Health Safety Net Surcharge Decrease

Decrease to HSN Surcharge

The Health Safety Net (HSN) Surcharge formerly known as the Uncompensated Care Pool, is a fund created by the state of Massachusetts to finance health care for the low income and uninsured within the state.  As we have previously notified our clients, the surcharge tax is levied upon all health care services rendered at an acute hospital or ambulatory surgical center in Massachusetts. Any individual or entity that makes payments for the purchase of health care services by hospitals and ambulatory surgical centers must pay the surcharge.
 
Each year the state of Massachusetts reviews the surcharge rate and fund usage, to determine if any adjustments need to be made for the following fiscal year. This year effective October 1st, 2016, the Health Safety Net Surcharge percentage is 1.76%. Below is a chart which reflects the surcharge percentage change from last year to this year, and the dates in which they were effective for.


     FY                                 Surcharge %                                               Coverage Period
2017                                     1.76%                                  October 1st, 2016 – September 30th, 2017
2016                                     1.86%                                  October 1st, 2015 – September 30th, 2016

As your TPA, HRC Total Solutions, makes payments to the HSN on your behalf. The HSN Surcharge is calculated and paid on a monthly basis. HRC Total Solutions determines the amount of the payments subject to the surcharge by multiplying the total payments made to qualified Massachusetts acute hospitals and ambulatory surgical centers at the end of each calendar month by the surcharge in effect.


2016 PCORI Fee Reminder

PCORI Fee Overview and Guidance

The Affordable Care Act imposes fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fees, required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st, are based on the average number of lives covered under the policy or plan. The fees apply to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. HRCTS will make available an Average Covered Lives Report to all clients that are responsible to file and pay the PCORI fee each year. You can request this report by contacting your Account Management Team.

The IRS recently released the revised Form 720 that insurers and sponsors of self-insured plans will use to pay the Patient-Centered Outcomes Research Institute (PCORI) fee. The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended. Sponsors of any plans that ended in 2015 must pay the 2015 fee by July 31,2016.  Plan sponsors can now complete their planning for payment of this fee. The IRS has also confirmed health insurers and self-insured health plan sponsors can deduct PCORI fees as ordinary and necessary business expenses. The fee is based on the number of covered lives including employees, retirees and COBRA participants along with their covered dependent spouses and children are all counted. However, only the employee, retiree or COBRA participant needs to be counted for an HRA or a health flexible spending account (health FSA) -- dependents covered by these accounts can be excluded.

The types of plans that must pay the PCORI Fees by July 31, 2016 include:

  • Health/accident plans
  • Health Reimbursement Arranagement (HRA) plans that are not an excepted benefit (Employer contribution is greater than $500)
  • Health Flexible Spending Account (FSA) plans that are not an excepted benefit (Plan has employer contributions with the maximum reimbursement greater than two times an employee’s salary reduction election or employer contribution is greater than $500)
  • Retiree plans

Calculating the Fee:

The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year.

  • For plan years that end on or after October 1, 2014, and before October 1, 2015, the fee is $2.08.
  • For plan years that end on or after October 1, 2015, and before October 1, 2016, the fee is $2.17.

For policy and plan years beginning on or after Oct. 1, 2016, and before Oct. 1, 2019, the applicable dollar amount is further adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.

IRS Form 720 and Instructions:

IRS Form 720 can be accessed at http://www.irs.gov/pub/irs-pdf/f720.pdf which is an interactive document so that can be completed on line.

 

The PCORI fees are entered on line 133 for the appropriate plans. See pages 8 and 9 of the IRS Instructions for completing these fields. Instructions can be found at http://www.irs.gov/pub/irs-pdf/i720.pdf.

 

 

Complete the fields on page 7 and make your check or money order payable to “United States Treasury”.

Additional information on the PCORI fees can be found here:
Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers

• An IRS chart that shows which types of benefits the fee applies to:  Application of the Patient-Centered Outcomes Research Trust Fund Fee to Common Types of Health Coverage or Arrangements

IRS Form 720 Overview

IRS Form 720 instructions (see pages 8 to 9)

Please Note:
This information is provided for educational purposes only. It reflects the understanding of HRC Total Solutions and our partners using the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice.  You should not act on this information without consulting legal counsel or tax advisors.  (Updated June 16, 2016)


IRS Releases Inflation Adjustments for 2016

On Wednesday, October 21st, the Internal Revenue Service announced inflation adjustments for the 2016 tax year.

For FSA plans the election limit has remained steady at $2550.  For tax year 2016, the monthly limitation for the qualified transportation fringe benefit remains at $130 for transportation, but rises to $255 for qualified parking, up from $250 for tax year 2015. Revenue Procedure 2015-53 provides details about these annual adjustments

The “high deductible health plan” annual deductible cannot be less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses cannot exceed $6,550 for self-only coverage or $13,100 for family coverage.  You can read the full details in the IRS publication - Rev. Proc. 2015-30.
As always if you should have any questions regarding this change, please contact the Client Relations Team.


2015 PCORI Fee Reminder

PCORI Fee Overview and Guidance

The Affordable Care Act imposes fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fees, required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st, are based on the average number of lives covered under the policy or plan. The fees apply to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. HRCTS will make available an Average Covered Lives Report to all clients that are responsible to file and pay the PCORI fee each year. You can request this report by contacting your Account Management Team.

The IRS recently released the revised Form 720 that insurers and sponsors of self-insured plans will use to pay the Patient-Centered Outcomes Research Institute (PCORI) fee. The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended. Sponsors of any plans that ended in 2014 must pay the 2014 fee by July 31,2015.  Plan sponsors can now complete their planning for payment of this fee. The IRS has also confirmed health insurers and self-insured health plan sponsors can deduct PCORI fees as ordinary and necessary business expenses. The fee is based on the number of covered lives including employees, retirees and COBRA participants along with their covered dependent spouses and children are all counted. However, only the employee, retiree or COBRA participant needs to be counted for an HRA or a health flexible spending account (health FSA) -- dependents covered by these accounts can be excluded.

The types of plans that must pay the PCORI Fees by July 31, 2015 include:

  • Health/accident plans
  • Health Reimbursement Arranagement (HRA) plans that are not an excepted benefit (Employer contribution is greater than $500)
  • Health Flexible Spending Account (FSA) plans that are not an excepted benefit (Plan has employer contributions with the maximum reimbursement greater than two times an employee’s salary reduction election or employer contribution is greater than $500)
  • Retiree plans

Calculating the Fee:

The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year.

  • For plan years that end between January 2, 2014, and before October 1, 2014 the fee will be $2.
  • For plan years that end on or after October 1, 2014, and before October 1, 2015, the fee is $2.08.
  • For plan years that end on or after October 1, 2015, and before October 1, 2016, the fee is $2.17.

For policy and plan years beginning on or after Oct. 1, 2015, and before Oct. 1, 2019, the applicable dollar amount is further adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.

IRS Form 720 and Instructions:

IRS Form 720 can be accessed at http://www.irs.gov/pub/irs-pdf/f720.pdf which is an interactive document so that can be completed on line.

 

The PCORI fees are entered on line 133 for the appropriate plans. See pages 8 and 9 of the IRS Instructions for completing these fields. Instructions can be found at http://www.irs.gov/pub/irs-pdf/i720.pdf.

 

 

Complete the fields on page 7 and make your check or money order payable to “United States Treasury”.

Additional information on the PCORI fees can be found here:
Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers

• An IRS chart that shows which types of benefits the fee applies to:  Application of the Patient-Centered Outcomes Research Trust Fund Fee to Common Types of Health Coverage or Arrangements

IRS Form 720 Overview

IRS Form 720 instructions (see pages 8 to 9)

Please Note:
This information is provided for educational purposes only. It reflects the understanding of HRC Total Solutions and our partners using the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice.  You should not act on this information without consulting legal counsel or tax advisors.  (June 4, 2015)


MBTA 15% Discount for May

The following notice was sent by the MBTA Corporate Pass Program.  If you are currently participating in your employers pre-tax transit benefit plan you will need to contact your HR Department to make any election changes for the month of May.


To Our Corporate Pass Program Participants,

The Massachusetts Department of Transportation has approved a relief plan for commuters after the hardships caused by a series of severe winter storms.

All monthly pass holders will receive a 15% discount on the cost of a May 2015 monthly pass.

Examples:

Monthly Link Pass

Original Price: $   75.00    May 2015 Discounted Price: $63.00


Commuter Rail Zone 1         

Original Price: $182.00    May 2015 Discounted Price: $154.00

The tariff rates for all monthly passes will be lowered to reflect the 15% discount and will automatically be displayed in your Pass Program account for the May 2015 benefit period.  After the cycle period closes for the May 2015 benefit period, the original tariff rates as published in July 2014 will be restored.

For those Corporate Pass Program participants that are applying pre-tax payroll funding, we suggest that you adjust your specific employee deductions to offset the 15% discount.  This would be the easiest way for your employees to see the immediate effect of the discount for the May 2015 benefit period.

Please note that the 15% discount only applies to monthly pass holders and does not apply to 10 Trip Ticket purchases.   On April 24, 2015, all transit service will be free across each mode of transportation.

The Massachusetts Department of Transportation wishes to thank you for your continued participation in the Pass Program and to thank your employees for their patience, understanding, and loyalty during this tumultuous winter.

Thank you,

MBTA Pass Program
888-844-0353


No Changes to Parking and Transit Pretax Contribution Limits

The maximum pretax contribution employees can make to cover qualified transit and parking expenses is not changing. These are the applicable numbers for the 2015 tax year – effective January 1, 2015. Please read the entire IRS Revenue Procedure 2014-61 for more information.

  • Parking: $250

  • Transit: $130


COBRA Services: Changes to HIPAA Certificates in 2015

New final regulations published by the U.S. Department of Health and Human Services (HHS) on May 16, 2014 confirm the end of the requirement to issue certificates of creditable coverage. Certificates of creditable coverage are no longer required after December 31, 2014.

HRC Total Solutions will remove the HIPAA Certificate options from our COBRA service offering starting December 30, 2014.

HRCTS currently offers clients the option to include HIPAA Certificates with the following notices:

  • QB Specific Rights notice
  • QB Termination notice
  • NPM Special Enrollment Rights notice 

Below is the updated regulatory language.
Evidence of creditable coverage.

  1. The rules for providing certificates of creditable coverage and demonstrating creditable coverage have been superseded by the prohibition on preexisting condition exclusions. See §2590.715-2704 for rules prohibiting the imposition of a preexisting condition exclusion.
  2. The provisions of this section apply beginning December 31, 2014.

PCORI Fee Increase for New Plan Years

The adjusted applicable dollar amounts for PCORI fees were recently released in IRS Notice 2014-56. For plan years ending on or after October 1, 2014 – September 31, 2015 the fee has been increased to $2.08 per covered life. This is an increase of $0.08.  Please refer to our prior guidance on PCORI fees or contact our Sales or Client Relations teams if you have any additional questions.


Health Safety Net Surcharge Providers Updated

The list below is to assist Health Safety Net (HSN) surcharge payers in identifying surchargeable payments made to Massachusetts acute hospitals and ambulatory surgical centers (ASCs) for the purchase of heath care services.  The Health Safety Net annually requests that providers identify and update FEINs for all Massachusetts acute hospitals, ASCs, and certain provider organizations that receive direct and indirect payments subject to the HSN surcharge.  The list below reflects the current list of providers reported to the Health Safety Net as of July 12, 2012 and then updated for October 2014.

According to HSN regulation 101 CMR 614.00, payments that are made directly to an acute hospital or ASC for the purchase of health care services are considered direct payments and are subject to the HSN surcharge in whole.  Payments that are made to an affiliated provider or group of providers for the purchase of health care services of which a portion is then forwarded to an acute hospital or ASC are considered indirect payments.  For indirect payments, the HSN surcharge applies only to the portion forwarded to the acute hospital or ASC.

Massachusetts Acute Hospitals
Anna Jaques Hospital
Athol  Memorial Hospital
Baystate Franklin Medical Center
Baystate Mary Lane Hospital
Baystate Medical Center
Baystate Wing Hospital (formerly Wing Hospital)
Berkshire Medical Center
Beth Israel Deaconess Hospital-Plymouth (formerly Jordan Hospital)
Beth Israel Deaconess Medical Center
Beth Israel Deaconess Medical Center-Needham Campus
Beth Israel Deaconess-Milton (formerly Milton Hospital)
Boston Medical Center
Boston Medical Center/ Codman Square Health Center
Boston Medical Center/ Dorchester House
Boston Medical Center/ East Boston NHC
Boston Medical Center/ South Boston CHC
Brigham and Women's Hospital
Cambridge Health Alliance - Cambridge Campus
Cambridge Health Alliance/ Cambridge Health Alliance Physician Org
Cape Cod Hospital
Children's Hospital
Clinton Hospital
Cooley Dickinson Hospital
Dana Farber Cancer Institute
Emerson Hospital
Fairview Hospital
Falmouth Hospital
Faulkner Hospital
Hallmark Health Systems
Harrington Memorial Hospital
Health Alliance Hospitals, Inc
Heywood Hospital
Holy Family Hospital at Merrimack Valley
Holyoke Medical Center, Inc.
Kindred Hospital Boston
Kindred Hospital North Shore
Lahey Clinic Hospital
Lahey Clinic Hospital /Lahey Clinic Foundation, Inc.
Lahey Clinic Hospital MRI Services, LLC
Lawrence General Hospital
Lowell General Hospital
Lowell General Hospital-Saints Campus (formerly Saints Medical Center)
Marlborough Hospital
Martha's Vineyard Hospital
Mass General Hospital
Mass. Eye & Ear Infirmary
Mercy Medical Center (includes Providence Hospital)
Metro West Medical Center
Milford Regional Medical Center, Inc
Morton Hospital and Medical Center
Mount Auburn Hospital
Nantucket Cottage Hospital
Nashoba Valley Medical Center, A Steward Family Hospital, Inc.
New England Baptist Hospital
Newton-Wellesley Hospital
Noble Hospital
North Shore Medical Center (includes Salem & Union Hospital)
Northeast Hospital
Quincy Medical Center
Saint Vincent Hospital
Shriners Hospital-Boston
Shriners Hospital- Springfield
Signature Healthcare Brockton Hospital (listed previously as Brockton Hospital)
South Shore Hospital
Southcoast Hospitals Group, Inc. (listed previously as Southcoast Health Systems)
Steward  Norwood Hospital
Steward Carney Hospital Inc.
Steward Good Samaritan Medical Center
Steward Holy Family
Steward Saint Anne's Hospital
Steward St. Elizabeth's Medical Center
Sturdy Memorial Hospital
Tufts Medical Center (listed previously as Tufts New England Medical Center)
UMass. Memorial Medical Center
Winchester Hospital

Massachusetts Ambulatory Surgical Centers
Advanced Eye Surgery Center, LLC
ARC Worcester Center, LP d/b/a Worcester Surgical Center
Berkshire Cosmetic and Reconstructive Surgery Center
Berkshire Endoscopy Center LLC
Boston Center for Ambulatory Surgery, Inc.
Boston Endoscopy Center
Boston Eye Surgery and Laser Center, Inc.
Boston Laser Group
Boston Outpatient Surgical Suites, LLC
Boston Surgery Center, LLC (new effective 9/29/09)
Boston University Eye Associates Surgery and Laser Center formerly University Eye Associate)
Candescent Eye Health Surgi Center (d/b/a Greater New Bedford Surgicenter)
Cape and Islands Endoscopy Center, LLC
Cape Cod ASC, LLC
Cape Cod Eye Surgery and Laser Center
Cape Cod Surgery Center, Inc.
Cataract & Laser Center West, LLC.
Cataract & Laser Center, Inc.
Cataract and Laser Center  of the North Shore, LLC
Cataract and Laser Center Assoc. (Adams)
Cataract and Laser Center Central, L.L.C.
Central Massachusetts Ambulatory Endoscopy Center, LLC
Charles River Endoscopy, LLC (new effective 9/29/09)
Commonwealth Endoscopy Center, Inc.(new FEIN only effective 2/1/09)
DHA Endoscopy, LLC
East Bay Surgery Center, LLC
East Pond Enterprises Inc.
Eastern Massachusetts Surgery Center  (new effective 9/29/09)
Four Women's Health Services
Good Samaritan North Easton Surgery Center(formerly Orthopedic Care Surgi Ctr)
Greater Springfield Surgery Center, LLC
Hyannis Ear, Nose & Throat Assoc.
Hyde Park Pain Management, LLC
MD Sine, LLC dba Spine Institute of New England
Merrimack Valley Endoscopy Center, LLC
Middlesex  Endoscopy Center, LLC
New England Ambulatory Surgicenter, LLC
New England Eye Surgical Center Inc.
New England Pain Association P.C.
New England Pain Care
New England Surgery Center
New England Surgical Center for Outpatient Endoscopy, LLC
North Shore Cataract and Laser Center
Northeast Ambulatory Center, Inc
Northeast Endoscopy Center,  LLC
Orthopedic Surgical Center of North Shore, LLC
Peabody Surgery Center LLC
Pioneer Valley Surgicenter
Plymouth Laser and Surgical Center
Same Day Surgiclinic
South Shore Endoscopy Ctr, Inc.
St. Anne's Hospital Ambulatory Care Center-Hawthorne(formerly Hawthorn Endoscopy)
Surgical Eye Experts of New England
The  Surgery Center of Waltham (formerly listed as Boston IVF, Inc)
The Cataract Surgery Center of Milford, Inc. (new effective 10/05/09)
The Endoscopy Center of  Southeast Massachusetts, LLC
Valley Medical Group, P.C.
West Suburban Eye Surgery Center  dba SurgiSite Boston
Weymouth Endoscopy LLC
Women's Health Services

Affiliated Organizations
Baycare Health Partners
Baystate Medical Practices
Health Alliance with Physicians
Partners Community HealthCare Inc. (PCHI)

 


Additional Permitted Election Changes for Health Plans: IRS Notice 2014-55

The Internal Revenue Service recently released IRS Notice 2014-55 which states that as of September 18, 2014 participants in an employer sponsored section 125 cafeteria plan have two additional reasons to change their health insurance plan elections during a plan year.

How does this affect participants?

All employees covered by a company cafeteria plan now have two additional reasons to change their health insurance plan elections during the plan year. These include the following two scenarios:

  • If an employee’s hours are reduced to fewer than 30 hours (on average) per week and the employee is still eligible for the employer’s health plan coverage.
  • If an employee chooses to stop participating in the employer’s group health plan in order to purchase coverage through an ACA marketplace.

How does this affect employers?

Employer cafeteria plans will need to be amended to reflect these changes before the last day of the plan year in which elections are allowed. These amendment changes can be made retroactive to the first day of your plan year, assuming your plan follows the IRS guidance and employers have communicated these amendments to your participants. For plan years beginning in 2014, employers can amend the plan at any time before the last day of the plan year beginning in 2015.

What do I do now?

If you decide to opt into these new election change offerings you will need to update the amendment for your plan document and Summary Plan Description (SPD).  Once this amendment has been adopted you will need to keep this on file with your plan document and provide it to your employees as this would be a material change to your benefits offering.  You can find the proposed amendment document here.

What about future plan documents?

Unless otherwise specified, HRCTS will include this new election change offering with our standard template documents moving forward.  If you require customized documents you will need to notify us whether you have adopted these new election change offerings.


Higher Deductibles Keep Premium Increases in Check

The following information from the Healthcare Trends Institute gives us some insight into current trends regarding deductibles and insurance premiums. HRC Total Solutions has been administering Health Reimbursement Arrangements, Health Savings Accounts and Flexible Spending Accounts to help offset these costs for over 12 years! Please reach out to our sales team for more information about how we can keep your costs down and your participants happy with their health plan.

Recent survey findings reveal that although growth of employer-sponsored health premiums is modest, deductibles are on the rise.

Conducted from January through May 2014, the 2014 Employer Health Benefits Survey from the Kaiser Family Foundation and the Health Research & Educational Trust (HRET) takes a detailed look at trends in employer-sponsored health coverage, including premiums, employee contributions, cost-sharing provisions, and employer opinions.
Modest Premium Increases

In 2014, annual premiums for a family reached $16,834, up 3 percent from the previous year.  On average, workers pay $4,823 toward family health coverage costs this year. Over the past five years, premium rates have increased a slower rate than the years prior (26 percent vs. 34 percent). This year’s increase is also is comparable the year-to-year rise in worker’s wages (2.3 percent) and general inflation (2 percent).

In comparison, annual premiums for worker-only coverage stand at $6,025 this year with workers contributing $1,081 on average annually.
Higher Deductible Increases

Unlike the modest increases in premiums, the survey found that since 2009, the average deductible is up by 47 percent ($1,217 vs. $826). The study also found that 41 percent of all covered workers face an annual deductible of at least $1,000 with workers at small companies (three to 199 employees) more likely to face large deductibles with 61% facing at least $1,000 deductibles.

“The deductibles for workers have crept higher over time, topping $1,200 on average this year,” said study lead author Gary Claxton, a Foundation vice president and director of the Health Care Marketplace Project.  “Today, four in 10 covered workers face at least a $1,000 deductible, nearly double the share from just five years ago.”
Good or Bad News?

What does this ultimately mean for employers and employees? Well, there’s no simple answer and depends on whether or not someone gets sick.   

“The relatively slow growth in premiums this year is good news for employers and workers, though many workers now pay more when they get sick as deductibles continue to rise and skin-in-the-game insurance gradually becomes the norm,” Foundation President and CEO Drew Altman, Ph.D., said.

Read the complete 16th annual Kaiser/HRET survey of more than 2,000 small and large employers here.


PCORI Fees

IRS Form 720 and Instructions

The Affordable Care Act imposes fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fees, required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st, are based on the average number of lives covered under the policy or plan. The fees apply to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. HRCTS will make available an Average Covered Lives Report to all clients that are responsible to file and pay the PCORI fee each year. You can request this report by contacting your Account Management Team.

The IRS recently released the revised Form 720 that insurers and sponsors of self-insured plans will use to pay the Patient-Centered Outcomes Research Institute (PCORI) fee. The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended. Sponsors of calendar year plans must pay the 2013 fee by July 31,2014. Any plan ending January 2, 2013 – December 31, 2013 would have to pay the fee by July 31, 2014. Any plan ending January 2, 2014 - December 31,2014 will have to pay the fee by July 31, 2015. Plan sponsors can now complete their planning for payment of this fee. The IRS has also confirmed health insurers and self-insured health plan sponsors can deduct PCORI fees as ordinary and necessary business expenses. The fee is based on the number of covered lives including employees, retirees and COBRA participants along with their covered dependent spouses and children are all counted. However, only the employee, retiree or COBRA participant needs to be counted for an HRA or a health flexible spending account (health FSA) -- dependents covered by these accounts can be excluded.

The types of plans that must pay the PCORI Fees by July 31, 2014 include:

  • Health/accident plans
  • HRAs with a plan year that began 1/1/2013 that are not an excepted benefit (Employer contribution is greater than $500)
  • Health FSAs with a plan year that began 1/1/2013 that are not an excepted benefit (Plan has employer contributions with the maximum reimbursement greater than two times an employee’s salary reduction election or employer contribution is greater than $500)
  • Retiree plans

Calculating the Fee:

The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year. For policy and plan years ending after Sept. 30, 2012, and before Oct. 1, 2013, the applicable dollar amount is $1. For policy and plan years ending after Sept. 30, 2013, and before Oct.1, 2014, the applicable dollar amount is $2. For policy and plan years beginning on or after Oct. 1, 2014, and before Oct. 1, 2019, the applicable dollar amount is further adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.

IRS Form 720 can be accessed at http://www.irs.gov/pub/irs-pdf/f720.pdf which is an interactive document so that can be completed on line.

 

The PCORI fees are entered on line 133 for the appropriate plans. See pages 8 and 9 of the IRS Instructions for completing these fields. Instructions can be found at http://www.irs.gov/pub/irs-pdf/i720.pdf.

 

 

Complete the fields on page 7 and make your check or money order payable to “United States Treasury”.

Additional information on the PCORI fees can be found here:
Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers
• An IRS chart that shows which types of benefits the fee applies to:  Application of the Patient-Centered Outcomes Research Trust Fund Fee to Common Types of Health Coverage or Arrangements

Please Note:
This information is provided for educational purposes only. It reflects the understanding of HRC Total Solutions and our partners using the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice.  You should not act on this information without consulting legal counsel or tax advisors.  (June 14, 2014)


MBTA Fare Increase Effective July 1, 2014

To our clients and participants making use of the MBTA please be advised of the following Fare changes effective July 1, 2014.  For those participating in the MBTA transit program administered by HRCTS, changes may be needed to payroll deductions from the June payrolls to fund the July pass program.

http://hrcts.com/theme/HR/pdf/MBTA_Fare_Changes_July2014.pdf


COBRA Termination Process for Aged Out Dependents

The following update considers the regulatory guidance for handling COBRA beneficiaries during the month in which a dependent attains age 26. A commenter requested clarification on the application of section 4980H to an employee’s child for the month in which the child attains age 26. In response, the final regulations clarify that for purposes of section 4980H, a child is a dependent for the entire calendar month during which he or she attains age 26.

Employers must continue to cover the beneficiary through the end of the month of the dependents attaining the age of 26 on the active plan. Employers may use "Event Date" to continue coverage and do not need to adjust to “End Of Month” because of this regulation change.  The event which is occurring in the above situation is loss of coverage.  The loss of coverage happens on the last day of the month therefore the date of the event will always fall on the end of the month for dependants aging off.


Updated Guidance Provided on FSA and HSA Plans

Post Windsor Decision Changes to FSA & HSA Plans

On December 16, 2013, the IRS released Notice 2014-1 in order to provide further guidance on the updated rules under Section 125 cafeteria plans (FSA & DCA plans) and Section 223 health savings accounts (HSAs) as they relate to participants with same-sex spouses.  After the Supreme Court decision in United States v. Windsor and the issuance of Revenue Rulings 2013-17, 2013-38.

In Windsor, the Supreme Court held on June 26, 2013 that section 3 of DOMA is unconstitutional because it violates Fifth Amendment principles. Rev. Rul. 2013-17, interpreting the Windsor decision, held the following:

  1. For Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term “marriage” includes such a marriage between individuals of the same sex;
  2. For Federal tax purposes, the IRS adopts a general rule recognizing a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages; and
  3. For Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term “marriage” does not include such formal relationships.

The following questions and answers provide further guidance on the application of the Windsor decision with respect to certain rules governing the federal tax treatment of certain types of employee benefit arrangements.

This IRS release also provided a number of important questions and answers around language related to spouses and marriage.

 


IRS Announces Plan Limits for 2014 Commuter Plans

The IRS has issued a press release announcing the Revenue Procedure 2013-35, which contains 2014 limits for qualified transportation fringe benefits.

Qualified transportation fringe benefits
The monthly limits under section 132(f) for tax years beginning in 2014 are:

Commuter vehicle and transit pass: $130 ($245 - 2013)

Qualified Parking: $250 ($245 - 2013)

Please be sure to inform your employees if they would like to increase their election for their parking account starting in January of 2014 they are able to change their monthly election from $245 to $250.  In order to update their election for 2014 they must complete the Parking and Transit Enrollment form and return it to their HR representative for confirmation.  Once the new election is updated within your payroll system please forward along to HRC Total Solutions for processing.  Election changes are effective the first of the following month in which they are received.

If you have any employees who have enrolled for a monthly transit amount over $130 they will have to decrease their election to no more than $130 starting in January.  In order to update their election for 2014 please have them complete the Parking and Transit Enrollment form.  If we do not receive a new form for January 2014 we will still have to decrease their election to $130 as this is a required change.


BCBSMA Claims and DOMA Reversal Update

Blue Cross Blue Shield of Massachussts Claim Feed Changes:

BCBSMA has informed HRC Total Solutions that in order to comply with the recent reversal of the Defense of Marriage Act (DOMA), all claim file feeds will now include Same Gender Spouse claims as of Friday, November 1, 2013 file feed.  Domestic Partner claims will continue to be excluded from the file feeds because they are not usually considered a taxable dependent. BCBSMA has indicated that this exclusion is necessary for them to remain compliant with minimum necessary information provision of HIPAA by not sending Domestic Partner claims to vendors.  HRC Total Solutions does allow manual claims to be submitted for domestic partner claims that are not able to be sent on the BCBSMA file feed.


FSA $500 Rollover: Frequently Asked Questions

Here are a list of some important questions pertaining to the recent IRS modification of the "use it or lose it" rule.  Please contact your Account Executive team for further guidance on this important change for Flexible Spending Account (FSA) plans.

Q: Can we have the 2 ½ month extension (Grace Period) and the $500 rollover?
A: No, employers will need to decide between those 2 options.


Q: Which is better for my employees; the 2 ½ month extension (Grace Period) or the $500 rollover?
A: If you have the 2 ½ month extension you have 2 ½ months to spend all the money left from  the previous year.  If you have the $500 rollover then you have all year to spend the rollover  amount. This will vary person to person as to which one is better for them.


Q: How do I know how much money my employees leave at the end of the year so I can decide if I want to have our company adopt the $500 rollover?
A: You can view an Account Balance report on the employer portal and see how much money  your employees have left at the end of the plan year to help guide your decision making.


Q: As an employer; will this mean there could be less money coming back to us at the end of the year because there were less funds forfeited?
A: Yes


Q: Can FSA plans that currently have a Grace Period be amended to allow the rollover provision instead?
A: Yes. If a plan has provided for a grace period and is being amended to add a rollover provision, the plan must also be amended to eliminate the grace period provision by no later  than the end of the plan year from which amounts may be carried over. The ability to eliminate a grace period provision previously adopted for the plan year in which the amendment is adopted may be subject to non-Code legal constraints.


Q: Will this increase participation in the FSA?
A: Most likely this will increase participation because employees will not be afraid of the "use it or lose it" rule.  This will mean a tax savings for your employees and you as the employer as well.

 

Q: Can Employers amend plan documents to allow this rollover feature?
A: Yes. Accordingly, an employer, at its option, is permitted to amend its § 125 cafeteria plan  document to provide for the rollover to the immediately following plan year of up to $500 of  any amount remaining unused as of the end of the plan year in a health FSA.


Q: Will HRCTS be updating our documents if we adopt the $500 rollover?
A: Yes, your documents will be updated if you do adopt the rollover.


Q: When will educational materials for our employees regarding the change be available? 
A: HRCTS has updated FSA enrollment materials available here for Employers who decided to adopt this feature. We have also provided you with an employer notice you can customize and send to your employees if you’d like to advise them of the change should you decide to adopt the rollover feature.


Q: Do you have some general information on the ruling you can provide to us?
A: Please refer to our notice regarding the IRS modification as well as our announcement regarding FSA enrollment.  You may also view the details of  the ruling in the Department of Treasury Notice 2013-71.


Q: Does this change affect the 90 day run out for the FSA?
A: No.


Q: Is this change for the healthcare and/or dependent care flexible spending accounts?
A: This is only for the healthcare FSA.


Q: Does the $500 rollover apply to the Limited Purpose FSA?
A: Yes.


Q: Can an employee rescind their rollover if they are signing up for a HSA and cannot have the FSA with the rollover in their new year if they are changing to a HSA upon their plan renewal?
A: Yes they can.  If they do not do that they cannot set up the HSA.


Q: Can employer contributions rollover to the new year or just employee contributions?
A: The guidance does reference that remaining unused amounts can carry over to the new year.  It does not specify employer or employee amounts.  However, the remaining available balance does include both employee and employer contributions.


Q: How do we notify you if we want to adopt this change?
A: Please email your Account Executive to let them know if you’d to adopt this for your plan.


Q: Do we need to do a new application for our plan if we make this change?
A: No.  Employers will not need to complete a new application for this change.


Q: When do we have to decide if we want to adopt this change?
A: A plan may be amended to adopt the carryover provision as long as the rollover provision is adopted prior to the end of the plan year ending in 2013 or 2014.


Q: Can we adopt this change now for our current plan year if we do not have the 2 ½ month extension?
A: Yes.


Q: Will you be notifying my employees of this change?
A: Employers would be responsible to communicate this change to their employees as well as provide the updated Summary Plan Description to participants once provided by HRCTS.


Q: Is there a fee associated with this change?
A: No, there are no additional fees.


Q: Will this change affect the accounting of our plans?
A: This is a question that we are still looking to clarify.  We are working with our software vendor currently as they are updating the system to accommodate the change.  Once we clarify how the rollover will be reflected in the system we will be able to provide more information as to how the rollover will show on reports and if it will affect the accounting of the plan if at all.


Q: Can an employee elect the full $2,500 election if they are rolling over funds to the new plan year?
A: Yes, the employee can elect the full $2,500 giving them a balance of up to $3,000 in the new  FSA plan year.


Q: Would rollover amounts be available day one of the new plan year or after the run-out period?
A: We believe the solution with our software vendor will allow the funds to be available day one of the new plan year. We believe that if there are claims coming in for the previous plan year during the run out that the system will look back to the old plan year to be able to pay the claim.


Q: Can the rollover amounts be given back to the participant as taxable income instead of rolling it over?
A: No, A § 125 cafeteria plan is not permitted to allow unused amounts relating to a health FSA  to be cashed out or converted to any other taxable or nontaxable benefit. Unused amounts  relating to a health FSA may be used only to pay or reimburse certain § 213(d) medical expenses  (excluding health insurance, long-term care services, or insurance.


Q: Can an Employer choose to only allow a lesser amount than $500 to be rolled over?
A: Yes, the Employer can elect to only allow an amount less than $500 to be rolled over to the  next plan year.


Q: If an employee elects the full $2,500 upon renewal and rolls over $500, would the full $3,000 be available once the rollover funds are rolled over?
A: Yes, the Uniform Coverage Rule still applies.


Q: Can an employee rollover the money to the next plan year if they do not elect a FSA account for the next plan year?
A: Yes, an employee can rollover up to $500 to the new plan year even if they’re not enrolling for any additional salary reductions in the new plan year.


IRS: Modification of “Use-It-or-Lose-It” Rule For Flexible Spending Arrangements (FSAs)

On October 31, 2013, the Department of Treasury issued notice Notice 2013 -71 along with a press release announcing a significant policy change affecting Flexible Spending Accounts (FSAs).  This policy modification contains a number of positive changes for FSA participants. The Department of Treasury has modified its FSA “use-it-or-lose-it” provision to allow a limited rollover of FSA funds.

What is changing?

  • Effective for plan years starting in 2014, employers will now have the option of allowing participants to roll over up to $500 of unused funds at the end of the plan year.
  • Effective immediately, employers that offer FSA programs that do not include a 2.5 month extension (grace period) will have the option of allowing participants to roll over up to $500 of unused funds at the end of the current 2013 plan year.

How will this benefit my participants?

  • This modification will help encourage FSA participation and significantly improve the overall experience of employees who already participate.
  • By enhancing healthcare options and offering greater protection of participant's annual elections.
  • This will also help to curb unnecessary spending by FSA participants seeking to avoid losing unused funds.

HRC Total Solutions will be providing additional information and educational materials for our broker partners, clients, and participants in the coming weeks.

 


Massachusetts Health Safety Net Fund

What is the Health Safety Net Fund?

The Health Safety Net Fund (formerly known as the Massachusetts Uncompensated Care Pool) is a fund created by the state of Massachusetts to finance health care for the low income and uninsured within the state. The Pool was started in 1998 and is funded by a surcharge tax on all health services rendered at a hospital or ambulatory surgical center in the state of Massachusetts. All health insurance plans, including insured and self funded, are required by law to pay the tax.

 

Who is Required to Pay the Surcharge?

Any HRC Total Solutions Health Reimbursement Arrangement (HRA) Employer Group whose HRA direct pays any of the listed Acute Care Hospitals and/or Ambulatory Surgical Centers for health services incurred by their participants. Employer Groups whose HRA plan direct reimburses employees is not subject to this Surcharge.

 

What Payments are Subject to the Surcharge?

All payments to Massachusetts acute hospitals for hospital health care services or to ambulatory surgical centers for ambulatory surgical facility services are subject to the surcharge. Please see the list below of Acute Care Hospitals and Ambulatory Surgical Centers.  Services received at hospitals that are not part of the list below are not subject to the Health Safety Net Fund.

 

How is the Surcharge Calculated?

Currently, payments for services applicable to the Surcharge are taxed 2.00% of the payment, effective October 1, 2013.  The percentage is subject to change annually by the MA Division of Health Care Finance.

 

How is HRCTS Going to Assist?

After concluding ongoing discussions with the State of Massachusetts, HRC Total Solutions is now in the process of registering with the Massachusetts Department of Health and Finance Policy in order to make payments toward the fund on behalf of our clients.  We will identify claims that meet the requirements in our system as they are processed. HRCTS is capturing the claims incurred at these specific hospitals so we can identify the claims subject to the Surcharge and invoice our clients for the applicable surcharge fee. Once the surcharge invoice is paid by the Employer, HRCTS will then make the payment to the applicable providers.

 

Next Steps?

Our Account Executive teams will be working with in the coming weeks and months to help clarify and provide further guidance on this process and the additional billing that may occur as a result.

 

Massachusetts Acute Hospitals

Anna Jaques Hospital
Athol  Memorial Hospital
Baystate Franklin Medical Center
Baystate Mary Lane Hospital
Baystate Medical Center
Berkshire Medical Center
Beth Israel Deaconess Medical Center
Beth Israel Deaconess Medical Center-Needham Campus
Boston Medical Center
Boston Medical Center/ Codman Square Health Center
Boston Medical Center/ Dorchester House
Boston Medical Center/ East Boston NHC
Boston Medical Center/ South Boston CHC
Brigham and Women's Hospital
Cambridge Health Alliance - Cambridge Campus
Cambridge Health Alliance/ Cambridge Health Alliance Physician Org
Cape Cod Hospital
Children's Hospital
Clinton Hospital
Cooley Dickinson Hospital
Dana Farber Cancer Institute
Emerson Hospital
Fairview Hospital
Falmouth Hospital
Faulkner Hospital
Hallmark Health Systems
Harrington Memorial Hospital
Health Alliance Hospitals, Inc
Heywood Hospital
Holyoke Medical Center, Inc.
Jordan Hospital
Kindred Hospital Boston
Kindred Hospital North Shore
Lahey Clinic Hospital
Lahey Clinic Hospital /Lahey Clinic Foundation, Inc.
Lahey Clinic Hospital MRI Services, LLC
Lawrence General Hospital
Lowell General Hospital
Marlborough Hospital
Martha's Vineyard Hospital
Mass General Hospital
Mass. Eye & Ear Infirmary
Mercy Medical Center (includes Providence Hospital)
Merrimack Valley Hospital, A Steward Family Hospital, Inc.
Metro West Medical Center
Milford Regional Medical Center, Inc
Milton Hospital
Morton Hospital and Medical Center
Mount Auburn Hospital
Nantucket Cottage Hospital
Nashoba Valley Medical Center, A Steward Family Hospital, Inc.
New England Baptist Hospital
Newton-Wellesley Hospital
Noble Hospital
North Adams Regional Hospital
North Shore Medical Center (includes Salem & Union Hospital)
Northeast Hospital
Quincy Medical Center
Saint Vincent Hospital
Saints Medical Center  (listed previously as Saints Memorial Medical Center)
Shriners Hospital-Boston
Shriners Hospital- Springfield
Signature Healthcare Brockton Hospital (listed previously as Brockton Hospital)
South Shore Hospital
Southcoast Hospitals Group, Inc. (listed previously as Southcoast Health Systems)
Steward  Norwood Hospital
Steward Carney Hospital Inc.
Steward Good Samaritan Medical Center
Steward Holy Family
Steward Saint Anne's Hospital
Steward St. Elizabeth's Medical Center
Sturdy Memorial Hospital
Tufts Medical Center (listed previously as Tufts New England Medical Center)
UMass. Memorial Medical Center
Winchester Hospital
Wing Memorial Hospital and Medical Center

 

Massachusetts Ambulatory Surgical Centers

Advanced Eye Surgery Center, LLC
ARC Worcester Center, LP d/b/a Worcester Surgical Center
Berkshire Cosmetic and Reconstructive Surgery Center
Berkshire Endoscopy Center LLC
Boston Center for Ambulatory Surgery, Inc.
Boston Endoscopy Center
Boston Eye Surgery and Laser Center, Inc.
Boston OutPatient Surgical Suites, LLC
Boston Surgery Center, LLC (new effective 9/29/09)
Boston University Eye Associates Surgery and Laser Center formerly University Eye Associate)
Cape and Islands Endoscopy Center, LLC
Cape Cod ASC, LLC
Cape Cod Eye Surgery and Laser Center
Cape Cod Surgery Center, Inc.
Cataract & Laser Center West, LLC.
Cataract & Laser Center, Inc.
Cataract and Laser Center  of the North Shore, LLC
Cataract and Laser Center Assoc. (Adams)
Cataract and Laser Center Central, L.L.C.
Central Massachusetts Ambulatory Endoscopy Center, LLC
Charles River Endoscopy, LLC (new effective 9/29/09)
Commonwealth Endoscopy Center, Inc.(new FEIN only effective 2/1/09)
DHA Endoscopy, LLC
East Bay Surgery Center, LLC
East Pond Enterprises Inc.
Eastern Massachusetts Surgery Center  (new effective 9/29/09)
Four Women's Health Services
Greater New Bedford Surgicenter
Greater Springfield Surgery Center, LLC
Hawthorn Endoscopy Services, LLC
Hyannis Ear, Nose & Throat Assoc.
Hyde Park Pain Management, LLC
MD Sine, LLC dba Spine Institute of New England
Merrimack Valley Endoscopy Center, LLC
Middlesex  Endoscopy Center, LLC
New England Ambulatory Surgicenter, LLC
New England Eye Surgical Center Inc.
New England Pain Association P.C.
New England Pain Care
New England Surgery Center
New England Surgical Center for Outpatient Endoscopy, LLC
North Shore Cataract and Laser Center
Northeast Ambulatory Center, Inc
Northeast Endoscopy Center,  LLC
Orthopaedic Surgical Center of North Shore, LLC
Orthopedic Care Surgery Center, LLC (new effective 9/29/09)
Peabody Surgery Center LLC
Pioneer Valley Surgicenter
Plymouth Laser and Surgical Center
Same Day Surgiclinic
South Shore Endoscopy Ctr, Inc.
Surgical Eye Experts of New England
The  Surgery Center of Waltham (formerly listed as Boston IVF, Inc)
The Cataract Surgery Center of Milford, Inc. (new effective 10/05/09)
The Endoscopy Center of  Southeast Massachusetts, LLC
Valley Medical Group, P.C.
West Suburban Eye Surgery Center  dba SurgiSite Boston
Womens Health Services
Weymouth Endoscopy LLC

 

Affiliated Organizations

Baycare Health Partners
Baystate Medical Practices
Health Alliance with Physicians
Partners Community HealthCare Inc. (PCHI)


PCORI Fees for Employers

HRC Total Solutions would like to provide our clients and partners the important next steps related to the PatientCentered Outcomes Research Institute (PCORI) fee. Some critical questions include the following:

What plan years must pay by July 31, 2013?
The final regulations confirm that plan sponsors will be required to report and pay the PCORI fee for a plan
year no later than July 31 of the calendar year immediately following the last day of such plan year. This means
that sponsors of calendar year plans or plans with plan years that began between October 2, 2011 and December31, 2011 must make their initial payment of the PCORI fees by July 31, 2013.

What plan years must pay by July 31, 2014?
Any plan years that began on January 2, 2012 –December 31, 2012 will have to report and pay the PCORI fee
by July 31, 2014.

How do we make payment?
The fees must be paid annually using Tax Form 720 (Quarterly Federal Excise Tax Return Form) and generally
will be due by July 31 of the calendar year immediately following the last day of the policy or plan year. The final
regulations also confirm thatthird parties cannot report or remit the fees on behalf of plan sponsors.

How do we calculate the fees?
The Snap Shot Method of Calculation shall be used to determine average number of covered lives. The SnapShot Method is defined by the IRS as follows:

  • Count the total number of covered lives on a single day in a quarter (or more than one day) and divide the total by the number of dates on which a count was made. (The date or dates must be consistent for each quarter.)
  • For HRA purposes we use the start date and take the fifteenth (15th) of each month within the plan start and end date and then divide those totals by the total number of dates. If multiple plans are being calculated at the same time they will be counted by plan the average lives will be determined (rounded up) and then added together for the total.

How will HR Concepts assist?
HR Concepts will make a new report available to all of our clients prior to July 1 called the PCORI Average
Covered Lives Report. Employers will use this report to calculate the PCORI fee that is to be paid by the Employer using the Form 720. If you need this report you will need to request it from your Account Executive or Client Manager and they will provide it to you. Please note this reporting capability will not be available to us until the middle of June.

What is the applicable fee amount?

  • $1 for plan years ending on or after October 1, 2012 and before October 1, 2013.
  • $2 for plan years ending on or after October 1, 2013 and before October 1, 2014.
  • For subsequent plan years ending before October 1, 2019, the fee will be adjusted for projected increases in national health expenditures.

What are the most recent updates to this legislation?
The final regulations do not exempt health reimbursement arrangements (HRAs) and health flexible spending accounts (FSAs). In fact, HRAs and FSAs may be subject to PCORI Fees in their own right (in addition to PCORI Fees related to the plan sponsor’s group health plan) under certain circumstances. Please note:

  • Multiple self-insured arrangements established and maintained by the same plan sponsor and having the same plan year are subject to a single PCORI Fee.
  • An HRA that is integrated with a self-insured health plan providing major medical coverage will not incur a separate PCORI fee if the HRA and plan are established or maintained by the same plan sponsor.
  • An HRA that is integrated with a fully-insured group health plan is treated as an applicable self-insured health plan and is subject to the PCORI Fee. Additionally, the insurer of the group insurance policy is subjectto the PCORI Fee separately.
  • A health care FSA is not subject to the PCORI Fee if it meets the requirements of an “excepted benefit” under Code §9832(c).
  • The PCORI Fee does not apply if substantially all of the coverage is for excepted benefits under Code §9832(c) (for example, certain limited-scope dental and vision benefits).
  • Employee assistance programs (EAPs) and wellness programs are not subject to the PCORI Fee if they do not provide “significant benefits relating to medical care.”

How to determine if a Health FSA meets the excepted benefit definition:
If your FSA is considered an excepted benefit per IRS Code §9832(c),the FSA will be exempt from the PCORI fee.
Please see below to determine whether your FSA is considered an Excepted Benefit or not.

Two simple conditions:

Maximum Benefit Condition. The maximum benefit payable under the health FSA is the total of employer plus employee contributions. The maximum benefit cannot exceed the greater of 1) two times the employee’s annual health FSA election, or 2) the employee’s annual health FSA election plus $500.

  • Therefore, if the health FSA is funded exclusively by employee salary reductions, they will, by definition, meet the excepted benefits rule, if they also meet the Availability Condition (#2 below).
  • A health FSA with employer contributions will satisfy the Maximum Benefit Condition only if the employer matching contribution does not exceed the greater of the participant’s salary reduction, or $500.

Examples of Health FSA funding that meet the Maximum Benefit Condition:

  • A one-for-one employer match (employer $600, employee $600).
  • An employer contribution of $500 or less (employer $500, employee $200).

Examples of Health FSA funding that do not meet the Maximum Benefit Condition:

  • An employer contribution that is made regardless of whether the employee contributes (employer $500, employee $0)
  • An employer contribution of more than $500, if employee contributes $500 or less (employer $600,employee $400).
  • An employer contribution in excess of one-to-one match, if employee contributes more than $500 (employer contributes $700, employee contributes $600).

Availability Condition. There must be another non-excepted group health plan (like major-medical coverage)available to the class of employees that are eligible for the FSA.

If you have any further questions on what makes your FSA an Excepted Benefit, please consult your legal or tax
advisor for further clarification.


Durbin Amendment Dodd-Frank Wall-Street Reform and Consumer Protection Act - Debit Card Pin

Durbin Amendment - Debit Card Pin

The Durbin Amendment (Section 1075) of the Dodd-Frank Wall-Street Reform and Consumer Protection Act and it's impact on the HR Concepts Visa Debit Card

HR Concepts would like to make you aware of a legislative change that impacts all Debit Card holders.  Effective April 1, 2013 a new regulation goes into effect as part of the Dodd-Frank Wall-Street Reform and Consumer Protection Act that requires consumers to be provided with the ability to pay using a PIN (Personal Identification Number) at the point of sale, in addition to the current signature process.   Keep in mind, that the use of a PIN is not required for your participants using the debit card.  Your participants can continue to use their debit card as they always have – no change required, simply by swiping their card and providing a signature. This new regulation requires us to make the PIN option available to card holders. HR Concepts will be notifying all Debit Card holders about the pin option by March 1st.  A copy of that notice can be found here. Please review our Durbin Amendment FAQ page for more information on this change.  If you have any additional questions, please feel free to contact your Account Executive team.


FSA Changes for 2013 Tax Year

IRS Guidance on Flexible Spending Accounts (FSA)

The Internal Revenue Service recently issued updated guidance for employers and administrators regarding the new $2500 limit on Flexible Spending Accounts to take effect January 1, 2013.  This updated guidance clears up a number of outstanding questions regarding this ruling.  Please refer to IRS Notice 2012-40 for the official guidelines.

  • The rule is effective for plan years starting on or after Jan. 1, 2013. The $2500 limit does not apply to plan years that begin prior to 2013.  This means that non calendar plan years that start during 2012 will not be subject to the $2500 limit on individual FSA plans.
  • Employer contributions do not count toward the $2,500 limit.
  • The rule defines that if a husband and wife both work for the same employer, each may make contributions of $2,500 per year in 2013.
  • This regulation applies to deductions withheld for pay periods during the 2013 tax year. Therefore if you are utilizing the 2.5 month extension on your FSA, there are no deductions taken during the extension for the previous plan year and will not count toward the $2500 max. 
  • Employees who are employed by 2 or more unrelated employers can contribute the maximum amount to an FSA plan with each company.
  • If an employer, due to “a reasonable mistake,” allows an employee to contribute more than $2,500 out of his or her salary, and the mistake is corrected by the employer, the plan will not cease to be a valid plan.
  • Employers that have already established their FSA election maximum for the current plan year will not be able to increase the limit as this is not a ‘Qualifying Event’ per IRS guidelines.
  • HR Concepts will update your FSA plan documents for each plan that begins on or after January 1, 2013 to reflect the new plan limit.
  • Please contact your account executive team at HR Concepts if you have any additional questions or concerns. We appreciate your understanding and patience as we continue to navigate healthcare reform and the ongoing changes that result from it.


The Continuing Extension Act of 2010

Continuing Extension Act of 2010

April 15, 2010, Congress passed and the President later signed the Continuing Extension Act of 2010 (the "Act") that extended to May 31, 2010 the eligibility for the 65% premium subsidy for COBRA premiums for individuals that incur an involuntary termination of employment on or before that date. Prior to this Act, the eligibility time period for the COBRA premium subsidy expired on March 31, 2010. This Act modifies the American Recovery and Reinvestment Act of 2009 (ARRA), which was amended by the Temporary Extension Act of 2010 earlier this year.

HRC is currently modifying our systems to comply with these new changes and extension by April 23, 2010. We will be able to provide:

*A modification to include the requisite ARRA subsidy language and modified forms for each individual that incurs a Qualifying Event on or before May 31, 2010.

*The ability to automatically print letters to re-notify individuals who (i) incurred a Qualifying Event on or after April 1, 2010, and (ii) whose COBRA Election Notice or State Continuation Eligibility Notice was printed after April 1, 2010 so that their notice did not incorporate the COBRA premium subsidy offer.

HRC's staff is working carefully on these changes to make sure that we add these new capabilities while maintaining all other capabilities currently in our system. Thank you again for being an HR Concepts' client. We will continue to respond when changes to the COBRA law are enacted.

As a client of HR Concepts, please let us know if any of the qualifying events that have taken place since April 1, 2010 have been involuntary terminations. We will correct your account for these employees and resend their COBRA paperwork.


For additional information regarding the Temporary Extension Act, please see www.dol.gov/ebsa/COBRA

(HR Concepts strives to keep you updated on the regulations and changes that affect all your qualified plans. However, HR Concepts can never provide legal or tax advice. This notification is for informative purposes only and should not be construed as legal advice or guidance. Any questions regarding COBRA laws, an employer is directed to seek their own independent counsel.)


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