Human Resources

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.

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 [email protected] 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.

IRS Guidelines – Indexed Figures for 2016

FICA
Social Security 6.2% to $ 118,500
Medicare 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 $3,350 / $6,750
Catch-up Contribution $1,000

Flexible Spending Accounts
Health Care Flexible Spending Account Maximums $2,550
Dependent Care Spending Account Maximum $5,000

Mileage & Transportation
Standard Mileage Rate
54 cents per mile for business miles driven (down from 57.5 cents for 2015);
19 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 $265,000
Highly Compensated Employee Salary Amount $120,000
Annual Compensation for Key Employee $170,000
Defined Benefit Plan Limit $210,000
Defined Contribution Plan Limit $53,000

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

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

Cadillac (n.) best of its kind; standard of excellence

What else would you expect big government to call a 40% tax that is expected to hit 25% of employees in 2018 and 42% by 2028? The last major piece of Obamacare will impact consumers, corporations and union members.

The Impact? Middle-class workers could see a reduction in benefits. Companies in areas with high medical costs are more likely to be subjected to the Cadillac tax than those in lower-cost areas. Same for employers with unionized workers. Under scrutiny to be cut from the benefit package are the FSA, HSA and HRA accounts which provide tax-free dollars for out-of-pocket health costs. The law counts those contributions toward the thresholds for triggering the tax.

The Cadillac tax is 40 percent of the value of employer-sponsored plans that exceeds $10,200 for individual coverage and $27,500 for family coverage. The tax is levied on insurers and plan administrators, who are expected to pass it back to employers. The 40 percent rate is well above the income tax rates for most workers. If they don’t know it already, employees will learn, Obamacare came with Obamaco$t.

 

Employee Benefit Advisors provides employee benefits. We are a broker helping companies with their Health & Welfare Benefits. We also help companies revaluate PEO Services, deciding if a PEO is a good choice and if so selecting and implementing the PEO.

1095-C Reporting

This continues our review of the ACA reporting requirements. In our previous blog Employee Benefit Advisors mentioned we decided to do a little review because we’re getting questions from employers about their reporting requirements.

Who files Form 1095-C? Sponsors of both self-insured plans and insured plans must file Form 1095-C.  Payroll providers should have the capability to report the required information.

What does Form 1095-C report? The number of full time employees for each calendar month and lists coverage information for each full time employee.

What will the IRS do with the information reported on Form 1095-C? In 2015 employers with 100 or more (50 or more beginning in 2016) full time employees (including FTEs) must provide affordable coverage that provides MEC or be subject to penalty taxes for employees who receive subsidized coverage.  The information will be used to determine whether a penalty tax is to be assessed.

Are companies with fewer than 50 full time employees required to file Form 1095-C? No, only companies with 50 or more full time employees* are required to file. However only companies with 100 full time employees* are subject to the “play or pay” penalty for 2015. In 2016 companies with more than 50 full time employees* will be subject to the “play or pay” penalty. (*Including FTEs)

What Form 1095-C filing requirements apply to FSAs, HSAs or HRAs? Some employer contributions to an FSA, HSA or HRA can count toward the calculation of minimum value and therefore may affect 1095-C filing.

Note: Our previous blog discussed 1095-B reporting. If a plan sponsor of a self-insured plan is also required to file Form 1095-C, the Form 1095-B and Form 1095-C information can be combined onto one Form 1095-C filing.

 

Employee Benefit Advisors provides employee benefits. We are a broker helping companies with their Health & Welfare Benefits. We also help companies revaluate PEO Services, deciding if a PEO is a good choice and if so selecting and implementing the PEO.

1095-B Reporting

Employee Benefit Advisors decided to do a little review because we’re getting questions from small employers about their reporting requirements.

Who files Form 1095-B? The insurance company is required to file Form 1095-B if your company sponsors an insured plan. If self-insured, the plan sponsor is required to file Form 1095-B.

What information does Form 1095-B report? 1095-B reports the name, address and social security number of all individuals (employees, spouses, dependents and others) who are covered under an employer’s medical plan and the number of months during which the individual had at least one day of coverage.

What will the IRS do with the information reported on Form 1095-B? The IRS will use the information to verify which individuals have MEC through an employer and are therefore not subject to the individual mandate penalty tax.

Are companies with less than 50 full time employees (including FTEs) required to file Form 1095-B? Yes, the filing requirement applies to all employers who provide health coverage to their employees.

Are there 1095-B filing requirements for FSAs, HSAs or HRAs? No because by themselves they do not provide MEC.

What is the date that these forms must be filed? The forms must be filed with the IRS by February 28 (March 31 if reporting electronically) and copies of the forms must be provided to individuals by January 31.

 

Employee Benefit Advisors provides employee benefits. We are a broker helping companies with their Health & Welfare Benefits. We also help companies revaluate PEO Services, deciding if a PEO is a good choice and if so selecting and implementing the PEO.

Obamaco$t – What is hiding in the numbers.

Aetna’s Health Reform Weekly published a New Kaiser Family Foundation research found that single and family premiums for employer-sponsored health insurance in 2015 rose by an average of 4 percent, but the survey also found that workers’ out-of-pocket costs are rising at a much faster rate, with a 67 percent increase in deductibles since 2010. – The hidden cost of Obamacare. Ouch!

Top 8 Issues for Employers under ACA

To be fully compliant employers face 8 key requirements.

  1. All “applicable large employers” are subject – The trick here is properly counting part-time and variable hour employees.
  2. January 1, 2015 was the “effective date” for the new requirements. – Even if employers qualify for temporary relief they must report 2015 calendar year data to the IRS.
  3. Employers must be able to identify their “full-time employees”. – The rules include look-back and stability periods to determine whether variable hour employees need to be offered coverage.
  4. IRS Form 1095-C is used to report employee-level data to the IRS. – This reporting uses a complicated set of codes and must be provided directly to employees and filed with the IRS. The form reports on a monthly basis whether the employer offered medical coverage to the employee, whether the coverage provided minimum value and was affordable.
  5. Self-Insured Plans need to report coverage data for employees and any covered dependents. – Regardless of the number of employees employers are required to complete Part III of Form 1095-C
  6. IRS Form 1094-C is used to report employer-level data to the IRS. – 1094-C is the “transmittal letter” to the IRS with employer-level demographic data including exemptions to the employer mandate.
  7. Employers must disclose their “controlled group” on the Form 1094-C. – The names and EINs of other ALE members must be listed. (This is the first time the IRS has required this disclosure.)
  8. Employers filing 205 or more Form 1095-C must file electronically. – The IRS required filers to use its electronic submission system. The complexity of this system will make it extremely difficult for large employers to file on their own behalf.

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

New Law Increases ACA Information Reporting Penalties

The Trade Preferences Extension Act of 2015 will increase the penalties employers are subject to under the Affordable Care Act’s information reporting provisions.

Information Reporting Penalties

Self-insuring employers that provide minimum essential health coverage (regardless of size) and large employers with 50 or more full-time employees (including full-time equivalents) that fail to comply with the information reporting requirements may be subject to the general reporting penalty provisions under Internal Revenue Code (IRC) sections 6721 (failure to file correct information returns) and 6722 (failure to furnish correct payee statements).

The penalty for failure to file an information return and the penalty for failure to provide a correct payee statement is increased from $100 to $250 for each return which such failure. The total penalty imposed for all failures during a calendar year cannot exceed $3,000,000, increased from $1,500,000.

Employers are required to report for the first time in early 2016 for calendar year 2015. The law will apply to returns and statements required to be filed after December 31, 2015.

Question: What does the Trade Preferences Extension Act of 2015 have to do with the Affordable Care Act?

 

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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