PowerNotes: January, 2012
IRS Updates Guidance on W-2 Reporting of Health Coverage Costs
The Internal Revenue Service has released updated guidance for employers on W-2 reporting of aggregate coverage costs under group health plans, which will soon be required by the Patient Protection and Affordable Care Act. Issued in Q&A format, Notice 2012-9 makes changes to earlier guidance and provides additional information on issues such as the cost of coverage under employee assistance programs and health reimbursement arrangements. The guidance generally is applicable beginning with Forms W-2 for calendar year 2012—that is, the forms that employers must give employees by the end of January 2013, IRS noted. (More.)
New 2013 FSA Limit Requires Plan Amendments in 2012
Health care reform legislation imposed a new, $2,500 limit on annual contributions to health care flexible spending accounts (FSAs). This limit applies to all FSA plans in taxable years beginning after Dec. 31, 2012 — even plans grandfathered under other provisions of health care reform. (More.)
FMLA Forms: Expiration Date Saga
The US Department of Labor (DOL) has submitted the Family and Medical Leave Act (FMLA) forms for renewal by the Office of Management and Budget (OMB). The most recent versions originally expired on December 31, 2011. On Saturday January 14, the DOL quietly changed the expiration date on the FMLA forms to January 31, 2012; however, this appears to be the only change at this time. As always, employers should use the most recent versions of the forms; however, be reminded that the DOL forms that expire on January 31 do not address the Genetic Information Nondiscrimination Act (GINA) safe harbor notice employers can provide when seeking medical information from employees or employees’ medical providers.
According to law [5 CFR 1320.10(e)(2)], employers may continue to use the form while its renewal is pending at OMB.
Affordable Care Act holding insurers accountable for premium hikes
Health insurance premium increases in five states have been deemed “unreasonable” by the U.S. Department of Health and Human Services, HHS Secretary Kathleen Sebelius announced today. After independent expert review, HHS determined that Trustmark Life Insurance Company has proposed unreasonable health insurance premium increases in Alabama, Arizona, Pennsylvania, Virginia, and Wyoming. The excessive rate hikes would affect nearly 10,000 residents across these states. (More.)
New Report: States Moving Forward to Implement Health Reform’s Affordable Insurance Exchanges
Twenty-eight states are on their way toward establishing a key component of health care reform — Affordable Insurance Exchanges — according to a report issued today by the White House. Affordable Insurance Exchanges are state-based, one-stop marketplaces where consumers can choose a private qualified health insurance plan that fits their health needs. The report outlines some of the steps the Administration has taken to ensure all Americans have access to an Exchange beginning in 2014. (More.)
New 2013 FSA Limit Requires Plan Amendments in 2012
New 2013 FSA Limit Requires Plan Amendments in 2012
1/13/12
The Patient Protection and Affordable Care Act (PPACA) imposed a new $2,500 limit on the contribution or election amount for health care Flexible Spending Accounts (FSA). The new requirement applies to all FSA plans whose taxable years begin after Dec. 31, 2012 — even plans grandfathered under other provisions of health care reform.
The “taxable year” refers to the employee’s taxable year –and in most cases this stipulation means a calendar year. Thus, a calendar year limitation of $2,500 in salary reductions for the health care FSA will become effective Jan. 1, 2013.
Changes to Plan Documents
Plans that currently allow a health care FSA election of more than $2,500, must amend plan documents before Jan. 1, 2013, and change employee communications. Non-calendar plans that amend their plans as of Jan. 1, 2013, mid-plan year, may face some unique challenges or situations due to the changes required.
Be Proactive
To simplify administration of this change, sponsors of non-calendar year plans may want to adopt the new limit as of the first day of the plan year rather than waiting until Jan. 1, 2013. For example, if the current plan year begins May 1 and ends April 30, the plan sponsor may:
Communicate the change to employees.
- Amend their plan documents to implement the new $2,500 maximum election
- Initiate the changes to the contribution effective May 1, 2012, rather than wait until the mid-plan year in Jan. 1, 2013
IRS Modifies Forms W-2 Guidance
IRS Modifies Forms W-2 Guidance
The Internal Revenue Service Jan. 3 issued Notice 2012-9, which amends interim guidance for employers on reporting the cost of their group health insurance to employees on Forms W-2 beginning with the 2012 tax year.
Like the initial guidance (Notice 2011-28), these latest modifications are in question-and-answer format (62 BTM 108, 4/5/11). The changes come in response to solicited comments on the reporting requirement under Internal Revenue Code Section 6051(a)(14) as imposed by the Patient Protection and Affordable Care Act, the agency said.
The new Q& As address issues such as cost of coverage under an employee assistance program and under a health reimbursement arrangement, and the application of the exception for fixed indemnity insurance offered by an employer on an after-tax basis.
The guidance is “generally applicable” beginning with 2012 Forms W-2, Wage and Tax Statement—that is for forms that employers generally must file by the end of January 2013—IRS said. Employers required to file fewer than 250 Forms W-2 for the 2011 tax year will not be subject to the reporting requirement for 2012 Forms W-2, the agency said.
Notice 2012-9 is scheduled to appear in Internal Revenue Bulletin 2012-4, to be published Jan. 23.
