News

The federal government has been busy issuing final rules on a number of benefits-related regulations that will directly impact employers.
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The NLRB is proposing a series of rules that would change procedures regarding union representation elections.
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Federal agencies have issued a final rule that eased a few requirements on the summary of benefits and coverage (SBC) and moved the deadline to comply.
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Employers of all sizes are turning to new technologies to make benefit communications easier and more effective.
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After months of delay, the Department of Labor (DOL) has just released final regulations under Section 408(b)(2) of ERISA.
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The IRS has issued more guidance on W-2 reporting of health care coverage.
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EAP stands for Employee Assistance Program.

EAP's can cost little to no money to add to your benefits program.  Companies can buy EAP's on a stand-alone basis (meaning the EAP would not be tied to another plan) or they can add this to their long term disability program.  EAP's offer many services and can often fill in some coverage gaps in the medical plan.

Usually EAP's on a stand-alone basis are $2 to $6 per employee per month.  Price depends on the size of your employer group as well as the richness in benefits the company wishes to offer.  I have found the majority of the costs lie in the number of face-to-face counseling visits the EAP will pay for.  Most plans offer 3 face-to-face visits per occurrence per year.  An occurrence is usually loosely defined and can be pretty much anything.  Common occurrences include, but are not limited to: divorce, death, financial issues, marital issues, and drug abuse.

EAP's don't just offer counseling.  Most EAP's offer other services as well. General categories that EAP's target:

• Family, relationship and parenting issues
• Child and elder care needs
• Emotional and stress related issues
• Conflicts at home or work
• Alcohol and drug dependencies
• Health and wellness issues

Services generally offered to assist in these areas:

• Telephone consultation, available 24/7, with licensed mental health professionals
• Referrals to local child and/or elder care services and resources
• Online information and service
• Referrals to community resources when employees need additional assistance
• Legal and financial services
• Workplace support services

EAP's can help improve productivity, workplace safety, absenteeism, and reduce the number of health insurance claims.

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A Consumer Driven Health Plan, or CDHP, is several things rolled into one term.  The term came about because these plans are meant to essentially give the control back to the consumer.  Whether they actually do this or not is another thing.  These plans also have one element in common; they all begin with a High Deductible Health Plan, or HDHP.  The other element they have in common is they have means of using savings dollars toward medical expenses.  The difference is that each has a different owner of the “savings" account.

The most popular CDHP is the Health Savings Account, or HSA.  In order to have a Health Savings Account, you must first buy a High Deductible Health Plan (HDHP).  What is a high deductible?  Well, these CDHPs are governed by the IRS (of course; because they offer tax savings) and the IRS defines a HDHP as having at least a $1,200 deductible for an individual and $2,400 deductible for a family. Once you have a HDHP, you may open a Health Savings Account (HSA).  A HSA works very much like any other savings account.  It is essentially a savings account with tax saving capabilities.  You may put up to $3050 per calendar year as a single person and up to $6,150 for a family (this is defined by having a main subscriber and a spouse or a main subscriber and a child/ren or a main subscriber and a spouse and child/ren). I usually refer people to www.hsabank.com.  This is a wonderful resource.   The money that a person puts into a HSA is tax deductible.  You can use the money in your HSA toward qualified medical expenses.  Qualified Medical Expenses are defined by the IRS.  You can get a list of these expenses by visiting www.hsabank.com or the IRS website (http://www.irs.gov/pub/irs-pdf/p502.pdf ).  The great thing about a HSA is it is owned by the individual.  If you change jobs, you take it with you!  You can also use this money for retirement.

 

There was another type of CDHP that was owned by the individual.  This is call a MSA or Medical Savings Account.  This plan has been replaced by HSAs.  Legislation was updated by the Bush Administration and improved to incentivize people to participate in a tax saving vehicle in relation to health care expenses.

The second type of CDHP is a HIA, or Health Incentive Account.  The difference between this and a HSA is that the savings account is held by the insurance carrier.  On the day you start coverage, you have access to a pre-designated amount per calendar year.  For example, let’s say you enroll on a $750 HIA and you start your coverage 2/1/10.  This plan also has a $1500 deductible (as it must have a HDHP in order to be a Consumer Driven Product).  You start out with $750 first dollar coverage.  The insurance company is giving you this money and it is included in your monthly premium.  Once you use all of the $750, you have to meet the remainder of the $1500 deductible, which is $750, before the insurance will begin paying on your claims again.  Once that deductible is met, the insurance will start paying for services again on a coinsurance level/percentage basis (most of these plans pay out 80%).  So, why are these plans cheaper than a traditional PPO?  Because insurance actuaries have determined that people pay more attention to their benefit dollars when they are given a designated amount of first dollar coverage.  When insureds are looking at their Explanation of Benefits (item you receive in the mail from your insurance company once a claim is processed) it is more likely that people will:

1. Shop around for services (hints why the word “consumer” is used in Consumer Driven Health Care) and find the best “deal.”
2. Catch insurance fraud.
3. Budget their insurance dollars.

 

The third type of CDHC can be administered thru a HRA, or Health Reimbursement Account.  HRAs are owned by the employer.  This doesn’t mean that employers cannot use the other two types of CDHCs.  The point is that the account is owned by the employer and NOT the individual or employee(s) and the account is NOT owned by your insurance company.  HRAs give the control to the employer.  It is the employer’s money; they can design a plan that works for their company and their employees.  In short, the employer purchases a HDHP for all of their employees, and then the employer chooses how they would like to fund that deductible.  If you want a $100 deductible with 100% coverage, you can do that.  If you want a $0 deductible with 50% coverage you can do that as well.  It is completely up to the employer on how they want to design the coverage. The money that is distributed from a HRA is tax deductible to the employer.  The reason why HRAs work is there is usually about a 20%+ savings in premium between a traditional plan and a HDHP.  With that savings, the employer can then use that money to fund the deductible for its employees.  If the employees do not use the plan, the employer keeps the money.  The risk is minimal in comparison to a fully self-funded plan.  These HRAs are also referred to as a Partially Self-Funded Plan.  This is because the employer is only funding the deductible of $1500 to $5000 usually and with a Self-Funded plan, the deductible will be between $30,000 (with plans like Great West) to $100K+.  HRAs are a great solution for employers who are smaller in size and need smaller amount of risk than a self-funded plan.

Consumer Driven Health Plans are not for everyone.  However, when it is appropriate it can be a wonderful solution to rising health care costs.

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We here at Beneflex Insurance Services are proud to announce that our group, the United Benefits Advisors, remains among the top-3 (by revenue) benefits advisory organizations in the entire United States. This is a distinction that we have been proud to claim over the past several years. We feel strongly that this success is due to the unparalleled service and expertise that we are able to provide our clients.

We sincerely wish to thank our clients for their continued belief in our efforts; here’s to ongoing success in 2012!

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The number of consumer-driven health plans continued to climb in 2011, but at a slower rate than previous years, according to a new United Benefit Advisors survey.
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Despite concerns about the impact of rising health care costs on their businesses and employees, only one in six employers (16.3 percent) say they favor a federally tax-funded universal health care system, according to the 2011 UBA Benefit Opinions Survey.
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Dear Friend,


As promised, we are conveying the just-now-released-official guidance from the California Economic Development Department regarding overage dependent taxation in this state.  This only applies to those of you who issued W-2s that accounted for the cost of coverage for an overage dependent in California (those of you who did *NOT* do so, feel free to ignore this article in its entirety).

 http://www.edd.ca.gov/Payroll_Taxes/New_state_law_to_conform_income_taxes_with_Federal_Health_Care_Act.htm

For 2010, employers who calculated a fair market value benefit amount as imputed income for California Personal Income Tax (PIT) wages for their employees and subsequently withheld PIT on this value should issue Form W-2C to impacted employees that reflect the correct PIT wage amount. Employers can amend their California state payroll tax returns using our Tax and Wage Adjustment Form (DE 678).

For 2011, if employers calculated a fair market value of the health insurance premium and withheld the applicable PIT in the first quarter and have already filed their Quarterly Contribution Return and Report of Wages (DE 9), they can amend the return by using our Quarterly Contribution and Wage Adjustment Form (DE 9ADJ).

For employers who have calculated PIT wages and withheld PIT from their employees for the first quarter but not yet filed the DE 9 and Quarterly Contribution and Wage Adjustment Form (Continuation) (DE 9C), you may choose to file and report the correct wages and withholding amounts while revising your payroll process internally for the over-reporting and withholding.

Please refer to the 2011 California Employer`s Guide (DE 44), for information on how to amend payroll tax returns. You can access the above forms on our web site on EDD`s Forms and Publications.

Further California taxation-amendment information (this information pertaining to employees) can be found at:

http://www.ftb.ca.gov/professionals/taxnews/Patient_Protection_and_Affordable_Care_Act.shtml

How to File:

Form 540 - On an original tax return

If the employer issued Form W-2 including the amount of medical coverage for your nondependent adult children in your California wages, contact your employer to have them issue you Form W-2C excluding the amount from your California wages. Use form FTB 3525 as a substitute for federal Form W-2C if your employer does not issue you a Form W-2C.

Self-employed individuals may deduct the health insurance premium paid for nondependent adult children under age 27. No California adjustment is needed.

Form 540X “ On a previously-filed tax return

If you have already filed Form 540 with Form W-2 that included the amount of medical coverage for your nondependent adult children in your California wages, contact your employer to have them issue you Form W-2C excluding the amount from your California wages. Use form FTB 3525 as a substitute for federal Form W-2C if your employer does not issue you a Form W-2C. File Form 540X to report the reduction in your California wages.

For self-employed individuals who reported a California adjustment excluding the health insurance premium paid for nondependent adult children, file Form 540X to report the allowed deduction for California.

 

 

Best Regards,

 

Michael J. Cramer, J.D.
Compliance Officer, Beneflex Insurance Services, Inc.  

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Only one in six employers favor a universal health care system funded by tax dollars.
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April 18, 2011

Excellent news: late last-week, President Obama signed into law the REPEAL of the requirement under PPACA that, effective January 1, 2012, employers would have to report to the IRS any purchase of goods or services pertaining to a single transaction for any amount greater than $600.00.  Therefore, your organization need not concern itself whatsoever with the (prospective) changes in the IRS Form 1099 regulations œenacted by this provision going forward. 

Further reading regarding this matter can be found in the following article:

http://www.reuters.com/article/2011/04/14/us-usa-taxes-healthcare-idUSTRE73462D20110414

As always, please feel free to contact our office with any questions!

Best Regards,

Michael J. Cramer, J.D.
Compliance Officer, Beneflex Insurance Services, Inc.

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Dear Friend,

Last Thursday (April 7, 2011), Governor Brown officially signed AB 36.  While neither the California Franchise Tax Board nor the Economic Development Department have issued guidance pertaining to this matter, one aspect that has immediate practical implications is the fact that any individual (who was taxed on overage dependent coverage) who has NOT yet filed his/her California 2010 tax return will not have to account for this on his/her 540 form.  Due to the timing of this matter (i.e., April 18 being less than two weeks away), you may wish to inform your employees of this development at your earliest possible convenience.

Also, those of you who have not amended your payroll/accounting structure in order to comply with the previously-valid law need no longer be concerned with changing your systems.  For those of you who have changed your systems, be advised that we will update you immediately once either (or both) the FTB or the EDD have issued official guidance pertaining to this matter.

Best Regards,

Michael J. Cramer, J.D.
Compliance Officer, Beneflex Insurance Services, Inc.

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