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ABOUT CONEXIS |
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CONEXIS is one of the nation's oldest and most trusted employee benefits administrators. We've been providing fully compliant administration services to employers nationwide since 1986. Today, we are proud to serve more than 25,000 organizations, ranging from small businesses to many of the nation's largest employers.
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READER POLL |
HSA and HRA participation was up by 70 percent in assets and 55 percent in accounts in 2011. Is this a sign of a rebounding economy? Click here to take the poll! |
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CONTACT US |
Do you have questions, comments, or feedback regarding the CONEXIS Comment Newsletter? If so, we would love to hear from you. Please drop us a line at comment@conexis.com. |
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LETTER FROM THE EDITOR |
Have you started planning for the health care reform changes that are looming in the near future? In Compliance Corner, we discuss the mandatory health FSA election cap affecting the 2013 plan year. You'll also find W-2 reporting requirements for employer-sponsored group health coverage that may apply to participants' health FSAs, and an outline of standard mileage rates for 2012.
The state of tax-free commuter benefits continues to be a hot topic. Read all about it in our lead News and Trends story. We also take a look at rising HSA and HRA participation. After flat years in 2008 and 2009, participation dipped slightly in 2010 but surged by 70 percent in assets and 55 percent in accounts in 2011. In this issue's Reader's Poll, we ask if the increase is a sign the economy is improving, or if perhaps employers are preparing for future health care reform changes. Be sure to weigh in with your opinion.
What's new at CONEXIS? We're excited about our revamped public website! You will definitely want to spend a few minutes navigating around www.conexis.com and exploring the new content and updates.
We are also pleased to introduce a new Comment feature, Behind the Scenes, which gives you the chance to get to know a featured team member, preview a new enhancement, or simply check out something special within CONEXIS. In this issue, we shine a light on Fran Scott, our compliance specialist who is living with heart disease. Fran has turned her diagnosis into an opportunity to help others, and we salute her!
Until next time, thanks for reading.
Jason Culp
AVP of Marketing and Sales Operations
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COMPLIANCE CORNER |
Health FSA Max Limits for 2013
New health FSA salary reduction amounts mandated by the Patient Protection and Affordable Care Act of 2010 (PPACA) become effective after December 31, 2012. Employee health flexible spending account (FSA) elections will be capped at $2,500 (indexed for inflation in future years) for the taxable year beginning January 1, 2013.
Plan Year Reference
The IRS statute fails to reference the "plan year" of the health FSA, even though FSA elections are typically made for a plan year. This failure creates compliance and operational challenges for plan sponsors that maintain health FSAs with a non-calendar (i.e., a fiscal) plan year. It is our understanding that the IRS is considering guidance that will clarify the effective date of the rule. However, in the absence of formal guidance from the IRS, plan sponsors with fiscal plan years will need to make a decision regarding the appropriate action to take. For additional details, check out our interpretations of this legislation.
Required Action
For those plans that are on a calendar year, action may still be required. The new rule requires a plan amendment if your current health FSA annual salary reduction maximum is greater than $2,500. Plan amendments must be formally adopted by the individual(s) authorized by the company's governing documents to amend plans, and the formal amendment must be completed prior to the January 1, 2013 effective date.
For more information, refer to page 37190 of the Federal Register issued on June 28, 2010.
Clarification of W-2 Reporting Rules
Earlier this year, the IRS released Notice 2012-9 that clarifies and amends W-2 requirements for reporting employer-sponsored group health plan coverage. Notice 2012-9 replaces Notice 2011-28, which was issued in June 2011. The new notice includes thorough explanations of numerous W-2 reporting requirements related to coverage costs, including health flexible spending accounts (FSAs). Summarized details related to account-based plans are noted below.
- Plans that are not subject to the W-2 reporting rules
include (but are not limited to):
- Government coverage for military and military families
- Dental and vision plans
- HRA plans that are the only applicable employer-sponsored coverage options provided to an employee
- Health savings accounts (HSAs)
- Archer medical savings accounts (MSAs)
- If the employee's health FSA amount is greater than the aggregate salary reduction amount (for all qualified benefits), then the amount of the health FSA that is in excess of the employee's salary reduction amount must be included in the aggregate cost of coverage reported on the Form W-2. Specific health FSA examples are available in a CONEXIS Compliance Flash distributed earlier this year.
All employers providing applicable employer-sponsored coverage during the 2012 calendar year must report coverage costs. However, exceptions include employers that file fewer than 250 Forms W-2 for the 2011 calendar year and tribally chartered corporations that are wholly-owned by a federally recognized Indian tribal government.
For the full text and detailed health FSA examples, go to the IRS website. A helpful chart that outlines W-2 reporting requirements is also available online.
IRS 2012 Standard Mileage Rates
Since our last CONEXIS Comment edition, the IRS announced its standard mileage rates for 2012 in Notice 2012-1, and rates remain mostly unchanged from those issued in July 2011. These rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. Rates for cars, vans, pickups, and panel trucks are as follows:
- 55.5 cents per mile for business miles driven
- 23 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The only change is noted in the medical and moving rate, which has been reduced by 0.5 cents per mile.
Eligible Expense
As a reminder, the use of a personal automobile to obtain medical care may be a deductible medical expense if primarily for, and essential to, medical care. This mileage is an eligible health flexible spending account (FSA) expense, and employers may include mileage as an eligible expense under their health reimbursement arrangement (HRA).
You can read the full text on the IRS website.
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NEWS AND TRENDS |
Senate Votes to Reverse Commuter Benefit Cut
Legislation that would reverse cuts to pre-tax commuter benefits was passed by the U.S. Senate on March 14, 2012 by a 74-22 vote and sent to the House of Representatives. The Surface Transportation Reauthorization Bill includes a provision that would increase the monthly benefit for commuters who use public transportation and vanpools to $240, retroactive to January 2012.
In 2009, Congress increased the mass transit benefit from $120 per month to $230 per month as part of the economic stimulus package. The legislation had to be renewed on a yearly basis, and while an extension was approved in 2010, Congressional inaction at the end of 2011 prevented a renewal for 2012.
Current Limits
The federal government's failure to approve the extension by the December 31, 2011 deadline means pre-tax commuter benefits for public transportation and vanpools were cut from $230 per month to $125 per month for 2012. However, pre-tax parking benefits rose from $230 to $240 for 2012 due to a cost of living adjustment. If the House approves the retroactive extension, pre-tax commuter benefits are expected to be $240 per month.
Go to the U.S. Senate website for more information about this legislation.
HSA and HRA Participation Swells
After leveling off in 2008 and 2009 and declining slightly in 2010, participation in health savings accounts (HSAs) and health reimbursement arrangements (HRAs) surged in 2011, according to a recent report from the Employee Benefit Research Institute (EBRI).
HSA and HRA participation is up from $7.3 billion in assets on 5.4 million accounts in 2010 to $12.4 billion across 8.4 million accounts in 2011 - an annual increase of more than 70 percent and 55 percent, respectively. Also posting a year-to-year increase is the average health account balance, up nine percent to $1,490 in 2011.
Employer Contribution Trends
While this growth is attributed to an increase in the number of employers that now offer HRAs and HSAs, the report also recognized some variances in account contribution patterns over the past several years; most notable is declining employer contributions for those with employee-only coverage, which have fallen since 2008. The report notes this is mostly due to employers with new plan offerings and not changes to existing plans.
Approximately two-thirds of HRA or HSA participants reported a decrease in employer contributions in 2011, continuing a pattern that has been seen since 2006. Employer contributions of $1,000 or more significantly dropped from 37 percent in 2008 to 24 percent in 2011.
Of those with family coverage, employer contributions of $1,000 or more stayed the same at 64 percent. Individual contributions of $1,500 or more to HSA plans has risen, up from 21 percent in 2006 to 44 percent in 2011.
To view the
full version of this report, visit the EBRI website.
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BEHIND THE SCENES |
CONEXIS Launches New Website
CONEXIS is proud to announce the launch of our completely redesigned new website, www.conexis.com. The site offers a streamlined appearance and improved access to industry-critical information related to benefits administration.
Visitors can find the latest news and trends, compliance updates, a complete library of product information, regulatory resources, a glossary of industry terms, and frequently asked questions that address common concerns. The site not only provides a wealth of information, but it also has been optimized to work across various platforms and devices.
In addition, employers and participants can easily log in to their secure online accounts to access specific account information. Brokers and employers can also use the online quoting system to get pricing on all of CONEXIS' services. If you haven't done so already, check it out today!
Shining a Light on Heart Disease
 Fran Scott had anxiety. At least, that's what the doctor told her. Why else would a 16-year-old girl be fainting in the middle of school?
The day she fainted and then went into cardiac arrest, it became clear there was more to the story. Suddenly, Fran was learning terms like Long QT Syndrome, an abnormality of the heart's electrical system, and discovering the role heredity can play in heart disease.
The Family Factor
Heredity is a major risk factor in Fran's family. When Fran was two months old, her mother passed away because of sudden cardiac death. There have been a number of other sudden cardiac episodes in her family, including two cousins also living with heart disease.
"There's a perception out there that people with heart disease got it because they were not healthy or because they were not living right," said Fran, who had a pacemaker and a defibrillator implanted at age 17. "Since heart disease is linked to heredity, it's important that people know their family history."
Reaching Out
Today, Fran has turned her personal experience into an opportunity to reach out to others who are living with heart disease and educate the public on prevention. She started the Facebook page, Frannie's Heart Talk, in late 2010 and has recently begun spreading her message on local Dallas-area radio.
"I feel it's important to share my story," she said, "and to have a real dialogue about the struggles and the triumphs. I share what I have gone through, what I still go through, and my tips to both manage and prevent the disease.
"It was hard for me at first," she continued, "because I didn't want people to look at me differently. People can automatically assume that you have heart disease because you didn't take care of yourself. Or they can think that because I have heart disease, I'm not normal, or I'm limited in what I can do. But I have a full-time job. I go to college. I have a husband and four kids (Deandre, Jakobe, Nicholas, and Amanda). I live a full life."
CONEXIS Goes Red
Fran, a compliance specialist at CONEXIS, is near and dear to our hearts, so when she sought to increase heart awareness at work, a new annual event was born. Fran helped launch CONEXIS Goes Red, a company-wide heart health event to coincide with American Heart Month in February. This event featured vendors promoting heart-healthy living as well as blood pressure, cholesterol, and body mass index screenings, and raised more than $1,250 that was donated to the American Heart Association.
"The CONEXIS Goes Red event was a way for me to help educate more people, and it was a great success," she said. "Ultimately, I decided to speak out and become an advocate for heart health in the hopes that my story can help someone else. Just encouraging one person to learn about their family history, help change their unhealthy habits, or help them cope with their condition - that makes me happy."
FSA Savings
One of the most critical elements for Fran's health and ongoing management of heart disease is the way she uses her health benefits. With numerous medications to take and regular doctor's appointments, Fran has to manage costs carefully and relies on her CONEXIS FSA. "My health FSA really does give me the ability to manage my health care needs properly," she said. "Without it, I would struggle, and I don't know if I could afford to take care of myself. A health FSA really does make it easier."
For more information about Long QT Syndrome, heart disease, or risk factors, visit the American Heart Association website.
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