Legislative Update - January 2012

New Guidance on Group Health Insurance Coverage Informational Reporting The IRS has issued new guidance to clarify how employers and benefit plan administrators will need to meet Form W2 health benefit cost reporting requirements, including the treatment of FSAs, HRAs, EAPs and wellness programs as well as supplemental coverage. The W2 reporting requirements were created under PPACA and for informational purposes only so that employees are provided with comparable consumer information on the cost of their health care coverage. Notice 2012-9 restates and amends the interim guidance initially provided in Notice 2011-28 and includes the following changes: States that the reporting requirement does not apply to coverage under a health FSA if contributions occur only through employee salary reduction elections (Q&A-19). Clarifies that employers may include the cost of coverage under programs not required to be included under applicable interim relief, such as the cost of coverage under an HRA (Q&A-33). Employers are not required to include the cost of coverage under an employee assistance program, wellness program or on-site medical clinic in the reportable amount if the employer does not charge a premium with respect to that type of coverage provided under COBRA to a qualifying beneficiary (Q&A-32). Employers do have to include the cost of any supplemental health benefits, such as cancer insurance they pay for, but they do not have to include the cost of supplemental health benefits that the employees pay for with after-tax dollars (Q&A-38). The guidance is applicable beginning with 2012 Forms W2 (forms required for the 2012 calendar year that employers are required to give employees by the end of January 2013). In addition, employers may rely on the guidance provided in this notice if they voluntarily choose to report the cost of coverage on 2011 Forms W2, even though this reporting is not required for 2011. Click here to read Notice 2012-9 in PDF format. Back to Top

Legislative Update - December 2011

HHS to Give States More Flexibility to Implement Health Reform States now have more freedom and flexibility to implement PPACA and design comprehensive coverage options known as essential health benefits for consumers. The Department of Health and Human Services (HHS) announced this month a proposal to define essential health plan benefits and give states the flexibility to select an existing health plan to set the benchmark for items and services included in the essential health benefits package. States can choose one of the following health insurance plans as a benchmark: One of the three largest small group plans in the state One of the three largest state employee health plans One of the three largest federal employee health plan options The largest HMO plan offered in the state's commercial market The benefits and services included in the health insurance plan selected by the state would be considered the essential health benefits package. Plans can modify coverage with a benefit category provided they do not reduce the value of coverage. States must ensure the package covers items and services in at least 10 categories of care, including preventive care, emergency services, maternity care, hospital and physician services and prescription drugs. Click here to read the HHS bulletin. Standard Mileage Rates for 2012 The IRS has issued optional standard mileage rates for operating an automobile for business, medical or moving expenses. Effective Jan. 1, 2012, the new rates will be 55.5 cents per mile for business expenses and 23 cents for medical or moving purposes. Charitable contribution related mileage remains fixed at 14 cents. The rate for business mileage is unchanged from the mid-year adjustment that became effective on July 1, 2011 resulting from the increase in gas prices. The medical and moving rate has been reduced by 0.5 cents per mile from 2011. Click here to read Announcement 2012-01 in PDF format. Mass Transit Limits Decrease Beginning January 1, 2012 As you know, Congress temporarily amended the commuter benefit in 2009 to allow employees to pay up to $230 per month in transit fares with pre-tax dollars - the same amount allowed for parking expenses. Before 2009, the transit benefit was limited to just $120 per month. Unless Congress acts to extend the $230 benefit level or make it permanent, the transit benefit will decrease to $125 per month effective January 1, 2012. Workers will still be able to contribute up to $240 per month for parking, an increase of $10 for 2012. Last year, lawmakers extended the higher cap level for transit benefits in 2011, but it's unclear if Congress will take action before the end of the year. 2012 HSA Changes 2012 brings with it changes for contribution and plan limits. For the past two years, HSA contribution limits have remained static with the single contribution set at $3,050/$6,150 for families and an additional $1,000 catch-up contribution for those 55 and older. However, contribution limits will once again change for 2012, as dictated by the results on an annual calculation for inflation factors. For the 2012 calendar year, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan will be $3,100. The annual limitation on deductions for an individual with family coverage under a high-deductible health plan will be $6,250. The catch-up contribution for those 55 and older will remain at $1,000. This should be great news for people who want to maximize their pre-tax savings and invest more for their future health care needs. Also be aware that the contributions for the 2011 tax year can be made up until April 15, 2012. Just be sure the HSA trustee is notified that contributions are for 2011. Click here to view the IRS document with additional information on 2012 contribution limits. Back to Top