October 30, 2014     
 
Today, the Internal Revenue Service announced  in Revenue Procedure 2014-61  the annual inflation adjustments for more than 40 tax provisions for 2015, including the tax rate schedules, and other tax changes. This Revenue Procedure provides details about these annual adjustments.
 
There are several benefit limitations for 2015 included:

* The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) is increased to $2,550.
 
*The amount for the adoption credit or the amount excluded for adoption assistance allowed for an adoption of a child with special needs is $13,400.
 
*The dollar amount for employee health Insurance expense of small employers is $25,480.
 
*The monthly limitation for qualified transportation fringe benefit regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $130. The monthly limitation regarding the fringe benefit exclusion amount for qualified parking is $250.
 
*The limitations regarding eligible long-term care premiums includible in the term “medical care,” are as follows:
 
Attained Age Before the Close of the Taxable Year            Limitation on Premiums
 
40 or less                                                                                      $380
More than 40 but not more than 50                                                  $710
More than 50 but not more than 60                                               $1,430
More than 60 but not more than 70                                               $3,800
More than 70                                                                              $4,750

*For Medical Savings Accounts, the term “high deductible health plan”  means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,200 and not more than $3,300, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,450.
 
*For Medical Savings Accounts, the term “high deductible health plan” means, for family coverage, a health plan that has an annual deductible that is not less than $4,450 and not more than $6,650, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,150.
 
For a copy of Revenue Ruling 2014-61, please click on the link below:
 
http://www.irs.gov/pub/irs-drop/rp-14-61.pdf

For More Information: If you have any comments or questions regarding any of above information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@clarrygrudzien.com

Thank-You, Larry Grudzien -Attorney-At-Law

October 31, 2014
 
Statement of Enforcement Discretion regarding 45 CFR 162 Subpart E – Standard Unique Health Identifier for Health Plans

Effective October 31, 2014, the Centers for Medicare & Medicaid Services (CMS) Office of e-Health Standards and Services (OESS), the division of the Department of Health & Human Services (HHS) that is responsible for enforcement of compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) standard transactions, code sets, unique identifiers and operating rules, announces a delay, until further notice, in enforcement of 45 CFR 162, Subpart E, the regulations pertaining to health plan enumeration and use of the Health Plan Identifier (HPID) in HIPAA transactions adopted in the HPID final rule (CMS-0040-F).
 
This enforcement delay applies to all HIPAA covered entities, including healthcare providers, health plans, and healthcare clearinghouses.

On September 23, 2014, the National Committee on Vital and Health Statistics (NCVHS), an advisory body to HHS, recommended that HHS rectify in rulemaking that all covered entities (health plans, healthcare providers and clearinghouses, and their business associates) not use the HPID in the HIPAA transactions (see http://ncvhs.us/wp-content/uploads/2014/10/140923lt5.pdf). This enforcement discretion will allow HHS to review the NCVHS’s recommendation and consider any appropriate next steps.
 
For More Information: If you like more information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@larrygrudzien.com

Thank-You, Larry Grudzien – Attorney-At-Law

By Larry Grudzien
Attorney-At-Law
November 17, 2014  
 
Question:  One of my clients has 75 employees and has never offered health coverage to its employees and it does not plan do so in the future.  When would it have to comply with the employer mandate, 2015 or 2016?

Answer:  January 1, 2016  For employers eligible for the transition relief described below, no subsection (a) or subsection (b) penalty will apply for any calendar month during 2015 or any calendar month during the portion of the 2015 plan year that falls in 2016.

An employer is eligible for this transition relief if it satisfies the following conditions:

i. Limited Workforce Size
 
The employer employs on average at least 50 full-time employees (including full-time equivalent employees) but fewer than 100 full-time employees (including full-time equivalent employees) on business days during 2014.
 
ii. Maintenance of Workforce and Aggregate Hours of Service
 
During the period beginning on February 9, 2014 (the date of the issuance of the final regulations) and ending on December 31, 2014, the employer does not reduce the size of its workforce or the overall hours of service of its employees in order to satisfy the workforce size condition set forth above. A reduction in workforce size or overall hours of service for bona fide business reasons will not be considered to have been made in order to satisfy the workforce size condition.  
 
iii. Maintenance of Previously Offered Health Coverage

Except as otherwise provided herein, during the coverage maintenance period the employer does not eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014. An employer will not be treated as eliminating or materially reducing health coverage if (a) it continues to offer each employee who is eligible for coverage during the coverage maintenance period an employer contribution toward the cost of employee-only coverage that either (1) is at least 95% of the dollar amount of the contribution toward such coverage that the employer was offering on February 9, 2014, or (2) is the same (or a higher) percentage of the cost of coverage that the employer was offering to contribute toward coverage on February 9, 2014; (b) in the event there is a change in benefits under the employee-only coverage offered, that coverage provides minimum value after the change; and (c) the employer does not alter the terms of its group health plans to narrow or reduce the class or classes of employees (or the employees’ dependents) to whom coverage under those plans was offered on February 9, 2014.
 
iv. Certification of Eligibility for Transition Relief
 
The ALE certifies on a prescribed form that it meets the eligibility requirements set forth above. The final regulations under Code § 6056 provide that an ALE, or an ALE member, that otherwise qualifies for this relief must provide this certification as part of the transmittal form it is required to file with the IRS under the Code § 6056 regulations, in accordance with the instructions to that transmittal form.
 
IRS Position:

In conversations with the IRS,  Mr. Thomas Reeder, Health Care Counsel in the IRS Office of Chief Counsel, indicated that if the employer didn’t manipulate its workforce size and health coverage just to get into the transition relief, it would be able to use the transition rule for 2015 and will not be subject to the employer shared responsibility requirement until 2016. Note that the employer will still have to report for 2015 (and on the Form 1095-C they have to indicate they are eligible for this relief).
 
If you need more information regarding the above, please do not hesitate to call me at (708) 717-9638 or e-mail me at  larry@larrygrudzien.com

By Larry Grudzien
Attorney-At-Law

Q. Each year, my client gives its employees a choice of health coverage or a cash payment of $3,000. If my client does not adopt a cafeteria plan, will any portion of the health coverage elected by the employee be taxable?
 
A. Yes. An employee will be taxed up to the amount of cash that he or she could have received.
 
In Private Letter Ruling 9406002, IRS indicates that a cafeteria plan must be in place in order to be a qualified cash-out option. If the cash-out option plan is not set up under cafeteria plans, employees who elect coverage under the health plan will be taxed on an amount equal to the amount of cash they could have received for waiving coverage.
 
IRS provided that when an option is available to either elect the health plan, or to receive a cash-out incentive, then the premium payment becomes wages. Employees who elected health insurance received less compensation than employees who declined health insurance. The amount of compensation to be paid was determined before services were rendered by the employees; the difference in compensation did not necessarily correspond to the actual cost of the health insurance elected.
 
The IRS concluded that the difference between the compensation paid to an employee who elected health insurance and the greater amount that the employee would have received if he or she had not elected health insurance was includible in the employee’s gross income and was wages for employment tax purposes.
 
It is important to note that, although the cafeteria plan protects the employees electing coverage from taxation, the cash-out incentive is an after-tax benefit.
 
Another thing to consider when setting up a cash-out incentive plan is proper documentation. An employee should only be allowed to waive coverage when there is another plan available and proof of enrollment is provided. If there is a subsequent loss of that coverage, HIPAA Special Enrollment Rights will allow entry onto the plan, and the cash-out incentive will cease.
 
If you have any comments or questions regarding any of above information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@larrygrudzien.com.

The Centers for Medicare & Medicaid Services (CMS) released a software enhancement to the Health Plan and Other Entity Enumeration System (HPOES).  
 
This update streamlines the HPID application process so that the system automatically approves the application and generates an HPID upon submission.
 
Also, CMS has updated two resources to help health plans register for an HPID:

•    A revised Quick Guide to obtaining an HPID for controlling health plans:

http://www.cms.gov/Regulations-and-Guidance/HIPAA-Administrative-Simplification/Affordable-Care-Act/Downloads/HPIDQuickGuideOctober2014v2.pdf

•    An updated User Manual, which provides details about the registration process:

http://www.cms.gov/Regulations-and-Guidance/HIPAA-Administrative-Simplification/Affordable-Care-Act/Downloads/HIOS_HPOES_User_Manual_v61.pdf
 
Visit the CMS website for these and other HPID resources:
 
http://www.cms.gov/Regulations-and-Guidance/HIPAA-Administrative-Simplification/Affordable-Care-Act/Health-Plan-Identifier.html
 
If you like more information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@larrygrudzien.com

Thank-You, Larry Grudzien – Attorney-At-Law