FSAs can do some heavy lifting for your benefits plan – they allow employees to save pretax dollars for healthcare costs without the price tag of other financial wellness initiatives.
However, many HR professionals lack a deep understanding of the compliance requirements to offer and administer a well-rounded program for their employees. Engage your employees with a financial wellness benefit that works.
Key webinar takeaways:
- How different types of FSAs interact with benefit plans as a whole
- FSA and reimbursement limits for 2018
- Legal implications of offering an FSA to employees
- Best practices for administering a successful FSA benefit plan
This presentation reviews: what information must be protected, what policies and procedures need to be in place, what disclosures have to be given to employees, what agreements have to be in place for business associates, and what breach procedures have to be followed.
How Medicare Affects Employer Health Coveragebenefitexpress
This presentation reviews the topic of Medicare and how it can affect Employers Health Coverage offerings, including: employer secondary rules, COBRA, notice requirements, and reporting requirements.
Webinar | COBRA Pitfalls: Common Mistakes and How to Avoid Thembenefitexpress
Leaving the organization isn't the end of the benefits cycle for employees. This webinar focuses on how to avoid one of the most common compliance pitfalls in benefits ... COBRA administration.
Some of the top takeaways were:
• The basics of successful COBRA administration
• Required notices associated with COBRA coverage
• How Medicare interacts with COBRA for employees and dependents
• Penalties for noncompliance
Smooth and successful off-boarding of departing employees is as important as well-planned on-boarding of new hires. Log on to your roadmap for a smooth ride into COBRA compliance.
Review all of the requirements of the Employee Retirement Income Security Act of 1974. Training will go over which employers have to comply, which benefits are subject to ERISA, what documentation employers must provide, and penalties for noncompliance.
This presentation covers how Medicare affects employer health coverage in: Providing opt out amounts | Paying for Medicare for active employees | Electing COBRA
FSAs can do some heavy lifting for your benefits plan – they allow employees to save pretax dollars for healthcare costs without the price tag of other financial wellness initiatives.
However, many HR professionals lack a deep understanding of the compliance requirements to offer and administer a well-rounded program for their employees. Engage your employees with a financial wellness benefit that works.
Key webinar takeaways:
- How different types of FSAs interact with benefit plans as a whole
- FSA and reimbursement limits for 2018
- Legal implications of offering an FSA to employees
- Best practices for administering a successful FSA benefit plan
This presentation reviews: what information must be protected, what policies and procedures need to be in place, what disclosures have to be given to employees, what agreements have to be in place for business associates, and what breach procedures have to be followed.
How Medicare Affects Employer Health Coveragebenefitexpress
This presentation reviews the topic of Medicare and how it can affect Employers Health Coverage offerings, including: employer secondary rules, COBRA, notice requirements, and reporting requirements.
Webinar | COBRA Pitfalls: Common Mistakes and How to Avoid Thembenefitexpress
Leaving the organization isn't the end of the benefits cycle for employees. This webinar focuses on how to avoid one of the most common compliance pitfalls in benefits ... COBRA administration.
Some of the top takeaways were:
• The basics of successful COBRA administration
• Required notices associated with COBRA coverage
• How Medicare interacts with COBRA for employees and dependents
• Penalties for noncompliance
Smooth and successful off-boarding of departing employees is as important as well-planned on-boarding of new hires. Log on to your roadmap for a smooth ride into COBRA compliance.
Review all of the requirements of the Employee Retirement Income Security Act of 1974. Training will go over which employers have to comply, which benefits are subject to ERISA, what documentation employers must provide, and penalties for noncompliance.
This presentation covers how Medicare affects employer health coverage in: Providing opt out amounts | Paying for Medicare for active employees | Electing COBRA
Mid-Year Election Changes Under Cafeteria Plansbenefitexpress
This webinar reviews all of the events that affect employees to change their elections under a cafeteria plan and when/how they apply. All 14 events are discussed.
FSAs can do some heavy lifting for your benefits plan – they allow employees to save pretax dollars for healthcare costs without the price tag of other financial wellness initiatives. However, many HR professionals lack a deep understanding of the compliance requirements to offer and administer a well-rounded program for their employees.
If ACA is repealed, there will be significant implications for FSAs. Devise your strategy to:
- Accurately catch employee election changes
- Manage rollover requirements
- Determine who pays first – HSA vs FSA
- Understand COBRA’s impact on an FSA
Get coaching from benefits attorney Larry Grudzien on how to prep now for the legislative impact on FSA administration.
Webinar: Mid-Year Election Changes for Cafeteria Plansbenefitexpress
Let's talk about cafeteria plans. When can participants make election changes?
While cafeteria plans can be a great option for employees wishing to pick and choose benefits based on cost, when and how to facilitate election changes outside of open enrollment can be tricky to navigate for employers. As the use of cafeteria plans continue to grow, we take a deeper look at the rules and regulations of these plans, particularly as they pertain to mid-year election changes.
Health Reform Bulletin – IRS PronouncementsCBIZ, Inc.
Information on 1) Cafeteria Plan Status Change Events, 2) Employment Status Change Proposals to Employer Shared Responsibility Rules, 3) Increase in PCOR Fees, and Final Excepted Benefit Regulations. Recently, the Internal Revenue Service (IRS) released three pronouncements relating to the Affordable Care Act (ACA). In addition, final regulations have been issued relating to certain excepted health benefits.
With the recent delay in the employer coverage mandate until 2015, employers should continue to plan their compliance strategy and remain vigilant as regulations continue to change. Hosted by Aon’s health and benefits expert, Richard Kaufman, this webinar will update employers on the ongoing changes and provide reminders of what remains, deadlines and other helpful information in understanding the complexities of the mandate.
Presented by Richard S. Kaufman, Aon Consulting VP, Health and Benefits
This webinar will covers:
• What is COBRA?
• When does it need to be provided?
• What are the triggering events?
• How long does it have to be provided?
• What are notice requirements?
• Payment requirements
This is a complete guide to FMLA, including qualifying factors, notice requirements, certification, calculating and tracking leave, employer responsibilities, and additional resources.
The Family and Medical Leave Act (FMLA) provides up to 12 weeks of unpaid leave per year for family and medical reasons to eligible employees at employers with 50 or more employees.
Under FMLA, employees are entitled to return to their same or an equivalent job at the end of their FMLA leave and retain their group health insurance coverage. FMLA also provides certain military family leave entitlements for eligible employees.
The International Trade Council and TSI Present, The Evolution of SeveranceLana Mellis
Learning outcomes:
•Learn what a Supplemental Unemployment Benefits (SUB) Plan is and how it works.
•Examine the advantages of SUB benefits compared to traditional severance programs.
•Discover why employers choose SUB-Pay programs.
Action Steps for Your Employee Benefits Plan During the Coronavirus PandemicQuarles & Brady
With the enactment of two new Coronavirus-related laws, plan sponsors of retirement, health and welfare plans have several "must-do" items to consider, along with several "optional" items. Join us for this informative webinar where we will discuss the different legal considerations plan sponsors and service providers (such as third party administrators, insurance brokers and pharmacy benefit mangers) should consider for their retirement, health and welfare plans.
We will discuss:
-What coronavirus testing must be covered by health plans
Important changes to "over the counter" drugs and medicine
-Addressing layoffs and furloughs, and how to survive the benefit costs
-Best practices for distribution and loan options for those who have been affected
-Delaying, repaying and fixing 2020 required minimum distributions
-How to treat paid leave under your retirement plans
These seminars are aimed at anyone who deals with employment law on a day to day basis, including HR managers and HR directors.
At these events we present an overview of what we consider to be the most significant cases decided in 2014, and what they teach about managing your workforce – together with our practical tips.
Also hear about what is coming up in 2015, and how you can get ready for what will be another busy year in employment law.
Topics that are covered include:
• changes to TUPE
• changes to flexible working
• shared parental leave
• the holiday pay cases
• equal pay audits
• social media
• zero hours contracts
• discrimination update
• what’s coming up in 2015.
Health FSA "Use-or-Lose" Rule DisappearsInfinisource
On October 31, 2013 the Department of Treasury modified the longstanding Health FSA Use-or-Lose Rule to allow carryover of FSA funds from one plan year to the next plan year at the employer's discretion. Find out more about this change with this iGuide.
Guidance was recently issues that modified the Health FSA Use-or-Lose Rule to allow carryover of FSA funds from one plan year to the next plan year - at an employer's discretion. What does this mean?
Watch our free one-hour webinar reviewing the rules for the new Individual Coverage HRA and the new Excepted Benefit HRA (ICHRA and EBHRA).
In June 2019, Treasury, DOL and HHS released final regulations that are effective for plan years beginning on or after January 1, 2020. These regulations created two new HRAs, Individual Coverage HRAs (ICHRA) and Excepted Benefit HRAs (EBHRA).
These new HRAs will be subject to ERISA and COBRA, but will not be subject to the nondiscrimination rules under Code Section 105(h). Any employer can offer these new HRAs to their employees. They can be offered to common law employees, but cannot be offered to self-employed individuals, partners and more than 2% S-Corporation shareholders.
Facilitated by ERISA attorney Larry Grudzien, and moderated by Chief Marketing Officer Julia Goebel, this webinar will cover the following:
-Why are these new HRAs so important?
-Which employees can be included or excluded
-What documentation is needed to be completed by employers to adopt them
-What reporting and disclosure requirements must be met
-What types of expenses can be reimbursed
-The pros and cons of establishing and participating in these new HRAs for employers
Are you ready for the upcoming 2014 provisions of the new healthcare reform act? Do you know what the implications are to you as a small or midsize company?
Our webinar will help you become familiar with upcoming requirements under the Patient Protection and Affordable Care Act.
Expect to learn the following and more:
What is the Patient Protection and Affordable Care Act
How does an organization determine their 2014 cost to comply?
What should organizations be doing now to prepare?
COVID-19 Health & Welfare: Compliance for Employersbenefitexpress
As part of our continuing ERISA Compliance series, we covered such compliance topics and more in our April 9th webinar discussing COVID-19 and updates from the IRS and DOL concerning the Families First Coronavirus Response Act.
Plan Sponsor Webinar: Navigating COVID-19 for Employersbenefitexpress
In this webinar, we take a deeper look into how the novel coronavirus is not only affecting the way we live, but changing the way we work. From remote work environments, FMLA, contract agreements and more, we discuss how to navigate the changing workforce during this time of uncertainty, and answer questions to help you make the best decisions for the health and safety of your employees.
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FSAs can do some heavy lifting for your benefits plan – they allow employees to save pretax dollars for healthcare costs without the price tag of other financial wellness initiatives. However, many HR professionals lack a deep understanding of the compliance requirements to offer and administer a well-rounded program for their employees.
If ACA is repealed, there will be significant implications for FSAs. Devise your strategy to:
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While cafeteria plans can be a great option for employees wishing to pick and choose benefits based on cost, when and how to facilitate election changes outside of open enrollment can be tricky to navigate for employers. As the use of cafeteria plans continue to grow, we take a deeper look at the rules and regulations of these plans, particularly as they pertain to mid-year election changes.
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Information on 1) Cafeteria Plan Status Change Events, 2) Employment Status Change Proposals to Employer Shared Responsibility Rules, 3) Increase in PCOR Fees, and Final Excepted Benefit Regulations. Recently, the Internal Revenue Service (IRS) released three pronouncements relating to the Affordable Care Act (ACA). In addition, final regulations have been issued relating to certain excepted health benefits.
With the recent delay in the employer coverage mandate until 2015, employers should continue to plan their compliance strategy and remain vigilant as regulations continue to change. Hosted by Aon’s health and benefits expert, Richard Kaufman, this webinar will update employers on the ongoing changes and provide reminders of what remains, deadlines and other helpful information in understanding the complexities of the mandate.
Presented by Richard S. Kaufman, Aon Consulting VP, Health and Benefits
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• What is COBRA?
• When does it need to be provided?
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• How long does it have to be provided?
• What are notice requirements?
• Payment requirements
This is a complete guide to FMLA, including qualifying factors, notice requirements, certification, calculating and tracking leave, employer responsibilities, and additional resources.
The Family and Medical Leave Act (FMLA) provides up to 12 weeks of unpaid leave per year for family and medical reasons to eligible employees at employers with 50 or more employees.
Under FMLA, employees are entitled to return to their same or an equivalent job at the end of their FMLA leave and retain their group health insurance coverage. FMLA also provides certain military family leave entitlements for eligible employees.
The International Trade Council and TSI Present, The Evolution of SeveranceLana Mellis
Learning outcomes:
•Learn what a Supplemental Unemployment Benefits (SUB) Plan is and how it works.
•Examine the advantages of SUB benefits compared to traditional severance programs.
•Discover why employers choose SUB-Pay programs.
Action Steps for Your Employee Benefits Plan During the Coronavirus PandemicQuarles & Brady
With the enactment of two new Coronavirus-related laws, plan sponsors of retirement, health and welfare plans have several "must-do" items to consider, along with several "optional" items. Join us for this informative webinar where we will discuss the different legal considerations plan sponsors and service providers (such as third party administrators, insurance brokers and pharmacy benefit mangers) should consider for their retirement, health and welfare plans.
We will discuss:
-What coronavirus testing must be covered by health plans
Important changes to "over the counter" drugs and medicine
-Addressing layoffs and furloughs, and how to survive the benefit costs
-Best practices for distribution and loan options for those who have been affected
-Delaying, repaying and fixing 2020 required minimum distributions
-How to treat paid leave under your retirement plans
These seminars are aimed at anyone who deals with employment law on a day to day basis, including HR managers and HR directors.
At these events we present an overview of what we consider to be the most significant cases decided in 2014, and what they teach about managing your workforce – together with our practical tips.
Also hear about what is coming up in 2015, and how you can get ready for what will be another busy year in employment law.
Topics that are covered include:
• changes to TUPE
• changes to flexible working
• shared parental leave
• the holiday pay cases
• equal pay audits
• social media
• zero hours contracts
• discrimination update
• what’s coming up in 2015.
Health FSA "Use-or-Lose" Rule DisappearsInfinisource
On October 31, 2013 the Department of Treasury modified the longstanding Health FSA Use-or-Lose Rule to allow carryover of FSA funds from one plan year to the next plan year at the employer's discretion. Find out more about this change with this iGuide.
Guidance was recently issues that modified the Health FSA Use-or-Lose Rule to allow carryover of FSA funds from one plan year to the next plan year - at an employer's discretion. What does this mean?
Watch our free one-hour webinar reviewing the rules for the new Individual Coverage HRA and the new Excepted Benefit HRA (ICHRA and EBHRA).
In June 2019, Treasury, DOL and HHS released final regulations that are effective for plan years beginning on or after January 1, 2020. These regulations created two new HRAs, Individual Coverage HRAs (ICHRA) and Excepted Benefit HRAs (EBHRA).
These new HRAs will be subject to ERISA and COBRA, but will not be subject to the nondiscrimination rules under Code Section 105(h). Any employer can offer these new HRAs to their employees. They can be offered to common law employees, but cannot be offered to self-employed individuals, partners and more than 2% S-Corporation shareholders.
Facilitated by ERISA attorney Larry Grudzien, and moderated by Chief Marketing Officer Julia Goebel, this webinar will cover the following:
-Why are these new HRAs so important?
-Which employees can be included or excluded
-What documentation is needed to be completed by employers to adopt them
-What reporting and disclosure requirements must be met
-What types of expenses can be reimbursed
-The pros and cons of establishing and participating in these new HRAs for employers
Are you ready for the upcoming 2014 provisions of the new healthcare reform act? Do you know what the implications are to you as a small or midsize company?
Our webinar will help you become familiar with upcoming requirements under the Patient Protection and Affordable Care Act.
Expect to learn the following and more:
What is the Patient Protection and Affordable Care Act
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What should organizations be doing now to prepare?
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The Affordable Care Act touches the lives of most Americans. In fact, nearly 21 million will be at risk if Obamacare is struck down, and may even lose health insurance completely if the law is ruled unconstitutional. This webinar will discuss what the outcome may be if ACA is repealed.
In today's multi-generational workforce, health and wellness benefits are weighted equally with salary expectations. This is why it's important for small and large businesses alike to embrace health and wellness benefits to recruit top talent as well as retain valued employees.
While offering these benefits has been shown to improve employee engagement and productivity, it comes with some challenges. This webinar reviews common questions human resources professionals confront when offering health and welfare benefits to employees.
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Using data to advise clients can be a game changer for a broker. With analytics, you can quantify your benefit plan suggestions based on hard evidence, and advise based on unbiased data versus mere opinion. But where does this data come from? And how do you know which data to use?
This webinar shows how decision support tools can provide data to simplify health benefit decisions, allowing employees to feel more confident in their decisions, leading to lower costs for employers and client retention for brokers as a result.
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We work in an exciting industry—which means quick changes are the norm, and adaptability is a necessity.
Keep your compliance plan up-to-date with a download of recent legislative changes.
We'll cover legislation that's passed, what's on the way, and what it means for your organization.
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Make this year’s ACA reporting a piece of cake.
5. Mid-Year Election Changes
• General irrevocability rule - no change required
for the plan year.
• 5 events are recognized by the IRS as permitting
mid-year election changes for health FSAs.
• Other events are recognized permitting mid-year
election changes.
• Administrative requirements that must be met to
implement a mid-year election change.
6. 5 Events for Mid-Year Election Changes For Health FSAs
1. Change in Status
2. COBRA Qualifying Event
3. Judgment, Decree, or Order
4. Entitlement to Medicare or Medicaid
5. FMLA Leave of Absence
7. 1 | Change in Status
These changes include:
Employee’s marital status
Number of dependents
Employment status
Dependents satisfying or ceasing to satisfy
dependent eligibility requirements
Residence
Commencement or termination of adoption
proceedings
Note: The plan document must include a provision for each
of the above events the employer wishes to allow.
8. 1 | Change in Status – Marital Status
Change in marital status includes
Marriage
Divorce
Death of Spouse
Legal Separation
Annulment.
9. 1 | Change in Status – Number of Dependents
Change in the number of dependents
Birth,
Adoption,
Placement for adoption, and
Death.
Note: Dependent is defined as a dependent under Code
§105(h)
For Dependent Care Plans, a dependent means an
individual eligible for the dependent care tax credit defined
in IRC §21(b)(1).
10. 1 | Change in Status – Employment Status
Change in Employment Status
Termination or commencement of employment,
Strike or lockout,
Commencement or return from unpaid leave of absence,.
A change in work site, and
Change in employment status causing a change in eligibility
under the plan (example – if the plan covers only salaried
employees and the employee becomes hourly).
Note: Any of the above events that change the employment status
of an employee, the employee’s spouse or the employee’s
dependents would qualify as a change in status.
11. 1 | Change in Status – Dependent Eligibility
Dependents satisfying or ceasing to satisfying
dependent eligibility
Attainment of age
Marriage or any other similar circumstances
Note:The individual must be under Code § 105(h).
12. 1 | Change in Status – Change in Residence
Change In residence
Change in the place of residence of an employee,
spouse or dependent.
Change of residence would have to change the
eligibility for health coverage.
Coverage may be dropped where the change affects
eligibility for a managed care option (even if the
employee could elect similar coverage).
13. 1 | Change in Status – Consistency Requirement
If a change in status event occurs, a plan can only permit
employees to make election changes that are consistent
with the event.
There is one “general consistency rule” and 4 special
consistency rules.
Group Term Life, Disability, and Dismemberment Coverage.
Dependent Care and Adoption Expenses.
Loss of Spouse’s or Dependent’s Eligibility.
Gain of Eligibility under another Employer’s Plan.
14. 1 | Change in Status – Consistency Requirement
• A participant may increase or decrease group
term life, disability and dismemberment
coverage for any change in status event, even
through eligibility under the plan is not gained or
lost.
• The occurrence of the event is enough.
• Check the insurance contract to determine
wither the event is allowed.
Group Term Life, Disability, and Dismemberment Coverage
15. 1 | Change in Status – Consistency Requirement
• This rule is satisfied if the election change on
account of and corresponds with a change in
status that affects eligibility of dependent care or
adoption assistance expense for tax exclusions
available under tax code.
• Election may be canceled when an employee’s
child turns 13 in the middle of the a plan year
and is no longer a qualifying individual.
• An employee’s or a spouse’s leave of absence
or other change in employment status could also
trigger this rule.
Dependent Care and Adoption Expenses
16. 1 | Change in Status – Consistency Requirement
• An employee can cancel accident or health
coverage for only the spouse or dependent.
• An election to cancel coverage for anyone else
fails to correspond with that change in status.
• May create a hardship under plans that offer
limited coverage categories.
Loss of Spouse’s or Dependent’s Eligibility
17. 1 | Change in Status – Consistency Requirement
If coverage is gained as a result of a change in
marital or employment status, then an employee’s
election to cease or decrease coverage for that
individual corresponds with the change in status if
coverage for that individual becomes effect or is
increased under the other employer’s plan.
Gain of Eligibility under another Employer’s Plan
18. 1 | Change in Status – Consistency Requirement
• If one of the 4 special rules do not apply then the
general consistency rule applies.
• Under this rule, an election change satisfies the
consistency requirement “if the election change is on
account of and corresponds with a change in status
that affects eligibility for coverage under the employer’s
plan.”
• The rule includes 2 elements:
The change in status event must affect eligibility for
coverage under the employer’s plan.
The election change must be on account of and correspond
with the event.
General Consistency Rule
19. 1 | Change in Status – Consistency Requirement
The change in status event must affect eligibility
for coverage under the employer’s plan.
Gain or loss of coverage eligibility under the
component benefit plan or the cafeteria plan will
satisfy the consistency requirement.
A change in status that affects eligibility includes the
increase or decrease of the number of an
employee’s family member or dependents who
benefit from coverage under the plan.
General Consistency Rule - Elements
20. 1 | Change in Status – Consistency Requirement
The election change must be on account of and
correspond with the event:
If one type of coverage is lost or gained, then the
employee is limited to changing an election with
respect to that coverage.
Other eligible individuals can also be added when a
spouse or dependent gains eligibility as a change in
status event.
If an employee was no previous enrolled and a
change in status occurs this rule will also allow the
employee to enroll in order to enroll the dependents.
General Consistency Rule - Elements
21. 2 | COBRA Qualifying Event
A cafeteria plan may permit an employee to make
a mid-year election change if a COBRA event
occurs to the employee, spouse or dependent.
Employee may increase pre-tax salary reductions
to cover the COBRA premiums.
Example:
Employee has reduction of hours triggering a COBRA
event.
He can increase pre-tax salary reductions to cover cost
of COBRA premiums.
22. 3 | Judgment, Decree, or Order
A cafeteria plan may allow mid-year changes on
account of judgment decrees and orders resulting
from divorce, legal separation, annulment, or
change in legal custody.
Example:
An employer receives a qualified medical child support
order (QMCSO) requiring the employee to cover a
dependent child.
The employee is allowed to change his election in order
to cover the child.
23. 4 | Entitlement to Medicare or Medicaid
• A cafeteria plan may allow mid-year election
changes on account of eligibility of the
employee, spouse or dependent for Medicare or
Medicaid.
• Gaining Medicare or Medicaid allows participant
to cancel or reduce FSA amount .
• Losing Medicare or Medicaid allows participant
to elect or increase the FSA amount.
24. 5 | FMLA Leave of Absence
• A cafeteria plan may allow a mid-year election change on account
of a leave of absence under FMLA.
• Employer must allow all the election changes available to
employees on non-FMLA leave.
• The plan must allow participant to revoke health care coverage if
he so wishes.
• Employee can reinstate coverage upon return from leave.
• If employee continues coverage during an FMLA leave, employer
may allow three types of payment options: pre-pay, pay-as-you
go or catch-up.
• These rules apply to health care FSA plans and uniform coverage
rule still applies
25. Other Events That Might Permit Mid-Year Elections
• Military leave under USERRA.
• Mistakes made by employee or employer.
• Participant Fails Medical Underwriting.
• Mid –year election changes may be required to
pass non-discrimination testing.
• Automatic loss of coverage.
26. Administrative Requirements for Mid-Year Election Changes
• Obtain substantiation for reasons for the change.
• Decide when the election can be effective.
• Confirm that cafeteria plan regulations allow the
change.
• Confirm that plan document and insurance
policies allow the election.
28. What is allowed?
• IRS guidance issued in October 2013 allows health FSAs to offer
carryovers of unused balances of up to $500 remaining at the end
of a plan year, to be used for qualified medical expenses incurred
in subsequent plan years.
• Offering health FSA carryovers is optional and is an alternative to
offering a health FSA grace period—health FSAs allowing
carryovers from a plan year cannot also have a grace period with
respect to that year.
• This exception to the use-or-lose rule offers the potential to
reduce health FSA forfeitures, which may encourage more
employees to participate in health FSAs.
29. What is allowed?
• Amounts carried over are available to reimburse
eligible medical expenses incurred in a subsequent
plan year.
• Offering health FSA carryovers is optional, and plan
sponsors wishing to allow carryovers must specifically
provide for carryovers in their plan documents.
• If carryovers are offered, the same carryover limit
must apply to all participants.
• The uniform coverage rule will continue to apply to a
health FSA that offers carryovers.
30. What is allowed?
• The amount that an employee can carry over is based
on the health FSA amount remaining from a plan year
at the end of the run-out period for that plan year (i.e.,
after all expenses for that plan year have been
reimbursed).
• At that time, unused health FSA amounts from the plan
year in excess of $500 (or a lower amount, if
applicable under plan) are forfeited, and the remaining
amounts can be used to reimburse eligible expenses
incurred during the new plan year.
31. What is allowed?
• During a health FSA’s run-out period, potential carryover
amounts may be used either for prior-year or current-year claims,
although no more than $500 in potential carryovers can be used
to reimburse current-year expenses.
• During this time, plans may reimburse current-year claims first
from current-year amounts.
• While this ordering rule is permissive, it appears to be a best
practice.
• Using current-year contributions first leaves potential carryover
amounts available to reimburse prior-year expenses submitted
during the run-out period.
• Conversely, reimbursing current-year claims from potential
carryover amounts during the run-out period will reduce the
amount available to pay run-out claims from the prior year.
32. Additional Issues Raised by Carryovers
• How Do Carryovers Affect HSA Eligibility?
• Will Carryovers Affect a Health FSA’s Status as
an Excepted Benefit?
• What COBRA Issues Are Presented by
Carryovers?
• W-2 Reporting
• Other Administrative and Compliance Issues
34. Does COBRA Apply?
• Health FSAs are group health plans and thus are subject to
COBRA, unless maintained by a small employer, a church, or the
federal government.
• Health FSAs that are subject to COBRA must offer COBRA
coverage to qualified beneficiaries who lose coverage as the
result of a qualifying event, unless the special limited COBRA
obligation and must provide all required COBRA notices, including
initial notices and election notices.
• IRS representatives have informally indicated the IRS view that
family members other than the covered employee are entitled to
elect COBRA under a health FSA in connection with an
employee's termination of employment.
35. Limited COBRA Obligation for Certain Health FSAs
If a health FSA meets certain conditions prescribed in the
IRS COBRA regulations, the obligation to offer COBRA
coverage is limited, as follows:
COBRA coverage need not be offered to qualified beneficiaries
who have “overspent” their accounts as of the date of the
qualifying event.
For those with underspent accounts, COBRA must be offered,
but may be terminated at the end of the year in which the
qualifying event occurs (a qualified beneficiary receiving
COBRA coverage at that time would also be entitled to any
grace period provided under the plan).
36. Which Health FSAs Qualify?
To qualify, a health FSA must provide excepted benefits; and the
COBRA premium under the health FSA must meet certain
minimums.
Benefits provided under a health FSA “are excepted for a class of
participants” if the health FSA is an FSA as defined in Code §106(c)
(2) and satisfies the following two conditions:
Condition #1—Maximum Benefit Condition. The maximum benefit payable
under the health FSA to any participant in the class for a year cannot exceed
two times the participant's salary reduction election under the health FSA for
the year (or, if greater, the amount of the employee's salary reduction election
for the health FSA for the year, plus $500).
Condition #2—Availability Condition. Other group health plan coverage, not
limited to benefits that are excepted benefits (e.g., limited-scope dental and
vision coverage), must be made available for the year to the class of
participants by reason of their employment.
37. Which Health FSAs Qualify?
Under the IRS COBRA regulations, a health FSA qualifies for the
special limited COBRA obligation only if it satisfies the previous two
conditions (i.e., it is an excepted benefit) and also satisfies the
following third condition:
Condition #3—COBRA Premium Condition. The maximum annual COBRA
premium chargeable for health FSA COBRA coverage must equal or exceed
the maximum annual health FSA coverage amount.
38. Determining Whether an Account is Overspent
• To determine whether an account is overspent, an employer must
examine the claims activity for a specific qualified beneficiary.
• The determination of whether a qualified beneficiary's account for a plan
year is overspent or underspent as of the date of the qualifying event
depends on three variables:
The elected annual limit for the qualified beneficiary for the plan year;
The total reimbursable amount of claims submitted to the health FSA for that plan
year before the date of the qualifying event; and
The maximum amount that the health FSA is permitted to require to be paid for
COBRA coverage for the remainder of the plan year.
• The “Remaining Annual Limit” is the elected annual limit less the claims
submitted.
• If the remaining annual limit is less than the maximum COBRA premium
that can be charged for the rest of the year, then the account is
overspent.
40. Who pays first?
• Code §105(h)(6) defines a self-insured medical
reimbursement plan as “a plan of an employer to
reimburse employees for expenses for medical
care for which reimbursement is not provided
under a policy of accident and health insurance.”
• There is one exception, however.
• It seems that the “payer of last resort” principle
still survives as a practical matter when the
employer also has an HRA , unless the HRA
requires the health FSA to pay expenses first.
41. Who pays first?
• Generally, if an employee participates in both an HRA and a
health FSA offered by the employer and both plans cover the
same expenses, the employee must look first to the HRA for
reimbursement and second (after the HRA limits are exhausted)
to the health FSA.
• However, an HRA plan sponsor may choose, prior to the
beginning of the health FSA plan year, to require in the HRA plan
document that the health FSA will pay first.
• The HRA plan document (and presumably the health FSA plan
document) must clearly specify that the HRA is the payer of last
resort (i.e., that coverage under the HRA is available only after
expenses exceeding the dollar amount of the health FSA have
been paid).
43. HSA Issues
If an employee’s spouse participates in a
Health FSA during the year and the spouse can
be reimbursed for the employee’s expenses,
will that right make the employee ineligible to
participate in a HSA?
Yes, even if the spouse never submits a claim for
reimbursement the employee’s expenses under
the Health FSA.
44. HSA Issues
If an employer adopts a HDHP during the year,
may an employee elect to terminate
participation in a Health FSA?
No, a change in cost or coverage is not a
allowable reason to change an election during the
year for Health FSAs.
45. HSA Issues
Can an employee participate in either a Health FSA or a HRA in
the same month and still be eligible to make or receive
contribution to an HSA?
No, unless the employee’s situation is one of the following:
The employee’s expenses reimbursed under a Health FSA and/or an HRA
are limited to dental, vision and/or preventive care benefits (“Limited
Purpose Health FSA or HRA”),
The employee suspends participation in an HRA for the year (“Suspended
HRA”),
Health FSA or HRA pays expenses above the deductible of the HDHP
(“Post-Deductible Health FSA or HRA”), or
HRA pays or reimburses the employee’s expenses incurred after the
employee retires (“Retirement HRA”).
46. HSA Issues
Can an employer amend its general purpose
FSA to a limited purpose Health FSA during the
year?
Yes – unofficial advice from IRS.
An employer may amend its Health FSA to a
limited purpose Health FSA.
48. Important Changes
Limitation on Health FSA Salary Reductions
Code § 125(I)(2) imposes a limit on annual salary reduction
contributions to health FSAs offered under cafeteria plans,
effective for plan years beginning in or after 2013.
The limit was $2,500 for plan years beginning in 2013, and is
indexed for cost-of-living adjustments for subsequent plan
years. ($2,550 for 2015).
The limit applies on a plan year basis.
The limit only applies to employee salary reduction
contributions.
The limit applies separately on an employee basis.
The limit applies separately for each unrelated employer.
49. Important Changes
Restrictions on OTC Medicines and Drugs
Health care reform establishes new restrictions on the
reimbursement of over-the-counter (OTC) medicines and
drugs purchased after December 31, 2010.
Under these restrictions, health FSAs, can only reimburse
medicines and drugs other than insulin if the medicine or
drug is prescribed (determined without regard to whether a
prescription is necessary to acquire the drug).
By its terms, the prescription requirement applies only to
medicines and drugs—it does not extend to items other than
medicines or drugs that are available over-the-counter (e.g.,
equipment, supplies, and medical devices).
50. Health FSAs
• For health FSAs to avoid the requirements of
Health Care Reform, they must meet the
requirements of an “excepted benefit.”
• Free standing health FSAs are still possible if
reimbursing excepted benefits.
• What requirements apply if a Health FSA is not
an excepted benefit?
51. Health FSAs
A health FSA is considered an excepted benefit if it
satisfies two conditions:
Maximum Benefit Condition: The maximum benefit payable
under the health FSA to any participant in the class for a year
cannot exceed two times the employee's salary reduction
election under the health FSA for the year (or, if greater, the
amount of the employee's salary reduction election for the
health FSA for the year, plus $500), and
Availability Condition: Other non-excepted group health plan
coverage (e.g., major medical coverage) must be made
available for the year to the class of participants by reason of
their employment.
52. Recent Guidance
• On May 13, 2014, the IRS issued Q&A guidance restating the
conclusion in Notice 2013-54, that an employer is considered to
establish a type of group health plan-called an "employer payment
plan"-if it reimburses employees' premiums for individual health
insurance policies.
• Q/A-1 provides that the employer's exposure to excise taxes of
$36,500 per year (i.e., $100 per day) for each employee affected
by the failures.
• This excise tax liability requires self-reporting on IRS Form 8928.
• Adverse consequences are also possible under ERISA and the
PHSA.
• Q/A-2 indicates that the DOL issued substantially identical
guidance in Technical Release 2013-03, and HHS is expected to
announce soon that it concurs.
53. Recent Guidance
On February 18, 2015, the IRS released Notice 2015-17 which
provides transition relief from the assessment of excise tax under
Code Section 4980D for failure to satisfy market reforms in certain
circumstances.
The transition relief applies to employer healthcare arrangements
that constitute:
Employer payment plans, as described in Notice 2013-54, if the plan is
sponsored by an employer that is not an Applicable Large Employer (ALE)
under Code § 4980H(c)(2) and §§54.4980H-1(a)(4) and -2;
S corporation healthcare arrangements for 2-percent shareholder-
employees;
Medicare premium reimbursement arrangements; and
TRICARE-related health reimbursement arrangements (HRAs).
54. Recent Guidance
• The IRS will not impose excise taxes otherwise
assessable under Code § 4980H for employer
payment plans maintained in 2014 or the first six
months of 2015 (i.e., through June 30, 2015) for
employers that are not “applicable large employers”
(ALEs) for those periods.
• Employers eligible for the relief are also excused from
the requirement to self-report these violations on Form
8928.
• The Notice relief does not apply to stand-alone HRAs
or other arrangements to reimburse any expenses
other than insurance premiums.
55. Recent Guidance
The Notice also addresses “2% shareholder-employee
healthcare arrangements,” under which a Subchapter S
corporation pays for or reimburses premiums for
individual health insurance coverage for a “2%
shareholder” where the payment or reimbursement is
included in income and the premiums are deductible by
the 2% shareholder-employee under Code § 162(l).
Pending the issuance of additional guidance on these
arrangements, the Notice provides that an S corporation
will not be subject to Code § 4980D or required to file
Form 8928 solely as a result of having a 2%
shareholder-employee health care arrangement.
56. Recent Guidance
The Notice permits an employer’s reimbursement of Medicare Part
B or Part D premiums to be integrated with another group health
plan offered by the employer, but only if:
The employer offers a group health plan (other than the premium
reimbursement arrangement) to the employee that does not consist solely
of excepted benefits and offers coverage providing minimum value;
The employee participating in the premium reimbursement is actually
enrolled in Medicare Parts A and B;
Premium reimbursement is available only to employees who are enrolled in
Medicare Part A and Part B or Part D; and
Reimbursement is limited to Medicare Part B or Part D premiums and
premiums for excepted benefits, including Medigap premiums.
57. Recent Guidance
The Notice confirms that an employer may increase an
employee’s taxable compensation, not conditioned on
the purchase of health coverage, without creating an
employer payment plan (or any group health plan at all).
The Notice reiterates the IRS’s position that an
employer’s payment or reimbursement of employees’
individual health insurance premiums is a group health
plan subject to the market reforms even if the payments
or reimbursements are made on an after-tax basis.
59. Reimbursed Claim That Should Not Have Been Paid
• The plan administrator should follow the debit card correction
procedures and attempt to correct the error by seeking repayment
from the participant, withholding the improper reimbursement from
the participant's pay, or offsetting the improper reimbursement
against other valid claims under the FSA.
• IRS guidance provides that if the above correction steps have
been unsuccessful, the improper payment should be treated as
any other business indebtedness.
• When this step is applied, the employer must first request
payment consistent with its collection procedures for other
business debts.
• If the payment is not recovered, it should generally be treated as a
forgiven debt and reported as wages on Form W-2 for the year in
which the indebtedness is forgiven; the reported amount is subject
to withholding for income tax, FICA, and FUTA
Error Found Before Year-End
60. Reimbursed Claim That Should Not Have Been Paid
IRS guidance indicates that under these circumstances,
the mistaken payment should be treated as business
indebtedness which, if forgiven, must be included in
income and reported as wages on Form W-2 (subject to
wage withholding) in the year in which the debt is
forgiven.
The employer can seek repayment of the indebtedness
from the participant on an after-tax basis through
repayment by check or after-tax payroll withholding in the
year in which the error is discovered.
Error Found Before Year-End
61. Denied Claim That Should Have Been Paid
• If a denied FSA claim is later determined to be eligible
for reimbursement and the run-out period has not
ended, then the participant should be reimbursed for it,
up to the amount available in the participant's account.
• A denied FSA reimbursement claim that should have
been paid is similar to a situation in which an employer
withholds excess cafeteria plan salary reductions.
• In both cases, the employer is contractually obligated
to make the participant whole.
Error Found Before the Run-Out Period Ends
62. Denied Claim That Should Have Been Paid
• Upon discovering the error, the employer should
reimburse the participant for the valid claim from
his or her FSA account.
• The claim should be resubmitted if necessary for
plan administration and promptly paid according
to the plan's terms.
• The amount to be paid would be the lesser of the
full amount of the claim or the balance available
in the account for paying valid claims.
Error Found Before the Run-Out Period Ends
63. Denied Claim That Should Have Been Paid
• Where claims are paid from general assets, most employers will allow
pre-tax reimbursement of a previously incorrectly denied claim, either
because of formal plan provisions for exceptions to the run-out deadline
or as a practical and equitable correction.
• Some employers correct these errors by reimbursing the claims on a
taxable basis outside the plan.
• To help offset the lost tax benefits, some employers provide a tax gross-
up by increasing the payment for the mistakenly denied claim by the
taxes due on the amount of the payment.
• The amount paid would be the lesser of the full amount of the claim or the
balance that would have been available in the account had the claim
been paid before the funds were forfeited.
• If the reimbursement is grossed up for taxes, it could include the
participant's share of FICA taxes and the amount of federal and state
income taxes payable on the reimbursement amount.
Error Found After the Run-Out Period Ends