March 2018 Compliance Recap

From UBA Benefits, here is your March 2018 Compliance Recap - everything you need to know that's been happening in the employee benefits world.

March was a quiet month in the employee benefits world.

The Internal Revenue Service (IRS) released a bulletin that lowered the family contribution limit for health savings account (HSA) contributions. The U.S. Department of Labor (DOL) updated its model Premium Assistance Under Medicaid and the Children’s Health Insurance Program notice (CHIP notice).

The IRS issued its updated Employer’s Tax Guide to Fringe Benefits, issued transition relief regarding HSA eligibility of individuals with health insurance that provides benefits for male sterilization or male contraceptives without a deductible, and issued its updated Guide on Health Savings Accounts and Other Tax-Favored Health Plans.

UBA Updates

UBA released two new advisors:

UBA updated existing guidance: 2018 Annual Benefit Plan Card

IRS Releases Adjusted Annual Inflation Factor

The Internal Revenue Service (IRS) released its Internal Revenue Bulletin No. 2018-10 that adjusted the annual inflation factor from the Consumer Price Index (CPI) to a new factor called a chained CPI. This is retroactively effective to January 1, 2018.

As a result of the change, the family contribution limit for Health Savings Account contributions is lowered to $6,850 from $6,900. Individuals with family coverage who planned to contribute to the full family amount should decrease their contributions going forward.

Review our updated 2018 Annual Benefit Plan Card and read more.


DOL Updates Employer CHIP Notice

The U.S. Department of Labor (DOL) updated its model Premium Assistance Under Medicaid and the Children’s Health Insurance Program notice (CHIP notice).

Employers that provide health insurance coverage in states with premium assistance through Medicaid or the Children’s Health Insurance Program (CHIP) must provide their employees with the CHIP notice before the start of each plan year. The CHIP notice provides information to employees on how to apply for premium assistance, including how to contact their state Medicaid or CHIP office. The DOL usually updates its model CHIP notice biannually.

IRS Issues Updated Employer’s Tax Guide to Fringe Benefits

The Internal Revenue Service (IRS) issued its 2018 Publication 15-B which contains information for employers on the employment tax treatment of fringe benefits. The guide is updated to reflect, among other items:

  • The suspension of qualified bicycle commuting reimbursements from an employee’s income for any tax year beginning after December 31, 2017, and before January 1, 2026.
  • The suspension of the exclusion for qualified moving expense reimbursements from an employee’s income for tax years beginning after December 1, 2017, and before January 1, 2026. However, the exclusion remains available for a U.S. Armed Forces member on active duty who moves because of a permanent change of station.
  • Limits on the deduction by employers for certain fringe benefits, such as meals and transportation commuting benefits.
  • The definition of items that aren’t tangible personal property for purposes of employee achievement awards.

The guide lists fringe benefits’ tax treatment in its Table 2-1 “Special Rules for Various Types of Fringe Benefits.”

IRS Issues Transition Relief Notice for Plans with Male Sterilization or Contraceptive Benefit

Recently, some states adopted laws that require certain health insurance policies to provide benefits for male sterilization and male contraceptives without cost-sharing.

However, under health saving account (HSA) eligibility requirements, a high deductible health plan (HDHP) generally may not provide benefits for any year until the minimum deductible for that year is satisfied. Although an HDHP may provide preventive care without a deductible or with a deductible that is below the minimum annual amount required by HSA eligibility requirements, male sterilization and male contraceptives are not considered preventive care under the Social Security Act or any Treasury Department guidance.

The Internal Revenue Service (IRS) released its Notice 2018-12 (Notice) to clarify that if a health plan provides benefits for male sterilization or male contraceptives before satisfying the minimum deductible for an HDHP, then the plan is not an HDHP, regardless of whether state law requires coverage of such benefits. Further, an individual who is not covered by an HDHP with respect to a month is not an HSA-eligible individual and may not deduct contributions to an HSA for that month. Similarly, HSA contributions made by an employer on behalf of the individual are not excludible from income and wages.

To allow states time to change their laws so their residents will be able to purchase health insurance coverage that qualifies as an HDHP, the Notice provides transition relief for periods before 2020 to individuals who are, have been, or become participants in or beneficiaries of a health insurance policy that provides benefits for male sterilization or male contraceptives without a deductible or with a deductible below the minimum deductible for an HDHP.

During the transition relief period, an individual with this type of health insurance policy will not be treated as HSA-ineligible, merely because the policy fails to qualify as an HDHP.

IRS Issues Updated Guide on Health Savings Accounts and Other Tax-Favored Health Plans

The Internal Revenue Service (IRS) updated its Publication 969 for taxpayers to use in preparing their 2017 returns. The publication explains health savings accounts (HSAs), medical savings accounts (Archer MSAs and Medicare Advantage MSAs), health flexible spending arrangements (FSAs), and health reimbursement arrangements (HRAs).

Question of the Month

  1. How does a person who is 65 years old or older maintain HSA eligibility and continue working? Also, when the person plans to retire, what should the person do about HSA contributions to avoid IRS penalties?
  2. To maintain HSA eligibility, an individual who is working and age 65 or older must:
  • Not apply for or waive Medicare Part A, and
  • Not apply for Medicare Part B, and
  • Waive or delay Social Security benefits.

For example, if a person delays Social Security benefits and delays Medicare Part A and B, retires at the end of April at the age of 65 or older, and applies for Social Security benefits and Medicare on May 1, 2018, then the general rule is that the person’s Social Security entitlement and Medicare Part A coverage will be retroactive for six months, meaning that the benefits would be retroactively effective as of November 2017.

IRS regulations state that a person can’t contribute to an HSA when the person has Medicare, so a person would need to stop contributing six months in advance of applying for Social Security benefits and Medicare. If a person contributes to an HSA after Medicare coverage begins, then the person may be subject to IRS penalties.

4/3/2018


Health Savings Accounts: What Did The IRS Change?

 

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Don’t Get Tripped Up By The IRS’ Tweak To Health Savings Accounts

It’s tax time, and this week I answered questions from readers about the penalty for not having health insurance as well as changes to health savings accounts. I also discuss health insurance coverage options for a reader’s parents who are immigrants and green card holders.

Q: I heard that health savings account rules would be loosened under the new spending bill passed by Congress last month. Did that happen?

No. In fact, the standards have become slightly tighter this year. In recent years, members of Congress from both parties have supported expanding eligibility for health savings accounts and how the money in them can be spent, among other things. To date, though, those proposals haven’t become law.

Health savings accounts, which are linked to high-deductible health plans, continue to multiply. In 2017, there were 22 million accounts totaling more than $45 billion in assets, an increase of 11 percent in the number of accounts over the previous year, according to Devenir, a firm that offers advice on HSA investments. Money deposited in HSAs is tax-deductible, grows tax-free and can be used without owing tax to pay for medical expenses. Advocates promote the plans as a way to help consumers play a larger role in controlling their health spending and say that the tax advantages help people afford care.

The Internal Revenue Service announced last month that the maximum amount individuals with family coverage could contribute to their health savings accounts would actually be reduced slightly from their previously announced limit for 2018. The maximum contribution for people with individual coverage in 2018 remains $3,450. The $50 family coverage contribution reduction, from $6,900 to $6,850, is pretty small change. It happened because the federal government altered the way it calculates inflation adjustments to the contribution limits.

But ignoring the new limit could create headaches for people who have already made the maximum HSA contribution for the year based on the $6,900 figure, said Roy Ramthun, president of HSA Consulting Services. If you don’t ask the bank that handles your HSA to return the $50 plus any earnings that have accrued before the next tax season, your taxable income will be off by that amount, plus you’ll be on the hook for a 6 percent penalty for exceeding the maximum contribution allowed. That’s not going to amount to a lot of money, but there’s more than financial pain to consider, Ramthun said. “Do you really want to give the IRS a reason to come find you?”

Q: I didn’t have health insurance for one month last year, in January 2017. Do I owe a penalty for not having health insurance when I file my taxes this spring?

If you were uninsured for only one month in 2017, you won’t owe a penalty. People can be uninsured for up to three consecutive months during the year without triggering a tax penalty for not having coverage, said Tara Straw, a senior policy analyst at the Center on Budget and Policy Priorities. This year, for the first time, the Internal Revenue Service won’t accept electronically filed tax returns unless filers report whether they had health insurance all year, were exempt from the requirement or will pay a penalty for not having had coverage. Tax refunds that are due with paper returns that don’t have this information may be delayed, according to the IRS.

—khn.org


Change to 2018 HSA Family Contribution Limit

Yesterday, the IRS released a bulletin that includes a change impacting contributions to Health Savings Accounts (HSAs).

 

  • The family maximum HSA contribution limit has decreased from $6,900 to $6,850.
  • This change is effective January 1, 2018 and for the entire 2018 calendar year.
  • The self-only maximum HSA contribution limit has not changed. 
  • This means that current 2018 HSA contribution limits are $3,450 (self-only) and $6,850 (family).

 

Why is the change happening so abruptly?

 

The IRS continues to make adjustments to accommodate the new tax law that passed at the end of 2017. Tax reform updates require the IRS to implement a modified method of calculating inflation-adjusted or cost-of-living-adjusted limits for 2018. The IRS is now using a different index (Chained Consumer Price Index for All Urban Consumers) to calculate benefit-related inflationary adjustments.

 

Typically, the IRS adjusts the HSA limits for inflation on an annual basis about six months before the start of the impacted year. For example, the IRS established the 2018 limits in May 2017. Today’s bulletin supersedes those limits.

Resource:

• IRS Bulletin IRB 2018-10March 5, 2018


Compliance Bulletin: IRS Issues New Tools for 2018 Tax Withholding

As of Feb. 15, 2018, employers must use new tables to determine how much income tax to withhold from their employees’ paychecks. The Internal Revenue Service (IRS) issued the required new tables in Notice 1036 on Jan. 9, 2018. The new tables are also available in IRS Publication 15.

In addition, the IRS issued a new Form W-4 and a new withholding calculator on Feb. 28, 2018.

The updated tools aim to help employers improve the accuracy of their tax withholdings under changes made by the tax reform law, the Tax Cuts and Jobs Act, which was enacted on Dec. 22, 2017.

ACTION STEPS

Employers should already be using the new tables for 2018. Employers are not required to use the new Form W-4 for 2018 but may use it for any 2018 withholding changes. Employers will be required to use the new version of Form W-4 for 2019.

Taxpayers can use the updated tax withholding calculator to determine whether they should make any changes to their 2018 withholdings.

Background

The Tax Cuts and Jobs Act made several changes to the tax code that will affect individual taxpayers in 2018. For example, the new law:

 

  • Adjusted tax rates and tax brackets;
  • Increased the standard deduction;
  • Repealed certain exemptions;
  • Changed itemized deductions;
  • Increased the child tax credit; and
  • Created a new dependent credit.

 

To reflect these changes, the IRS has issued three new tax withholding tools. The tools aim to help employers avoid withholding too much or too little from their employees’ paychecks for income taxes in 2018 and 2019.

For 2018, New Tables Work with Existing Forms W-4

The IRS’ new withholding tables are designed to work with the Forms W-4 that employees have already filed with their employers to claim withholding allowances for 2018. Thus, employers do not need to obtain updated Forms W-4 from their employees to use the new tables. The deadline for employers to begin using the new tables was Feb. 15, 2018.

New Form W-4 for 2019 May Be Used in 2018

For 2019, the IRS has revised Form W-4 to more fully reflect the new tax law and to help employees determine appropriate withholding amounts. Released on Feb. 28, 2018, the Form W-4 can be used in 2018 if an employee starts a new job or if existing employees wish to update their 2018 withholding in response to the new law or changes in their personal circumstances.

New Calculator

The IRS’ updated withholding calculator allows employees to perform a quick “paycheck checkup” to help them determine whether they should make changes to their 2018 withholdings. While the IRS encourages all taxpayers to use the new calculator, employees who have simple financial situations are not likely to require any revisions for 2018. Those with more complicated situations, however, are strongly encouraged to check their 2018 withholdings using the calculator. These include employees who itemized their deductions in 2017 or have:

     Two-income households;

Two or more jobs at the same time;

     Children who claim credits; or

High incomes.

Employees with even more complex situations (such as those who owe self-employment tax or have capital gains) may need to use Publication 505 instead of the withholding calculator. The IRS expects to release an updated version of this publication in the near future.

Download the Full Bulletin


IRS Reporting Tip 2: 2017 Plan Year Form 1094-C, Line 22

Just in: From UBA Benefits, get the IRS Reporting Tips for Form 1094-C, Line 22.


Under the Patient Protection and Affordable Care Act (ACA), individuals are required to have health insurance while applicable large employers (ALEs) are required to offer health benefits to their full-time employees.

In order for the Internal Revenue Service (IRS) to verify that (1) individuals have the required minimum essential coverage, (2) individuals who request premium tax credits are entitled to them, and (3) ALEs are meeting their shared responsibility (play or pay) obligations, employers with 50 or more full-time or full-time equivalent employees and insurers are required to report on the health coverage they offer. Similarly, insurers and employers with less than 50 full time employees but that have a self-funded plan also have reporting obligations. All of this reporting is done on IRS Forms 1094-B, 1095-B, 1094-C and 1095-C.

Form 1094-C

Form 1094-C is used in combination with Form 1095-C to determine employer shared responsibility penalties. It is often referred to as the "transmittal form" or "cover sheet." IRS Form 1095-C will primarily be used to meet the Section 6056 reporting requirement, which relates to the employer shared responsibility/play or pay requirement. Information from Form 1095-C will also be used in determining whether an individual is eligible for a premium tax credit.

Form 1094-C contains information about the ALE, and is how an employer identifies as being part of a controlled group. It also has a section labeled "Certifications of Eligibility" and instructs employers to "select all that apply" with four boxes that can be checked. The section is often referred to as the "Line 22" question or boxes. Many employers find this section confusing and are unsure what, if any, boxes they should select. The boxes are labeled:

A. Qualifying Offer Method
B. Reserved
C. Reserved
D. 98% Offer Method

Qualifying Offer Method

The instructions provide the following definition to explain the qualifying offer method.

Check this box if the ALE Member is eligible to use and is using the Qualifying Offer Method to report the information on Form 1095-C for one or more full-time employees. Under the Qualifying Offer Method there is an alternative method of completing Form 1095-C and an alternative method for furnishing Form 1095-C to certain employees. If the ALE Member is using either of these alternative rules, check this box. To be eligible to use the Qualifying Offer Method, the ALE Member must certify that it made a Qualifying Offer to one or more of its full-time employees for all months during the year in which the employee was a full-time employee for whom an employer shared responsibility payment could apply. Additional requirements described below must be met to be eligible to use the alternative method for furnishing Form 1095-C to employees under the Qualifying Offer Method.

This means that, if an employer used code 1A for any employee on Line 14 of its 1095-C form, the employer should check Box A. Code 1A is only used by employers who offered minimum value, minimum essential coverage to a full-time employee, and the coverage meets the federal poverty level safe harbor.

It cannot be used for minimum value, minimum essential coverage that meets either the W-2 or rate of pay safe harbor.

98% Offer Method

An employer meets the requirements of the 98% Offer Method if it offers affordable, minimum value coverage to at least 98 percent of its total employees for whom it is filing a Form 1095-C (regardless of whether they are full-time or part-time). This means that the employer does not need to report whether an employee is full time and it does not need to provide a count of its full-time employees. If the employer meets the requirements of the 98% Offer Method, it should check Box D.

However, the employer will still need to provide Form 1095-C to each of its employees, which includes all of the other information required, and if an employee requests a premium tax credit, it will need to respond to an IRS inquiry about the employee's work and coverage status. Employers that anticipate difficulties reporting full-time employees (excluding those in waiting periods) may find this option helpful.

If an employer selects Box D, it does not need to complete Part III Column (b) of the 1094-C.

The IRS provides the following example for the 98% offer method:

Employer has 325 employees. Of those 325 employees, Employer identifies 25 employees as not possibly being full-time employees because they are scheduled to work 10 hours per week and are not eligible for additional hours. Of the remaining 300 employees, 295 are offered affordable minimum value coverage for all periods during which they are employed other than any applicable waiting period (which qualifies as a Limited Non-Assessment Period). Employer files a Form 1095-C for each of the 300 employees (excluding the 25 employees that it identified as not possibly being full-time employees). Employer may use the 98% Offer Method because it makes an affordable offer of coverage that provides minimum value to at least 98% of the employees for whom Employer files a Form 1095-C. Using this method, Employer does not identify whether each of the 300 employees is a full-time employee. However, Employer must still file a Form 1095-C for all of its full-time employees. Employer chooses to file a Form 1095-C on behalf of all 300 employees, including the five employees to whom it did not offer coverage, because if one or more of those employees was, in fact, a full-time employee for one or more months of the calendar year, Employer would be required to have filed a Form 1095-C on behalf of those employees.

Reserved Code B (formerly, Qualifying Offer Method Transition Relief)

This box is not applicable in 2017. In 2015, the instructions provided the following definition to explain the qualifying offer method transition relief.

Check this box if the employer is eligible for and is using the Qualifying Offer Method Transition Relief for the 2015 calendar year to report information on Form 1095-C for one or more full-time employees. To be eligible to use the Qualifying Offer Method Transition Relief, the employer must certify that it made a Qualifying Offer for one or more months of calendar year 2015 to at least 95% of its full-time employees. For this purpose, an employee in a Limited Non-Assessment Period is not included in the 95% calculation.

This transition relief has expired, and is no longer available to employers regardless of size or their plan years. No employer should select Box B, which is now reserved for future use.

Reserved Code C (formerly Section 4980H Transition Relief)

This box is not applicable in 2017. In 2015 and 2016, Box C was used to inform the government that an employer is entitled to one of two forms of transition relieffor its 2015 plan year:

1.     Midsize Employer Transition Relief (only available to employers with 50 to 99 employees who meet the maintenance requirements of transition relief)

2.     Relief when Calculating Assessable Penalties (only available to employers with 100 or more employees)

Conclusion

Different real-world situations will lead an employer to select any combination of boxes on Line 22, including leaving all four boxes blank. Practically speaking, only employers who met the requirements of using code 1A on Form 1095-C or who offered coverage to virtually all employees will check any of the boxes on Line 22. Notably, employers who do not use the federal poverty level safe harbor for affordability will never select Box A, and corresponding with that, will never use codes 1A or 1I on Line 14 of a Form 1095-C.


Latest IRS ACA Round Up (Including 2018 Cost-of-Living Adjustments)

Recently, the Internal Revenue Service (IRS) issued the instructions for Forms 1094/1095 for the 2017 tax year, announced PCORI fees for 2017-18, and announced cost-of-living adjustments for 2018. The IRS provided additional guidance on leave-based donation programs' tax treatment and released an information letter on COBRA and Medicare. Here’s a recap of these actions for your reference.IRS Announces Cost-of-Living Adjustments for 2018

The IRS released Revenue Procedures 2017-58 and Notice 2017-64 to announce cost-of-living adjustments for 2018. For example, the dollar limit on voluntary employee salary reductions for contributions to health flexible spending accounts (FSAs) is $2,650, for taxable years beginning with 2018.

Request UBA’s 2018 desk reference card with an at-a glance summary of the various limits.

IRS Announces PCORI Fee for 2017-18

The IRS announced the Patient-Centered Outcomes Research Institute (PCORI) fee for 2017-18. The fee is $1.00 per covered life in the first year the fee is in effect. The fee is $2.00 per covered life in the second year. In the third through seventh years, the fee is $2.00, adjusted for medical inflation, per covered life.

For plan years that end on or after October 1, 2016, and before October 1, 2017, the indexed fee is $2.26. For plan years that end on or after October 1, 2017, and before October 1, 2018, the indexed fee is $2.39.

For more information, view UBA’s FAQ on the PCORI Fee.

IRS Provides Additional Guidance on Leave-Based Donation Programs' Tax Treatment

Last month, the IRS provided guidance for employers who adopt leave-based donation programs to provide charitable relief for victims of Hurricane and Tropical Storm Irma. This month, the IRS issued Notice 2017-62 which extends the guidance to employers' programs adopted for the relief of victims of Hurricane and Tropical Storm Maria.

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, 2019, to the Section 170(c) charitable organizations for the relief of victims of Hurricane or Tropical Storm Maria. Employers do not need to include these payments in Box 1, 3, or 5 of an employee's Form W-2.

IRS Releases Information Letter on COBRA and Medicare

The IRS released Information Letter 2017-0022 that explains that a covered employee's spouse can receive COBRA continuation coverage for up to 36 months if the employee became entitled to Medicare benefits before employment termination. In this case, the spouse's maximum COBRA continuation period ends the later of: 36 months after the employee's Medicare entitlement, or 18 months (or 29 months if there is a disability extension) after the employment termination.

 

You can read the original article here.

Source:

Capilla D. (16 November 2017). "Latest IRS ACA Round Up (Including 2018 Cost-of-Living Adjustments)" [Web blog post]. Retrieved from address http://blog.ubabenefits.com/latest-irs-aca-round-up-including-2018-cost-of-living-adjustments


IRS Issues Strong Warnings About ACA Compliance: Should HR be worried?

With all the confusion surrounding the ACA over the past few months, employers have been wondering if the IRS was gonna enforce the ACA reporting mandate. The IRS  has just recently released the ACA employers' and individual mandates to make sure everyone is in compliance for the healthcare reporting for 2017. Take a look at this article published by Jared Bilski from HR Morning hightlight eveything you need to know about reporting your healthcare information with the IRS.

Despite lots of warnings, the IRS has yet to impose any non-compliance penalties on employers during the two years the ACA reporting provisions have been mandatory. And with all of the efforts to kill or water down Obamacare, many employers are wondering if they should even make ACA compliance a priority at all.

Now, the agency is reminding folks that the ACA reporting mandate is still in full effect and compliance isn’t optional. It’s also assuring skeptical businesses it’s ready to start issuing penalties.

So should you believe the feds?

It sure sounds like it.

Most recently, the agency released four information letters about the ACA’s employer and individual mandates, and reminding employers exactly what they have to do to stay in compliance.

In addition, IRS sure warned employers it’s primed and ready to collect reporting penalties in a recent government report the folks at FreedomCare called a “game changer.”

Sweeping noncompliance tool

The Treasury Inspector General for Tax Administration (TIGTA) just released a report titled “Assessment of the Efforts to Implement the Employer Mandate under the Affordable Care Act.”

You can view the entire report here.

If you don’t have time to scour a 43-page document, here’s the one key fact: IRS has a new system in place for identifying potentially non-compliant employers, and the system has a very wide reach.

The feds’ ACA Compliance Validation System (ACV) will not only identify potentially non-compliant Applicable Large Employers, it will also calculate the “A” penalty under the Employer Mandate. Plus, the system will allow the feds to mass identify non-compliant employers and send notices to those non-compliant firms for any and all reporting years.

Questions and answers

By this point, you’ve probably got a few questions about the IRS’ new Obamacare compliance weapon, like:

When will the system be in place and ready?

Answer: According to the feds, the ACV should be ready by May 2017. Once it’s up and running, IRS should be able to start issuing large scale penalties.

Hasn’t IRS said it’s ready to start imposing ACA penalties before? Why should we believe them this time?

Answer: Granted, IRS has stated it planned to start penalizing firms before, but this seems different. Initially, the feds have been developing this ACV system since July 2015 and planned to have it ready by January 2017.

But as the report said, “the implementation of the ACV System has been delayed to May 2017.”

With the release of this detailed report, it’s clear the feds are ready to start collecting on all the noncompliance penalties that are long overdue. IRS has stated it expects to pull in $228 billion in ACA penalties.

Plus, with ACA repeal efforts currently on hold, now is a very good time for the agency to come after firms that have been pushing their compliance obligations to the back burner.

Bottom-line: Employers can’t afford to operate as if the delay in IRS reporting penalties is a permanent situation. If you’ve put this task on hold, now is the time to get everything in order.

Key correction steps

So what should employers do if they’ve already missed ACA reporting deadlines? File ASAP.

The sooner you correct an issue, the less likely you’ll wind up in a long, drawn out federal audit. Plus, as employment attorney David M. Pixley points out, IRS has a number of different penalties depending on how late the ACA reporting actually is.

For example, correcting a reporting failure within 30 days of the due date cuts the penalty to $50 per return, with a $532,000 cap.

When firms correct reporting failures after 30 days, but on or before August 1, the penalty is $100 per return, and the cap is $1,596,500.

And of course, late-filing is much safer (i.e., less costly) than not filing at all.

Reason: The standard per return penalty of $260 (max $3,193,000/year) jumps drastically for violations due to “intentional disregard” to a per-return penalty of $530 (no penalty cap).

See the original article Here.

Source:

Bilski J. (2017 August 16). IRS issues strong warning about ACA compliance: should HR be worried? [Web blog post]. Retrieved from address http://www.hrmorning.com/irs-issues-strong-warnings-about-aca-compliance-should-hr-be-worried/


The IRS Is Still Enforcing The Individual Mandate, Despite What Many Taxpayers Believe

Did you know that there are many people who still don't believe that they will be hit by tax penalty if they do not have health insurance? Here is an informative article by Timothy Jost from Health Affairs on why everyone should be keeping up with their health insurance in-order to avoid a tax penalty by the IRS.

There has been considerable speculation since President Trump’s Inauguration Day Affordable Care Act Executive Order as to whether the Internal Revenue Service is in fact enforcing the individual and employer mandates. The IRS website has insisted that the mandates are still in force, despite the Executive Order and despite the fact that the IRS decided not to implement for 2016 tax filings a program rejecting “silent returns” that did not indicate compliance with individual mandate requirements.

There is evidence, however, that many taxpayers do not believe it. An April report from the Treasury Inspector General for Taxpayer Services found that as of March 31, a third fewer taxpayers were paying the penalty than had been the case a year earlier. More importantly, insurers seem to believe that the IRS is not enforcing the mandate, or at least that taxpayers do not believe the IRS is enforcing the mandate, and are raising their rates for 2018 to account for the deteriorating of the risk pool that nonenforcement of the mandate will cause.

It is of note, therefore, that Robert Sheen at the ACA Times has identified several letters from the IRS reaffirming that it is still in fact enforcing the individual, and employer, mandates.

One is a letter reportedly sent in April by the IRS General Counsel to Congressman Bill Huizenga (R-MI) in response to an inquiry as to whether the IRS could waive the employer mandate with respect to a particular employer. The IRS replied that there was no provision in the ACA for waiver of the mandate penalty when it applied and that: “The Executive Order does not change the law; the legislative provisions of the ACA are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe.”

In a second letter in June, responding to an individual who had written to President Trump, the IRS similarly responded:

The Executive Order does not change the law; the legislative provisions of the ACA are still in force until changed by the Congress, and taxpayers remain required to follow the law, including the requirement to have minimum essential coverage for each month, qualify for a coverage exemption for the month, or make a shared responsibility payment.

Of course, whether taxpayers believe it, and whether insurers believe taxpayers believe it, is another question.

See the original article Here.

Source:

Jost T. (2017 August 21). The IRS is still enforcing the individual mandate, despite what many taxpayers believe [Web blog post]. Retrieved from address http://healthaffairs.org/blog/2017/08/21/the-irs-is-still-enforcing-the-individual-mandate-despite-what-many-taxpayers-believe/


10 Ways Millennials are Saving for the Future

Have your millennial employees started saving for their retirement? Check out this article by Marlene Y. Satter from Benefits Pro and see what millennial across the country are doing to prepare themselves for retirement.

They’re called spendthrifts by other generations, are laden with student debt and burdened with lower-paying jobs.

But that doesn’t mean that millennials aren’t thinking about the future and saving for it.

And they could certainly use a little help—from human resources and from plan sponsors—to be more successful at it, since both the debt and the jobs don’t leave them much to work with when all expenses are accounted for.

Both HR and sponsors might want to consider how retirement savings plans and their features—auto-enrollment, auto-escalation, employer matching funds—could be tweaked to give millennials a boost in meeting major life goals and in saving for retirement, as well as for the health expenses it undoubtedly will bring along with it.

In the meantime, they can consider how millennials are already trying to stretch every dollar till it snaps—some in very unconventional ways.

In a survey, digital banking app Varo Money, Inc. has uncovered a range of methods millennials are using to make those paychecks go farther.

And while retirement is certainly on their radar, that’s not the only goal they’re pursuing; of course they have a whole life to live first. Some of their prime goals are travel, buying property and dreaming about a new car, while

Here are some of the strategies to which millennials resort in the quest to fund their futures. Can plan sponsors be less imaginative than some of these? Surely not….

10. Half of millennials surveyed save automatically.

While respondents say they aren’t fond of spreadsheets—they don’t track their money constantly, or input figures into programs like Excel or Mint to create detailed, category-based budgets—they do watch their bank balances regularly and are pretty aware of what they spend monthly.

They view it as “hands-off” money management.

What they do, however, is save automatically out of each paycheck, with 50 percent socking away a percentage every payday. So they’re prime candidates for savings plans with auto features—enrollment, escalation, etc.

report from the Society of Human Resource Management points to multiple studies indicating that auto escalation in particular—but to a high level such as 10 percent—results in higher savings for employees, since few actually opt out of a rate higher than they might have chosen for themselves.

9. Millennials are looking to climb the corporate ladder—to a higher paycheck.

An impressive 39 percent of millennials are on the prowl for a better-paying job opportunity, which is yet another reason that HR personnel and plan sponsors hoping to retain good staff might want to keep an eye on millennials’ rate of pay, as well as their rate of savings.

Reviewing other benefits wouldn’t hurt, either, since the more attractive an existing job is, the more likely an employee is to stay.

Considering the cost of finding, hiring and training replacements, a raise and better benefits might be cheaper in the long run.

8. Millennials know food is cheaper at home, especially with a partner to share it.

Millennials, despite their spendthrift reputation, are willing to skip little luxuries like the much-vaunted avocado toast or make coffee and meals at home.

In fact, 36 percent stick with the coffeepot on the counter instead of the barista at the corner, while 11 percent of men and 3 percent of women are willing to abandon the avocado toast—after all, everyone has his, or her, breaking point when economizing.

And 26 percent of respondents point out that cooking for two is cheaper than dining solo at home—much less in a restaurant.

7. Millennials recognize how much cheaper it is to live as a couple.

While 75 percent of millennials are conscious of the financial benefits in being half of a couple. 44 percent point to the cheaper rent when there are two to share the load.

And that helps them both save more.

Even those who aren’t part of a couple are looking for roommates, according to Mashable, which reports on a SmartAsset study finding that in high-rent cities like San Francisco, New York and Boston a person can save at least $700 a month by having a roommate.

Cue in the cooking-at-home technique for group meals, and the savings grow even more.

6. Millennials go on fewer dates to save money.

Being in a relationship, say 16 percent of millennials, is cheaper than still looking, since they save money by not going out on so many dates.

5. They save on taxes if they’re married.

Ever-practical, these millennials. They recognize that being half of a married couple can save on their tax bill—and they don’t forget that either when looking for cash to stash for the future.

4. They bargain-hunt for credit card perks.

Make no mistake, among millennials travel is a big deal: 58 percent said travel destinations are their favorite topic of conversation.

And asked what they would purchase with $2,000 if they could only spend it on one thing, 25 percent said plane tickets.

As a result, they tend to be particularly savvy when it comes to being able to travel, with 16 percent seeking out credit cards that provide big mileage bonuses.

3. They leverage perks to pursue other little luxuries without having to lay out cash for them.

In fact, they’re fond of doing it for travel, with 7 percent using airline miles to upgrade to business class.

In addition, 7 percent use status from premium credit cards for hotel upgrades, and 6 percent use premium cards for lounge access.

2. They’re planning on grad school.

While that may not seem like saving—even though it’s definitely ahead of the 11 percent of male millennials who are saving for a new luxury car and the 12 percent of female millennials saving for a new wardrobe—they’re looking toward an advanced degree for a leg up the job ladder.

Oh, and 27 percent are saving for a place of their own.

1. They stay away from credit cards.

Mashable reports that, despite their spendthrift reputations, millennials are actually opting for other types of technology—digital wallets, for instance—but not so much credit cards.

It cites a BankRate finding that in fact, 67 percent of millennials don't have credit cards—the lowest amount of people without credit cards in any demographic, among adults.

And they’d rather be paid in cash, thank you very much. So say 58 percent, and they’re smart; it wards off unnecessary purchases and helps keep them out of credit card debt.

See the original article Here.

Source:

Satter M.  (2017 June 29). 10 ways millennials are saving for the future [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/06/29/10-ways-millennials-are-saving-for-the-future?ref=mostpopular&page_all=1


2018 Amounts for HSAs; Retroactive Medicare Coverage Effect on Contributions

Great article from our partner, United Benefit Advisors (UBA) by Danielle Capilla.

IRS Releases 2018 Amounts for HSAs

The IRS released Revenue Procedure 2017-37 that sets the dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018.

For calendar year 2018, the annual contribution limit for an individual with self-only coverage under an HDHP is $3,450, and the annual contribution limit for an individual with family coverage under an HDHP is $6,900. How much should an employer contribute to an HSA? Read our latest news release for information on modest contribution strategies that are still driving enrollment in HSA and HRA plans.

For calendar year 2018, a "high deductible health plan" is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.

Retroactive Medicare Coverage Effect on HSA Contributions

The Internal Revenue Service (IRS) recently released a letter regarding retroactive Medicare coverage and health savings account (HSA) contributions.

As background, Medicare Part A coverage begins the month an individual turns age 65, provided the individual files an application for Medicare Part A (or for Social Security or Railroad Retirement Board benefits) within six months of the month in which the individual turns age 65. If the individual files an application more than six months after turning age 65, Medicare Part A coverage will be retroactive for six months.

Individuals who delayed applying for Medicare and were later covered by Medicare retroactively to the month they turned 65 (or six months, if later) cannot make contributions to the HSA for the period of retroactive coverage. There are no exceptions to this rule.

However, if they contributed to an HSA during the months that were retroactively covered by Medicare and, as a result, had contributions in excess of the annual limitation, they may withdraw the excess contributions (and any net income attributable to the excess contribution) from the HSA.

They can make the withdrawal without penalty if they do so by the due date for the return (with extensions). Further, an individual generally may withdraw amounts from an HSA after reaching Medicare eligibility age without penalty. (However, the individual must include both types of withdrawals in income for federal tax purposes to the extent the amounts were previously excluded from taxable income.)

If an excess contribution is not withdrawn by the due date of the federal tax return for the taxable year, it is subject to an excise tax under the Internal Revenue Code. This tax is intended to recapture the benefits of any tax-free earning on the excess contribution.

See the original article Here.

Source:

Capilla D. (2017 June 8). 2018 amounts for HSAs; retroactive medicare coverage effect on contributions  [Web blog post]. Retrieved from address http://blog.ubabenefits.com/2018-amounts-for-hsas-retroactive-medicare-coverage-effect-on-contributions