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Compliance Recap for November 2013

Originally posted by United Benefit Advisors (UBA)

Health FSAs

Health flexible spending accounts (FSAs) may now allow participants to carry over up to $500 in unused contributions to the next plan year. This feature is optional, and will not affect the $2,500 an employee is allowed to contribute to a health FSA each year. Read more: FSA Carryover

Transition to PPACA Compliant Policies

On Nov. 14, President Obama announced that the federal government will not enforce most of the 2014 PPACA requirements if a small group or individual policy that was in place on Oct. 1, 2013, is renewed between now and Oct. 1, 2014. Because state insurance departments also oversee insurance policies, the states also must agree to this non-enforcement, and several (including Massachusetts, Minnesota, New York, Rhode Island, and Washington) have said they will not allow this. Additionally, insurers may, but are not required to, reverse cancellations and continue to renew existing policies under the current rules well into 2014. Therefore, this option will be available to a limited number of individuals and employers. Read more: Extension Announcement

Revised Dates for Open Enrollment in the Health Marketplaces/Exchange and Individual Penalties

The White House and HHS have announced that individuals who enroll in the marketplace by Dec. 23, 2013, will be eligible for coverage as of Jan. 1, 2014. (The original deadline was Dec. 15.) Open enrollment for 2014 coverage will remain open until March 31, 2014. However, because time is needed to process applications, coverage elected in late March will not be effective until May 1, 2014. HHS has issued a Q&A that says the 2014 individual mandate penalty will not be applied to people who enroll in the health marketplace by March 31, 2014. (This extension does not apply to coverage purchased outside the marketplace. However, there is an extension to obtain coverage until the start of the plan year for employees and dependents that are eligible for coverage through an employer that has a non-calendar year plan.) Open enrollment for 2015 has been changed to Nov. 15, 2014, through Jan. 15, 2015.

Transitional Reinsurance Fee

HHS has said that it intends to propose that the reinsurance and administration portion of the transitional reinsurance fee will be collected at the beginning of the year and the treasury portion of the fee at the end of the year. This would seem to mean that about $52.50 of the $63 per covered person fee for 2014 will be due in January 2015 and the remaining $10.50 in late 2015.

Additional Coverage Considered Minimum Essential

Non-citizens who are legally in the U.S. are required to have health coverage, or the individual mandate penalty will apply. HHS will allow coverage through a foreign plan to be considered minimum essential coverage if the foreign plan covers services provided in the U.S. Similarly, while U.S. citizens who are abroad generally must have minimum essential coverage, coverage under a foreign policy will be treated as minimum essential coverage. An employer/plan sponsor that offers this type of coverage must provide a notice to affected U.S. employees stating that the coverage is considered minimum essential coverage and include it in its information reporting to the IRS. (A model notice is not available.)

HHS has also clarified that employer-sponsored coverage will be considered minimum essential coverage for non-employee business owners covered under the plan (such as sole proprietors, LLC members and partners) and their covered dependents. While this interpretation is not surprising, the employer/plan sponsor must provide a notice to affected owners stating that the coverage is considered minimum essential coverage and include it in its information reporting to the IRS.

Annual Limits

Many employee benefit limits and the Social Security wage base are automatically adjusted each year for inflation. The IRS and the Social Security Administration have provided updated annual amounts for 2014. Because inflation is relatively low and some amounts are adjusted only if the increase meets a minimum, many amounts are unchanged for 2014. Read more: 2014 Cost of Living


The COBRA election notice has been updated to include information about the health marketplace. (While COBRA will still be available after the marketplaces begin to provide coverage, many COBRA participants may find that the marketplaces provide a more affordable alternative, in part because of the availability of premium subsidies to those who qualify.) All other COBRA notices are unaffected. The Department of Labor has provided an updated Model Election Notice.

Question of the Month

Are the requirements for reporting health costs on W-2s the same for 2013 as they were for 2012?

Yes. The exemptions that were in effect for 2012 reporting remain in effect for 2013. This means that employers that filed fewer than 250 W-2s in 2012 are not required to show the cost of the employee’s health coverage on their 2013 W-2 (issued in January 2014). Multiemployer plans also are not required to report on employees who have coverage through a collectively bargained multiemployer plan (although they will need to report the cost of coverage for employees for whom the employer directly provides coverage if it issued 250 or more W-2s in 2012.) Reporting on health reimbursement arrangements (HRAs) also remains optional.