As the healthcare laws change, we adjust our services accordingly to accommodate your benefits package and to ensure compliance.
Under IRS Code 125, the employer can sponsor an employee benefit program known as a Cafeteria Plan (“Plan”) for their employees. The employer gives this opportunity to use a salary conversion arrangement through which you can use pre-tax dollars to pay for your benefits instead of paying for the benefits through after-tax payroll deductions. By paying for the benefits with pre-tax dollars, you save money by not having to pay social security and income taxes on your salary reduction.
There are several components within a Section 125 Café Plan that can be offered as stand alone or combined together:
Premium Plan: This plan is often called a Premium Only Plan (POP Plan) if it is offered as a stand alone component within the Café Plan. The component does not offer reimbursement of any payroll deductions. It merely acts as a mechanism to allow the employee to pay for their portion of the employer sponsored benefits tax free. The employer will forward payroll deducted premiums to the proper insurer on behalf of the each employee enrolled.
Flexible Spending Accounts (FSA): FSA’s allow for an employee to set aside dollars which are payroll deducted pre-tax to pay for certain qualified expenses and receive reimbursement of their dollars for each qualified expense. There are three types of FSA’s which can be offered. An employer may offer one, two or all three. Employees must be careful in planning how much they are going to set aside because if they do not use their dollars by the end of the plan year, they will lose it.
Medical FSA.: allows for the employee to set aside pre-tax dollars to pay for qualified medical expenses not reimbursed from insurance benefits, employer dollars or other reimbursement programs. The expenses which are qualified fall under Section 213 of the Internal Revenue Code.
There are three types of Medical FSAs:
1. The General Purpose is for all medical expenses applicable to Section 213(d) of IRC. This FSA is not compatible with an HSA.
2. The Limited Purpose FSA is compatible with an HSA. Applicable expenses within Section 213(d) of the IRC are limited to dental and vision and preventive.
3. The Post Deductible FSA is also compatible with an HSA. Medical expenses qualified under Section 213(d) of IRC are allowed once the minimum deductible amount allowed has been met by the HSA health plan. For the tax year 2017, the minimum deductible for a single person is $1300 and $2600 for family.
Dependent Care FSA: allows for the employee to set aside pre-tax dollars to pay for daycare expenses of a qualified dependent under the age of 13 or an elder person. This can be a huge tax savings for the employee who has daycare expenses.
Section 132 Transportation Plan: This allows for an employee to payroll deduct pre-tax costs for parking and transportation to and from work. Expenses such as commuter train, parking and commuter bus fares are included.
EBAS will work personally with your employees as an advocate for their medical claims.
The HRA is a reimbursement program which the employer sets aside dollars for each employee in a non-discriminatory way to help pay for medical expenses. The money stays with the employer until it is claimed by the employee for qualified medical expenses outlined in the plan design. To best describe the available money is to refer to it as ‘Employer exposure of funds’ for reimbursement of qualified medical expenses determined by the plan designed by the employer which were chosen from the eligible expenses outlined in Section 213(d) of the IRC.
When EBAS provides consulting services to help establish these types of plans, it is usually recommended to reimburse the employee who will then have to pay the provider. There are several reasons why doing this is best but the most valuable reason is because these plans are consumer driven plans, and when the employee is engaged with the costs of their health care expenses, they will understand and appreciate the value of the benefit offered by the employer.
Integrated HRAs: An HRA that is 'Integrated' (linked to an employer group health plan) will be designed to meet healthcare reforms under the Affordable Care Act.
QSEHRA: As of January 1, 2017, an employer that does not have a group health plan in place can establish an HRA to reimburse employees for their insurance premiums that are not sponsored by any employer plan. This is called QSEHRA (Qualified Small Employer Heath Reimbursement Arrangement). EBAS can assist with this plan set up, documents and procedures for a small employer to self administer.
There are many different ways to designs your benefits plan with an HRA. EBAS will analyze the current plan and recommend plan designs which best suit the group. An employer may decide to allow choices for the employee’s. The flexibility which an employer can create a customized benefit plan is key to the success of a benefits plan design which create longevity and continuity within the employer benefits plan as a whole.
Whatever plan design we assist you with will work to educate and engage the employee as a consumer and a participant in a program which offers more flexibility and choices. We have always created plan design options that will lower employee premium and health care cost exposure along with creating an efficient plan that lowers your benefit costs.
An HSA is a tax-exempt account established exclusively for the purpose of paying qualified medical expenses of the account beneficiary who, for the months for which contributions are made to an HSA, is covered under a high-deductible health plan.
The IRS set contribution limits for each tax year, along with minimum deductible limits and maximum out of pocket limits.
For Tax Year 2017: Single Coverage Family Coverage
Minimum Deductible $1,300 $2,600
Maximum Out of Pocket (In-network) $6,550 $13,100
Maximum Contribution $3,400 $6,750
For Tax Year 2018: Single Coverage Family Coverage
Minimum Deductible $1,350 $2,700
Maximum Out of Pocket (In-network) $6,650 $13,300
Maximum Contribution $3,450 $6,900
Account owners who are age 55 or older may contribute an addition $1,000 per year
Who is eligible to establish an HSA?
An “eligible individual” can establish an HSA. An “eligible individual” means, with respect to any month, any individual who: (1) is covered under a high-deductible health plan (HDHP) on the first day of such month; (2) is not also covered by any other health plan that is not an HDHP (with certain exceptions for plans providing certain limited types of coverage); (3) is not entitled to benefits under Medicare (generally, has not yet reached age 65); and (4) may not be claimed as a dependent on another person's tax return.
HSAs and FSA Cafeteria Plans
For group benefit plans, HSAs are NOT replacing Cafeteria Plan Medical FSAs (Flexible Spending Accounts). They can work together in the same benefits program. Since HSAs are only available to those who have a qualified high deductible health plan, the employees who are not participating in the group health plan can participate in the General Use Medical FSA. There is also a Limited Use Medical FSA or Post Deductible Medical FSA available for HSA participants.
HSAs and HRA Plans
HRA (Health Reimbursement Arrangements) can also be designed with an HSA in a benefits program as long as the minimum IRS requirements are met for the HSA. EBAS can help you with administration of HSAs and recommends them to employer groups and individuals depending upon the situations for each client.
EBAS will help account owners understand the details of their HSA and how the HSA will benefit them and their families.
COBRA / State Continuation Administration Services:
The following i are included in the COBRA administrative consulting:
Qualifying Event Notifications
Confirmation Letters to participant
•Should be given to each eligible employee and qualified dependents within 90 days of enrolling in benefits
• These notifications must be sent to the participant and qualified beneficiaries whenever there is a qualifying event.
• Should be sent to the participant and qualified beneficiaries
These plans work well for employers that want to create a benefits program that gives a fixed cost for the employer, but allowing flexibility for the employee. There are two variations of Defined Contribution Plans:
The first is a Flex Credit Plan that works within the Café Plan. This program is where the employer will give the employee a ‘Flex Credit’ approach to buying their benefits. The Flex Credit is a set dollar amount that the employer contributes to the plan. Then the employer will create a ‘menu’ of benefits for the employee to choose from with the Flex Credits. If the cost of the benefits chosen by the employee exceeds the amount of the Flex Credits, the employee will simply pay for the excess with pre-tax dollars. The menu could include the following:
• Ancillary employer sponsored products such as cancer insurance, accident plans and Flexible Spending Accounts offered within the Café Plan.
Please note: The Defined Contribution Plan is generally not a health plan which means that it may not be a qualified health plan for PPACA purposes. Therefore, if a large employer does not offer a qualified health plan, they may be subject to penalties under PPACA laws.
Employee Benefits Advisory Services • W3050 570th Ave, Elmwood, WI 54740
715.639.2282 • 866.341.EBAS • (fax) 715.639.2257
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