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News Items, by Subject

Cafeteria plans (125, flexible spending)

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[Opinion] ECFC Statement Submitted to House Subcommittee Hearing on Consumer-Directed Health Plans (PDF)
"Congress should take steps to stop the impact of the Cadillac Tax on consumer-directed health plans.... If full repeal of the excise tax is not feasible, we would advocate that employee contributions to FSAs and HSAs be exempted from the calculation of the Cadillac Tax or any direct limitation that may be proposed on employer-provided coverage." (Employers Council on Flexible Compensation [ECFC])
[Guidance Overview] Simple Cafeteria Plan Provides Alternative to Nondiscrimination Testing
"[A] simple cafeteria plan is treated by the [IRS] as meeting the applicable nondiscrimination rules associated with cafeteria plans ... Code section 125(j) ... establishes [1] which employers can sponsor a simple cafeteria plan; [2] which employees must be eligible under a simple cafeteria plan; and [3] what contributions must be provided under a simple cafeteria plan[.]" (Fraser Trebilcock)
FSA Eligible Expenses and Other Important Information
"If you have a health FSA, it's important to know which products and services are FSA-eligible. The following lists identify most FSA eligible expenses and non-eligible expenses according to the IRS." (DataPath)
Potential Compliance Issues Associated with Offering Employee Benefits Through a Cafeteria Plan
"[These] action steps [are] aimed at helping you navigate often overlooked cafeteria plan compliance issues. [1] Identify. Document. Repeat.... [2] Limit. Administer. Enforce.... [3] Recognize. Consult. Apply.... [4] Ascertain. Conform. Approve." (Arthur J. Gallagher & Co.)
Interaction of Health FSAs and Health Savings Accounts (PDF)
"This article explains how Health FSAs and HSAs work together and provides answers to some common questions posed by employers with respect to the complex interaction between these two consumer-driven benefit designs." (EPIC)
IRS Reduces 2018 Limits for HSAs, Adoption Assistance Programs
"Using the chained CPI also will lower the threshold for the so-called Cadillac tax ... the cap on salary reduction contributions to health flexible spending accounts (health FSAs) and transit benefits. However, Rev. Proc. 2018-18 does not address those limits." (Willis Towers Watson)
[Official Guidance] Text of IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans, for Use in Preparing 2017 Returns (PDF)
22 pages. "This publication explains the following programs. [1] Health Savings Accounts (HSAs). [2] Medical Savings Accounts (Archer MSAs and Medicare Advantage MSAs). [3] Health Flexible Spending Arrangements (FSAs). [4] Health Reimbursement Arrangements (HRAs)." (Internal Revenue Service [IRS])
Back to the Future: Making Sense of the Election Timing Rules for Cafeteria Plans
"[E]lections based on these events can be made on a retroactive basis: birth, adoption, placement for adoption of a child.... Correcting elections based on mistakes of fact has become a standard practice.... You can allow the election to take effect retroactively and allow employees to pay for the retroactive period on a post-tax basis.... An employer can simply waive payment for the retroactive period.... An employer can encourage employees to make anticipatory (a.k.a. springing) elections.... Employers have some flexibility when it comes to annual open enrollment." (HR Daily Advisor)
DOL Announces April 1, 2018 Applicability Date for Disability Benefit Claims Procedures
"[It] is imperative for employers to work with their insurance carriers, third party administrators, and attorneys to ensure that all underlying disability plans/benefits and associated documentation (including any ERISA wrap plans, Code section 125 cafeteria plans, and claims denial forms) are reviewed and updated to ensure legal compliance with the requirements for claims filings beginning after April 1, 2018." (Fraser Trebilcock)
Post-Open Enrollment Checkup: Tips to Avoid Headaches Later
"[1] Unconfirmed elections.... [2] HDHP enrollment with FSA.... [3] Stakeholder audits ... [4] Child support enrollments ... [5] Elections by employees with previous benefits issues.... [6] Elections by new hires during open enrollment.... [7] Missing life insurance beneficiaries ... [8] Family enrollment for one line of coverage but not others ... [9] DCAP enrollment without a dependent enrolled." (Cory Jorbin, HUB International, via Employee Benefit Adviser)
Tax Reform Bills as Passed: Issues of Concern (PDF)
7-page summary comparing fringe benefit provisions of current law with proposed and passed versions of House and Senate bills. (Employers Council on Flexible Compensation [ECFC])
New Tax Reform Bill: Major Changes to Executive Compensation Lead Impact on Benefits and Compensation Practices (PDF)
9 pages. "Employers that have used nonqualified deferred compensation plans to attract and retain highly compensated employees ... would need to consider alternatives to achieve their goals ... With the possible exception of incentive stock options, there would appear to be no reason for employers to grant stock options or stock appreciation rights.... [R]ule changes would ease the ability of employees to take hardship withdrawals and would reduce some of the complexity in administering hardship withdrawals.... As a taxable contribution, [Dependent Care FSAs] would be effectively eliminated as they would have no value to employees.... The Tax Bill does not eliminate Health Care Flexible Spending Accounts." (Mazursky Constantine LLC)
[Guidance Overview] IRS Announces Increased Health FSA Maximums and Increased PCORI Fees (PDF)
"The indexed annual [health FSA] limit for 2018 plan years is $2,650.... [If] an employer wants to increase the maximum to $2,650 as of January 1, 2018, there are several options depending on the current stage of the open enrollment process[.]" (Marsh & McLennan Agency LLC)
Get on Top of Nondiscrimination Testing
"While there are different schools of thought on when to test your cafeteria plans, the bottom line is the IRS requires that your plans have passed all testing by the last day of the plan year. Many employers wait until final quarter to perform their initial testing -- so if you haven't done so already, now is the time." (Frenkel Benefits)
Can Employees Pay for Cord Blood Storage with an HRA, FSA or HSA?
"[If] the storage is merely precautionary, then the storage wouldn't be a qualified medical expense. If there's a current need (for example, the baby or a sibling or parent is actually sick and could benefit from the cord blood in the short term) then there's an argument to count the cord blood storage as a qualified medical expense and allow reimbursement of the costs through an HRA, FSA or HSA." (Mintz Levin)
Can HSA Contributions Continue After an Employee Ceases to Be HSA-Eligible?
"HSA contributions for a partial year of HSA eligibility ... can be made at any time from the first day of the year until the individual's federal tax return due date, without extensions, for that year.... Thus, your cafeteria plan could be amended to allow participating employees to continue making HSA contributions through the end of the year in which they lose (or appear to lose) their HSA eligibility, or until they reach their contribution limit for the partial year of eligibility, whichever happens first." (Thomson Reuters / EBIA)
[Opinion] ECFC Letter to Treasury Requesting Disaster Relief for Cafeteria Plans (PDF)
"Like the relief given to retirement plan participants ... from the verification requirements with respect to loans and hardship distributions ... [ECFC] requests that limited relief from the substantiation requirements under the cafeteria plan regulations be provided for certain victims of Hurricanes Harvey and Irma." (Employers Council on Flexible Compensation [ECFC])
How to Educate Employees During Open Enrollment (PDF)
"[1] Communicate contribution limits.... [2] Communicate plan extensions and deadlines.... [3] Explain how to track expenses.... [4] Teach them about eligible expenses.... [5] Reduce paperwork with an FSA or HSA debit card.... [6] Anticipate common questions.... [7] Explain investment opportunities." (FSA Store)
[Discussion] Handling a Section 125 Plan During a Corporate Merger
"Let's say you have two non-profit corporations, only one of whom sponsors a cafeteria plan. The two corporations merge to form a new corporation, with a new Employer Identification Number. They do this mid-year. In the qualified plan world, there is certain guidance for merger and acquisition situations, but I haven't seen anything on this for cafeteria plans. Anyone have any experience with this, or know of any guidance? If not, opinions on what is normally (or should be) done?" (BenefitsLink Message Boards)
Is Your Cafeteria Plan Document Full of Plot Holes?
"The ERISA plan document describes the legal requirements for the ERISA plan; very often, it is a wrap document that wraps all ERISA benefits ... The cafeteria plan document ... summarizes the qualified benefits (for example, medical, dental, vision, health FSA, and dependent care FSA) that an employer allows employees to pay for on a pretax basis through salary reductions.... The 2007 proposed cafeteria plan regulations and other guidance provide several content requirements." (HR Daily Advisor)
[Opinion] ECFC Comment Letter to HHS on ACA Regulatory Simplification (PDF)
"We urge the Department to take this opportunity to review the excepted benefits regulation s and eliminate the so-called group health plan 'footprint' requirement so that health FSAs are allowable for employees even if there is no group health plan coverage offered to them through an employer (either because the employer does not offer group health coverage, or does not offer group health coverage to that particular class of employees)." (Employers Council on Flexible Compensation [ECFC])
Here We Go Again: The Senate's Health Reform Bill
"The Senate bill proposes to remove the dollar limit on health flexible spending account contributions by employees effective after December 31, 2017. Currently many employers are preparing for annual enrollment for the next calendar year and may want to address this limit if it is made unlimited rather than having an unlimited amount. The Senate bill also proposes to make over the counter medical expenses reimbursable under health savings accounts (HSAs), health flexible spending accounts (HFSAs) and under health reimbursement accounts (HRAs) effective after December 31, 2016." (Winstead PC)
FSA, HRA, and HSA Comparison Chart (PDF)
Chart summarizes 26 aspects of the programs, including eligibility, portability, discrimination rules, funding requirements, maximum contribution levels, and balance carry-overs. (Marsh Consulting Group)
That Section 125 Cafeteria Plan Needs a Second Look
"An increase in [DOL] audits warrants a much closer look at Section 125 Cafeteria Plans to ensure compliance and proper administration.... [1] Understand which health & welfare benefits should be pre-taxed ... [2] Test for nondiscrimination early rather than later ... [3] [D]ependent domestic partners prompt tax confusion." (Corporate Synergies)
What is a Limited Purpose FSA, and How Can Account Holders Use It?
"A limited purpose FSA (LPFSA) is a healthcare spending account that can only be used for eligible vision and dental expenses. Unlike a healthcare FSA, however, an LPFSA can be held at the same time as [an HSA]. When coordinated with an HSA, the LPFSA can further reduce your taxes while allowing you to allocate HSA funds to other purposes -- including retirement." (DataPath)
Cash Allowances for Employees to Select from Benefits Suite?
"Generally, if an employer wants to pay its employees a cash allowance that is earmarked for certain benefits, the arrangement has to qualify under one of the plans the IRS has established (e.g. HRA, FSA, HSA, cafeteria plan).... [T]he cafeteria plan rules were set up to accommodate a 'bucket' approach, but employers must comply with the IRS's requirements when setting up such a plan. The money in a full flex plan, that allows employees to choose and trade off among different benefits, can come from employer or employee contributions." (HR Daily Advisor)
[Opinion] U.S. Chamber of Commerce Statement on Cafeteria Plans, for House Subcommittee on Economic Growth, Tax and Capital Access
"[W]hen it comes to cafeteria plans, small business owners are at a significant disadvantage and, therefore, it discourages them from implementing cafeteria plans for their employees. Consequently, we urge Congress to allow small business owners to participate in cafeteria plans and, thereby, encourage the expanded implementation of cafeteria plans by small businesses." (U.S. Chamber of Commerce)
[Guidance Overview] IRS Clarifies Rules for Disposal of Cafeteria Plan Forfeitures upon Discontinuance of Business Operations
"In Information Letter 2016-0077, the IRS responds to a taxpayer's inquiry by confirming that the unused funds will not revert to the U.S. Treasury but are instead disposed of in accordance with the plan document." (The Wagner Law Group)
FSA Reimbursement: Nine Qualified Expenses You May Not Know About
"Guide dogs/service animals.... Braille reading material.... Auto adaptation expenses.... Television closed captioning.... Special telephone equipment.... Wigs ... Smoking cessation programs.... Lead-based paint removal.... Transportation." (DataPath)
IRS Information Letter Addresses Cafeteria Plan Forfeitures
"The letter responds to a question about whether unused funds in a cafeteria plan are paid to the U.S. Treasury when the employer ceases operations and the plan terminates ... [T]he disposition of unused funds when a cafeteria plan terminates depends on the plan document's provisions regarding plan termination and the facts and circumstances at the time.... [P]roposed regulations under Code Section 125 provide ... [that] forfeitures may be used to defray plan expenses, allocated among participants on a reasonable and uniform basis (but not based on claims experience), or retained by the employer." (Thomson Reuters / EBIA)
Are Your 'Voluntary' Benefit Plans Subject to ERISA?
"[T]here are four requirements of the voluntary plan safe harbor.... The benefit plan must be completely voluntary and employee paid, with no employer contributions made in any form for any employees.... [T]he employer must not endorse the plan. In simple terms if you endorse it, you own it (for purposes of ERISA) ... Finally, under the safe harbor, employers are prohibited from receiving any compensation that exceeds reasonable reimbursement for collecting and remitting premium payments." (Graydon Head & Ritchey LLP)
Healthcare Benefits in 2017: What Employers Have to Say
"2016 marked a milestone for healthcare consumerism, with the amount of organizations offering HDHPs jumping from 28% four years ago to 39% in last year's survey to 53% in this year's survey.... With this rise in HDHPs came an increase in the number of employees being enrolled in a Health Savings Account [HSA], Healthcare Reimbursement Arrangement [HRA], or Flexible Spending Account [FSA] ... 51.5% of respondents' employees are enrolled in one or more of these plans/arrangements." (Healthcare Trends Institute)
[Official Guidance] Text of IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans, for Use in Preparing 2016 Returns (PDF)
22 pages; Feb. 10, 2017. "An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of an eligible individual.... An Archer MSA may receive contributions from an eligible individual and his or her employer, but not both in the same year... A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is enrolled in Medicare.... A health FSA may receive contributions from an eligible individual. Employers may also contribute.... An HRA must receive contributions from the employer only. Employees may not contribute." (Internal Revenue Service [IRS])
[Guidance Overview] Supplemental and Wellness Benefits Received May be Taxable
"Many employers offer their employees various 'supplemental benefits,' such as accident insurance, cancer insurance, or critical disease insurance. [In CCM 201703013, the IRS] ruled that, to the extent the employer pays the cost of these benefits (or the employee contribution is made 'pre-tax' through a cafeteria plan), the benefits received are taxable income to the employee." (Barrett McNagny LLP)
Comparison Chart: Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Accounts (HRAs) (PDF)
Chart addresses contribution limits, portability, eligible expenses, substantiation, and other requirements. (Acclaris)
[Guidance Overview] IRS Issues Key Memorandum on Tax Treatment of Fixed Indemnity Health Plans
"According to [CCM 201703013], when a fixed indemnity health plan is employer-paid or purchased on a pre-tax basis, the usual tax free treatment of benefits paid under Internal Revenue Code section 105 is not available because the amount paid is not a reimbursement of medical care under Code section 213(d). Because the amount paid is not entitled to tax free treatment, any amounts paid under the fixed indemnity health plan are included in the employee's gross income and wages." (Morgan Lewis)
[Guidance Overview] Certain Small Employers Now May Offer Special Health Reimbursement Arrangements (PDF)
"QSEHRAs are only for 'small employers.' ... The employer cannot offer any other group health plan (such as medical, dental, vision and health flexible spending account plans).... Only the employer may fund the QSEHRA ... The employer must offer the QSEHRA to all eligible employees.... QSEHRAs must be offered on the same terms to all eligible employees.... A QSEHRA may reimburse an eligible employee for eligible medical expenses ... [Here are some other] QSEHRA considerations ... Small employer requirements [also apply]." (Fox Rothschild LLP)
[Official Guidance] Text of IRS Chief Counsel Memo 201703013: Tax Treatment of Benefits Paid by Fixed-Indemnity Health Plans (PDF)
"An employer may not exclude from an employee's gross income payments under an employer-provided fixed indemnity health plan if the value of the coverage was excluded from the employee's gross income and wages. An employer may not exclude from an employee's gross income payments under an employer-provided fixed indemnity health plan if the premiums for the fixed indemnity health plan were originally made by salary reduction through a Section 125 cafeteria plan." [Dec. 12, 2016; released Jan. 20, 2017] (Internal Revenue Service [IRS])
[Guidance Overview] Proposed Amendments to the Cafeteria Plan Provisions of the Puerto Rico Internal Revenue Code
"These proposed amendments are intended to reactivate in Puerto Rico cafeteria plans and make the adoption of these plans more attractive to Puerto Rico employers by expanding the list of 'qualified benefits' that they may be provided to Puerto Rico employees. However, as more fully explained [in this article], unless HR 453 is further amended to correct or eliminate certain deficiencies existing in Section 1032.06 of the 2011 PR Code, it will be very difficult to accomplish its intended goal." (McConnell Valdes)
It's That Time of Year: Use It or Lose It!
"For participants that have more than expected left in their FSA accounts at this time of year, it's not too late to remind them of some of the ways they can spend their money. But remember, not all FSAs are created equal -- the IRS has rules for what expenses are considered qualified depending on what type of FSA account(s) your employee has in place." (Frenkel Benefits)
HSA vs FSA: Which is Better?
"The Health Savings Account is like an IRA. You get to fund it with pre-tax dollars and it's typically administered by a financial institution. But unlike an IRA, you get to use the funds when you need them (not just in retirement) towards qualifying medical costs.... The Flexible Spending Account is a pre-tax dollars savings account your company administers where you're allowed to save up a year's worth of health care costs. Most people use it to pay for deductibles, co-pays, and household health care items." [A comparison chart is included.] (PTMoney)
Quick Guide: 2017 Contribution Limits for FSAs and HSAs
"In 2017, the annual FSA contribution limit is increasing by $50 from the previous year. Employees with this employer-sponsored benefit account can contribute a maximum of $2,600. FSA carryover limits remain the same at $500. Dependent Care FSA, also known as Dependent Care Assistance Plan (DCAP), limits remain at $5,000 for single, head of household, or married filing jointly, or $2,500 each for married filing separately." (DataPath)
How Do Health FSA Carryovers Affect HSA Eligibility?
"Carryovers in a general-purpose health FSA will make an employee ineligible to contribute to an HSA for the entire subsequent plan year, even after the carryover is exhausted and even if the employee does not make or receive new health FSA contributions for that plan year. HSA eligibility should not be adversely affected, however, if the plan permits carryovers but the participant actually has a $0 balance at year-end." (Thomson Reuters / EBIA)
Important Spending Account Reminders for Open Enrollment
"Employers can reduce the complexity and the confusion for employees during open enrollment by consistently communicating the following information: Plan extensions and deadlines (Carryover or Grace Period).... Contribution limits.... How to track expenses.... What's eligible.... How to eliminate paperwork with an FSA or HSA debit card." (FSA Store)
[Guidance Overview] New ACA Rules for HRAs, Flex Credits and Opt-Out Payments
"Although the rules in Notice 2015-87 generally apply for plan years beginning on or after December 16, 2015, under transition relief, many of the new rules will take effect for plan years beginning on or after January 1, 2017. Final regulations regarding opt-out payments will likely be issued later this year ... In planning for next year, employers and plan sponsors that include any of these features in their health plans should review plan documents and operations for compliance with the new requirements, several of which are explained in this article." (Hanson Bridgett LLP)
[Guidance Overview] Can We Allow Laid-Off Employees to Spend Down Their Health FSAs Without Electing COBRA?
"No. Under the cafeteria plan rules, health FSA participants can only be reimbursed for eligible medical expenses incurred while their health FSA coverage is in effect, and coverage stops when the participant stops making contributions. Furthermore, any amounts remaining when coverage stops are subject to the 'use-or-lose' rule, which generally requires forfeiture of health FSA contributions not used to reimburse expenses incurred during the coverage period." (Thomson Reuters / EBIA)
[Official Guidance] Text of IRS Rev. Proc. 2016-28: Inflation Adjusted Amounts for Health Savings Accounts (HSAs) (PDF)
"For calendar year 2017, the annual limitation on deductions ... for an individual with self-only coverage under a high deductible health plan is $3,400. For calendar year 2017, the annual limitation on deductions ... for an individual with family coverage under a high deductible health plan is $6,750.... For calendar year 2017, a 'high deductible health plan' is ... a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses ... do not exceed $6,550 for self-only coverage or $13,100 for family coverage." (Internal Revenue Service [IRS])
Top Five Ways HR Can Bolster Workers' FSA Participation
"To help employees get the most out of their FSAs, make sure they're aware of ... [1] The most up-to-date eligibility list ... [2] Allowable changes.... [3] Planning tips.... [4] FSA debit cards.... [5] Additional spending options." (HR Benefits Alert)
What's a 'Limited Purpose' FSA?
"A general purpose FSA allows account holders to pay for a long list of IRS-approved expenses, including prescription medications, copays, most dental treatments, and other medical related needs. If a person has an HSA, they are not eligible to also have a general purpose FSA. An LPFSA allows account holders to receive reimbursement for eligible dental and vision expenses. A person with a high deductible health plan with an HSA is eligible for an LPFSA." (DataPath)
Is Healthcare FSA COBRA Continuation Really Required?
"[T]here are specific circumstances where employers may either have the option to limit the timeframe for coverage, or may even not be required to offer the option at all. For example, if the employee has 'overspent' their FSA account by the time the qualifying event has occurred (in this case, termination of employment), the employer is not required to continue coverage in the Healthcare FSA account." (Frenkel Benefits)
Do You Have a Proper Cafeteria Plan?
"[A] recent Ninth Circuit decision ... focused on the circumstances under which the value of certain non-cash-wage benefits (such as those provided under 'cash-in-lieu' programs or cafeteria plans) must be included in the determination of FLSA overtime wages.... In order to avoid the risk that the IRS might take the position that your cafeteria plan does not have the required 'written plan' and that, as a result, your employees are taxable on the amounts that they could have received as wages (even if they selected nontaxable benefits), you should have a cafeteria plan document that satisfies [certain specific] requirements[.]" (Chang Ruthenberg & Long PC)
[Opinion] House Shouldn't Repeal Limits on Tax-Advantaged Health Accounts
"The House is expected to consider legislation this week ... to repeal health reform's limit on ... [FSAs and HSAs] to buy over-the-counter medicines. The limit, in effect now for more than five years, is both sound tax and health policy and should be retained." (Center on Budget and Policy Priorities)
[Official Guidance] Text of IRS Chief Counsel Advice 201622031: Tax Treatment of Wellness Program Benefits and Employer Reimbursement of Premiums Provided Pre-Tax Under a Section 125 Cafeteria Plan (PDF)
"An employer may not exclude from an employee's gross income payments of cash rewards for participating in a wellness program. [Further, an] employer may not exclude from an employee's gross income reimbursements of premiums for participating in a wellness program if the premiums for the wellness program were originally made by salary reduction through a section 125 cafeteria plan." (Internal Revenue Service [IRS])
[Guidance Overview] Interaction of HSAs and Medicare Addressed in IRS Information Letters
"[T]hese proration principles also apply to individuals who do not apply for Social Security, continue working past age 65, and delay their enrollment in age-based Medicare because they are covered by a group health plan based on their current employment.... When their employment or group health coverage ends, whichever occurs first, they will also have an eight-month special enrollment period to sign up for Medicare Part A. Application of the proration rules in that situation is more complicated, however, because the first month of Medicare entitlement may be retroactive." (Thomson Reuters / EBIA)
[Guidance Overview] FSAs and Mid Year HDHP/HSA Implementation (PDF)
"Employees who have coverage under a traditional or 'full-service' FSA (one that reimburses more than just dental, vision and preventive care expenses) are ineligible to make, or even accrue the right to make, HSA contributions for any month they begin while enrolled under the traditional FSA.... The best answer: Avoid these midyear HDHP/HSA implementations, if at all possible. This means getting way out in front of the issue, maybe 6-12 months early." (Lockton)
[Guidance Overview] IRS Information Letters Confirm Cafeteria Plan Reimbursement Fundamentals
"The IRS has issued three information letters confirming and calling attention to fundamental principles of cafeteria plan design and administration.... Health FSAs cannot reimburse insurance premiums [2016-001] ... No income exclusion for reimbursement of spouse's pre-tax premiums [2016-009] ... Documentation required before reimbursing expenses [2016-013]." (Thomson Reuters / EBIA)
[Guidance Overview] ACA Potluck: IRS Notice 2015-87 Provides Full Serving of New ACA Guidance (PDF)
29 presentation slides. Topics include: [1] More HRA integration guidance for ACA compliance; [2] Even more clarity on prohibition of individual policy reimbursement (again!); [3] ACA affordability rule clarifications (opt-out credits and flex credits, and inflation adjustments applied to affordability safe harbors); [4] New ACA pay or play penalty amounts (Section 4980H) adjusted for inflation; [5] Special HSA eligibility rules clarified for veterans with service-connected disability; [6] COBRA rights to the health FSA carryover finally explained. (ABD Insurance & Financial Services)
[Guidance Overview] IRS Clarifies FSA Carryover and HRA Coverage Issues
"Notice 2015-87 gives employers two tools to address concerns over keeping an employee on the FSA plan books when that employee isn't otherwise an active FSA participant ... [1] Employers can limit the carryover feature to only those employees who elect to make their own contributions for the following plan year. [2] The employer can limit the carryover to only one plan year." (Society for Human Resource Management [SHRM])
[Guidance Overview] Text of IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans (PDF)
21 pages, dated Jan. 13, 2016. "An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of an eligible individual.... An Archer MSA may receive contributions from an eligible individual and his or her employer, but not both in the same year.... A health FSA may receive contributions from an eligible individual. Employers may also contribute.... An HRA must receive contributions from the employer only. Employees may not contribute." (Internal Revenue Service [IRS])
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