The EXPERT’S CORNER | THE ACA IN 2014So you’ve extended dependent coverage to age 26, issued a Summary of Benefits and Coverage (SBC) and included the cost of coverage on your employees’ W-2. You are now in compliance with the ACA, or are you? Employers have made many changes to their benefit plans since the ACA was enacted. However, there is still more to be done in 2014, including getting ready to comply with the employer mandate.
Despite the fact that the employer mandate penalties have been delayed from 1/1/2014 to 1/1/2015, there is still work to be done for employers in 2014. Whether or not an employer is considered an applicable large employer, and therefore subject to the mandate to offer coverage, will be determined based on the number of employees in 2014. Employers should have systems in place to track employee hours to determine if they exceed the threshold. Employers who employ more than 50 full-time employees or full-time equivalent employees will be subject to the mandate.
Furthermore, employers who intend to utilize the safe harbor method for employee eligibility will generally need to begin tracking hours in late 2013 or no later than 1/1/2014. The safe harbor allows an employer to use a measurement period followed by a stability period. If an employee averages at least 30 hours per week during the measurement period, they need to be offered coverage for the duration of the stability period, regardless of their actual hours during the stability period. The agencies had allowed a special rule for 2014 whereby an employer could have a measurement period that was a different length than the stability period so long as the measurement period began before 7/1/2013. It is not clear if this will be extended for 2014. Therefore, employers that intend to use a 12-month measurement period followed by a 12-month stability period on a calendar year basis will need to start their measurement period by the end of 2013.
Another item gaining attention for 2014 is the reinsurance fee. This fee is assessed on both self-funded and fully-insured health plans, and the amount for the 2014 plan year is $63 per year per individual enrolled in the plan. This applies to active employees as well as retirees. Some relief was granted to plans that are both self-funded and self-administered (i.e., they do not use a third-party administrator to administer claims). While the fee will not be due until December 2014, employers may want to consider this item when preparing annual 2014 budgets. For self-funded plans, this means you can also consider including the reinsurance fee in your COBRA rate calculation.
TOTAL WORKER HEALTH – THROUGH WELLNESS
Health advocates, care providers, and plan sponsors all agree that individuals need to become more engaged in efforts to improve their health. Even the federal Affordable Care Act promotes individual responsibility for healthy choices.
Over the past decade, employers with well-planned wellness programs have achieved real gains: reduced health premiums, lowered absenteeism, and better morale. The trend to coordinate with occupational safety and mental health programs has led to the concept of a ‘Total Worker Health’ approach, combining the expertise of risk management, operations, human resources and employee benefits professionals to reduce injuries and illness among the workforce.
Touchstone has extensive experience developing a broad range of programs, including many years fine-tuning sophisticated return-on-investment measurements for several Fortune 500 clients. We can assist any client in designing an appropriate, graduated wellness program that encourages employee participation and avoids the hefty legal and financial dangers of federal and state regulations.
Two links below provide just a small sample of materials that Touchstone can provide to help you foster a commitment to wellness at your organization. We’ve also given links to the 2013 wellness survey and to federal government guidance regarding the requirements for a compliant program.
- Live Well Work Well Newsletter – January 2014
- ‘Know Your Benefits’ Health Care Reform Workplace Wellness Program Incentives
- 2013 Wellness Benefits Survey Results
- Final rule: Incentives for Nondiscriminatory Wellness Programs in Group Health Plans: The Federal Register, Vol. 78, No. 106, pp. 33158-33192. 6/3/2013
- Fact Sheet: The Affordable Care Act and Wellness Programs, US Dept of Labor, Employee Benefits Security Administration 11/20/2012
Tight budgets and ever-changing regulations put pressure on employers and unions to continue to meet the needs of their benefit plan participants. Workers want help in dealing with stresses that even the best-designed benefit programs may not address. And no one seems to have the time to deal with all of life’s concerns.
An increasing variety of voluntary benefit offerings can cover needs that are not satisfied by core benefit programs. These employee-pay-all benefits are attractive to employees, providing the flexibility to address their own life style and the convenience of letting the employer do the leg-work to find the best options and to set-up payroll deductions. Voluntary benefits foster the kind of consumer responsibility in employees that is becoming increasingly vital to the success of health and wellness programs, while allowing plan sponsors to expand benefits at no significant cost.
Additional layers of life insurance have commonly been offered as a voluntary benefit for many years. Now the range of voluntary benefits is stretching to meet gaps in personal, financial, and security needs that are as diverse as the people they serve.
Check out details on a few popular new voluntary benefits through the links below. The ‘Know Your Benefits’ communications educate prospective enrollees on the help that these coverages could provide. Considerations for benefits professionals are also provided.
- Benefits Insights Educating Employees on Voluntary Benefits
- Plan Designs for Voluntary Benefits
- Know Your Benefits Voluntary Benefits – Accident Insurance
- Know Your Benefits Voluntary Benefits – Home and Auto Insurance
- Know Your Benefits Voluntary Benefits – Identity Theft Insurance
- Know Your Benefits Voluntary Benefits – Pet Insurance
ACCOUNTING FOR BENEFITS FOR SAME-SEX SPOUSES
The Supreme Court’s Windsor decision on the status of same-sex marriages has prompted guidance from both the IRS and the Department of Labor on what administrative actions, documents, and enrollment rights and choices must be revised in employment-based plans. A quick look through any communications that contain the word ‘spouse’ gives an indication of how many policies and procedures need to be updated.
For purposes of ERISA, marriages that were legally valid in the state or country in which they were performed are valid in all states, regardless of law regarding same-sex marriage in the couple’s state of residence or employment.
These changes impact not just benefits and human resources documents, but may also require retroactive changes in tax records based on what had been considered imputed income for federal tax purposes. State laws often differ from the federal requirements, so care must be taken to determine which rules apply to each type of program in order to assure compliance.
The links below provide a sampling of communications which explain some effects of the Windsor decision to plan sponsors and/or plan participants. Links are also provided to IRS statements regarding applications under federal tax law.
- Legislative Brief Recognition of Same-sex Marriage for Purposes of ERISA
- Know Your Benefits Same Sex Couples Answers to Federal Tax Questions
- Compliance Bulletin IRS Guidance on Cafeteria Plan Elections and Other Benefits for Same Sex Spouses
- Legislative Brief IRS Procedures to Correct Overpayments on Taxes for Same sex Spouse Benefits
Please contact Touchstone if we can assist your organization in updating your plans’ policies and procedures to keep pace with these changes.
- DOL/EBSA Technical Release No. 2013-04, Guidance to Employee Benefit Plans on the Definition of “Spouse” and “Marriage” under ERISA and the Supreme Court’s Decision in United States v. Windsor, 9/18/2013
- IRS Answers to Frequently Asked Questions for Individuals of the Same-sex Who Are Married (updated Nov. 20, 2013)
- IRS Notice 2014-01, Cafeteria Plans, Flexible Spending Arrangements, and Health Savings Accounts – Elections and Reimbursements for Same-sex Spouses Following the Windsor Supreme Court Decision 12/16/2013
FSAs CHANGES FOR 2014; HRAs AND HSAs SHOULD BE EVALUATED
The Affordable Care Act has forced major changes in health benefits which can be offered through employment-related plans. The impact on individually-controlled health care accounts has been significant, but has not received as much press attention as some other changes. Some notable revisions to health flexible spending accounts (health FSAs) include:
- For plan years beginning on or after January 1, 2014, all health FSAs must reimburse only excepted benefits and must be offered through a cafeteria plan. Stand-alone FSAs are no longer permitted.
- Plan sponsors may (but are not required to) allow participants to carry-over an amount of up to $500 in unused 2013 funds into the 2014 plan year. (This option is not available to health FSAs which permit the 2 ½ month grace period for submitting eligible expenses.) These funds may reimburse 2014 plan year eligible expenses.
- Plan documents must be amended to account for the above change, and participants must be notified.
- Salary reduction contributions to a health FSA under a section 125 plan are limited to $2,500 in 2014, not including any amount carried over from 2013. This limit will be COLA indexed in future years.
Many plan sponsors will need to reevaluate the usefulness of a health FSA in light of the changes to their basic medical and prescription drug plan designs. Federal regulations seem to be promoting health savings accounts (and, to a lesser extent, health reimbursement arrangements) while boxing in the effectiveness of health FSAs. As these regulations continue to develop, Touchstone can help analyze what overall benefit elements would be most effective to meet the needs of your employees.
Below are links to communication materials and the federal regulations that they help interpret. The impact of developing regulations, as well as major changes in the health care marketplace, require a more thorough evaluation of an organization’s health care plans. Please give us a call for a consultation on how we can help you determine the appropriate direction for your programs.
- Health Care Reform Legislative Brief Health FSA Changes for 2014
- Compliance Bulletin Changes to the Use-or-lose Rule for Health FSAs
- Compliance Bulletin IRS Guidance on Cafeteria Plan Elections and Other Benefits for Same Sex Spouses
- IRS Notice 2013 -71, Modification of “Use-or-Lose” Rule For Health Flexible Spending Arrangements (FSAs) and Clarification Regarding 2013-2014 Non-Calendar Year Salary Reduction Elections Under § 125 Cafeteria Plans
- IRS Notice 2014-01, Cafeteria Plans, Flexible Spending Arrangements, and Health Savings Accounts – Elections and Reimbursements for Same Sex Spouses Following the Windsor Supreme Court Decision
- IRS Notice 2013-54: Application of Market Reform and other Provisions of the Affordable Care Act to HRAs, Health FSAs, and Certain other Employer Healthcare Arrangements 9/30/2013
end January 2014 Newsletter