December 2012 – The Patient Protection and Affordable Care Act (PPACA) requires that certain employers report the cost of employer-sponsored health care costs on an employee’s W-2 beginning with W-2s issued for the 2012 calendar year. This does not mean that the cost of employer-sponsored health care is taxable to employees, but rather the reporting of such costs is a means by which employees, and the government, are notified of the cost of health care coverage.
Which Employers Are Subject to This Reporting Requirement?
With very limited exceptions, all employers sponsoring a group health plan and filing more than 250 W-2s in the previous calendar year must comply with PPACA’s W-2 reporting requirement. This includes governmental employers and churches.
The IRS has provided that the “small employer exception” (e.g., less than 250 W-2s in the previous calendar year) will apply to all future calendar years until the IRS issues additional guidance providing otherwise. It is important to note that the small employer exception is determined based on the individual employer and not on a controlled group basis.
How are the Reportable Costs Calculated?
Employers must report “aggregate reportable cost” of all the coverage it provides. Aggregate reportable cost is defined as the total cost of all applicable employer-sponsored coverage which includes both the employee and employer portion of the benefit costs, regardless of whether it is paid on a pre-tax basis. (See below for information on which group health plans to include in these calculations.) For insured plans, costs are usually based on the premiums charged. For self-funded plans, employers can use the costs calculated for purposes of COBRA premium calculations, minus the 2% administration fee.
Which Group Health Plans Are Exempt From Cost Reporting?
Not all employer-sponsored group health plans are subject to the W-2 reporting requirements. For example, employers do not need to include the cost of the following group health plans in its calculation of aggregate reportable costs:
• HIPAA excepted benefits (e.g., standalone dental, standalone vision, certain health flexible spending account plans)
• Health Savings Account (HSA) contributions
• Health Reimbursement Arrangements (HRAs)
• Self-funded plans that are not subject to COBRA or other similar continuation coverage
• Long-term care coverage
• Accident or disability income
• Multi-employer plans
What Are the Reporting Requirements For Former Employees?
The IRS has issued guidance which provides flexibility for employers with regard to reporting aggregate reporting costs for employees who terminate employment during the calendar year. In general, as long as the employer is consistent in reporting the cost of coverage under a particular health plan for all employees who terminate employment during the year, any reasonable method may be used.
For example, an employer may report only the costs for the portion of the year during which employees were active employees covered by the plan, and ignore any costs for post-employment coverage, such as COBRA continuation coverage. Alternatively, the employer may choose to report the cost of both pre-and post-employment coverage on the employee’s W-2 for the year of termination, as long as this is the treatment for all covered employees who terminated during the year.
The IRS also provided that employers are not required to report the cost of coverage on a W-2 furnished to a former employee who requests their W-2 before the end of the calendar year in which the employee terminated employment.
With respect to retirees, or other former employees who received no compensation during the calendar year, the employer is not otherwise required to issue a W-2 in order to report the cost of any employer-provided coverage to such former employees.
Immediate Employer Action Required
Employers must comply with these new W-2 reporting requirements for 2012 reporting, which will take place in January 2013. Therefore, if they have not already done so, employers should review their employer-sponsored health plans to determine which plans will be subject to the W-2 reporting requirements. Employers also need to implement payroll and reporting processes to comply with the requirement, including working with any applicable third-party administrators that assist the employer with its payroll processing.
*This article is not intended to give legal advice. It is comprised of general information. Employers facing specific issues should seek the assistance of legal counsel.
Kristi R. Gauthier is a senior attorney in Clark Hill’s Birmingham office and concentrates her practice in Employee Benefits Law. Kristi has represented clients in a wide variety of employee benefits issues involving health and welfare benefits, as well as retirement plans. Kristi is admitted to practice in the State of Michigan, the U.S. District Court for the Eastern District of Michigan, and the U.S. Sixth Circuit Court of Appeals. She also is active in the legal community with memberships in the American Bar Association, the State Bar of Michigan, and the Oakland County Bar Association where she is a member of the Employee Benefits Committee. Kristi also serves as a member of the Clark Hill Diversity and Inclusion Committee. Kristi has lectured on various employee benefits issues, including ERISA compliance, healthcare reform, COBRA, section 125 plans, 403(b) plans and IRS plan correction programs. Kristi is also a co-author of the ABA publication ERISA Survey of Federal Circuits. Kristi was named a “Rising Star” by Michigan Super Lawyers in 2011.
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Can an employer reimburse individual medical insurance premiums under a Health Reimbursement Arrangement (HRA)?
Although employers may permit their HRAs to reimburse health insurance premiums under the IRS Notice 2002-45, they should be cautious in reimbursing individual health insurance premiums. By including individual health insurance policies in an HRA, these policies may be treated as group health insurance coverage. If they are, the following compliance issues might arise. They could be subject to: (a) the HIPAA portability, privacy & security requirements (b) ERISA requirements for disclosure, claims and fiduciary liability, (c) other federal mandates, including FMLA, Mental Health Parity, Reconstructive Surgery After Mastectomy, Newborns’ and Mothers’ Health Protection Act and other federal mandates, and( d) state insurance mandates for group insurance policies.
At the current time, there is no guidance in the area. Employers should be warned and cautioned before establishing such an HRA. This uncertainty has arisen because since HRAs provide medical care, they are considered “group health plans” and must comply with additional ERISA requirements such as HIPAA and COBRA.
Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.
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November 2012 – As any employer sponsoring a group health plan knows, the Patient Protection and Affordable Care Act (“PPACA”) significantly impacts the way group health plans operate going forward. While many of the changes under PPACA are already in effect, there are still many important changes looming around the corner in the years to come.
Many of these changes will have a profound impact on employer-sponsored group health plans, such as the employer mandates that take effect in 2014. Although some uncertainty over PPACA remains due to the upcoming 2012 elections, as of right now PPACA remains the law of the land and employers should take heed and prepare themselves, and their health plans, for the fast approaching PPACA deadlines.
Below is a summary of just some of the most important upcoming PPACA deadlines impacting employers and employer-sponsored group health plans in 2012 and beyond.
2012
• W-2 Reporting: Employers who filed at least 250 Form W-2s for the preceding calendar year must report the cost of employer-sponsored health care on employees’ W-2s.
• Summary of Benefits and Coverage (“SBC”) and Uniform Glossary: Plan sponsors must prepare and distribute a SBC and Uniform Glossary beginning with the first open enrollment period or plan year beginning on or after September 23, 2012.
2013
• Health FSA Employee Contribution Cap: Effective with the first plan year beginning on or after January 1, 2013, the employee maximum contribution amount under a health FSA plan is limited to $2,500. Plan documents must be formally amended, if necessary, to reflect this change no later than December 31, 2014.
• Medicare FICA Tax Increases: Effective for taxable years beginning after January 1, 2013, PPACA provides for an increase in the Medicare payroll tax by 0.9 percent on wages in excess of $200,000 for single filers, and $250,000 for joint filers. Employers must withhold the employee’s share, but PPACA does not increase the employer’s share of FICA Medicare tax.
• Notice of Exchange Option: Effective March 1, 2013, and in accordance with agency guidance to be issued, employers must provide notice to employees of the existence of state exchanges, information regarding premium tax credits and cost-sharing reductions through the exchanges, and options and implications of obtaining health care through an exchange.
• Comparative Clinical Effectiveness Research Fees: Effective July 31, 2013, certain health insurance issuers and self-funded health plans will be required to pay a temporary annual fee of $2.00 ($1.00 during the first year the provision is applicable), indexed for inflation starting in 2014, times the average number of covered lives under the health plan for the year to the IRS on Form 720. The fees will be used to fund the Patient-Centered Outcomes Research Institute. The fee must be paid on the July 31st following the plan year (for example, July 31, 2013 for the 2012 plan year) and is scheduled to end for plan years ending after September 30, 2019.
2014
• Employer Shared Responsibility Penalties: Large employers (those with 50 or more full-time equivalent employees) must provide health coverage that meets affordability and minimum value requirements or face penalties if one or more of its full-time employees obtains a premium credit and obtains coverage on a State insurance exchange.
• Wellness Programs: The reward/incentive limit under a wellness program increases to 30 percent effective January 1, 2014.
• Pre-existing Condition Exclusions: Effective for plan years beginning on or after January 1, 2014, pre-existing condition exclusions are no longer allowed in group health plans.
• Waiting Periods: Effective for plan years beginning on or after January 1, 2014, group health plans may not impose waiting periods in excess of 90 days.
• Annual Limits: Effective for plan years beginning on or after January 1, 2014, group health plans may no longer include annual limits on essential health benefits for participants.
2018
• “Cadillac Plan” Tax: Effective January 1, 2018, employers sponsoring a health plan with an aggregate value of $10,200 for individual coverage and $27,500 for family coverage (indexed annually) will be assessed an excise tax based upon the excess value of coverage and the number of participants in the plan.
Provisions with Unknown Effective Dates
• Automatic Enrollment: Employers with more than 200 full-time employees who sponsor a group health plan will be required to automatically enroll full-time employees in health coverage. The original effective date for this provision was January 1, 2014, but the Department of Labor has postponed compliance until further guidance is issued.
• Insured Plan Nondiscrimination Testing: Insured health plans will be subject to similar nondiscrimination rules as self-insured plans, which generally prohibit discrimination in favor of highly compensated employees. The Internal Revenue Service has delayed implementation of these rules until further guidance is issued.
*This article is not intended to give legal advice. It is comprised of general information. Employers facing specific issues should seek the assistance of legal counsel.
Kristi R. Gauthier is a senior attorney in Clark Hill’s Birmingham office and concentrates her practice in Employee Benefits Law. Kristi has represented clients in a wide variety of employee benefits issues involving health and welfare benefits, as well as retirement plans. Kristi is admitted to practice in the State of Michigan, the U.S. District Court for the Eastern District of Michigan, and the U.S. Sixth Circuit Court of Appeals. She also is active in the legal community with memberships in the American Bar Association, the State Bar of Michigan, and the Oakland County Bar Association where she is a member of the Employee Benefits Committee. Kristi also serves as a member of the Clark Hill Diversity and Inclusion Committee. Kristi has lectured on various employee benefits issues, including ERISA compliance, healthcare reform, COBRA, section 125 plans, 403(b) plans and IRS plan correction programs. Kristi is also a co-author of the ABA publication ERISA Survey of Federal Circuits. Kristi was named a “Rising Star” by Michigan Super Lawyers in 2011.
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November 2012 – On January 1, 2013, we will ring in the New Year and also start to ring in some of the most significant provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA and the “Act”). Although you may be part of a large business with plenty of people-power to help you understand the new Act, you still may find yourself feeling confused about how the Act’s changes may affect your company in the years to come.
It has been said that this piece of legislation signifies the most comprehensive transformation of the U.S. health care system since the creation of the Medicare and Medicaid programs nearly 50 years ago. Therefore, with such a monumental piece of legislation, it is without wonder that the question remains for many: “What do I need to know and what can I do to prepare for the impact of this Act?” To help you with this, this article addresses some specific concerns of large businesses.
Health insurance premiums reportable on W-2s
Effective for the year ending December 31, 2012, employers who will be filing in excess of 250 Forms W 2 will be required to include the cost of the employee’s health insurance on their W-2s. This inclusion is for informational purposes only and will cause no additional tax liability for employers or employees. IRS Notice 2012-9 provides interim guidance on informational reporting to employees of the cost of their group health insurance coverage. In case you were also wondering about the proposed expansion of Form 1099 reporting requirements, rest assured this measure was officially repealed in 2011.
Contribution limitations being imposed on healthcare Flexible Spending Accounts
Effective January 1, 2013, annual contribution limits to a Flexible Spending Account (FSA) for medical expenses will now be mandated by the Federal Government. What does this mean to you and your employees? In the past, FSA plan limits were set by the plan sponsors to accommodate the needs and desires of its participants. As you well know, many employees relied heavily on these tax-free funds to pay for, amongst many things, their children’s braces or their own specific medical needs. This legislation caps contributions for 2013 at just $2,500. It would likely benefit many of your employees to know about this drastic change ahead of time so they can plan accordingly. Luckily, this change only affects medical FSAs, so employees’ dependent care FSAs will be unaffected. While considering alternatives, keep in mind that although the contributions to Health Savings Accounts and Health Reimbursement Accounts have not been affected, certain restrictions have been placed on them. For instance, over-the-counter medicine is no longer a qualified expense under these plans unless prescribed by your doctor. Also, the penalty for unqualified distributions rose steeply from 10 percent to 20 percent.
Additional Medicare Plan A hospital insurance tax on high earners
Does your business rely heavily on valuable employees who are earning wages in excess of $200,000 ($250,000 in the case of married filing jointly, $125,000 married filing separately)? If so, it is important to know that one of the more significant financing mechanisms of the Act will be an additional Medicare tax of .9 percent on all wages in excess of these amounts starting January 1, 2013. You may want to look at withholdings to assure compliance with this part of the Act.
Excise Tax on Medical Equipment
Is the sale or purchase of medical equipment a significant part of your operations? Then you should be aware that beginning in January 2013, there will be an excise tax of 2.3 percent placed on nearly all medical devices. Manufacturers and importers of medical devices will have this tax levied on all sales. Currently, the tax will not apply to items such as eyeglasses, contact lenses, hearing aids, or any other medical device that the public generally buys at retail for individual use. Although this tax is levied on sales, if you are a large purchaser of the non-exempt items, you should assume that this additional cost will be passed on to you. This may mean some tough financial decisions will need to be made before this new tax takes effect.
Large-Employer Health Insurance Requirements
Effective January 1, 2014, employers with 50 or more full-time employees will incur a nondeductible excise tax if they offer health insurance and they have at least one employee receiving a premium tax credit. This excise tax will be the lesser of $3,000 for each employee receiving a premium credit or $2,000 for every full-time employee in excess of 30 employees. Employers with more than 200 full-time employees are required to automatically enroll all employees in their health insurance plan with no exceptions. Employees do, however, have the option to then opt out of the plan should they choose to.
Conclusion
The January 2013 implementations of the Patient Protection and Affordable Care Act will have varying impacts on large businesses based on numerous criteria, including the size and the current insurance offerings to name just two. What is important for large business owners such as you to keep in mind is that regardless of changes that may still come, we must use the best information available to begin planning today. The sooner your particular situation is analyzed, the better chance you will have to mitigate the new requirement’s impacts and protect the financial health of your company.
With extensive experience providing financial solutions to clients – from business operation & efficiency assessments to consulting & corporate tax guidance – Don McAnelly is ideally positioned to provide the support today’s businesses need. Don serves as Rehmann’s primary CPA contact for health care clients in East Michigan and his experience extends to tax, valuation and financial matters. Don has been with Rehmann for 18 years, with prior Big Five national accounting firm experience. Additionally, he is a member of the Michigan Association of CPAs, has authored overviews on the Patient Protection and Affordable Care Act for the Firm’s BWD magazine and has spoken on the Act to various chambers of commerce.
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November 2012 – January 1, 2013 is just around the corner….and as you may know, it marks the effective date for some of the most significant provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA and the “Act”). So are you confused about how the Act’s changes may affect your small business in the coming years? Well, you’re certainly in good company.
Many business owners find themselves spinning in circles attempting to navigate the lengthy legislation that continues to be altered and has, at times, confused even the most competent professionals in the accounting and legal communities. So, I am sure that the question remains: “What do I need to know and what can I do to prepare for the impact of this Act?” To attempt to answer this question, we have compiled the following information addressing specific concerns of small business owners.
Just what is a “Small Business” under PPACA?
So you may be wondering: “Under PPACA just what is a ‘Small Business’?” This is a good question as depending upon which aspects of PPACA you are referring to, the definition of a small business seems to vary somewhat. If you are talking about reporting the cost of health insurance on an employee’s W-2, then the split between a large or small employer is at 250 employees. If you are talking about the ability of a business to access the Small Employer Health Insurance Credit, then the threshold for a small business is at 50 employees. Differences such as these, and PPACA’s yet unknown and misunderstood consequences, will continue to impact small business owners in many ways. In fact, earlier this year, a Gallup survey indicated that nearly half of all small business owners who aren’t hiring cited fear about the potential cost of health care as a reason.
Does a Small Business have to provide Health Insurance?
This is a good question. In the past, providing health insurance to employees was at the employer’s discretion. Starting January 1, 2014, if you have 50 or more full-time employees, it’s effectively mandated and failure to comply comes with a cost. Small employers coming close to the 50 full-time-employee threshold may have to think twice about hiring more employees knowing that it could burden the company with additional taxes. Under what has been termed “pay or play penalties,” a nondeductible excise tax may apply to employers with 50 or more full-time employees. Such employers that offer coverage but have at least one employee receiving a federal health insurance premium credit will have to pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for every full-time employee in excess of 30 employees.
Health insurance premiums reportable on W-2s
I’m sure you’ve heard about the numerous updates and changes regarding the reporting of health insurance premiums on your employees’ W-2s since 2011, when this part of PPACA was originally to go into effect. It’s probably safe to say you and your accounting staff have been dreading the additional time and cost that would come with compliance with this requirement, especially being a small business. It turns out I have some good news for you. The government finally agreed with those very concerns and has decided to exempt employers that file 250 or fewer Forms W-2. You can find out more details regarding W-2 reporting guidance within IRS Notice 2012-9. In case you were also wondering about the proposed expansion of Form 1099 reporting requirements, rest assured this measure was officially repealed in 2011.
Continuation of Small Employer Health Insurance Tax Credit
Does your business have fewer than 25 full-time employees who are earning on average less than $50,000 per year? If so, and you provide them health insurance coverage, you’re in luck! You will very likely continue to be eligible under Phase One of the Small Employer Health Insurance Tax Credit that began in 2010. While a bit more complex than what can be set forth in an article such as this, generally, during Phase One of the program, qualifying employers can receive a federal tax credit of up to 35 percent of the cost of health insurance premiums paid on behalf of employees if the employer paid at least 50 percent of those premiums. Phase One will continue through 2013. So you might be wondering, what happens in 2014? If you have 10 or fewer full-time employees who earn on average $25,000 or less, then you’re still eligible! These employers may qualify under Phase Two of the tax credit, which increases the credit from 35 percent up to 50 percent of health insurance premiums paid. Phase Two will be in effect from 2014 through the end of 2017. But, even if you have more than 10 full-time employees or they make more than $25,000, you might still be in luck. At this point, some complex calculations will dictate if you qualify, and if so for how much, based on the amounts by which these two criteria are exceeded.
Contribution limitations being imposed on health care Flexible Spending Accounts
Effective January 1, 2013, annual contribution limits to a Flexible Spending Account (FSA) for medical expenses will now be mandated by the Federal Government. What does this mean to you and your employees? In the past, FSA plan limits were set by the plan sponsors to accommodate the needs and desires of its participants. As you well know, many employees relied heavily on these tax-free funds to pay for, amongst many things, their children’s braces or their own specific medical needs. This legislation caps contributions for 2013 at just $2,500. It would likely benefit many of your employees to know about this drastic change ahead of time so they can plan accordingly. Luckily, this change only affects medical FSAs, so employees’ dependent care FSAs will be unaffected. While considering alternatives, keep in mind that although the contributions to Health Savings Accounts and Health Reimbursement Accounts have not been affected, certain restrictions have been placed on them. For instance, over-the-counter medicine is no longer a qualified expense under these plans unless prescribed by a doctor. Also, the penalty for unqualified distributions rose steeply from 10 percent to 20 percent.
Additional Medicare Part A hospital insurance tax on high earners
Does your small business rely heavily on valuable employees who are earning wages in excess of $200,000 ($250,000 in the case of married filing jointly, $125,000 married filing separately)? As an owner, do you draw wages in this range? If so, it is important to know that one of the more significant financing mechanisms of the Act will be an additional Medicare tax of .9 percent on all wages in excess of these amounts starting January 1, 2013. You may want to look at withholdings to assure compliance with this part of the Act.
Conclusion
The January 2013 implementations of the Patient Protection and Affordable Care Act will have varying impacts on small businesses based on numerous criteria, including the size and the current insurance offerings to name just two. What is important for small business owners such as you to keep in mind is that regardless of changes that may still come, we must use the best information available to begin planning today. The sooner your particular situation is analyzed, the better chance you will have to mitigate the new requirement’s impacts and protect the financial health of your company.
With extensive experience providing financial solutions to clients – from business operation & efficiency assessments to consulting & corporate tax guidance – Don McAnelly is ideally positioned to provide the support today’s businesses need. Don serves as Rehmann’s primary CPA contact for health care clients in East Michigan and his experience extends to tax, valuation and financial matters. Don has been with Rehmann for 18 years, with prior Big Five national accounting firm experience. Additionally, he is a member of the Michigan Association of CPAs, has authored overviews on the Patient Protection and Affordable Care Act for the Firm’s BWD magazine and has spoken on the Act to various chambers of commerce.
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What premium tax credits and cost-sharing subsidies are available to individuals in 2014 and who is eligible for them?
To assist individuals and families who do not qualify for Medicare or Medicaid and are not offered affordable health coverage by their employers, a refundable tax credit (the “premium tax credit”) and a cost sharing subsidy will be available beginning in 2014 to help pay for insurance purchased through an Exchange. Generally, taxpayers with income between 100 percent and 400 percent of the federal poverty line (FPL) who purchase insurance through an Exchange will qualify them, as provided in Code Section 36B. and Section 1402 of the Patient Protection and Affordable Care Act (PPACA).
A premium assistance tax credit will be provided monthly to lower the amount of premium the individual or family must pay for their coverage. Cost sharing subsidies will limit the plan’s maximum out-of-pocket costs, and for some individuals will also reduce other cost sharing amounts (i.e., deductibles, coinsurance or copayments) that would otherwise be charged to them by their coverage.
Both types of assistance will be tied in some way to the value of the coverage available in the Exchanges. Four levels of plans will be offered by insurers in the exchanges. All the plans must offer a set of essential health benefits. The four plan levels vary in the total value of coverage they must provide. This amount is sometimes called “actuarial value” and represents the proportion of health insurance expenditures for covered benefits that, for an average population, would be paid by the plan. Section 1302(d)(1) of PPACA requires that the actuarial value be 60 percent for “bronze” plans, 70 percent for “silver” plans, 80 percent for “gold” plans and 90 percent for “platinum” plans. In addition, the out-of-pocket maximum for any of these plans may not exceed a limit that is determined annually. For 2013, the limit is $6,250 for individual coverage and $12,500 for family coverage. It will be adjusted higher for 2014.
Who is eligible for the premium tax credit and cost sharing subsidy?
Citizens and legal residents in families with incomes between 100 percent and 400 percent of poverty who purchase coverage through a health insurance exchange are eligible for a premium tax credit cost sharing subsidy to reduce the cost of coverage. individuals eligible for public coverage are not eligible for premium assistance in Exchanges. In states without expanded Medicaid coverage, individuals with incomes less than 100 percent of poverty will not be eligible for Exchange subsidies, while those with incomes at or above poverty will be.
Would an individual be eligible for premium tax credits and cost-sharing subsidies in the Exchange if he or she is offered “minimum essential coverage” by his or her employer in that it is both affordable and provides minimum value, but declines it and obtains coverage in the Exchange?
No. As a general rule, if an eligible employer-sponsored plan constitutes “minimum essential coverage” in that it is both affordable and provides minimum value merely being eligible for the plan will make an individual ineligible for the tax credit. In Treasury Regulation Section 1.36B-2(c)(3)(iii)(A), the IRS indicates that an eligible employee who declines enrollment in such a plan remains ineligible for the tax credit for each month in the coverage period related to the enrollment period (e.g., for the full plan year in the case of an annual enrollment period).
Would an individual be eligible for premium tax credits and cost sharing subsidies in the Exchange if he or she is enrolled coverage offered by his or employer that is either unaffordable and does not provides minimum value?
If an employee actually enrolls in an eligible employer-sponsored plan, the tax credit is not available-even if the plan does not meet the affordability and minimum value conditions, as provided in Code Section 36B(c)(2)(C)(iii). Employees who are automatically enrolled in an eligible employer-sponsored plan have a grace period to unwind the enrollment to maintain their eligibility for the tax credit, as provided in Treasury Regulation Section 1.36B-2(c)(3)(vii)(B). An employee is not considered eligible for minimum essential coverage (i.e., may qualify for the tax credit) during any required waiting period before coverage becomes effective under an eligible employer-sponsored plan. The IRS is expected to provide a safe harbor under which an employer would not have to pay the shared responsibility tax penalty under Code § 4980H for failing to offer coverage for at least the first three months after an employee’s hire date, as provided in Department of Labor Technical Release 2012-01, Q/A-3.
Individuals who meet these thresholds for unaffordable employer-sponsored insurance are eligible to enroll in a health insurance exchange and may receive tax credits to reduce the cost of coverage purchased through the exchange.
What are the amounts of the premium tax credit and cost-sharing subsidies to be provided?
Under Code Section 36B(b), the amount of the tax credit that a person can receive is based on the premium for the second lowest cost silver plan in the Exchange . A silver plan is a plan that provides the essential benefits and has an actuarial value of 70 percent. (A 70 percent actuarial value means that on average the plan pays 70 percent of the cost of covered benefits for a standard population of enrollees.)
Under Code Section 36B(b)(3), the amount of the tax credit varies with income such that the premium that the premium a person would have to pay for the second lowest cost silver plan would not exceed a specified percentage of their income (adjusted for family size), as follows:
Household Income (as percentage of Federal Poverty Line (FPL)
Premium as a Percent of Household Income
Up to133%
2% of income
133-150%
3-4% of income
150-200%
4-6.3% of income
200-250%
6.3-8.05% of income
250-300%
8.05-9.5% of income
300-400%
9.5% of income
In addition, Section 1402(b) of PPACA limits the total amount that people must pay out-of-pocket for cost sharing for essential benefits. Generally, the limits are based on the maximum out-of-pocket limits for Health Savings Account-qualified health plans ($6,250 for single coverage and $12,500 for family coverage in 2013), which will be indexed to the change in the Consumer Price Index until 2014 when the provision takes effect.
After 2014, the limits will be indexed to the change in the cost of health Coverage. Individuals with incomes at or below 400 percent of federal poverty line have their out-of-pocket liability capped at lower levels, as follows:
Household Income (as a percentage of Federal Poverty Line FPL)
Reduction in Out-of-Pocket Liability
100-200%
Two-thirds of the maximum
200-300%
One-half of the maximum
300-400%
One-third of the maximum
The limits on out-of-pocket maximum amounts means that a person with income of 150 percent of poverty purchasing coverage in the exchange would have the limit on their out-of-pocket spending reduced to at least two-thirds of the generally applicable maximum value (for example, if the provision were in effect in 2013, the out-of-pocket maximum for single coverage for such a person would be about $2,083 for single coverage and $4,166 for family coverage).
In addition, Section 1402(c) of PPACA provides that federal payments will be made to health insurers to increase the actuarial value of the plan for individuals with household incomes under 250 percent of the federal poverty line. For example, for individuals with household incomes between 100 percent and 150 percent of federal poverty line, the actuarial value of the plan will be increased to 94 percent. That means that in addition to keeping within the lower out of pocket maximums established above, insurers must make other changes to increase the actuarial value of the coverage. Most likely this will mean reducing plan deductibles, coinsurance or copayments in order to meet the higher actuarial value requirements.
For individuals with household incomes over 250 percent of federal poverty line, the actuarial value of their plan may not exceed 70 percent, which is the basic value of the silver plan even for those who receive no financial assistance. This means that, for some individuals, some cost sharing amounts could increase. That would happen if their out of pocket maximum was decreased to keep within the required lower maximum, because the deductibles, copayments or coinsurance that would otherwise apply would have to be increased to keep the actuarial value at 70 percent.
The last cost sharing subsidy is summarized below:
Household Income (as percentage of Federal Poverty Line (FPL)
Net Value of the Subsidy (% of Actuarial Value)
Out-of-Pocket Liability
100-150%
94%
150-200%
87%
200-250%
73%
250-400%
70%
Who determines an individual’s eligibility for the premium tax credit and the cost-sharing subsidies?
Under 45 CFR Section 155.300, HHS is requiring the Exchanges to establish a system of coordinated eligibility and enrollment so that an individual can simultaneously apply for enrollment in a Qualified Health Plan (“QHP”), as well as Insurance Affordability Programs (“IAPs”), including the premium tax credit and cost-sharing reductions. Under Treasury Proposed Regulation Section 301.6103(l)(21). The IRS is permitted to disclose income and other specified information about an individual taxpayer to HHS for purposes of making eligibility determinations for advance payments of the premium tax credit or the cost-sharing reductions.
When an individual purchases a Qualified Health Plan how are any credits and subsidies applied?
Under the Actuarial Value and Cost-Sharing Reductions Bulletin (released by HHS), when an individual receives covered essential health benefits, the provider would collect from the individual only the amount of cost-sharing specified in the silver plan variation in which the individual is enrolled. The federal government would pay in advance to the insurer amounts estimated to cover the cost-sharing reductions associated with the specific silver plan variation. HHS intends to propose that this advance cost-sharing reduction payment to the insurer would occur monthly, and that after the end of the calendar year, the federal government would reconcile the advance payments to actual cost-sharing reduction amounts.
The Exchange must report to the IRS and to each taxpayer required information for the Qualified Health Plan in which the employee (or a member of the employee’s family) is enrolled through the Exchange, as provided in Treasury Regulation Section 1.36B-4. In turn, individuals who receive advance payments of the premium tax credit must file an income tax return for that taxable year, as provided in Treasury Regulation Section 1.36B-5.
Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.
By Larry Grudzien, J.D.
September 2012 – On April 13, 2012, the Internal Revenue Service released proposed regulations that provide that the first potential date to pay the new comparative effectiveness research fees that apply to insured and self-insured health coverage for plan years ending on or after Oct. 1, 2012 will be July 31, 2013.
In the proposed regulations, the IRS also provides:
• These fees apply to insured and self-funded group health plans for active or former employees, as well as some health reimbursement arrangements and health flexible spending arrangements. These fees do not apply to plans that provide “excepted benefits.” Excepted benefits include such benefits as stand-alone dental or vision plans; employee assistance, wellness and disease management programs that don’t offer “significant benefits in the nature of medical care or treatment”; most expatriate plans; and stop-loss insurance. Retiree-only plans, however, are not exempt from these fees.
• These fees will be paid by insured and self-insured plans. While insurers will file reports and pay the fees for insured policies, self-insured plan sponsors must do file reports and pay these fees. They cannot delegate this work to third parties or vendors. Plan sponsors and insurers will file IRS Form 720 to report the fees and make annual payments. The form has yet to be updated to reflect the comparative effectiveness fees. This return must be filed each year by July 31 of the calendar year immediately following the last day of the policy year (for insured plans) or the plan year (for self-insured plans).. If a plan or policy year ends on December 31, 2012, Form 720 must be filed by July 31, 2013. If the plan or policy year ends on January 31, 2013, Form 720 must be filed by July 31, 2014.
• These fees will be calculated as the average number of covered lives under a policy or plan multiplied by $1 for plan years ending after October 1, 2012. The multiplier increases to $2 for the next plan year, then may rise with health care inflation through plan years ending before Oct. 1, 2019, when the fees are slated to end. To determine the average number of covered lives, plan sponsors generally can use any reasonable method in the first plan year and will choose from several proposed approaches in later years.
• These fees will fund an institute set up by the health care reform law to perform and promote research on the effectiveness and outcomes of various medical treatments, services, procedures and drugs. This comparative effectiveness research aims to broaden patient, clinician, payer and other access to evidence-based medical information.
Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.
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Health care reform expands ERISA’s disclosure requirements by requiring that a “summary of benefits and coverage” be provided to applicants and enrollees before enrollment or re-enrollment. The summary (referred to as the SBC) must accurately describe the “benefits and coverage under the applicable plan or coverage.” The requirement applies beginning with the first open enrollment period beginning on or after September 23, 2012 for participants and beneficiaries enrolling or re-enrolling through open enrollment. For individuals enrolling other than through open enrollment (e.g., newly eligible individuals or special enrollees), the requirement applies beginning on the first day of the first plan year that begins on or after September 23, 2012. For calendar-year plans, this means that SBCs will first be required during open enrollment in 2012 for the 2013 plan year. But for some non-calendar-year plans, the SBC rules may first apply to newly eligible individuals and special enrollees.
The SBC requirement applies to so-called “grandfathered” health plans under health care reform—that is, it is not one of the requirements from which those existing group health plans and health coverage were excused.
The various governmental agencies released a template and instructions which contained sample language for completing the template and provided a uniform glossary of terms used for health coverage. The SBC template and related materials are available on the websites of the DOL and HHS. Included among the materials are:
• SBC template (available in modifiable format in MS Word)
• Sample completed SBC
• Instructions
• Why This Matters language (to be used when completing this column on the first page of the SBC template)
• Coverage examples (includes information necessary to perform the coverage example calculations)
• Uniform glossary of coverage and medical terms
Plans and insurers are instructed to use the full SBC template, but to the extent a plan’s terms cannot reasonably be described in a manner consistent with the template and instructions, the plan or insurer must accurately describe the relevant terms while using “best efforts” to do so in a manner as consistent as reasonably possible with the instructions and template format.
Which Plans Are Required to Provide the SBC?
The SBC requirement applies to group health plans (both insured and self-insured) and insurers but not to certain “excepted benefits.” The SBC template is intended to be used by all types of plans or coverage designs.
The SBC requirements do not apply to excepted benefits (which include many health FSAs and certain HRAs). Information about health FSAs and HRAs that are not excepted benefits, but are integrated with other major medical coverage, can be included in the appropriate spaces on the major medical SBC for deductibles, co-payments, co-insurance, and benefits otherwise not covered by the major medical coverage. But stand-alone health FSAs and HRAs that are not excepted benefits must satisfy the SBC requirements independently. Since HSAs are generally not group health plans, they are generally not subject to the SBC requirements.
Who Must Provide the SBC?
The SBC must be provided by plan administrators (for self-insured health plans) and plan administrators or insurers (for insured health plans). So, if the group health plan is self-insured, the obligation to provide an SBC lies solely with the plan administrator (usually the plan sponsor unless another entity is named as such in the plan documents). If the plan is fully insured, the obligation to timely provide an SBC lies both with the plan administrator and the insurer.
Who Must Be Furnished the SBC?
The SBC must be distributed to all applicants (at the time of application), policyholders (at issuance of the policy), and enrollees (at initial enrollment and annual enrollment). The plan (including the plan administrator) and the insurer must automatically provide an SBC to participants and beneficiaries with respect to each “benefit package” offered for which the participant or beneficiary is eligible. Information can be combined for different coverage tiers (self-only, employee-plus one coverage and family coverage) in one SBC, provided the appearance is understandable.
When Must the SBC Be Distributed?
Group health plans and insurers are required to provide an SBC to a participant or beneficiary with respect to each “benefit package” offered for which the participant or beneficiary is eligible.
The SBC must be distributed at various times, as outlined below.
At Open Enrollment (Renewal): The SBC must be included with open enrollment materials. If the plan or insurer requires participants or beneficiaries to renew in order to maintain coverage for a succeeding plan year, a new SBC must be provided no later than the date the renewal materials are distributed. If renewal is automatic, the SBC must be furnished no later than 30 days prior to the first day of the new plan year. For insured plans, if the new policy has not yet been issued 30 days prior to the beginning of the plan year, the SBC must be provided as soon as practicable, but no later than seven business days after the issuance of the policy.
In an effort to reduce unnecessary duplication with respect to group health plans that offer multiple benefit packages, in connection with renewal, the plan or insurer only need to automatically provide a new SBC with respect to the benefit package in which a participant or beneficiary is enrolled. SBCs are not required to be provided automatically with respect to benefit packages in which the participant or beneficiary is not enrolled. However, if a participant or beneficiary requests an SBC with respect to another benefit package for which the participant or beneficiary is eligible, the SBC must be provided as soon as practicable, but in no event later than seven business days following the request.
At Initial Enrollment: The SBC for each benefit package offered for which the participant or beneficiary is eligible must be provided as part of any written application materials that are distributed by the plan or insurer for enrollment. If the plan does not distribute written application materials for enrollment, the SBC must be distributed no later than the first date the participant is eligible to enroll in coverage for the participant and any beneficiaries. In the unlikely event that there is any change to the information required to be in the SBC before the first day of coverage (e.g., prior to the end of the plan’s waiting period), the plan or insurer must update and provide a current SBC to a participant or beneficiary no later than the first day of coverage.
At Special Enrollment: The plan or insurer must also provide the SBC to special enrollees (employees and dependents with the right to enroll in coverage midyear upon specified circumstances) within 90 days after enrollment pursuant to a special enrollment right, which is the timeframe for providing SPDs.
Upon Request: The plan or insurer must provide the SBC to a participant or beneficiary upon request, as soon as practicable, but in no event later than seven business days following the request.
How are the SBCs Distributed to Participants and Beneficiaries?
An SBC provided by a plan or insurer to a participant or beneficiary may be provided in paper form. Alternatively, for plans and insurers subject to ERISA (including plans sponsored by private-sector employers) or the Code (including plans subject to ERISA and church plans not subject to ERISA), the SBC may be provided electronically to participants and beneficiaries covered under the plan if the requirements of the DOL’s electronic disclosure safe harbor are met.
For participants and beneficiaries who are eligible but not enrolled, the SBC may be provided electronically if the format is readily accessible and a paper form is provided free of charge upon request. For these participants and beneficiaries only, the SBC may be provided via Internet posting if the individuals are notified in paper form (such as a postcard) or via email that the documents are available on the Internet. The postcard or email must provide the Internet address and indicate that the documents are available in paper form upon request.
How Should the SBC Appear?
The SBC be presented in a uniform format, utilize terminology understandable by the average plan participant, not exceed four pages in length, and not include print smaller than 12-point font.
The SBC is designed to be provided in the form authorized by the agencies and completed in accordance with the instructions and guidance. Plans and insurers may provide the SBC either in color or grayscale. Group health plan SBCs may be provided either on a stand-alone basis or in combination with other summary materials (such as the SPD) if certain requirements are met. If the SBC is provided in combination with other materials, it must remain intact and must be prominently displayed at the beginning of the materials (such as immediately after a table of contents), and the timing requirements for providing the SBC must still be satisfied.
What are the Language Requirements for the SBC?
The SBC must be presented in a “culturally and linguistically appropriate manner.” To satisfy this requirement, a plan or insurer should follow the rules for providing appeals notices in a culturally and linguistically appropriate manner under PHSA § 2719 and its implementing regulations. In general, those rules provide that for materials sent to an address in specified counties of the United States, plans and insurers must provide oral language services in the applicable non-English language, include a one-sentence statement in the English versions of the SBC—prominently displayed in the non-English language—clearly indicating how to access the language services, and must provide written translations of the SBC upon request in the applicable non-English languages. The counties in which this must be done are those in which at least 10% of the population residing in the county is literate only in the same non-English language. This determination is based on U.S. Census data. In order to assist with compliance with this language requirement, HHS will provide written translations of the SBC template, sample language, and uniform glossary in the four applicable languages (Spanish, Tagalog, Chinese, and Navajo) and may also make these materials available in other languages.
What are the Content Requirements for the SBC?
The SBC must include the following information:
• Uniform definitions of standard insurance and medical terms so that consumers may compare health coverage and understand the terms of (or exceptions to) their coverage.
• A description of the coverage, including cost-sharing, for each category of benefits identified by the agencies.
• Exceptions, reductions, and limitations on coverage.
• Cost-sharing provisions, including deductible, co-insurance, and co-payment obligations.
• Renewability and continuation of coverage provisions.
• A “coverage facts label”—called “coverage examples” in the regulations—illustrating common benefits scenarios (e.g., pregnancy, serious or chronic medical conditions) and related cost-sharing based on recognized clinical practice guidelines.
• With respect to coverage beginning on or after January 1, 2014, a statement of whether the plan or coverage provides “minimum essential coverage”, and whether the plan’s share of the total allowed cost of benefits provided under the plan meets applicable requirements.
• A statement that the SBC is only a summary and that the plan (or policy or certificate) should be consulted to determine the governing contractual provisions.
• The telephone number to call for additional questions and to obtain a copy of the plan document, insurance policy, or group certificate of coverage (or individual coverage policy), and the Internet web address where the materials are available.
• For plans and insurers that maintain one or more networks of providers, an Internet address (or similar contact information) for obtaining a list of the network providers.
• For plans and insurers that maintain a prescription drug formulary, an Internet address where an individual may find more information about the prescription drug coverage under the plan.
• An Internet address for obtaining the uniform glossary and a contact phone number to obtain a paper copy of the glossary, and a disclosure that paper copies are available.
The coverage examples component of the SBC (referred to as the “coverage facts label” above) is intended to estimate what proportion of expenses under an illustrative benefits scenario might be covered by a given plan to allow participants and beneficiaries to use this information to compare their share of the costs of care under different plan options to make an informed enrollment decision. A benefits scenario is a hypothetical situation consisting of a sample treatment plan for a specified medical condition during a specific period of time, based on recognized clinical practice guidelines. A benefits scenario should include the information needed to simulate how claims would be processed under the scenario to generate an estimate of cost-sharing which a participant or a beneficiary could expect to pay under the benefit package.
When must a Notice of Material Modification to the SBC be provided?
A group health plan or insurer must provide notice of a material modification if it makes a material modification in any of the terms of the plan that is not reflected in the most recently provided SBC.
Only material modifications that would affect the content required in the SBC required would require plans and insurers to provide this notice. In these circumstances, the notice must be provided no later than 60 days prior to the date on which such change will become effective, if it is not reflected in the most recent SBC provided and occurs other than in connection with a renewal (i.e., mid-plan year). The notice may be provided in paper or electronic form, in accordance with the requirements discussed above for providing the SBC.
This requirement for an advance notification could be satisfied either by a separate notice describing the material modification or by providing an updated SBC reflecting the modification.
What are the Consequences of Failing to Provide the SBC?
A penalty of up to $1,000 per failure can be assessed on plan administrators and insurers (for insured health plans) and plan administrators (for self-insured health plans) that “willfully fail” to timely provide the SBC. A failure with respect to each participant or beneficiary constitutes a separate offense. The fine cannot be paid from plan or trust assets.
No penalties will be imposed during the first year on plans and issuers that are working diligently and in good faith to provide the required SBC content in an appearance that is consistent with the final regulations.
Resources:
The foregoing list the most recent of guidance for creating the SBC. Other items will be addressed at a later date, including revised, more flexible timelines for providing the SBC by carriers to plan sponsors, and from carriers/plan sponsors to participants/beneficiaries.
Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.
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My employer has just indicated that it will receive a Medical Loss Ratio (MLR) rebate from the insurer for group health coverage provided in 2011. It will distribute the rebate to employees in the form of a cash payment for any amounts contributed by employees. Will these cash payments be taxable to employees when they receive them?
It will depend if employees made pre-tax or after-tax contributions for their share of premium. See the discussion below:
Pre-tax Contributions: In frequently asked questions (FAQs), IRS clarified the tax treatment of rebates for group health plan enrollees. Employees who paid for health coverage with pretax contributions will be taxed on any cash MLR rebate they receive. Rebates used to reduce employee pretax contributions will lower employees’ salary reduction amounts, resulting in higher wages subject to income and employment taxes.
If an employer uses the MLR rebate received this year to make cash payments to employees who made pretax contributions, the rebate payment will be taxable income to those employees and subject to employment taxes. If the employer instead uses the MLR rebate to reduce employees’ 2012 health plan premiums, each employee’s pretax plan contribution will shrink, causing wages subject to income and employment taxes to increase by the same amount.
Example. For 2011 and 2012, Betty participated in her employer’s insured group health plan, making pretax contributions for coverage. In 2012, her employer sends Betty a check for her share of the MLR rebate after income and employment tax withholding.
Example. John participates in his employer’s group health plan, electing under its cafeteria plan to make $6,500 in pretax contributions for coverage in 2012. John’s employer receives an MLR rebate in July 2012 and applies it to reduce each group health plan participant’s 2012 premiums by $1,000. This requires adjusting the payroll system to lower pretax deductions for the rest of the year. As a result, Robin’s total pretax cafeteria plan contributions will decrease to $5,500, and his taxable income will increase by $1,000 for 2012. Both John and his employer will have to pay employment taxes on that additional taxable amount.
After-tax Contributions. When employees pay group health plan premiums with after-tax contributions, MLR rebates typically won’t be taxable. Whether used to reduce 2012 premiums or paid in cash, any MLR rebates for these employees simply refund their after-tax premium payments. The rebate will be taxable, however, if employees – such as partners in a partnership –deducted the after-tax premiums on their 2011 federal income tax returns. Individuals in this position should work with their personal tax advisers.
The FAQs don’t address the tax treatment of MLR rebates for former employees participating in an employer’s plan, such as COBRA beneficiaries or retirees. Although the tax treatment of rebates presumably would be the same for former and current employees paying with after-tax contributions, any guidance would be helpful.
Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.
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(PLANSPONSOR.com) – The Internal Revenue Service has issued interim guidance on informational reporting to employees about the cost of their group health insurance coverage.
Notice 2012-9 restates and amends the interim guidance on informational reporting to employees of the cost of their employer-sponsored group health plan coverage initially provided in Notice 2011-28. This informational reporting is required under § 6051(a)(14) of the Internal Revenue Code (Code), enacted as part of the Patient Protection and Affordable Care Act of 2010 (the Affordable Care Act), Public Law, 111-148, to provide useful and comparable consumer information to employees on the cost of their health care coverage.
Notice 2012-9 supersedes Notice 2011-28 and makes the following changes to the guidance provided in Notice 2011-28:
Modifies Q&A-3 to provide that until further guidance is issued, the reporting requirement will not apply to tribally chartered corporations wholly owned by Federally recognized Indian tribal governments.
Modifies Q&A-3 to clarify the application of the interim relief from the reporting requirement for employers filing fewer than 250 Forms W-2 for the preceding calendar year.
Modifies Q&A-7 to clarify the application of the reporting requirement to certain related employers not using a common paymaster.
Adds a new example to Q&A-19 that demonstrates that the reporting requirement does not apply to coverage under a health flexible spending arrangement (FSA) if contributions occur only through employee salary reduction elections.
Modifies Q&A-20 to clarify that the standard for determining whether coverage under a dental plan or vision plan is subject to the reporting requirement is based upon the same standard for determining whether the coverage is subject to the rules set forth in the regulations under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
Modifies and corrects Q&A-23 to clarify that the reporting requirement does not apply to the cost of coverage includible in income under § 105(h), or payments or reimbursements of health insurance premiums for a 2% shareholder-employee of an S corporation who is required to include the premium payments in gross income.
Modifies Q&A-28 to clarify the application of the reporting requirement if a composite rate is used with respect to the premium charged active participants, but not the premium charged under COBRA to a qualifying beneficiary.
The notice also provides the following additional guidance through new Q&As:
Provides that employers are not required to include the cost of coverage under an employee assistance program (EAP), wellness program, or on-site medical clinic in the reportable amount if the employer does not charge a premium with respect to that type of coverage provided under COBRA to a qualifying beneficiary (Q&A-32).
Clarifies that employers may include the cost of coverage under programs not required to be included under applicable interim relief, such as the cost of coverage under a Health Reimbursement Arrangement (HRA) (Q&A-33).
Clarifies how to calculate the reportable amount for coverage only a portion of which constitutes coverage under a group health plan (Q&A-34).
Clarifies how to calculate the reportable amount if an employer is provided notice after December 31 of a calendar year of events that occurred on or before December 31 of a calendar year that affect the prior year’s coverage, such as an employee providing an employer notice of a divorce or other change in family status that occurred during a prior calendar year (Q&A-35).
Clarifies how to calculate the reportable amount where coverage extends over the payroll period including December 31 (Q&A-36).
Clarifies the application of the exception for certain hospital indemnity or other fixed indemnity insurance offered by an employer on an after-tax basis (Q&A-37 and Q&A-38).
Provides that the reportable amount is not required to be included on a Form W-2 provided by a third-party sick pay provider (Q&A-39).
Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.
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