Compliance – ACA & Other

Power of THE Pen – Trump holds the key to Repeal!

Many have forgotten that our Congress (Senate and State Representatives) and public employees are not fully subject to Obamacare. President Trump can change that with a stroke of THE Pen.

Congress was initially subject to the ACA. However, after a meeting with Senate Democrats in March 2013, Obama exempted Congress from section 1312(d)(3)(D). That section would have required Congress and their staff to buy insurance through an Obamacare exchange and does not authorize an employer contribution toward their premium. Congress and their staff would lose their taxpayer-funded, gold-plated health care rather than go into Obamacare and pay their own way.

The Office of Personnel Management (OPM), under the instruction of President Obama, ruled “the DC Health Link Small Business Market administered by the DC Benefit Exchange Authority, is the appropriate SHOP from which Members of Congress and staff purchase health insurance in order to receive a government contribution (subsidy). The Congress employees thousands, not the required 50 or fewer required to be eligible for the DC (or any) Exchange.

Federal Employees Health Benefits Program: Members of Congress and Congressional Staff, 78 Fed. Reg. 60653- 01 (Oct. 2, 2013). https://www.gpo.gov/fdsys/pkg/FR-2013-10-02/pdf/2013-23565.pdf

President Trump has the power to end this abuse by directing OPM to rescind the rule and issue a new one that conforms to the statutory requirement the congress and their staff pay their own premiums in the individual Obamacare Exchange.

Employee Benefit Advisory provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

Health Care Reform – Where do we stand?

By now everyone knows the initial attempt to replace Obamacare with a more workable solution has failed. I’m sure another attempt will resurface later. Let’s focus on what we know and how President Trump’s executive order, signed in January, impacted Obamacare.

President Trump’s executive order is still in effect. – The primary focus of the executive order was for Federal agencies to minimize the economic burden of the Affordable Care Act (ACA), pending repeal of the law. However, until further guidance or legislation, all ACA requirements remain in effect, including penalties for noncompliance.

The executive order specifically calls upon agencies to exercise authority and discretion to:

  • exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications;
  • provide greater flexibility to States and cooperate with them in implementing healthcare programs; and
  • encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.

Although the penalties for noncompliance remain in effect it does give the appearance that there is an out. However, I don’t recommend you be the one to test it.

IRS Guidelines – Indexed for 2017

FICA
Social Security Tax is 6.2% on income up to $127,200 up from $ 118,500.
Medicare Tax unlimited 1.45% to Unlimited

High Deductible Health Plans
Minimum Annual Deductible (Individual/Family) $1,300 / $2,600
Maximum Out-of-Pocket Limit (Individual/Family) $6,550 / $13,100

Health Savings Accounts
Individual / Family $3,400 / $6,750
Catch-up Contribution $1,000

Flexible Spending Accounts
Health Care Flexible Spending Account Maximums $2,600
Dependent Care Spending Account Maximum $5,000

Mileage & Transportation
Standard Mileage Rate
53.5 cents per mile for business miles driven
17 cents per mile for medical or moving purposes
14 cents per mile driven in service of charitable organizations
Parking (monthly) $255
Mass Transit Passes (monthly) $255

Compensation
Compensation Limit $270,000
Highly Compensated Employee Salary Amount $120,000
Annual Compensation for Key Employee $170,000
Defined Benefit Plan Limit $215,000
Defined Contribution Plan Limit $54,000

Retirement Plans
401(k) $18,000
401(k) Catch-up $6,000
403(b) $18,000
457(b)(2) and 124(c)(1) $18,000
457(b) Catch-up $6,000
IRA Limit $5,500/$6,500 for age 50+
Simple IRA Limit $12,500/$3,00 Catch-Up

 

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

Repealing Obamacare (Part 2of 2) – The Employer Tax Exclusion

The National Association of Health Underwriters (of which Employee Benefit Advisors is a member) and other industry groups support the employer-based healthcare system and have been opponents to eliminating or capping the exclusion and supports a platform that would preserve existing tax incentives for insurance, including the exclusion.

Proposals that eliminate the exclusion would push individuals from group coverage into the individual market. While deductions or refundable tax credits would help consumers secure coverage in the individual market, NAHU believes that they would fall far short both financially and in terms of coverage of the current system that allows for tax-free contributions from employers.

An individualized health insurance market would be ripe for adverse selection leading to higher insurer losses participating in these markets. Insurers would offset these losses by reducing provider networks and increasing cost-sharing. Currently, employer-sponsored plans are much more likely to have a mix of health risks and, in this case, the volume of individuals allows the costs associated with higher risks to be spread over that mixed population of high and low risks. Eliminating the exclusion and pushing consumers to the individual market would reduce the means for spreading risk among healthy and unhealthy individuals. The healthiest would be more likely to opt-out of coverage, leaving the most unhealthy covered. Employers still offering health insurance could be faced with difficulty meeting participation requirements and ever-increasing rates in a potential death-spiral as only the sickest remain insured.

Financially, employees receiving employer contributions already receive generous “subsidies” for their health coverage. Group premium rates tend to be more favorable than individual markets given the ability to control for adverse selection, and employers and employees alike benefit by reducing the taxable income for contributions made to insurance premiums. When employees’ taxable income increases due to the new taxable status of employer contributions, the employer’s FICA match would also increase. For every new dollar of taxable income due to newly taxable employer contributions or employee contributions previously made on a pre-tax basis under Section 125, employers would be responsible for 7.65% in new costs until the employee reached the Social Security wage base.

Ultimately, eliminating the exclusion would in turn result in a massive tax increase on middle class Americans that would not come close to being offset by any deduction, particularly for lower-paid workers who don’t have a deduction for income tax. Rather, a deduction for this type of worker would likely cause them to forego coverage altogether since it would offer no immediate relief towards the cost of coverage.

Finally, moving from a group insurance marketplace to an individualized marketplace would cause considerable strain on the enrollment process. Group plans are highly efficient at seamlessly enrolling millions into coverage, and without these group plans agents and brokers would be faced with enrolling upwards of 170 million Americans individually into plans. The ACA has demonstrated the challenges of enrolling as few as 13 million consumers onto the federal and state marketplaces. Increasing this number by more than ten-fold would not be any less chaotic.

The bottom line is that the employer-based system has proven highly efficient at providing Americans with affordable coverage options for decades. Eliminating the tax exclusion would likely result in the demise of the employer-based system, a significant tax increase on middle-class families, significantly increased costs for coverage, and more restrictive plan offerings. Healthcare reform has proven its challenges; however it is important that any policy proposals not make difficult situations worse and eliminating or even capping the exclusion would be far worse for all Americans.

Repealing Obamacare (Part 1 of 2) – Individual Tax Credits

Republicans hope to repeal Obamacare. One plan getting attention is creating a health insurance federal income tax deduction of $7,500 per individual and $20,500 for family. Everyone will be free to use their tax credit to buy the health insurance of their choice, not just the plan their employer provides.

A derivative plan recommends a refundable health insurance tax credit that is based on age, rather than income since 40% of people don’t pay any federal income tax. Money left could be put into a health savings account. HSA eligibility would be extended beyond age 65 (an idea Employee Benefit Advisors really likes).

Policy proposals would eliminate or cap the employer tax exclusion for health insurance. This would decimate the employer-based system, where a majority of Americans, roughly 169 million, receive their insurance coverage.

The employer exclusion allows an employer’s contributions to an employee’s health insurance to be excluded from that employee’s compensation for income and payroll tax purposes. The result has been a highly efficient means of providing affordable coverage through group purchasing and its economies of scale by spreading risk and avoiding adverse selection.

Proponents contend that eliminating the exclusion would result in Americans having more control over their coverage, reduce job-lock, and result in greater transparency and reduced costs.

Everything You Need to Know About COBRA in Under 5 Minutes

Have your employees ever asked you for information about COBRA? Have you ever had to spend time trying to explain how it works? Wouldn’t it be nice to have a simple reference you could point them to?

Diversified Administration came up with this 5 minute video “Everything You Need to Know about COBRA in Under 5 Minutes”. This video answers some of the most frequently asked questions, such as:

  • What is COBRA?
  • Can I change plans with COBRA?
  • How long can my COBRA last?
  • How long does it take for my benefits to be reinstated?
  • Can I pick the date my COBRA starts?
  • When are my COBRA premiums due?
  • How long does my employer have to send out my COBRA Election Notice?

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services. We can customize a wellness plan for your budget and culture.

2017 ACA Required Contribution Percentages

The required contribution percentages for 2017 used to determine whether individuals are eligible for a premium tax credit and whether individuals are eligible for an affordability exemption from the individual mandate have increased.

Premium Tax Credit Eligibility will increase to 9.69% – Percentage is used to determine if an individual is eligible for a premium tax credit to purchase health coverage through the Health Insurance Marketplace (Exchange) if not able to get affordable coverage through an eligible employer plan.

Individual Mandate Affordability Exemption will increase to 8.16% – Exemption applies when the individual cannot afford coverage because the minimum amount they must pay for the premiums is more than 8.16% of the individual’s household income.

Pay or Play Affordability Safe Harbors – The employer shared responsibility (“pay or play”) regulations are expected to mirror the percentage in the affordability safe harbors.

 

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services. We can customize a wellness plan for your budget and culture.

Up Up and Away – 2017 ACA Cost-Sharing Limits Released

HHS updated the annual limits based on the premium adjustment percentage for 2017. As a result, annual out-of-pocket expenses may not exceed $7,150 for self-only coverage or $14,300 for family coverage in 2017. – Why? It is an attempt to keep the premiums down. – I can hear the moans and groans of open enrollment already!

 

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services. We can customize a wellness plan for your budget and culture.

2016 Benefits Notices

Employers have 14 required notices to provide to employees for review and selection of benefits include certain required notices. Do you know what they are? There are 3 required notices for all group health plans, 9 notices for particular designs and 2 other important notices. States may require additional notices.

Think you know the entire list? Would you like to review the list? Contact Employee Benefit Advisors to see the list, learn the due date for each notice and a link to US DOL website for sample notices and details. Send your inquiry to info@ebafl.com with the subject line 2016 Benefit Notices.

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

Non-Discrimination Rules for Group Health Plans

With all the focus on ACA it’s good to step back and look at other regulations that may help with benefit designs. Many incorrectly think the ACA health insurance requirements is a one-size fits all model. However the ACA non-discrimination requirements have been delayed, indefinitely, and therefore are not a factor.

ERISA is the determining regulation. And under ERISA employers are generally free to set the eligibility rules for their group sponsored health plans under ERISA, so long as the rules do not unlawfully discriminate against certain employees.

Bona-Fide Employment-Based Classifications may be permitted. Distinctions among group participants in a health plan must be based on bona-fide employment-based classifications consistent with the employer’s usual business practice. Whether an employment-based classification is bona fide is determined on the basis of all the facts and circumstances, including whether the employer uses the classification for purposes independent of qualification for health coverage (for example, determining eligibility for other employee benefits or determining other terms of employment.)

 

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

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