Distributed November 3, 2011
In this edition:
- Trade Adjustment Assistance Extension Act
- Changes to Section 111 Reporting Requirements
- Changes to Commuter Benefits Beginning January 1, 2012
- 2012 IRS Plan Limits
Trade Adjustment Assistance Extension Act
On October 21, 2011, President Obama signed into law the Trade Adjustment Assistance Extension Act (TAAEA), which increases the amount of the Health Coverage Tax Credit (HCTC) that is available to certain individuals receiving Trade Adjustment Assistance to 72.5 percent. This increase is retroactive to March 1, 2011, and the provision will expire at the end of 2013.
The American Recovery and Reinvestment Act of 2009 (ARRA) raised the HCTC amount from 65 percent to 80 percent through December 31, 2010. In addition, the Omnibus Trade Act, which passed in late December 2010, extended the period during which the HCTC was increased to 80 percent to coverage months beginning before February 13, 2011. With the new TAAEA legislation, individuals receiving the HCTC for coverage months March 1, 2011 and later will be eligible for a retroactive 7.5 percent additional credit to their COBRA premiums.
Qualified Beneficiaries
In addition, TAAEA provides an extension of COBRA coverage through January 1, 2014 to qualified beneficiaries who were:
- Pension Benefit Guaranty Corporation (PBGC) recipients
- Survivors of PBGC recipients
- Eligible Trade Adjustment Assistance recipients who were involuntarily terminated or experienced a reduction of hours
Additional Information
The full TAAEA text is available online and additional information regarding this new legislation can be found on the Department of Labor website.
Changes to Section 111 Reporting Requirements
The Centers for Medicare and Medicaid Services (CMS) recently issued an alert that provides updated information regarding the reporting requirements for health reimbursement arrangements (HRA) under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (known simply as Section 111).
Change to Annual Benefit Level Reporting Threshold
Beginning October 3, 2011, only HRA coverage with an annual benefit level of $5,000 or more must be reported. This amount was increased from the previous amount of $1,000. Any funds that are rolled over from the previous year's coverage must be included when calculating the current year's annual benefit amount. This new threshold amount applies to all new or renewing HRA coverage, which becomes effective on or after October 3, 2011.
Notice of Termination
Under current reporting requirements, termination dates must be reported whenever a covered individual loses or cancels coverage under the HRA. Effective immediately, a notice of termination must also be reported whenever an HRA participant's coverage is exhausted and no additional funds will be added to the HRA for the remainder of the plan's current coverage term.
More Information
Find the full text of the alert on the CMS website.
Commuter Benefits for 2012
The IRS recently released the 2012 maximum limits for qualified parking and transit benefits. The new limit for qualified parking benefits provided by an employer to its employees increases to $240 per month in 2012, up $10 from the 2011 monthly maximum limit. However, the temporary increase for pre-tax transit benefits extended under the American Recovery and Reinvestment Act of 2009 (ARRA) will expire at the end of 2011. The monthly maximum limit for the pre-tax transit benefit under a Section 132 transportation plan decreases from $230 to $125 per month for 2012.
Many Section 132 plans require that participants purchase their transit passes or other media in advance. For these plans, it is critical that this information is communicated to the plan participants in advance of the ordering period for January passes.
2012 IRS Plan Limits
In addition to new commuter benefits, other 2012 plan limits issued by the IRS are noted in the chart below.
|
2012 IRS Plan Limits |
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|---|---|---|---|
[1] Amount decrease is due to the expiration to the temporary increase under the American Recovery and Reinvestment Act of 2009 (ARRA). |
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[2] An employee is treated as being eligible for the entire calendar year as long as he or she is eligible during the last month of the calendar year. However, failure to maintain eligibility during the “testing period” will result in adverse tax consequences (including an additional excise tax). The testing period begins in December of the year in which the employee becomes eligible and ends the last day of December of the following year. |
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[3] The available adoption credit begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $189,710 and is completely phased out for taxpayers with modified adjusted gross income of $229,710 or more. |
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[4] The amount excludable from an employee's gross income begins to phase out for taxpayers with modified adjusted gross income in excess of $185,210 and is completely phased out for taxpayers with a modified adjusted gross income of $225,210 or more. |
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[5] The amount excludable from an employee's gross income begins to phase out for taxpayers with modified adjusted gross income in excess of $182,520 and is completely phased out for taxpayers with a modified adjusted gross income of $222,520 or more. |
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Plan Year |
2012 |
2011 |
2010 |
Transit Passes and Vanpooling |
[1]$125 |
$230 |
$230 |
Parking |
$240 |
$230 |
$230 |
Highly Compensated Employee – Section 414(q) |
$115,000 |
$110,000 |
$110,000 |
Key Employee – Section 416(i) |
$165,000 |
$160,000 |
$160,000 |
HSA Maximum Annual Contribution Limit |
[2]$3,100 |
[2] $3,050 |
[2] $3,050 |
HSA Maximum Annual Contribution Limit |
[2]$6,250 |
[2] $6,150 |
[2] $6,150 |
HSA Catch-up Contribution Limit |
$1,000 |
$1,000 |
$1,000 |
HSA Minimum Annual Deductible |
$1,200 |
$1,200 |
$1,200 |
HSA Minimum Annual Deductible |
$2,400 |
$2,400 |
$2,400 |
HSA Maximum Out-of-pocket |
$6,050 |
$5,950 |
$5,950 |
HSA Maximum Out-of-pocket |
$12,100 |
$11,900 |
$11,900 |
Maximum Exclusion for Employer-provided Adoption Assistance |
[3] $12,650 |
[4] $13,170 |
[5] $13,170 |
CONEXIS
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