Dallas chapter of the Society of Financial Service Professionals. Investing in Our Youth As a Cub Scout, you’re taught to do your best and to help others. Two things Rachel Hicks, client relationship manager at CONEXIS, teaches her two boys (ages 10 and 13) even outside of scouting. And mainly by example. Rachel and her husband, Rich, decided early on to involve themselves with their children in ways that kept them connected to each other as well as their community. They found participating in Scouts and youth ministries accomplished both. "We wanted to instill in our kids an attitude of service and giving back so hopefully it continues throughout their adult lives. Scouting and ministry activities encourage volunteerism and provide opportunities to serve as a family," said Rachel. Together, they’ve helped renovate homes, spruce up neighborhoods, stock food pantries, and deliver food, clothes, school supplies, and gifts to those less fortunate in their community of Hurst, Texas. Rachel and her oldest son also spent part of their vacation last summer together on a youth mission trip. "We pitched in at a food bank, refurbished an aging church building, and assisted in providing culinary, life, and job skills training to mentally challenged young adults. We also reached out to the homeless through a local organization that provides hot meals, clean water, clothes, and more," she shared. This resulted in her, her son, and many others from that trip returning to San Antonio this July. "We saw how jumping in and lending a hand can make a huge difference in others' lives. That’s very powerful," she said. "Not only that, but it’s also infectious," Rachel added. "My youngest son has already asked if we can do a mission trip together when he’s a little older."
CONTACT US
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