IRS issues PPACA guidance on W-2 reporting
IRS issues PPACA guidance on W-2 reporting
(Courtesy Employee Benefit News)
The Internal Revenue Service has issued interim guidance to employers on the informational reporting requirements on each employee’s annual Form W-2 of the cost of the health insurance coverage they sponsor for employees.
The IRS is also asking for comments on the interim guidance. The IRS emphasized that the new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable; employer-provided health coverage continues to be excludable from an employee’s income, and is not taxable.
The Patient Protection and Affordable Care Act provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2.
Notice 2010-69, issued last fall, made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012).
In the guidance, the IRS provided further relief for smaller employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least for 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013) and continuing this optional treatment for smaller employers until further guidance is issued.
Using a question-and-answer format, Notice 2011-28 also provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012.
The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage. The 2011 Form W-2, prior IRS Notice 2010-69 deferring the reporting requirement for 2011, and Notice 2011-28 containing the new guidance are available on IRS.gov.
The notice provides interim guidance that generally applies beginning with 2012 Forms W-2 (that is, the forms required for the calendar year 2012 that employers generally are required to furnish to employees in January 2013 and then file with the Social Security Administration. Employers are not required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2013.
See Notice 2010-69. However, any employers that choose to report earlier (on the 2011 Forms W-2 generally furnished to employees in January 2012) may look to this notice for guidance regarding that voluntary earlier reporting.
The notice also provides additional transition relief for certain employers and with respect to certain types of employer-sponsored coverage. This transition relief will continue at least through the 2012 Forms W-2 that are required to be furnished to employees in January 2013.
In other words, those employers for whom the additional transition relief applies, including smaller employers that are required to file fewer than 250 2011 Forms W-2, will not be required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2014.
The transition relief will continue until the issuance of further guidance.
Four Reasons Why Employers are Increasingly Implementing Voluntary Benefits Plans
Voluntary benefit plans are not a fad that will quietly go away. They are here to stay. And more employers are realizing they offer a win-win opportunity for both them and their employees.
By Garrett French
Here are four reasons why a growing number of employers are instituting Voluntary Benefits plans for their employees:
1. Voluntary benefits offer employers a solution for beefing up their benefit package without adding cost to the bottom line.
Rising health care costs and a difficult economy have driven employers to re-evaluate the way they provide and fund benefits to their employees. As with the retirement market, where defined-benefit pension plans have given way to employee-funded retirement accounts, responsibility for benefits decisions and funding is shifting to employees.
Voluntary benefits give employees options for additional coverage beyond a group offering without impacting an employer’s bottom line. And to show how impactful this trend has been, despite a tough economy, sales of voluntary benefits industry-wide grew $172 million between 2008 and 2009, with some insurers reporting 14 to 34 percent increases.
2. Voluntary benefits allow employees to choose coverage that suits their needs.
Today’s workforce is a diverse group of widely varying ages that has redefined family, brought an array of cultural backgrounds to the workplace and ended the era of the “one-size-fits-all” benefits package. Offering a broad, flexible range of benefits is critical to meeting the needs of this workforce and maintaining a competitive edge in the marketplace.
Voluntary products allow employees to customize their benefits packages to create this flexibility. For example, they allow younger employees to select accident insurance, and expectant mother to access more life insurance, and a mid-career or older employee to pick critical illness coverage. Supplemental health plans offer employees an affordable way to help protect their finances from the high cost of an illness or injury.
3. With voluntary benefits, employers can offer an integrated approach to a suite of products.
As cost-shifting has accelerated, many employers who are looking for ways to share benefits costs with employees have been hesitant from trying worksite products because of the perceived complexity. But the industry is responding with an integrated approach to group and voluntary benefits that is helping to address that perception.
Putting a suite of products on a single platform helps with simplicity by combining common benefits enrollment, education, billing and life changes across all products. But it also provides a blend of funding options that gives employers even greater flexibility in controlling and predicting costs.
Employers need more than just a list of product options. In an environment where employees may be making their own benefits decisions, employers not only need product recommendations, but also need help identifying the carriers that have the right education, technology and service infrastructure in place.
4. Employers like the value-added benefits of voluntary products.
Another benefit of the voluntary solution is the value added by quality benefits education. Education is a simple and truly effective way employers can show employees that they value the energy and effort they give their work, and adding voluntary products is another opportunity to communicate all benefits to employees. Moreover, research shows that employees who feel valued by their employer also feel loyal, have positive perceptions of their company and have higher levels of workplace satisfaction and productivity.
Please contact us if you’d like to explore how employer sponsored, yet employee funded voluntary benefits offerings can improve the safety net for your employees without adding to the expense ratio of your organization.
PG & BBBSKC
Power Group Basketball‘s 2011 First Annual Love For The Game Clinic was a success on many levels.
The Clinic was well attended with over 70 Kansas City area youth, including participants from Big Brothers Big Sisters, Boys & Girls Club and Gordon Parks Elementary. The Clinic kicked off with a motivational message from former UMKC star Michael Watson. His message focused on the FIVE D’s: DREAM, DESIRE, DEDICATION, DETERMINATION and DISCIPLINE.
Following the inspirational message, all participants rotated through four fundamental stations including shooting, passing, rebounding and ball handling. To conclude, Reggie Hines of the College Basketball Experience led all the kids through two very important foundations of PowerGroup Basketball, Defense and Team Work. Learn more.
Wellness: April Is Alcohol Awareness Month
April is Alcohol Awareness Month, and although talking with your kids about the dangers of drugs and alcohol can be very difficult, there are strategies that can help.
Following theses five suggestions can help you develop regular
communication with your children, if you haven’t already. Talking with them about their day-to-day lives will make it much easier to bring up the harder topics, such as drugs and alcohol, when the time is right. Download the Live Well Work Well April pdf.
Health care Reform & Retroactive Terminations: What You Need to Know
Power Group client-partners: We’ve received requests for clarification on how health care reform affects retroactive terminations. While each carrier may differ slightly in their approach, Aetna’s approach is representative of the actions you’ll need to take should this situation arise. Below is information from Aetna on how those situations need to be handled.
The health care reform law puts new restrictions in place for terminations. This means plan sponsors and insurers can only terminate a member’s coverage retroactively in specific circumstances. This affects all plans that are subject to the health care reform law, regardless of funding or grandfathering status. It is in effect as of each plan’s first renewal or effective date after September 23, 2010.
Here’s what you need to know about the new rules concerning administrative retroactive terminations.
The plan sponsor can’t terminate coverage effective with a date in the past if:
- The member was covered through plan error, and
- The member paid premium or contributed to the cost of the plan.
In these cases, the plan sponsor can only terminate the member’s coverage with a future effective date of termination.
The plan sponsor may terminate coverage retroactively as part of a monthly reconciliation of eligibility data if:
- The member did not pay any premium or contribution for coverage past the termination date.
The plan sponsor also may terminate coverage retroactively in cases of fraud or intentional misrepresentation. In these cases, a 30-day written notice of coverage termination is required, and the rescission of coverage may be appealed. (Most carriers will handle this notice for insured plans upon notification. Self-funded plans must administer this notice.).
Here are some examples:
- The plan sponsor finds it mistakenly enrolled a part-time employee who was not eligible under its plan. The employee paid premium/contribution, received medical services and submitted claims. Under the new law, the plan sponsor can terminate this employee’s coverage, but only with a prospective (future) termination date.
- A member’s employment was terminated, and the employee did not make any payment of premium/contribution toward his benefits after he left the job, but the carrier was not notified about termination of coverage until a few weeks later. In this case, the plan sponsor may terminate benefit coverage as of the employment termination date.
- The plan does not cover divorced ex-spouses, but an employee failed to notify the plan sponsor about a divorce for a period of time. As long as the employee or ex-spouse did not pay premium/contribution toward the benefit, the plan sponsor may terminate the ex-spouse’s coverage retrospectively.
How Aetna will handle retroactive terminations under the new rules
If a plan sponsor submits a retroactive termination to Aetna (or you submit it on the customer’s behalf), it must ensure that employees/dependents did not pay premiums/contributions during the retroactive termination time period.
When retroactive terminations are submitted, we will regard the submission as verification that no premium/contribution was paid by the member/dependent for that period.
Aetna’s policies related to time limits for retroactive terminations continue to apply.
Background
The Patient Protection and Affordable Care Act of 2010 (PPACA) prohibits health insurance carriers and group health plans from rescinding coverage (rescissions) except for cases involving fraud or intentional misrepresentation of material fact.
A rescission is defined as a cancellation or discontinuance of coverage that has a retroactive effect, except to the extent attributable to failure to pay required premium/contribution.
The Departments of Health and Human Services, Labor, and Treasury released interim final regulations and guidance for handling retroactive terminations. This regulatory guidance was summarized in the letter above.
This prohibition on rescissions applies to single individuals or individuals within a family, or an entire group of individuals.
More Information
We are also communicating this to plan sponsors. Read a copy of the letter.
For additional information, please see the following websites or contact your Aetna representative.
