Lynne P

I did not realize the MEC auto-enrollment (with annual opportunity to opt out) eliminated the (b) exposure. Found it in EBIA (called "risky" but apparently legit with the opt out).

The HSA annual limit is pro-rated monthly - each month you are enrolled in an HDHP (single or family) determines your maximum contribution for the CY. Employees who were enrolled in an HDHP for all 12 months in the calendar year (CY) can contribute the CY maximum. If they first enroll on 9/1, they can contribute 4/12ths of the CY maximum. There is one exception -- if you enroll mid-year and are enrolled on 12/1, you can contribute the CY maximum for that calendar year but you must stay enrolled through the next CY (called the testing period) or you owe taxes/penalties on the excess contributions.

An employer can set the dependent tiers at different employer contribution amounts. Since the employer likely has a cafeteria plan in order to make the employee payroll deductions pre-tax for the dependent coverage, you just need to be sure highly compensated employees (414 definition) are not favored. For example, if the employer contributes towards the spouse coverage for executives (who are highly comp or most of them are) but not for non-highly comp employees, that would be discriminatory. I would also recommend including at least a small contribution for EE only coverage so that the plan is contributory. That way an employee can legitimately waive coverage if they do not need this employer's plan. When the employer pays 100%, a waiver should not be allowed. Ensure that if this employer is subject to the ACA employer mandate, the employee's contribution is "affordable" under the ACA if it does decide to charge to EE only coverage.

The change in cost of day care is an acceptable DCFSA change in election event. The child starting kindergarten is a decrease in the cost of day care. The IRS agrees that the DCFSA mid-year changes are more flexible than other changes (like HCFSA or group health plan contributions).

You can't avoid the (b) penalty with a MEC skinny plan because it's not minimum value. So the Form 1095-C will show that minimum value coverage was not offered regardless if the employer pays all or most of the cost and the (b) will be assessed for any FT employee with Marketplace premium tax credits.

The disability contracts should be written as "contributory", meaning the employees are paying some or all of the cost of coverage. The carriers typically rate up, even if 100% participation is required. How the employer charges the employee for coverage (pre or post-tax payroll deduction, or gross up then post-tax deduction, or adding imputed income to taxable income) is typically up to the employer and not in the carrier plan documents. You can check the master policy and the certificate for that language (should state who is paying for the coverage in the ERISA section). The carrier should verify if 100% participation is required, which is typical even if written as "contributory". The carriers are familiar with employees paying taxes on the premium in order to have tax-free benefits (and the IRS agrees this is the same as paying for coverage). When there is a claim, the claim form then indicates that the employee paid for the coverage (so that the carrier knows the benefits are tax-free). The company should consult with its tax advisor on any W-2 corrections to the premiums that were taxed. The broker needs to fix the contract (have written and rated as "contributory") if the company wants employees to have tax-free benefits going forward. Or, the company could leave the contract alone, pay the premium, and any disability benefits are taxable - when employers have difficulty administering a plan properly, sometimes it is best to keep it simple. Hope this helps.