Human Resources

Social Security – Where’s the AARP?

Do you know when you retire you may be paying taxes on your Social Security income? And yes, you already paid taxes on that income. It’s double taxation. (Our friends in Boston that had a bit of a tea party would love this one.)

Not everyone pays though. Only high income earners. – When you retire will you be a high income earner? – Don’t think so? I suggest you take another look. The government says “This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.”

And, they try to soften the blow by saying “No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules.”

Who pays? You do, if you

  • file a federal tax return as an “individual” and your combined income* is
    • between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
    • more than $34,000, up to 85 percent of your benefits may be taxable.
  • file a joint return, and you and your spouse have a combined income* that is
    • between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
    • more than $44,000, up to 85 percent of your benefits may be taxable.
  • are married and file a separate tax return, you probably will pay taxes on your benefits.

Note: Your adjusted gross income + nontaxable interest + ½ of your Social Security benefits = your “combined income”

And the income levels mentioned above are not adjusted for inflation.

Clients and followers of Employee Benefit Advisors know that despite being well versed in investing and retirement planning we do not dabble in retirement benefits. Our practice is strictly Health & Welfare. We decided to blog bout this issue because every time this topic comes up people are stunned.

Do you want to change this law? Write the AARP. How did they let this get through and why are they not addressing this issue?

 

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.

Men are the problem!

Men don’t go to the doctor unless their arm or leg is falling off or they are dying. Consequently they are a major reason for the large preventable claims your company is incurring. So men, get a reality check, and become a smart patient.

Human Resource Directors, read the following then think about this recommendation. “Employees that have their annual wellness exam should pay less for their employer provided health insurance.” (This recommendation is good for women as well, you don’t want to discriminate. And you can implement this staying HIPAA compliant.)

Guys, you may feel fine, but the numbers don’t lie: More men than women are likely to be diagnosed with diabetes and kidney disease. And according to the Centers for Disease Control and Prevention (CDC) 12.1% of US men have circulatory diseases like coronary heart disease, heart attack and stroke. Your body may be suffering from silent conditions that have little or no symptoms, such as hypertension or colon cancer. About 3.5 million people are diagnosed with skin cancer every year, and men are more likely than women to die from melanoma, the deadliest form of skin cancer.

You should talk to your doctor about your risk of prostate cancer – especially if you’re over 50, African American, or if prostate cancer runs in your family. If you’re a baby boomer, you should get tested for hepatitis C (HCV). More than 75% of adults infected with HCV, often a symptomless disease, were born between 1945-1965. Left untreated, HCV can cause life-threatening diseases such as liver damage, liver cancer and cirrhosis.

So no more excuses. The old “ignore-it-and-it-will-go-away” approach doesn’t work. It’s time to get informed and become a smart patient. Make that doctor’s appointment now.

Statistical information came from sharecare, www.shaecare.com, a great resource for men and women’s health.

 

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.

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 $175,000
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.

Health Insurance As It Should Be (Part 2 of 2): Preventative, Wellness & Biometrics, Genetics & DNA

Under the ACA preventative care was free. At least there was no charge to the insured at the time they received the exam, the cost was built into the premiums. The argument was that an advanced diagnosis would save long term medical costs because illnesses would be caught at an early stage.

If we use that same argument to create “health Insurance as it should be” there are three key strategies that would prove to be very effective.  Here they are and here’s how to use them. (1) Preventative – Individuals have a responsibility to be examined at least periodically (every two years, yearly as we get older – I’ll let the AMA set the standard) and get their immunizations. Those that do receive a lower insurance premium. (2) Wellness / Biometrics – Smokers should be charged more (no need to argue why, everyone should be aware of the added health risks and costs). Lower premiums or premium rebates for those actively managing and meeting standards for blood pressure, BMI, cholesterol and blood sugar level. All are key indicators of health. It makes sense to provide a premium discount to the individual going to the gym or utilizing some other method to improve their health. Those that don’t should pay more. After all, they are costing everyone else more. (3) Genetics & DNA – Technology is a great tool. Let’s use it to help predetermine the medical conditions which we’re predisposed. Not to punish people with higher costs, but to be proactive. A lifestyle change at an early age could help prevent certain illnesses. Information can be kept confidential with case managers and not shared or used with underwriting. – i.e. If you knew you had a family history of cancer, breast or colon, you could be proactive and monitor the signs. Same principle for other genetic diseases.

Let’s use all the available resources to lower health care costs and create a proactive system, health insurance as it should be.

What ideas do you have?

 

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.

Health Insurance As It Should Be (Part 1 of 2): Taxes and Regulations

Much speculations evolves around what changes the Trump administration will bring to health care. Although I don’t know why. The basics have been laid out by the Republicans for months. There is some fine tuning that needs to be done, but the core is in place. In addition to the principles that have been laid out, here are a few well thought out suggestions.  (For a closer look at what’s been proposed go to my July 13th and 27th blogs, Repealing Obamacare – Individual Tax Credit & The Employer Tax Exclusion.)

What part of the current healthcare reform plan would I keep? Once Obamacare is repealed, it must be repealed, my primary complaint is the ACA was implemented as a regulatory law not a health advocacy tool, I’d reintroduce three things. (1) No one should be denied coverage due to preexisting conditions. However, no one should be allowed to burden the system who carries no insurance, goes to the doctor, learns they need medical care and now applies for insurance. They should be required to apply for insurance, bear a heavy portion of the medical expenses for a year or two (contracted rate), and have the carrier assign a case manager. (2) Keep adult children on the plan until age 26, unless they are employed full-time. Then it’s time to put their big boy & girl pants on and be a responsible adult. (3) The Summary of Benefits & Coverage and Glossary of Health Coverage & Medical Terms make it easier to understand coverages. However changes need to be made.

Whatever happens I hope we’ll see both the introduction of individual tax credits and the continuation of the employer tax exclusion, rightfully so. Both are integral to health care. Why individuals have not been able to deduct health insurance premiums is a mystery. The need to continue the employer tax exclusion is important because the vast majority of Americans receive coverage through their employer. Suddenly thrusting 170 million people into the individual market would be chaotic. Also, the employer resources can be provide health advocacy for the employees (independently contracted, through HR or the broker).

Here are some simple solutions that will make health insurance easier and better.

  • Paying for Preexisting Conditions – Every transaction, buying aspirin, medical procedures, hospital stays – anything medical related – should be charged a ‘PreX’ fee of 1 penny. The money would go towards funding preexisting conditions, nothing else. If it raises more than is needed, then cut it back to either ½ penny or only on certain purchases or procedures. (Need to have the bean counters look at this recommendation.)
  • All medical expenses (premium included) should be pretax. Do I really have to explain why this is good/fair? If health care is as important as everyone says, and it is, let’s make it as inexpensive and accessible as possible to all. Eliminate all the complex tax regulations around health insurance, especially the need to have 7.5% of income before receiving the current deduction. (Note: It’s a deduction not a tax credit.)
  • Everyone should be eligible for HSA accounts and eliminate FSA accounts. Why have the use-it-or-lose-it rule? Makes no sense, except the federal government is overly concerned about the tax revenue. Although medical expenses would be pretax, based on my recommendation above, the HSA account would continue pretax deductions with tax free expenditures for medical care. HSA accounts would incentivize people to finance future medical expenses. What should be the allowable limit for HSA contributions? It’s open for discussion, but a dollar amount equal to the plans out-of-pocket maximum would make sense.
  • Any able body, able mind,  receiving a government subsidy for health care (Medicaid) should be required to do some form of work, be it ever so menial. Health insurance is expensive, everyone can do their part.
  • Major changes to medical liability and malpractice need to be made. I’ll let others suggest specific tort reform recommendations. But we need to get the attorneys to give up their strong hold on the medical market. It’ll help lower costs.

Finally, before you suggest eliminating insurance companies, I hope you’ll think about the import role they play in lowering health care costs. Health insurance companies, just like many items you buy, negotiate rates, buy in bulk, and monitor expenditures. Need proof? Look at your EOB (Explanation of Benefits). Compare the original billed amount to the allowed amount (after discounts).

I’m not saying they are perfect or that changes can’t be made. I’m just saying they play an important role and we need to recognize it. Insurance companies are much better than a bloated government agency with little or no accountability. We tried that with the VA health care and Obamacare. – No thank you!

What ideas do you have?

 

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.

Big Increase for 2017 Payroll Taxes while Social Security Benefits, Not So Much

The maximum earnings subject to the Social Security* payroll tax will increase by $8,700 in 2017 to $127,200 —up from $118,500. The Jan 1 adjustment is based on the government’s estimate of real wage growth. The 2017 increase in the taxable-earnings cap is the largest one-year increase since 1983.

Monthly Social Security benefits will increase a mere 0.3 percent in 2017. The Social Security Act ties the annual cost-of-living adjustment (COLA) to increases in the Consumer Price Index, as determined by the DOL’s Bureau of Labor Statistics.

Do you see the irony in these increases? Shouldn’t the adjustments be similar? Also, on one hand the payroll tax hike will increase the costs of goods and services, on the other the people won’t have enough to pay for the increase in goods and services.

*Social Security is financed by a 12.4 percent tax on wages up to the taxable-earnings cap, with half (6.2 percent) paid by workers and the other half paid by employers. The Medicare payroll tax rate is a matching 1.45 percent on all earnings.

 

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.

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.

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.

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