Proposed Bill Could Change HRA Restrictions For Small Group Employers

A new bipartisan bill has been introduced to Congress pertaining to small businesses wanting to offer a stand-alone HRA (Heath Reimbursement Arrangement).  U.S. Rep. Mike Thompson (D-CA) and Congressman Charles W. Boustany, Jr.(R-LA) introduced the Small Business Healthcare Relief Act of 2014 to a congressional committee last December. Though the bill has a way to go, it would greatly benefit small business employers (49 or fewer employees) and their employees.


Back on September 13, 2013 the Department of Labor and Internal Revenue Service issued guidance disallowing businesses from using a stand-alone HRA to help employees pay for individual health insurance premiums on a tax-free basis. By moving this bill into law, it would alter those previous regulations while still building on the reforms made in the Affordable Care Act.


Under the Small Business Healthcare Relief Act of 2014 small employers could:


- Use pre-tax dollars to give workers a defined contribution

- Allow employees to use those pre-tax funds in an HRA to purchase healthcare coverage on the individual market and for qualified out-of-pocket medical expenses

- Avoid financial penalties for providing these types of funds to employees


While we all wait to see if the bill will gain any traction, we encourage you to contact your local Representative about H.R. 5860 – Small Business Healthcare Relief Act of 2014 and support the allowance of small businesses using pre-tax dollars for assistance to employees purchasing polices in the individual market.


Remember to keep BASE® in mind for your tax advantaged benefit plan needs. Call 1-800-309-8012 if you have any questions.


Tom Stiles
BASE® - Digital Marketing Assistant

More ACA Guidance Just in Time for Holidays

The holiday season is upon us…already!?  With Thanksgiving this week, BASE® plans to close our office for two days (November 27-28) to allow employees time to share with their family and recharge before one of the busier months of the year. 

 

Not only is it busy because of everything going on in everyone’s personal life, but here at BASE® we find a lot of business owners looking to take advantage of tax savings for the final month of 2014 and helping many business owners and Business Partners prepare for 2015. 

 

With all of the Affordable Care Act (ACA) changes that have taken place this year, many business owners find themselves looking to their tax professional for guidance.  And this year BASE® has found many tax professionals looking for a trusted advisor to administer employee benefit plans for them, simply because there is so much more for them to be responsible for and keep track of in light of the ACA. 

 

For instance, on November 6, 2014 the Department of Labor, Health and Human Services and the Treasury Departments issued new guidance regarding what arrangements do not comply with the ACA’s market reforms and may subject the employer to penalties. This latest guidance effectively puts an end to the S Corporation shareholders’ ability to take the 1040 deduction for their health insurance premiums.  This change is effective immediately for the 2014 tax year and is for any S Corporation with 2 or more employees.  The measure prohibits all employer provided arrangements, with 2 or more employees, that reimburse individual health insurance premiums without regard to whether the employer treats the money as pre-tax or post-tax income to the employee. Since the individual premiums cannot be shown as income on the Form W-2, the S Corporation shareholder is unable to meet the criteria of the Self Employed Health Insurance Deduction.

 

This is just one of many changes that impacts business owners just in time for the holidays with regard to employee benefits.  That is why BASE® has more and more tax professionals partnering with us to focus on tax advantaged employee benefit plans for them, and to help them avoid risking their clients $100 per day per employee penalties due to many new regulations surrounding these types of plans.

 

BASE® remains vigilant as new ACA regulations and guidelines are released, and focused on keeping our clients and Business Partners up-to-date of changes that impact them.  With all of the competing demands our clients and Business Partners are faced with throughout the year, we take pride in providing the highest degree of service.  This service includes establishing that all of our plans are in compliance with the latest regulations, and knowing that our plans meet all ACA market reforms for our clients.  Don’t wait until after the holidays to see if your tax advantaged plans are in compliance, call BASE® today to see if your plan is at risk of ACA penalties!


Anne Case
BASE® - Director of Marketing & Communications

Are Premium Reimbursement Arrangements Allowed?

The answer to this question is NO, absolutely not, don’t even think about it, unless you want to face a $100 per day per employee penalty! New regulations were released by the Department of Labor on November 6, 2014, and the DOL has now determined that all employer arrangements that reimburse employees for individual premiums violates the ACA's market reforms. These new regulations apply regardless of whether the employer treats the money as pre-tax or post-tax for the employee, making this practice no longer allowed.


BASE® and our legal team believe that while this is a departure from the previous guidance, it requires immediate action.  While it is unfortunate that an employer can’t help their employees with the cost of their individually purchased health insurance premiums, even on a post-tax basis, BASE® will no longer administer the Choice Incentive Plan.  BASE® believes in keeping our clients in compliance, and will discontinue the offering of the BASE® Choice Incentive Plan.  This plan has now been deemed a form of group health coverage according to these latest regulations, and we believe that it is in our client’s best interest to avoid triggering excise tax penalties from an audit.

 

The only option that is currently viable for employers to assist their employees is for an employer to offer increases in compensation that is not tied to the purchase of insurance.  Additionally, these requirements still only apply to plans with more than 1 employee (exempting the BASE® 105 HRA) and with respect to reimbursement of individual market health insurance policies, not supplemental excepted benefit health insurance policies or life insurance policies.

 

While we are no longer able to offer the BASE® Choice Incentive Plan, BASE® still has a host of other viable product offerings, which include the BASE® Section 105 HRA for the self-employed, BASE® Integrated HRA, BASE® 125 Cafeteria Plan (FSA, DCAP, POP), and the Excepted Benefits HRA and 125 plans.

 

Please call 1-888-386-9680 with any questions regarding this information.


Anne Case
BASE® - Director of Marketing & Communications