Tag Archives: ERISA

Employers Facing Health Insurance Deadlines

The clock is ticking for Tommy Cain and thousands of other U.S. employers facing deadlines to make changes to the health insurance they offer their employees under the Affordable Care Act.

Mr. Cain has already met one of the law’s key requirements: offer health insurance to at least 70% of full-time staffers by 2015, or face penalties.

Back in January, he put a no-frills plan in place for his 250 employees. His Gulf Coast grocery chain offers to pay 60% of premiums costs, deducting $25 weekly from the paychecks of those who opt for the coverage.

But his dilemma now is figuring out whether that plan is affordable to those employees, as required under the law. The cost cannot exceed more than 9.5% of employees’ annual salaries, the law says.

With just three months to go before 2015, Mr. Cain is worried that he will be penalized next year if the plan doesn’t meet the technical standard.

As part of its “Faces of the Affordable Care Act” multimedia series, the Journal has been following two small businesses—T. Cain Grocery chain, based in Fairhope, Ala., and Ovenly LLC, a Brooklyn, N.Y., retail and wholesale bakery, to see how they are dealing with the changes they face under the law.

A minority of business owners are considering trimming their head counts below the 50 full-time-worker cutoff or reducing their workers’ hours rather than comply with the requirement, which begins in January for companies with 100 or more employees.

Others have run the numbers and concluded that their best financial move is simply to skip the requirement and instead pay penalties, $2,000 for each full-time worker after the first 30.

But most business owners, including Mr. Cain, are expected to comply or already do, consultants say.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

The IRS Issues Group Insurance Compliance Form Draft

The Internal Revenue Service has issued draft versions of the reporting forms most employers will begin using next year to show that their group health insurance plans comply with the health care reform law.

The long-awaited draft forms, posted late Thursday afternoon to the IRS’ website, are the first practical application of employers’ health care coverage and enrollment reporting obligations under the Patient Protection and Affordable Care Act since the regulations were finalized in March.

The forms are the primary mechanism through which the government intends to enforce the health care reform law’s minimum essential coverage and shared responsibility requirements for employers.

Beginning in 2015, employers with at least 100 full-time employees will be required to certify that benefits-eligible employees and their dependents have been offered minimum essential coverage and that their employees’ contributions to their premiums comply with cost-sharing limits established under the reform law. Smaller employers with 50-99 full-time employees are required to begin reporting in 2016.

Additionally, self-insured employers will be required to submit documentation to ensure compliance with minimum essential coverage requirements under the reform law’s individual coverage mandate.

“In accordance with the IRS’ normal process, these draft forms are being provided to help stakeholders, including employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them,” the IRS said in a statement released Thursday.

The IRS said it expects to publish draft instructions for completing the reporting forms by late August and that both the forms and the instructions would be finalized later this year.

Last year, the Obama administration announced it would postpone implementation of employers’ minimum essential coverage and shared responsibility obligations under the reform law for one year, largely due to widespread complaints about the complexity of the reporting requirements.

Though several months have passed since the administration issued a simplified set of information reporting rules, many employers have delayed preparations for meeting the requirements until the forms and instructions are available for review, said Richard Stover, a principal with Buck Consultants at Xerox in Secaucus, New Jersey.

“A lot of employers really haven’t been doing anything about reporting requirements, even with the final regulations in place, because they were waiting for these forms,” Mr. Stover said. “This is something they’ve been anxious to see.”

Here’s the sample draft.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

IRS Announces Inflation-Adjusted Increase for HSAs

The IRS released increases for HSAs and high-deductible health plans (HDHPs) for 2015.

The maximum annual HSA contribution for self-only HDHP coverage will increase from $3,300 to $3,350. The maximum annual HSA contribution for family HDHP coverage will increase from $6,550 to $6,650.

  • The age 55 catch-up contribution continues to be $1,000
  • The minimum HDHP deductible limit changes:
    • Self-only coverage increased from $1,250 to $1,300
    • Family coverage increased from $2,500 to $2,600

To read more, click here.

Jeffrey R. Ungvary

President

Jeffrey R. Ungvary

Health Care Coverage Cost and Tax Season Compliance

Are you an employer that offers or provide group health coverage to your workers?  Were you required to file 250 or more Forms W-2 for tax year 2012?  If so, an Affordable Care Act/IRS requirement to report health care coverage costs on Forms W-2 for 2013 applies.  What follows below is important information so that you can comply with the regulations.

Highlights:

  • Report the aggregate cost of applicable employer-sponsored health care coverage on the employee’s Form W-2 (Box 12, code DD).
  • Report is informational only; there are NO tax consequences.
  • Exceptions: Certain small employers or employers that contribute to a multiemployer plan.
  • IRS provides detailed instructions to assist employers and payroll administrators in meeting this reporting requirement.  The instructions first applied for 2012 and there are no changes for tax year 2013.

To read the rest, click here. 

Jeffrey R. Ungvary

Jeffrey R. Ungvary

President

ERISA Explains It All

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for retirement and health benefit plans in private industry. ERISA does not require any employer to establish a plan. It only requires that those who establish plans meet certain minimum standards.

ERISA covers retirement, health and other welfare benefit plans (e.g., life, disability and apprenticeship plans). Among other things, ERISA provides that those individuals who manage plans (and other fiduciaries) must meet certain standards of conduct. The law also contains detailed provisions for reporting to the government and disclosure to participants. There also are rules aimed at assuring that plan funds are protected and that participants who qualify receive their benefits.

ISA has also been expanded to include health laws. For example, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) amended ERISA to provide for the continuation of health care coverage for employees and their beneficiaries (for a limited period of time) if certain events would otherwise result in a reduction in benefits. In addition, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) amended ERISA to make health care coverage more portable and secure for employees.
Health Plans as Welfare Benefit Plans Under ERISA

According to ERISA, an employee welfare benefit plan is any plan, fund, or program which is established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing:

  • Medical, surgical, or hospital care or benefits;
  • Benefits in the event of sickness, accident, disability, death or unemployment;
  • Vacation benefits;
  • Apprenticeship or other training programs;
  • Day care centers;
  • Scholarship funds;
  • Prepaid legal services, or
  • Certain other benefits described in the Labor-Management Relations Act of 1947

Jeffrey R. Ungvary

 

Jeffrey R. Ungvary

President