The do’s and don’ts of ADA accommodations: 3 new rulings

Are you compliant with ADA accommodation laws? More than 25,000 ADA charges were filed by the EEOC in the past year, despite employers best compliance efforts. Continue reading to learn more.


Employers are facing more disability discrimination lawsuits than ever – despite their best compliance efforts. 
In the past year alone, over 25,000 ADA charges were filed by the EEOC.

The right way to accommodate

One area that’s often a point of contention? The accommodation process. Workers and employers can have a very different idea of how a disability should be accommodated.

And while each disability needs to be evaluated on a case by case basis, several recent court rulings shed further light on employers’ ADA accommodation responsibilities.

1. In Brumley v. United Parcel Service, a court ruled that ADA accommodations don’t necessarily have to be given to employees immediately.

Melissa Brumley delivered packages for UPS when she hurt her back lifting a heavy box from her truck.

She took leave to heal, and her doctor said when she returned to work she could no longer lift packages or drive. Since these were two essential functions of her job, Brumley’s manager put her on leave while waiting on more information from her doctor.

After beginning the interactive process and considering a reassignment, Brumley’s doctor cleared her to go back to her old job, and UPS ended the process.

But Brumley sued the company for failing to accommodate her during those weeks she was on leave, which resulted in loss of pay.

A district court ruled in favor of UPS, and on appeal, the 6th Circuit agreed. It said just because the company didn’t accommodate the employee immediately didn’t mean it violated the ADA.

UPS began the interactive process and only stopped once Brumley was cleared to go back to her old job without an accommodation.

The key things the company did? Beginning the process and requesting additional info from Brumley’s doctor – this showed the court a good faith effort to comply with the ADA.

2. In Sharbono v. Northern States Power, a court ruled a company that failed to find an accommodation didn’t fail to fulfill its ADA duties.

After a foot injury, James Sharbono wasn’t able to wear the steel-toed boots required by his company’s safety procedures.

HR worked with Sharbono and suggested several accommodations, such as altering his boots and getting a custom pair made, but none worked out. Sharbono was forced to retire, and he sued for ADA violation.

But the 8th Circuit ruled the company acted in good faith. It worked with Sharbono and suggested several accommodations. It was only after exhausting all options that Sharbono was forced to retire. The court said the company fulfilled its ADA responsibilities, despite finding no accommodation for Sharbono.

3. In Stokes v. Nielsen, a court decided companies can be required to make accommodations that cover more than just essential job functions.

Jacqueline Stokes had impaired vision and received multiple accommodations that allowed her to do her job. Stokes then requested special meeting handouts, printed in large letters, that she could read beforehand.

Despite many promises from HR, Stokes never received her requested handouts. She sued, claiming to be denied a reasonable accommodation under the ADA.

While the company argued it gave Stokes everything she needed to do her job, therefore fulfilling its ADA responsibilities, the Fifth Circuit disagreed.

“Our circuit has explicitly rejected the requirement that requested modifications must be necessary to perform essential job functions to constitute a reasonable accommodation,” it said. And Stokes’ request was deemed reasonable.

This case shows if an employee makes a reasonable request for their job, it’s easier to just grant it.

SOURCE: Mucha, R. (4 January 2019) "The do’s and don’ts of ADA accommodations: 3 new rulings" (Web Blog Post). Retrieved from http://www.hrmorning.com/the-dos-and-donts-of-ada-accommodations-3-new-rulings/


4 mistakes to avoid at the intersection of FMLA and PTO

Are your leave policies explicitly outlined for your employees? A costly mistake employers often make is not outlining the concurrent rule to employees. Read on for more mistakes employers make when it comes to FMLA and PTO.


By now, many employers can recite the basic requirements of the federal Family and Medical Leave Act (FMLA) in their sleep. The law provides eligible employees (those who have at least one year of service and 1,250 hours under their belt) with up to 12 weeks of unpaid, job-protected leave over a 12-month period for qualifying family-related or medical reasons. FMLA covers companies with 50 or more employees located within 75 miles of each other.

While the law itself is conceptually straightforward, administration can become incredibly complex — especially when you throw other types of leave entitlements into the mix such as workers' comp, disability leave, and paid time off (PTO).

HR Dive recently spoke with three employment law attorneys about the most common — and costly — leave administration errors employers make when it comes to the intersection of FMLA and paid leave.

Mistake #1: Not running leaves concurrently

"I would say that the biggest issue that we see is a lot of employers do not have policies that provide for the use of paid time off concurrently with the FMLA," said attorney Molly Batsch, an officer at the St. Louis office of Greensfelder, Hemker & Gale, P.C. "[Because] the FMLA regulations allow employers to require employees to use any paid time off concurrently with unpaid FMLA leave, we really encourage employers to put that specifically in their policies."

Attorney Jeff Nowak, a partner at the Chicago office of Franczek Radelet P.C., concurred via email: "A decent number of employers don't realize that they can run FMLA leave concurrently with paid leave benefits such as worker's compensation benefits — or they forget to run both at the same time."

Failing to run leaves concurrently, when permitted, can be costly for employers. A series of consecutive leaves strung together can mean longer absences and increased workplace disruption.

Mistake #2: Policy confusion

A similar mistake employers make is that they don't explicitly outline the concurrent rule to employees. Your FMLA policy should make clear that any paid time off will run concurrently with unpaid FMLA time, advised Batsch: "I think that employers have a few misconceptions about that.

"The first misconception would be that the employee gets to pick," she said. "If the employee doesn't want to run the two concurrently, then they can go ahead and take 12 weeks of unpaid FMLA and then they can take their five weeks of vacation after that, and that is not the case. It is permissible for an employer to require that time to run concurrently. So that's the first mistake I see."

Make sure your policy is abundantly obvious about that so employees don't get upset about that requirement when it's being administered.

Mistake #3: Missing an important caveat about FMLA and paid leave

There is an important exception to the general rule that employers may require an employee to use paid leave during unpaid FMLA leave, one that many employers miss, according to all three attorneys HR Dive spoke with.

"If an employee is on FMLA leave and simultaneously in receipt of a paid benefit, in any amount, FMLA leave is considered paid. When it's paid FMLA, an employer may not require that the employee substitute PTO — but it can permit that," said attorney David Mohl, a principal at the Atlanta office of Jackson Lewis PC.

For example, he said, if short-term disability provides 70% income replacement, an employer cannot require that the employee use PTO (or other paid leave) to make up the difference. If, however, there is a waiting period before that paid benefit kicks in — say, seven days — an employer may require the use of paid leave during that seven days.

Batsch noted that even if the employee is receiving paid time off via a third-party disability plan rather than an employer disability plan, "that's still a situation where you can't require an employee to run their paid time off concurrently with their FMLA time." This was clarified by the Seventh Circuit in a 2007 case (Repa v. Roadway Express, Inc., 477 F.3d 938).

Mistake #4: Forgetting to consider the patchwork of local laws

"The growing number of state and local laws heap a load of additional compliance concerns onto employers," said Nowak. "Not only are there additional considerations for accrual, carryover, and reasons for leave, but these new leave laws tend to provide job-protected leave in situations where the medical condition is not covered by the FMLA. As a result, employers cannot discipline an employee for an absence when he or she is utilizing leave covered by one of these leave laws."

Of course, those laws only make the interactions with FMLA management more complex.

"Paid parental leave policies interact with FMLA and gender discrimination laws," said Mohl. "PPL policies are, of course, a type of paid leave; some operate as a disability benefit."

Paid leave will likely continue to expand in scope in the coming months as more states and cities consider mandating it. Currently, 10 states and about 30 localities guarantee some type of paid sick leave. A number of federal policies have also been proposed, but no movement has been seen at that level yet.

SOURCE: Carsen, J. (27 November 2018) "4 mistakes to avoid at the intersection of FMLA and PTO" (Web Blog Post). Retrieved from https://www.hrdive.com/news/4-mistakes-to-avoid-at-the-intersection-of-fmla-and-pto/542962/


Compliance Recap - December 2018

December was a relatively quiet month in the employee benefits world.

A U.S. District Court issued an order declaring that the Patient Protection and Affordable Care Act (ACA) is unconstitutional. The Equal Employment Opportunity Commission (EEOC) issued two final rules to remove certain wellness program incentives. The Department of Labor (DOL) updated its Form M-1 filing guidance for association health plans.

UBA Updates

UBA updated or revised existing guidance:

U.S. District Court Declares ACA Unconstitutional

On December 14, 2018, the U.S. District Court for the Northern District of Texas (Court) issued a declaratory order in ongoing litigation regarding the individual mandate and the Patient Protection and Affordable Care Act (ACA). The Court declared that the individual mandate is unconstitutional and declared that the rest of the ACA – including its guaranteed issue and community rating provisions – is unconstitutional.

The Court did not grant the plaintiffs’ request for a nationwide injunction to prohibit the ACA’s continued implementation and enforcement. The Court’s declaratory judgment simply defined the parties’ legal relationship and rights under the case at this relatively early stage in the case.

On December 16, 2018, the Court issued an order that requires the parties to meet and discuss the case by December 21, 2018, and to jointly submit a proposed schedule for resolving the plaintiffs’ remaining claims.

On December 30, 2018, the Court issued two orders. The first order grants a stay of its December 14 order. This means that the court’s order regarding the ACA’s unconstitutionality will not take effect while it is being appealed. The second order enters the December 14 order as a final judgment so the parties may immediately appeal the order.

On December 31, 2018, the Court issued an order that stays the remainder of the case. This means that the Court will not be proceeding with the remaining claims in the case while its December 14 order is being appealed. After the appeal process is complete, the parties are to alert the Court and submit additional court documents if they want to continue with any remaining claims in the case.

At this time, the case’s status does not impact employers’ group health plans. However, employers should stay informed for the final decision in this case.

Read more about the court case.

EEOC Issue Final Rules to Remove Wellness Program Incentive Limits Vacated by Court

On December 20, 2018, the Equal Employment Opportunity Commission (EEOC) issued two final rules to remove wellness program incentives.

As background, in August 2017, the United States District Court for the District of Columbia held that the U.S. Equal Employment Opportunity Commission (EEOC) failed to provide a reasoned explanation for its decision to allow an incentive for spousal medical history under the Genetic Information Nondiscrimination Act (GINA) rules and adopt 30 percent incentive levels for employer-sponsored wellness programs under both the Americans with Disabilities Act (ADA) rules and GINA rules.

In December 2017, the court vacated the EEOC rules under the ADA and GINA effective January 1, 2019. The EEOC issued the following two final rules in response to the court’s order.

The first rule removes the section of the wellness regulations that provided incentive limits for wellness programs regulated by the ADA. Specifically, the rule removes guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that ask them to respond to disability-related inquiries or undergo medical examinations.

The second rule removes the section of the wellness regulations that provided incentive limits for wellness programs regulated by GINA. Specifically, the rule removes guidance that addressed the extent to which an employer may offer an inducement to an employee for the employee’s spouse to provide current health status information as part of a health risk assessment (HRA) administered in connection with an employee-sponsored wellness program.

Both rules will be effective on January 1, 2019.

Read more about the EEOC’s final rules.

DOL Updates Form M-1 Filing Guidance for Association Health Plans

On December 3, 2018, the Department of Labor (DOL) published its “10 Tips for Filing Form M-1 For Association Health Plans And Other MEWAs That Provide Medical Benefits” that provides plan administrators with information on when to file and how to complete portions of Form M-1.

The DOL emphasizes that all multiple employer welfare arrangements (MEWAs) that provide medical benefits, including association health plans (AHPs) that intend to begin operating under the DOL’s new AHP rule, are required to file an initial registration Form M-1 at least 30 days before any activity including, but not limited to, marketing, soliciting, providing, or offering to provide medical care benefits to employers or employees who may participate in an AHP.

Read more about the DOL guidance.

Question of the Month

Q: If an employee must increase the hours of childcare needed because the employee changes work schedules, may the employee increase the DCAP amount that the employee elects?

A: Yes, increasing the hours of childcare is a permitted election change event that would allow an employee to increase the employee’s DCAP election amount consistent with the change in childcare cost.

**This information is general and is provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.


From HSA to 401(k) contribution limits, 11 numbers to know for 2019

Are health savings accounts (HSA), 401(k)s and flexible spending accounts (FSA) a part of your employer-sponsored benefits? Read this blog post for the 11 numbers you should know for 2019.


There are a slew of important figures companies and employees need to know regarding health savings accounts, 401(k)s and flexible spending accounts. While the IRS announced HSA changes in May, the agency only recently announced annual changes to FSAs and 401(k)s. From contribution limits to out-of-pocket amounts, here are the figures employers need to know — all of which take effect in January.

$19,000: 401(k) pre-tax contribution limits

The IRS in November said it is increasing the pre-tax contribution limits for employees who participate in a 401(k), 403(b) and most 457 plans to $19,000 from $18,500. That limit also applies to the federal government’s Thrift Savings Plan.

$6,000: 401(k) catch-up contribution limit

For participants ages 50 and over, the additional 401(k) catch-up contribution limit, which is set by law, will stay at $6,000 for 2019.

$6,000: IRA contribution limits

IRA contribution limits are being raised to $6,000 from $5,500 — the first time the IRS has increased the limits since 2013. The catch-up contribution limit for people 50 and over will still be $1,000.

$3,500: Annual HSA contribution limit for individuals

The 2019 annual health savings account contribution limit for individuals with single medical coverage is $3,500, an increase of $50 from 2018.

$7,000: HSA contribution limit for family coverage

For HSAs linked to family coverage, the 2019 contribution limit will rise by $100, to $7,000, above the family cap set for 2018.

$1,350: HDHP minimum deductible for individual

The minimum deductible for a qualifying high-deductible health plan remains unchanged for 2019: $1,350 for individual coverage.

$2,700: HDHP minimum deductible for family

The minimum deductible for a qualifying high-deductible health plan remains at $2,700 for family coverage.

$6,750: HDHP maximum out-of-pocket amounts (individual)

Deductibles, copayments and other amounts that do not include premiums will have a maximum limit of $6,750 for individual coverage next year, up $100 from 2018.

$13,500: HDHP maximum out-of-pocket amounts (family)

Deductibles, copayments and other amounts that do not include premiums will have a maximum limit of $13,500 for family coverage, up $200 from 2018.

$1,000: HSA catch-up contributions

Individuals 55 years or older can contribute an extra $1,000 to their health savings account in 2019. The amount remains unchanged from 2018.

$2,700: FSA contribution limit

The health flexible spending account contribution limit for 2019 is $2,700 — an increase of $50 over the 2018 limit. The increase also applies to limited-purpose FSAs that are restricted to dental and vision care services, which can be used in tandem with health savings accounts.

SOURCE: Mayer, K. (6 December 2018) "From HSA to 401(k) contribution limits, 11 numbers to know for 2019" (Web Blog Post). Retrieved from https://www.benefitnews.com/list/from-hsa-to-401-k-contribution-limits-11-numbers-to-know-for-2019


The ACA Remains In Place After Being Struck Down By Federal Court

Overview

On Dec. 14, 2018, a federal judge ruled in Texas v. United States that the entire Affordable Care Act (ACA) is invalid due to the elimination of the individual mandate penalty in 2019. The decision was not stayed, but the White House announced that the ACA will remain in place pending appeal.

This lawsuit was filed by 20 states as a result of the 2017 tax reform law that eliminates the individual mandate penalty. In 2012, the U.S. Supreme Court upheld the ACA on the basis that the individual mandate is a valid tax. With the penalty’s elimination, the court, in this case, ruled that the ACA is no longer valid under the U.S. Constitution.

Action Steps

This ruling is expected to be appealed and will likely be taken up by the Supreme Court. As a result, a final decision is not expected to be made until that time. The federal judge’s ruling left many questions as to the current state of the ACA; however, the White House announced that the ACA will remain in place pending appeal.

Background

The ACA imposes an “individual mandate” beginning in 2014, which requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. In 2011, a number of lawsuits were filed challenging the constitutionality of this individual mandate provision.

In 2012, the U.S. Supreme Court upheld the constitutionality of the ACA in its entirety, ruling that Congress acted within its constitutional authority when enacting the individual mandate. The Court agreed that, while Congress could not use its power to regulate commerce between states to require individuals to buy health insurance, it could impose a tax penalty using its tax power for individuals who refuse to buy health insurance.

Highlights

  • A federal judge ruled that the entire ACA is invalid due to the elimination of the individual mandate penalty.
  • This ruling is expected to be appealed and will likely be taken up by the Supreme Court.
  • The ACA will remain in place pending appeal.

Important Dates

December 14, 2018

A federal judge ruled that the entire ACA is invalid due to the elimination of the individual mandate penalty

January 1, 2019

Individuals will no longer be penalized under the ACA for failing to obtain acceptable health insurance coverage

However, a 2017 tax reform bill, called the Tax Cuts and Jobs Act, reduced the ACA’s individual mandate penalty to zero, effective beginning in 2019. As a result, beginning in 2019, individuals will no longer be penalized for failing to obtain acceptable health insurance coverage.

Texas v. United States

Following the tax reform law’s enactment, 20 Republican-controlled states filed a lawsuit again challenging the ACA’s constitutionality. The plaintiffs, first, argued that the individual mandate can no longer be considered a valid tax, since there will no longer be any revenue generated by the provision.

In addition, in its 2012 ruling, the Supreme Court indicated (and both parties agreed) that the individual mandate is an essential element of the ACA, and that the remainder of the law could not stand without it. As a result, the plaintiffs argued that the elimination of the individual mandate penalty rendered the remainder of the ACA unconstitutional.

The U.S. Justice Department chose not to fully defend the ACA in court and, instead, 16 Democratic-controlled states intervened to defend the law.

Because the court determined that the individual mandate is no longer a valid tax, but is an essential element of the ACA, it ultimately ruled that the ACA is invalid in its entirety.

Federal Court Ruling

In his ruling, Judge Reed O’Connor ultimately agreed with the plaintiffs, determining that the individual mandate can no longer be considered a valid exercise of Congressional tax power. According to the court, “[u]nder the law as it now stands, the individual mandate no longer ‘triggers a tax’ beginning in 2019.” As a result, the court ruled that “the individual mandate, unmoored from a tax, is unconstitutional.”

Because the court determined that the individual mandate is no longer valid, it now had to determine whether the provision is “severable” from the remainder of the law (meaning whether other portions of the ACA can remain in place or whether the entire law is invalid without the individual mandate).

In determining whether the remainder of the law could stand without the individual mandate, the court pointed out that “Congress stated three separate times that the individual mandate is essential to the ACA … [and that] the absence of the individual mandate would ‘undercut’ its ‘regulation of the health insurance market.’ Thirteen different times, Congress explained how the individual mandate stood as the keystone of the ACA … [and,] ‘together with the other provisions’ [the individual mandate] allowed the ACA to function as Congress intended.” As a result, the court determined that the individual mandate could not be severed, making the ACA invalid in its entirety.

Impact of the Federal Court Ruling

Judge O’Conner’s ruling left many questions as to the current state of the ACA, because it did not order for anything to be done or stay the ruling pending appeal. However, this ruling is expected to be appealed, and the White House announced that the ACA will remain in place until a final decision is made. Many industry experts anticipate that the Supreme Court will likely take up the case, which means that a final decision will not be made until that time.

While these appeals are pending, all existing ACA provisions will continue to be applicable and enforced. Although the individual mandate penalty will be reduced to zero beginning in 2019, employers and individuals must continue to comply with all other applicable ACA requirements. This ruling does not impact the 2019 Exchange enrollment, the ACA’s employer shared responsibility (pay or play) penalties and related reporting requirements, or any other applicable ACA requirement.

Download the PDF


Compliance Recap - November 2018

Compliance Recap

November 2018

November was a busy month in the employee benefits world.

The Internal Revenue Service (IRS) extended the due date for employers to furnish Forms 1095-C or 1095-B to individuals, extended “good faith compliance efforts” relief for 2018, and issued specifications for employer-provided substitute ACA forms. The Department of the Treasury (Treasury), Department of Labor (DOL), and Department of Health and Human Services (HHS) released two final rules on contraceptive coverage exemptions.

The IRS released indexed Patient-Centered Outcomes Research Institute (PCORI) fees and inflation-adjusted limits for various benefits. The DOL, IRS, and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2018 Form 5500 annual return/report and instructions.

For survivors of the 2018 California wildfires, the IRS provided tax relief and the DOL released employee benefit guidance. The IRS provided guidance to employers who adopt leave-based donation programs to provide charitable relief for victims of Hurricane Michael. The Treasury released its Priority Guidance Plan that lists projects that will be the focus of the Treasury and IRS for the period from July 1, 2018, through June 30, 2019.

UBA Updates

UBA released one new advisor: 2019 Annual Benefit Plan Amounts card

UBA updated or revised existing guidance:

IRS Extends Due Date to Furnish ACA Forms to Participants and Provides Good Faith Penalty Relief

The Internal Revenue Service (IRS) issued Notice 2018-94 to extend the due date to furnish 2018 Forms 1095-B and 1095-C to individuals. The due date moves from January 31, 2019, to March 4, 2019.

The IRS also extends “good faith compliance efforts” relief for 2018. As in prior years, this relief is applied only to incorrect or incomplete information reported in good faith on a statement or return. The relief does not apply to a failure to timely furnish a statement or file a return.

Read more about the notice.

IRS Issues Specifications for Employer-Provided Substitute ACA Forms

The Internal Revenue Service (IRS) issued Publication 5223 General Rules and Specifications for Affordable Care Act Substitute Forms 1095-A, 1094-B, 1095-B, 1094-C, and 1095-C that describes how employers may prepare substitute forms to furnish ACA reporting information to individuals and the IRS.

Treasury, DOL, and HHS Release Two Final Rules on Contraceptive Coverage Exemptions

The Department of the Treasury (Treasury), Department of Labor (DOL), and Department of Health and Human Services (HHS) (collectively, Departments) released two final rules on contraceptive coverage exemptions. These rules finalize the Departments’ interim final rules that were published on October 13, 2017. HHS also issued a press release and fact sheet on these final rules.

The first final rule provides an exemption from the contraceptive coverage mandate to entities (including certain employers) and individuals that object to services covered by the mandate on the basis of sincerely held religious beliefs.

The second final rule provides an exemption from the contraceptive coverage mandate to nonprofit organizations, small businesses, and individuals that object to services covered by the mandate on the basis of sincerely held moral convictions.

The final rules will be effective on January 14, 2019.

Read more about the final rules.

IRS Releases Indexed PCORI Fee

The Patient Protection and Affordable Care Act (ACA) imposes a fee on insurers of certain fully insured plans and plan sponsors of certain self-funded plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). The PCORI fee is due by July 31 of the year following the calendar year in which the plan or policy year ends.

The Internal Revenue Service issued Notice 2018-85 to announce the PCORI fee of $2.45 for policy years and plan years that end on or after October 1, 2018, and before October 1, 2019.

Plan/Policy Year

Last Year Fee Is
Due (2.45,
indexed/person)

Nov. 1, 2017 – Oct. 31, 2018

July 31, 2019

Dec. 1, 2017 – Nov. 30, 2018

July 31, 2019

Jan. 1, 2018 – Dec. 31, 2018

July 31, 2019

Feb. 1, 2018 – Jan. 31, 2019

July 31, 2020

March 1, 2018 – Feb. 28, 2019

July 31, 2020

April 1, 2018 – March 31, 2019

July 31, 2020

May 1, 2018 – April 30, 2019

July 31, 2020

June 1, 2018 – May 31, 2019

July 31, 2020

July 1, 2018 – June 30, 2019

July 31, 2020

Aug. 1, 2018 – July 31, 2019

July 31, 2020

Sept. 1, 2018 – Aug 31, 2019

July 31, 2020

Oct 1, 2018 – Sept. 30, 2019

July 31, 2020

Read more about the PCORI fee.

IRS Releases 2019 Inflation-Adjusted Limits

The Internal Revenue Service (IRS) released its inflation-adjusted limits for various benefits. For example, the maximum contribution limit to health flexible spending arrangements (FSAs) will be $2,700 in 2019. Also, the maximum reimbursement limit in 2019 for Qualified Small Employer Health Reimbursement Arrangements will be $5,150 for single coverage and $10,450 for family coverage.

Read more about the 2019 limits.

Advance Informational Copies of 2018 Form 5500 Annual Return/Report

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2018 Form 5500 annual return/report and related instructions.

Here are some of the changes that the instructions highlight:

  • Principal Business Activity Codes. Principal Business Activity Codes have been updated to reflect updates to the North American Industry Classification System (NAICS). For Line 2d, a plan administrator would enter the six-digit Principal Business Activity Code that best describes the nature of the plan sponsor’s business from the list of codes on pages 78-80 of the Form 5500 Instructions.
  • Administrative Penalties. The instructions have been updated to reflect that the new maximum penalty for a plan administrator who fails or refuses to file a complete or accurate Form 5500 report has been increased to up to $2,140 a day for penalties assessed after January 2, 2018, whose associated violations occurred after November 2, 2015.Because the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015 requires the penalty amount to be adjusted annually after the Form 5500 and its schedules, attachments, and instructions are published for filing, be sure to check for any possible required inflation adjustments of the maximum penalty amount that are published in the Federal Register after the instructions have been posted.
  • Form 5500-Participant Count. The instructions for Lines 5 and 6 have been enhanced to make clearer that welfare plans complete only Line 5 and elements 6a(1), 6a(2), 6b, 6c, and 6d in Line 6.

Be aware that the advance copies of the 2018 Form 5500 are for informational purposes only and cannot be used to file a 2018 Form 5500 annual return/report.

ERISA imposes the Form 5500 reporting obligation on the plan administrator. Form 5500 is normally due on the last day of the seventh month after the close of the plan year. For example, a plan administrator would file Form 5500 by July 31, 2019, for a 2018 calendar year plan.

Tax Relief for Victims of November Wildfire in California

Victims of the wildfires that took place beginning on November 8, 2018, in California may qualify for tax relief from the Internal Revenue Service (IRS). The President declared that a major disaster exists in California. The Federal Emergency Management Agency’s major declaration permits the IRS to postpone deadlines for taxpayers who have a business in certain counties within the disaster area.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

DOL Releases Employee Benefit Guidance and Relief for 2018 California Wildfire Survivors

The Department of Labor (DOL) released its FAQs for Participants and Beneficiaries Following the 2018 California Wildfires to answer health benefit and retirement benefit questions.

The FAQs cover topics including:

  • Whether an employee will still be covered by an employer-sponsored group health plan if the worksite closed
  • Potential options such as special enrollment rights, COBRA continuation coverage, individual health coverage, and health coverage through a government program in the event that an employee loses health coverage

The DOL also released its Fact Sheet: Guidance and Relief for Employee Benefit Plans Impacted by the 2018 California Wildfires to recognize that employers may encounter problems due to the wildfires. The DOL advises plan fiduciaries to make reasonable accommodations to prevent workers’ loss of benefits and to take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.

The DOL also acknowledged that there may be instances when full and timely compliance by group health plans may not be possible due to physical disruption to a plan’s principal place of business. The DOL’s enforcement approach will emphasize compliance assistance, including grace periods and other relief where appropriate.

IRS Provides Guidance on Leave-Based Donation Programs’ Tax Treatment

The IRS issued Notice 2018-89 to guide employers who adopt leave-based donation programs to provide charitable relief for victims of Hurricane Michael. These leave-based donation programs allow employees to forgo vacation, sick, or personal leave in exchange for cash payments that the employer will make to charitable organizations described under Internal Revenue Code Section 170(c).

The employer’s cash payments will not constitute gross income or wages of the employees if paid before January 1, 2020, to the Section 170(c) charitable organizations for the relief of victims of Hurricane Michael. Employers do not need to include these payments in Box 1, 3, or 5 of an employee’s Form W-2.

Treasury Releases 2018-19 Priority Guidance Plan

The Department of the Treasury (Treasury) released its 2018-2019 Priority Guidance Plan (Plan) that describes the priorities for the Treasury and the Internal Revenue Service (IRS) for the period from July 1, 2018, through June 30, 2019. The Plan contains a list of projects that will be the focus of the Treasury and IRS, including:

  • Guidance on employer shared responsibility provisions
  • Regulations regarding the excise tax on high cost employer-provided coverage (also known as the “Cadillac tax”).

Question of the Month

Q. Under the ACA, which employers must report information on Form W-2 and what information must be reported?

A. The ACA requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on Form W-2 does not mean that the coverage is taxable.

Employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. This includes businesses, tax-exempt organizations, and federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families). Federally recognized Indian tribal governments are not subject to this requirement.

Employers that are subject to this requirement should report the value of the health care coverage in Box 12 of Form W-2, with Code DD to identify the amount. There is no reporting on Form W-3 of the total of these amounts for all the employer’s employees.

In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee. Please see the chart below from the IRS’ webpage and its questions and answers for more information.

The chart below illustrates the types of coverage that employers must report on Form W-2. Certain items are listed as “optional” based on transition relief provided by Notice 2012-9 (restating and clarifying Notice 2011-28). Future guidance may revise reporting requirements but will not be applicable until the tax year beginning at least six months after the date that the IRS issues its guidance.

Form W-2 Reporting of Employer-Sponsored Health Coverage

Form W-2, Box 12, Code DD
Coverage Type

Report

Do Not 
Report

Optional

Major medical

X

Dental or vision plan not integrated into another medical or health plan

X

Dental or vision plan which gives the choice of declining or electing and paying an additional premium

X

Health flexible spending arrangement (FSA) funded solely by salary-reduction amounts

X

Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits

X

Health reimbursement arrangement (HRA) contributions

X

Health savings account (HSA) contributions (employer or employee)

X

Archer Medical SAvings Account (Archer MSA) contributions (employer or employee)

X

Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis

X

Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer

X

Employee assistance plan (EAP) providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium Optional if employer does not charge a COBRA premium
On-site medical clinics providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium Optional if employer does not charge a COBRA premium
Wellness programs providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium Optional if employer does not charge a COBRA premium
Multi-employer plans

X

Domestic partner coverage included in gross income

X

Governmental plans providing coverage primarily for members of the military and their families

X

Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government

X

Self-funded plans not subject to federal COBRA

X

Accident or disability income

X

Long-term care

X

Liability insurance

X

Supplemental liability insurance

X

Workers’ compensation

X

Automobile medical payment insurance

X

Credit-only insurance

X

Excess reimbursement to highly compensated individual, included in gross income

X

Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income

X

Other situations
Employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers)

X

Forms W-2 furnished to employees who terminate before the end of a calendar year and rquest, in writing, a Form W-2 before the end of that year

X

Forms W-2 provided by third-party sick-pay provider to employees of other employers

X

11/30/2018


HHS Releases Inflation-Adjusted Federal Civil Penalty Amounts

Are you up-to-date on the Department of Health and Human Services' (HHS) Annual Civil Monetary Penalties Inflation Adjustment? Read this blog post to learn about the new changes.


The Department of Health and Human Services (HHS) issued its Annual Civil Monetary Penalties Inflation Adjustment. Here are some of the adjustments:

  • Medicare Secondary Payer:
    • For failure to provide information identifying situations where the group health plan is primary, the maximum penalty increases from $1,157 to $1,181 per failure.
    • For an employer who offers incentives to a Medicare-eligible individual to not enroll in employer-sponsored group health that would otherwise be primary, the maximum penalty increases from $9,054 to $9,239.
    • For willful or repeated failure to provide requested information regarding group health plan coverage, the maximum penalty increases from $1,474 to $1,504.
  • Summary of Benefits and Coverage: For failure to provide, the maximum penalty increases from $1,105 to $1,128 per failure.
  • Health Insurance Portability and Accountability Act (HIPAA):
 Tier Penalty
1. Did Not Know:
Covered entity or business associate did not know (and by exercising reasonable diligence would not have known) that it violated the provision of the Administrative Simplification regulations.
$114 - $57,051 for each violation, up to a maximum of $1,711,533 for identical provisions during a calendar year.
2. Reasonable Cause:
The violation was due to reasonable cause and not to willful neglect.
$1,141 - $57,051 for each violation, up to a maximum of $1,711,533 for identical provisions during a calendar year.
3. Willful Neglect – Corrected:
The violation was due to willful neglect, but the violation is corrected during the 30-day period beginning on the first date the liable person knew (or by exercising reasonable diligence would have known) of the failure to comply.
$11,410 - $57,051 for each violation, up to a maximum of $1,711,533 for identical provisions during a calendar year.
2. Willful Neglect – Not Corrected:
The violation was due to willful neglect and the violation is not corrected as described in Tier 3.
$57,051 minimum for each violation, up to a maximum of $1,711,533 for identical provisions during a calendar year.

The adjustments are effective for penalties assessed on or after October 11, 2018, for violations occurring after November 2, 2015.

SOURCE: Hsu, K. (29 November 2018) "HHS Releases Inflation-Adjusted Federal Civil Penalty Amounts" (Web Blog Post). Retrieved from 


2019: A Look Forward

A number of significant changes to group health plans have been made since the Affordable Care Act (ACA) was enacted in 2010. Many of these changes became effective in 2014 and 2015 but certain changes to a few ACA requirements take effect in 2019.

 Changes for 2019 

  1. Cost-sharing Limits – Non-grandfathered plans are subject to limitations on cost sharing for essential health benefits (EHB). The annual limits on cost sharing for EHB are $7,900 for self-only coverage and $15,800 for family coverage, effective January 1, 2019.
    • Health plans with more than one service provider can divide maximums between EBH as long as the combined amount does not exceed the out-of-pocket maximum limit for the year.
    • Beginning in 2016, each individual – regardless of the coverage the individual is enrolled – is subject to the self-only annual limit on cost sharing.
    • The ACA’s annual cost-sharing limits are higher than high deductible health plans (HDHPs) out-of-pocket maximums. For plans to qualify as an HDHP, the plan must comply with HDHP’s lower out-of-pocket maximums. The HDHP out-of-pocket maximum for 2019 is $6,750 for self-only coverage and $13,500 for family coverage.
  2. Coverage Affordability Percentages – If an employee’s required contribution does not exceed 9.5 percent of their household income for the taxable year (adjusted each year), then the coverage is considered affordable. The adjusted percentage for 2019 is 9.86 percent.
  3. Reporting of Coverage – Returns for health plan coverage offered or provided in 2018 are due in early 2019. For 2018, returns must be filed by February 28, 2019, or April 1, 2019 (if electronically filed). Individual statements must be provided by January 31, 2019.
    • ALEs are required to report information to the IRS and their eligible employees regarding their employer-sponsored health coverage. This requirement is found in Section 6056. Reporting entities will generally file Forms 1094-B and 1095-B under this section.
    • Every health insurance issuer, self-insured health plan sponsor, government agency that provides government-sponsored health insurance, and any other entity that provides MEC is required to finalize an annual return with the IRS, reporting information for each individual who is enrolled. This requirement is found in Section 6055. Reporting entities will generally file Forms 1094-C and 1095-C under this section.
    • ALEs that provide self-funded plans must comply with both reporting requirements. Reporting entities will file using a combined reporting method on Forms 1094-C and 1095-C.
    • Forms Used for Reporting – Reporting entities must file the following with the IRS:
      1. A separate statement for each individual enrolled
      2. A transmittal form for all returns filed for a given calendar year.
    • Electronic Reporting – Any reporting entity that is required to file 250 or more returns in either section must file electronically on the ACA Information Returns (AIR) Program. Reporting entities that file less than 250 returns can file in paper form or electronically on the ACA Information Returns (AIR) Program.
    • Penalties – Entities that fail to comply with the reporting requirements are subject to general reporting penalties for failure to file correct information returns and failure to furnish correct payee statements. Penalty amounts for failure to comply with the reporting requirements in 2019 are listed below:
Penalty Type Per Violation Annual Maximum Annual Maximum for Employers with up to $5 million in Gross Receipts
General $270 $3,275,500 $1,091,500
Corrected within 30 days $50 $545,500 $191,000
Corrected after 30 days but before August 1 $100 $1,637,500 $545,500
Intentional Disregard $540* None N/A

**Intentional disregard penalties are equal to the greater of either the listed penalty amount or 10 percent of the aggregate amount of the items required to be reported correctly. 

Expected Changes

  1. Health FSA Contributions – Effective January 1, 2018, health FSA salary contributions were limited to $2,650. The IRS usually announces limit adjustments at the end of each year. This limit does not apply to employer contributions or limit contributions under other employer-provided coverage.
  2. Employer Shared Responsibility Regulations – The dollar amount for calculating Employer Shared Responsibility 2 penalties is adjusted for each calendar year. Applicable large employers (ALEs) must offer affordable, minimum value (MV) healthcare coverage to full-time employees and dependent children or pay a penalty. If one or more full-time employees of an ALE receive a subsidy for purchasing healthcare coverage through an Exchange, the ALE is subject to penalties.
    • Applicable Large Employer Status – ALEs are employers who employ 50 or more full-time employees on business days during the prior calendar year.
    • Offering Coverage to Full-time Employees – ALEs must determine which employees are full-time. A full-time employee is defined as an employee who worked, on average, at least 30 hours per week or 130 hours in a calendar month. There are two methods for determining full-time employee status:
      1. Monthly Measurement Method – Full-time employees are identified based on a month-to-month analysis of the hours they worked.
      2. Look-Back Measurement Method – This method is based on whether employees are ongoing or new, and whether they work full time or variable, seasonal or part-time. This method involves three different periods:
        • Measurement period – for county hours of service
        • Administration period – for enrollment and disenrollment of eligible and ineligible employees
        • Stability period – when coverage is provided based on an employee’s average hours worked.
      3. Applicable Penalties – ALEs are liable for penalties if one or more full-time employees receive subsidies for purchasing healthcare coverage through an Exchange. One of two penalties may apply depending on the circumstances:
        • 4980H(a) penalty – Penalty for not offering coverage to all full-time employees and their dependents. This penalty does not apply if the ALE intends to cover all eligible employees. ALEs must offer at least 95 percent of their eligible employees’ health care coverage. Monthly penalties are determined by this equation:
          1. ALE’s number of full-time employees (minus 30) X 1/12 of $2,000 (as adjusted), for any applicable month
          2. The $2,000amount is adjusted for the calendar year after 2014:
          3. $2,080 – 2015; $2,160 – 2016; $2,260 – 2017; $2,320 – 2018
        • 4980H(b) penalty – penalty for offering coverage – ALEs are subject to penalties even if they offer coverage to eligible employees if one or more full-time employees obtain subsidies through an Exchange because:
          1. The ALE didn’t offer all eligible employees coverage
          2. The coverage offered is unaffordable or does not provide minimum value.
          3. Monthly penalties are determined by this equation: 1/12 of $3,000 (as adjusted) for any applicable month
            1. $3,120 – 2015; $3,240 – 2016; $3,390 – 2017; $3,480 – 2018

Contact one of our expert advisors for assistance or if you have any questions about compliance in the New Year.

SOURCES: www.dol.gov, www. HHS.gov, https://www.federalregister.gov/documents/2018/04/17/2018-07355/patient-protectionand-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2019, https://www.irs.gov/e-fileproviders/air/affordable-care-act-information-return-air-program


How to Handle Employee Requests for Time Off to Vote

Did you know how to handle employee requests for time off to go and vote last Tuesday? Laws related to voting leave varies between states, leaving some employers questioning how they should address employee requests. Read on to learn more.


Many employees will be eligible to cast their ballot on Nov. 6, but will they have time to vote? Some states require employers to give workers time off to vote, and even in states that don't, some businesses are finding other ways to get employees to the polls.

With Election Day around the corner, employers should be mindful that, while no federal law provides employees leave to vote, many states have enacted laws in this area, said Marilyn Clark, an attorney with Dorsey & Whitney in Minneapolis. Depending on the state, employers may have to give workers notice about their voting rights and provide paid or unpaid time off to vote.

Even in states where there is no voting leave law, it is good practice to let employees take up to two hours of paid time off to vote if there isn't enough time for the employee to vote outside of working hours. "Encouraging and not discouraging employees should be the general rule," said Robert Nobile, an attorney with Seyfarth Shaw in New York City.

Encourage Employees

"Here in the United States, too many people don't vote because they don't have time due to jobs, child care and other responsibilities," said Donna Norton, executive vice president of MomsRising, an organization of more than 1 million mothers and their families. "Getting to the polls can be especially challenging for people in rural communities [or] single-parent households, and those who are juggling multiple jobs."

About 4 in 10 eligible voters did not vote in the 2016 presidential election, according to research conducted by Nonprofit VOTE and the U.S. Elections Project. And voter turnout has been historically lower for midterm elections, such as this year's, which are held near the midpoint of a president's four-year term, according to Pew Research Center.

"Businesses can help solve this problem by making sure that all employees have paid time off to vote," Norton said.

Some employers are offering solutions by making Election Day a corporate holiday, offering a few hours of paid time off for employees to vote and giving employees information about early and absentee voting, according to TheWashington Post.

Giving employees time off to participate in civic or community activities tends to improve worker performance, said Katina Sawyer, Ph.D., an assistant professor of management at George Washington University. Employers who are offering paid time off to vote will likely reap the benefits through improved employee attitudes and performance.

Know the Law

Employers in states with voting-leave laws should be familiar with the specific requirements, as some state laws have a lot of details. Even in states without such laws on the books, employers should check to see if there are any local voting leave ordinances in their cities.

Employers required to give workers time off to vote should plan for adequate work coverage to ensure that all employees can take time off, Clark said.

In many states, the employer may ask workers to give advance notice if they need time off and may require that workers take that leave at a specific time of the workday. In some states where leave is paid, employers might have the right to ask employees to prove they actually voted. Most states prohibit employers from disciplining or firing an employee who takes time off from work to vote.

"Ultimately, fostering an environment that generally encourages employees to exercise this important right is a good practice to mitigate the risk of a potential retaliation claim," Clark said.

Although state laws vary, "the general theme across the U.S. with respect to voting laws is that employees will be given time off to vote if there is insufficient time between the time the polls open and close within the state and the time employees start and finish work," Nobile said. "Typically, two to three consecutive nonworking hours between the opening and closing of the polls is deemed sufficient."

Some state laws provide unpaid leave to vote or do not address whether the leave must be paid. Oregon and Washington no longer have voting leave laws because they are "vote-by-mail" states.

voting leave laws.jpg

In some states, such as California and New York, employers must post notices in the workplace before Election Day to inform employees of their rights. Employers might have to pay penalties if they don't comply.

The consequences for denying employees their voting rights can be harsh, with some states even imposing criminal penalties, Clark noted.

Create a Policy

At a minimum, employers should adopt a policy spelling out the voting rights available to employees under applicable laws, Clark said. For businesses that operate in states that don't have a voting-leave law, employers may still wish to adopt a policy outlining their expectations about time off for voting.

Multistate employers may elect to adopt a single policy that includes the most employee-friendly provisions of the state and local laws that cover them. "By taking this approach, employers avoid the administrative burden of adopting and promulgating multiple policies for employees working in different locales," Clark said. All voting-leave policies should be sure to include strong anti-retaliation provisions, which make clear that the employer will not take any adverse action against employees for exercising their voting rights.

"It's important to remember that the law sets the floor," said Bryan Stillwagon, an attorney with Sherman & Howard in Atlanta. "Companies with the happiest and most-engaged employees recognize that positive morale comes from doing more than what is required."

Nagele-Piazza, L. (29 October 2018) "How to Handle Employee Request for Time Off to Vote" (Web Blog Post). Retrieved from https://www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/Pages/How-to-Handle-Employee-Requests-for-Time-Off-to-Vote.aspx

Dana Wilkie contributed to this article. 


8 ways to maintain HSA eligibility

Employers sponsoring high-deductible health plans with HSAs have to ensure their HDHPs maintain their HSA eligibility. Continue reading for eight ways employers can maintain HSA eligibility.


For employers sponsoring high-deductible health plans with health savings accounts, ensuring that the HDHP continuously remains HSA qualified is no easy task. One challenge in this arena is that most of the rules and regulations are tax-related, and most benefit professionals are not tax professionals.

To help, we’ve created a 2019 pre-flight checklist for employers.

With 2019 rapidly approaching and open enrollment season beginning for many employers, now’s a great time to double-check that your HDHP remains qualified. Here are eight ways employers can maintain HSA eligibility.

1. Ensure in-network plan deductibles meet the 2019 minimum threshold of $1,350 single/$2,700 family.

To take the bumps out of this road, evaluate raising the deductibles comfortably above the thresholds. That way, you won’t have to spend time and resources amending the plan and communicating changes to employees each year that the threshold increases. Naturally, plan participants may not be thrilled with a deductible increase; however, if your current design requires coinsurance after the deductible, it’s likely possible on a cost neutral basis to eliminate this coinsurance, raise the deductible and maintain the current out-of-pocket maximum. For example:

Current Proposed
Deductible $1,350 single / $2,700 family $2,000 single / $4,000 family
Coinsurance, after deductible 80% 100%
Out-of-pocket maximum $2,500 single / $5,000 family $2,500 single / $5,000 family

This technique raises the deductible, improves the coinsurance and does not change the employee’s maximum out-of-pocket risk. The resulting new design may also prove easier to explain to employees.

2. Ensure out-of-pocket maximums do not exceed the maximum 2019 thresholds of $6,750 single/$13,500 family.

Remember that the 2019 HDHP out-of-pocket limits, confusingly, are lower than the Affordable Care Act 2019 limits of $7,900 single and $15,800 family. (Note to the U.S. Congress: Can we please consider merging these limits?) Also, remember that out-of-pocket costs do not include premiums.

3. If your plan’s family deductible includes an embedded individual deductible, ensure that each individual in the family must meet the HDHP statutory minimum family deductible ($2,700 for 2019).

Arguably, the easiest way to do so is making the family deductible at least $5,400, with the embedded individual deductible being $5,400 ÷ 2 = $2,700. However, you’ll then have to raise this amount each time the IRS raises the floor, which is quite the hidden annual bear trap. Thus, as in No. 1, if you’re committed to offering embedded deductibles, consider pushing the deductibles well above the thresholds to give yourself some breathing room (e.g., $3,500 individual and $7,000 family).

For the creative, note that the individual embedded deductible within the family deductible does not necessarily have to be the same amount as the deductible for single coverage. But, whether or not your insurer or TPA can administer that out-of-the-box design is another question. Also, beware of plan designs with an embedded single deductible but not a family umbrella deductible; these designs can cause a family to exceed the out-of-pocket limits outlined in No. 2.

Perhaps the easiest strategy is doing away with embedded deductibles altogether and clearly communicating this change to plan participants.

4. Ensure that all non-preventive services and procedures, as defined by the federal government, are subject to the deductible.

Of note, certain states, including Maryland, Illinois and Oregon, passed laws mandating certain non-preventive services be covered at 100%. While some of these states have reversed course, the situation remains complicated. If your health plan is subject to these state laws, consult with your benefits consultant, attorney and tax adviser on recommended next steps.

Similarly, note that non-preventive telemedicine medical services must naturally be subject to the deductible. Do you offer any employer-sponsored standalone telemedicine products? Are there any telemedicine products bundled under any 100% employee-paid products (aka voluntary)? These arrangements can prove problematic on several fronts, including HSA eligibility, ERISA and ACA compliance.

Specific to HSA eligibility, charging a small copay for the services makes it hard to argue that this isn’t a significant benefit in the nature of medical care. While a solution is to charge HSA participants the fair market value for standalone telemedicine services, which should allow for continued HSA eligibility, this strategy may still leave the door open for ACA and ERISA compliance challenges. Thus, consider eliminating these arrangements or finding a way to compliantly bundle the programs under your health plan. However, as we discussed in the following case study, doing so can prove difficult or even impossible, even when the telemedicine vendor is your TPA’s “partner vendor.”

Finally, if your firm offers an on-site clinic, you’re likely well aware that non-preventive care within the clinic must generally be subject to the deductible.

5. Depending on the underlying plan design, certain supplemental medical products (e.g., critical illness, hospital indemnity) are considered “other medical coverage.” Thus, depending on the design, enrollment in these products can disqualify HSA eligibility.

Do you offer these types of products? If so, review the underlying plan design: Do the benefits vary by underlying medical procedure? If yes, that’s likely a clue that the products are not true indemnity plans and could be HSA disqualifying. Ask your tax advisor if your offered plans are HSA qualified. Of note, while your insurer might offer an opinion on this status, insurers are naturally not usually willing to stand behind these opinions as tax advice.

6. The healthcare flexible spending account 2 ½-month grace period and $500 rollover provisions — just say no.

If your firm sponsors non-HDHPs (such as an HMO, EPO or PPO), you may be inclined to continue offering enrollees in these plans the opportunity to enroll in healthcare flexible spending accounts. If so, it’s tempting to structure the FSA to feature the special two-and-a-half month grace period or the $500 rollover provision. However, doing so makes it challenging for an individual, for example, enrolled in a PPO and FSA in one plan year to move to the HDHP in the next plan year and become HSA eligible on day one of the new plan year. Check with your benefits consultant and tax adviser on the reasons why.

Short of eliminating the healthcare FSA benefit entirely, consider prospectively amending your FSA plan document to eliminate these provisions. This amendment will, essentially, give current enrollees more than 12 months’ notice of the change. While you’re at it, if you still offer a limited FSA program, consider if this offering still makes sense. For most individuals, the usefulness of a limited FSA ebbed greatly back in 2007. That’s when the IRS, via Congressional action, began allowing individuals to contribute to the HSA statutory maximum, even if the individual’s underlying in-network deductible was less.

7. TRICARE

TRICARE provides civilian health benefits for U.S Armed Forces military personnel, military retirees and their dependents, including some members of the Reserve component. Especially if you employ veterans in large numbers, you should become familiar with TRICARE, as it will pay benefits to enrollees before the HDHP deductible is met, thereby disqualifying the HSA.

8. Beware the incentive.

Employers can receive various incentives, such as wellness or marketplace cost-sharing reductions, which could change the benefits provided and the terms of an HDHP. These types of incentives may allow for the payment of medical care before the minimum deductible is met or lower the amount of that deductible below the statutory minimums, either of which would disqualify the plan.

SOURCE: Pace, Z.; Smith, B. (22 October 2018) "8 ways to maintain HSA eligibility" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/8-ways-to-maintain-hsa-eligibility