HSA Redesigns?

While it is anyone’s guess what might be included in the next health care bill once the dust settles, there are some proposed changes to Health Savings Accounts (HSA) designed to make them more attractive.  Remember, HSAs are permitted for individuals and families enrolled in High Deductible Health Plans.  Here are some of the proposed changes:

  1. Raise the HSA contribution limits.  Right now, the limits are $3,400 for a single plan and $6,750 for a family plan.  Proposed rule changes for 2018 would make that $6,550 for a single plan and $13,100 for a family plan.
  2. If an employee is not eligible for an HSA because they are enrolled in a traditional health plan, proposed legislation would remove the cap on contributions to Flexible Spending Accounts. The current limit for 2017 is $2,600.  Since FSA plans require all funds to be spent or forfeited in the plan year there is a built-in cap on what reasonable contributions might be for a given family.
  3. Remove the requirement that a prescription be required for over-the-counter medications to be eligible for payment from an HSA account.
  4. Lower the penalty for non-qualified early withdrawals from an HSA plan from 20% to 10%.
  5. Allow for distribution to reimburse medical expenses that were incurred within 60 days of the start of coverage by the High Deductible Health Plan and before the HSA account was established.
  6. Allow spouses to make catch-up contributions to the same HSA instead of having to open a second account.

Remember, money can continue to accumulate in an HSA plan from year to year and contributions up to the limit are pre-tax.  That means that contributed funds are never lost and can be withdrawn without penalty after age 65.

 

ACA – What Now?

First and foremost, just because we had an election doesn’t mean that everything changes immediately.  The Affordable Care Act forms are still going to be required for 2016 reporting.  You do have a one month reprieve:  the forms were originally due to employees on January 31, 2017 and now they are  due on March 2, 2017.  That extra time will be helpful to employers, but perhaps even more helpful is the IRS’s change regarding penalty relief.  Originally the IRS said employers would have to show “reasonable cause” to have penalties waived for 2016 reporting.  Instead, they are extending the good faith penalty relief from 2015 reporting for another year.  Saying ” I though this would go away after the election” will probably not be considered a good faith excuse, however so you should be prepared to take the forms seriously again this year.

There are some changes for 2016 reporting. Most notable is the change to the indicator codes denoting spousal coverage.  Codes 1J and 1K have been added to indicate conditional offers of healthcare coverage to spouses.  The codes go on Part II, Line 14 of Form 1095-C.  These codes will cover situations where coverage is available to the spouse only under certain situations such as when the spouse certifies that he or she is not eligible for other group coverage through an employer or not eligible for Medicare.

The deadlines for filing with the feds remain the same.  The deadline for filing employer copies on paper is February 28, 2917.  The deadline for electronic filing is March 31, 2017.  One reason to consider getting it all done in January is that you can get a special discount if you use the Aatrix tax filing service and are ready to send out W-2’s and 1095-C’s at the same time.

 

 

ACA – What to tell Employees

Employees are starting to receive their 1095-C forms.  Many have questions and they are  looking to you for answers.  Here are the most important questions and answers from an employee point of view.

Q.  What is this for?

  •  IRS Form 109-C provides information about your employer-provided health insurance, or offers of coverage if you chose not to accept it.

Q.  What should I do with it?

  •  You should keep it with the forms you give to your tax preparer.  If you prepare your own taxes you should refer to it as necessary to answer new questions this year about your health insurance coverage.

Q.  Do I have to wait for this form before I file my taxes?

  • Maybe.  It does not need to be submitted with your tax forms but your tax  preparer may want to review it to make sure the questions on your return are answered properly.  If you were covered by your employer all year you should be able to answer those questions without waiting for the form.  You do not need to include a copy of the form with your return.

Q. Why might I need to wait for the information?

  • If you received an advance premium tax credit or if you had a gap in coverage or more than three consecutive months you may need to refer to the 1095-C to prepare your return.

Q.  Why don’t I have it yet?  I got my W-2 already.

  • Since this is the first year the IRS extended the deadline for your employer to send out the 1095-C forms to March 31, 2016.

Q.  What if I didn’t get one?

  • Not every employer is required to send 1095-C forms to their employees.  If your employer has less than 50 full time employees you will not receive one.  You will need to rely on your own records to answer the coverage questions on your return.

 

 

My Workforce Analyzer

The end of the year is fast approaching and if you have not yet figured out how you are going to handle the forms required by the Affordable Care Act you have no time to lose.  These requirements are somewhat tricky because they depend on information regarding your health benefit enrollments and payroll information.  If you have a self funded health plan they require information about your employees’ enrolled dependents as well.  If you have Sage HRMS or Sage Abra Suite you are fortunate because all of the information you need resides in your current systems.  Then the Sage My Workforce Analyzer module gathers it together in easily understood dashboards to help you manage your employee eligibility information throughout the year.  At year end it produces the forms you need for your employees and the government.  It even connects to the Aatrix tax filing service to handle all the paper pushing at year end.

 

If you are stuggling to deal with employee compliance issues this may be your answer.  For more information see My Workforce Analyzer.