BAS Blog


 

Wellness Programs Under Health Care Reform

Many employers are implementing wellness programs for their employees as health care reform has made wellness programs more desirable.

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Health Savings Accounts

A health savings account is an IRA-like, tax-exempt trust or custodial account that can be used to pay for certain medical expenses of the HSA holder, the holder’s spouse and/or tax dependents. An HSA is available to an individual who is covered by a certain type of high-deductible health plan. Contributions to an HSA are tax-free.

To be eligible to contribute to an HSA, the individual must

  • Be covered under a qualifying high deductible health plan with self-only or family coverage. The individual may not have any other health coverage.
  • Not be entitled to Medicare.
  • Not be claimed as a tax dependent by any other taxpayer.
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Question of the Week

Q.- An employee is terminating employment next week. He made a full $2,500 election to our health FSA. He wants to know if he will be allowed to contribute $2,500 to his new employer’s health FSA when he starts working there in two weeks. Will he?

A.- The amount the employee will be able to defer under his new employer's FSA will depend on the terms of that employer's plan. Employers may set limits on contributions to an FSA that are lower than the IRS maximum of $2,500.

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New Account Set Up Program

BAS’ Cobra Control Services, LLC provides a quick and easy way for brokers to set up a new employer account through MyEnroll.com. Simply log into MyEnroll.com with your reseller user ID and password. Then, click on “Add new COBRA and/or FSA account.”

You may wish to notify your client before you set up a new employer for services. After you complete your portion of the new employer setup, CCS emails a services contract to the employer administrator identified in the system. The employer representative must sign the services agreement electronically before CCS will begin to provide COBRA administrative services.

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Reporting HIPAA Electronic Transaction Standard Compliance

The Health Insurance Portability and Accountability Act (HIPAA) requires health plans to transmit data using certain uniform communication standards and operating rules. The goal of this HIPAA requirement is to ease the burden, and resulting costs, of health plans and insurers having to accommodate many different transaction methods.

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Mid Year Change Events for Cafeteria Plans

In order to provide the pre-tax contributions to pay for benefits, cafeteria plans must require that elections be irrevocable for the period of coverage. This means that employees who participate in the cafeteria plan generally may not change their pre-tax elections mid year.

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Question of the Week

Q.- We have an employee who enrolled in the FSA beginning 1/1/ 2014. She just had a baby and is now enrolling in our high deductible health plan. She wants to cancel her FSA and create an HSA instead. Can she do this or does she have to wait until next year to start an HSA?

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2014 Health Care Reform Requirements

Many health care reform requirements become effective in 2014. As we start the year, see below for a look at new obligations under the Affordable Care Act.

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Prescription Drug Filing Required

The Medicare Modernization Act requires employers with health plans that include prescription drug coverage to notify Medicare-eligible participants if the drug coverage is “creditable” or not. This means the employer must let participants know if the employer’s prescription drug coverage is expected to pay on average as much as the standard Medicare prescription coverage.

The MMA implemented two disclosure requirements with respect to prescription drug coverage.

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Question of the Week

Q.- Are we required to send a COBRA Initial Rights Notice to a dependent who gets added to an employee's coverage after the employee has already been enrolled and has received the notice?

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IRS Guidance on Tax Treatment for Same-Sex Spousal Benefits

The IRS issued Notice 2014-1 to address issues relating to cafeteria plans, flexible spending account plans and health savings accounts for employees with same-sex spouses. The guidance incorporates the Supreme Court’s decision in United States v. Windsor, which ruled the Defense of Marriage Act unconstitutional, thereby recognizing same-sex marriage.

The Windsor decision created uncertainty with respect to the tax treatment of employee benefits provided to same-sex spouses. The IRS’ new notice recognizes the retroactive effect of marital status and provides:

  • Employees who were in same-sex marriages as of June 26, 2013 or later may change their cafeteria plan elections to reflect their marriages.
  • Employers may allow for the reimbursement of a same-sex spouse’s expenses from an employee’s FSA funds on and after June 26, 2013.
  • Employers should review their W-4 forms for employees whose same-sex domestic partner is covered under the employer’s health plan to see if the partner is now a same-sex spouse.
  • Contributions limits for HSAs and Dependent Care FSA contributions will be combined for spouses in a same-sex marriage.
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Contraceptive Mandate Under Health Care Reform

The United States Supreme Court ruled last week that some religious groups cannot be penalized for failing to cover birth control under their health plans.

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Question of the Week

Q.- An employer merged with another company and some employees will be covered under the new company’s group health plan. Is this a qualifying event for COBRA purposes?

A.- Possibly. If the employees have been terminated from employment with the original employer, and if there are any differences between the original coverage and the new coverage (either benefits or cost), then there will be a COBRA qualifying event.

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Options for Consumers with Cancelled Insurance Plans

In the roll out of health care reform, Americans were told that they would be able to keep their existing health insurance coverage. This proved difficult for consumers as insurance companies cancelled health plans that did not meet all of health care reform’s requirements.

Late in the game, the White House revised its position and allowed for the renewal of cancelled plans for additional time period, between January 1, 2014 and October 31, 2014, even if those plans did not offer the full coverage required by health care reform. Some states have adopted this transition policy and are allowing insurers to renew existing plans and policies. Other insurers are not renewing cancelled policies saying that at this point it is to difficult to reinstate those plans.

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New Transit/Parking Plan Limits

Qualified transportation and parking plans give employees a way to save on commuting expenses. The IRS has released new limits on contributions to these plans for 2014.

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Question of the Week

Q. An employee’s doctor has prescribed an experimental procedure for him. The procedure is not covered by insurance. May the amount the employee pays for the procedure be reimbursed from his health FSA?

A. Possibly. The participant would have to provide a letter of medical necessity from a provider stating that the procedure is necessary to treat a specific medical condition. The letter should provide the specific diagnosis, the treatment needed, how the treatment will address the medical condition and the length of treatment. We note that if the procedure is experimental, the provider may not be in a position to state that the procedure is medically necessary.

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