CONEXIS Comment Banner
Volume 12, Issue 4 November 19, 2014
COMPLIANCE CORNER
2015 Health FSA Plan Limits
Inflation adjustments for the 2015 tax year released by the IRS affect more than 40 tax provisions, including contribution limits to health flexible spending accounts (FSAs). The annual dollar limit on employee contributions to employer-sponsored health FSAs increases to $2,550 (up $50 from 2014). This maximum limit applies to general-purpose and limited-purpose health FSAs. To learn how this increase affects short plan years and any carryover amount from participants’ previous plan years, see our October 31, 2014 Compliance Flash.
See Revenue Procedure 2014-61 for more on all of the 2015 inflation adjustments.
ACA Regs Affecting Employers in 2015
Beginning January 1, 2015, there are several Affordable Care Act (ACA) regulations taking effect that employers and plan administrators need to address for compliance.
Pay or Play
Large employers with 100 or more full-time employees must comply with the employer-shared responsibility provisions known as the "employer mandate," or "pay or play." These employers must offer minimum essential health coverage to at least 70 percent of their full-time employees and eligible dependent children. This increases to 95 percent in 2016. Employers that fail to meet the mandate requirements in 2015 must make an employer responsibility payment.
Employers with 50 to 99 full-time employees have an additional year to comply with the mandate — until 2016. However, all employers must report on their workers and coverage in 2015 (see below). For more information on the employer mandate, visit the IRS Questions and Answers webpage.
Reporting Requirements
Internal Revenue Code Section 6055 requires employers that sponsor self-insured plans, as well as other entities that provide minimum essential coverage, to file annual returns for each individual provided coverage. Returns are due in early 2016; however, reporting of the coverage provided is required beginning 2015.
Coverage Statements
Section 6056 requires large employers subject to the employer mandate (those with 50 or more full-time employees) to file annual returns on the coverage offered and furnish coverage statements to their employees. Returns and coverage statements are due in early 2016; however, reporting of the coverage offered is required beginning 2015.
For additional details related to the requirements above, see the IRS website or speak with your organization’s legal or tax advisor.
Guidance for Complying with Employer Mandate
The IRS released updated guidance and draft forms instructing employers on how to comply with the employer mandate. The guidance includes employer reporting under Section 6056, which requires applicable large employers to file a transmittal with the IRS (Form 1094-C) and provide a new return to employees (Form 1095-C) in January 2016 for the 2015 calendar year. Employers are encouraged to review the guidance and draft forms in preparation for the first required filings in 2016. Finalized forms and instructions have not yet been released.
In addition, the IRS released Notice 2014-49 which proposes an approach to use when there is a change in the applicable measurement period for determining whether an employee is full-time for purposes of the employer mandate. Under the mandate, employers may use a monthly measurement method or a look-back measurement method to determine an employee’s full-time status. While Notice 2014-49 addresses the look-back measurement method only, it includes a number of scenarios that employers and plan administrators may find helpful. Employers can rely on this Notice through 2016 or until further guidance is issued.
Permitted Election Rules Expanded by IRS
In September, the IRS issued guidance that expanded the permitted election rules for health insurance under a Section 125 cafeteria plan. Notice 2014-55 explains two instances when employees participating in their employer’s cafeteria plan may revoke their group health plan elections during a coverage period.
1. A participant’s work hours are reduced, which results in an average of less than 30 hours per week. However, the reduction of hours does not affect the participant’s eligibility for health coverage under the employer’s group health plan.
2. A participant in the group health plan who wishes to end group coverage and purchase individual coverage through the federal or state exchanges established by the Affordable Care Act (the "Marketplace").
This guidance became effective on September 18, 2014, and employers must amend their cafeteria plans if they would like to allow their employees these two election options. Adoption of the plan amendment must take place on or before the last day of the plan year during which elections are allowed. The effective date may be retroactive to the first date of that plan year (if the employer follows the details outlined in Notice 2014-55), and plan participants should be informed of the plan change. However, an election to revoke coverage on a retroactive basis is not permitted. Employers may download and use this sample amendment to update their cafeteria plans, if needed.
Please note: This guidance does not apply to health flexible spending accounts (FSAs).
For additional details, please see Notice 2014-55 on the IRS website.
Departments Reiterate Guidance on PRAs
The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury released FAQs Part XXII providing three additional questions and answers on premium reimbursement arrangements (PRAs).
Briefly stated, Part XXII reiterates previous guidance affirming health care arrangements cannot be integrated with individual market policies to maintain ACA compliance. Thus, such arrangements may be subject to penalties, including excise taxes under section 4980D of the Internal Revenue Code. For more on these FAQs and others, visit the DOL website.
Departments Finalize Excepted Benefits for Dental and Vision
The IRS, the Employee Benefits Security Administration, and Department of Health and Human Services issued final regulations allowing employers with self-insured dental, vision, or long-term care plans to treat those plans as excepted benefits (without regard to a separate participant contribution for the benefits).
Effective December 1, 2014, the regulations apply to group plans and group plan insurance issuers for plan years starting in 2015. Additional guidance on limited wraparound coverage is still to come.
Is a Health FSA an Excepted Benefit?
Generally, excepted benefits provided under a group health plan or health insurance coverage are exempt from Health Insurance Portability and Accountability Act (HIPAA) and Affordable Care Act (ACA) market reform requirements. Typically, a health flexible spending account (FSA) is an excepted benefit if it meets certain conditions. For details on whether a health FSA plan meets the definition of an excepted benefit, see our March 2014 issue of the Comment or contact your CONEXIS representative for more information.
NEWS AND TRENDS
Verbal COBRA Notice Overlooks COBRA Regs
In a decision that overlooked central Consolidated Omnibus Budget Reconciliation Act (COBRA) guidance, a federal district court ruled that a COBRA Election Notice need not be in writing to satisfy COBRA notice requirements.
In Madonia v. S 37 Management, Inc., the court held that the employer/plan administrator satisfied notice requirements by verbally giving notice of COBRA rights and receiving premium payment upon an employee termination. Nevertheless, this ruling ignored a number of federal regulations that describe the form and structure of COBRA notices. It also ignored the precise time periods necessary for both the COBRA election and initial premium payment (i.e., qualified beneficiaries be given at least a 60-day period in which to make a COBRA election, and then another 45 days in which to make the initial premium payment).
To satisfy COBRA notice requirements, employers are encouraged to use the Department of Labor’s model General Notice and model Election Notice when providing COBRA notices to employees. Group health plans are not required to use these 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.
Outsourcing COBRA administration with CONEXIS can drastically reduce the time an employer spends on COBRA-related tasks and ensure strict compliance with all COBRA laws and regulations. Moreover, we assume full responsibility for the work we do and provide financial safeguards to the organization. No other COBRA administrator provides this same level of protection. Contact us to learn more.
IRS Clarifies Rules to Qualified Vanpooling
As many employers already know, a commuter benefits program lets employees save money by using pre-tax dollars to pay for eligible transit and parking expenses. And one of the eligible work-related transit expenses includes the use of vanpools.
Now there’s an informational letter from the IRS that provides insightful details on the rules that apply when vanpooling is offered as a qualified transportation plan benefit. The letter, issued as a response to an employee inquiry, addresses all of the rules that apply to employer-operated, employee-operated, and transit-operated vanpools. To view details, see the IRS publication 2014-0028.
NYC Employers to Offer Commuter Benefits
Thanks to a new ordinance, New York City joins Washington, D.C., and the City and County of San Francisco in passing commuter benefits bills this year. Introduction 295-A requires Big Apple businesses with 20 or more full-time employees to offer pre-tax commuter benefits to their workers.
This legislation will give an estimated 450,000 more New Yorkers access to saving money on their daily commutes in 2016 when the bill takes effect. About 700,000 New Yorkers benefit from this tax break currently.
The bill will also allow businesses to save money through reduced FICA contributions. With enough participation, the savings can even cover the cost of offering the plan. If you’d like to know more about offering commuter benefits to your employees, simply contact one of our sales representatives.
Second Round of HIPAA Audits Delayed
Scheduled to begin this fall, phase two of the HIPAA Audit Program is now delayed. It’s also changing.
Phase two follows a pilot program launched in 2012 by the Department of Health and Human Services’ Office for Civil Rights (OCR) to assess HIPAA compliance overall in the industry. The delay gives OCR more time to implement a new Web portal through which covered entities selected for audits can easily submit their information. And, instead of 400 desk audits, OCR plans to conduct fewer than 200. But these audits will be more on-site and comprehensive than originally planned.
What’s staying the same is the required documentation for entities selected for audits. OCR recommends that covered entities and business associates use this delay to review and update, if needed, their policies and procedures for compliance with the Security Rule (including risk analysis and management), the Privacy Rule (including privacy practices and access rights), and breach notification (including content and timeliness) under the Breach Notification Rule.
BEHIND THE SCENES
CONEXIS Supports Families of Fallen Heroes
This year, CONEXIS employees donated their time and money to help honor fallen firefighters and police officers through the Guns and Hoses Foundation of North Texas. This notable nonprofit provides support and benefits to the families of our local heroes killed in the line of duty. It also assists at-risk youth programs and children’s charities within our North Texas communities.
"Since food is always a big draw, our employees coordinated and participated in several tasty food and treats sales to raise funds," said Nicole Evans, CONEXIS senior HR specialist/recruiter. Events included a St. Patrick’s Day potato bar, Cinco de Mayo tamale plates, and "Beat the Texas Heat" cupcake-ice cream cones. "We also held our annual Operation Drumstick Thanksgiving luncheon where we collected donations at the door," she said.
"We can never repay the debit we owe the firefighters and police officers who lost their lives while protecting and serving us. But we hope our working together to raise and give donated funds to this organization helps to honor them," added Nicole. To learn more about Guns and Hoses, visit gunsandhosesnorthtx.org.
Beginning to End Zone
From the time Germain Gardea can remember, he’s been a Dallas Cowboys fan. But this season, instead of rooting for them from the comfort of his own home, he’s leading others in rooting on the Cowboys from the corners of the end zone.
"I happened to hear about tryouts for the 2014 Dallas Cowboys Flag Team being held this summer. Since I’m such a huge fan, I thought it would be something I’d really enjoy as well as a cool way to represent the football team," said Germain, a technical writer in the CONEXIS EDI department. "I also thought it would be a great way to get in and stay in shape with all the activities that Flag Team members do. And was I ever right."
Flag Team members have to be at home games six hours ahead of kickoff. As ambassadors of the Cowboys, their duties include supporting pregame promotions, assisting VIPs, leading the football team out on the field, helping fans cheer on the players during the game with various signs and antics, and running flags across the Cowboys end zone after every one of their touchdowns and field goals.
"It’s a big commitment and exhausting, but it’s also one of the most fun and satisfying things I’ve ever done in my life. As long as I live in the area and have legs that don’t quit on me, I plan to try out each year, and hopefully, continue the privilege of being a Dallas Cowboys Flag Team member," Germain said.
CONTACT US
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.
CONEXIS Logo
877.CONEXIS   |  WWW.CONEXIS.COM
© 2014 CONEXIS, a division of WageWorks, Inc. All rights reserved.
CONEXIS uses reasonable efforts to ensure that the information provided in the CONEXIS Comment Newsletter is accurate as of the date of publication. However, information of this nature can change at any time. You should confirm the accuracy of any such information prior to taking any action.
CONEXIS does not render legal, accounting, or other professional advice. If you need legal advice, you must seek the opinion of a qualified attorney.
No part of this publication may be reprinted without the written permission of CONEXIS.
View our Email Privacy Policy.