Don’t Forget About Dependent Care

As we reach the mid-point of summer, children and their parents have settled into their new routines. Kids get to enjoy the summer days hanging out with their friends, and parents can rest easy knowing that their child is with a trusted child care provider. However, can every parent rest easy knowing that they might not be using every tool available to them to help pay for the cost of child care?


BASE® works with several employers that offer the Dependent Care Assistance Plan (DCAP) as part of the 125 Cafeteria Plan. If you have ever utilized a Flexible Spending Account within the 125 Cafeteria Plan, the Dependent Care Assistance Plan is very similar.


DCAP is an account established by an employer to allow employees to set aside money from each paycheck on a pre-tax basis to pay for qualifying dependent care expenses such as daycare, preschool, before & after school care, and even elder care.


Employers benefit from this plan by enhancing their employee benefit package which in turn can help with recruitment and retention of employees. Of course the biggest advantage of this plan is in the form of tax savings for the employee. Since these funds are transferred from the employee’s wages on a pre-tax basis, employees save Federal, State, Social Security, and Medicare taxes. By setting aside these dollars pre-tax, employees are able to increase their take-home pay.


As you can see, there are multiple benefits to utilizing the Dependent Care Assistance Plan within a 125 Cafeteria Plan. One other tax break to look into would be the Dependent Care Tax Credit. Under some scenarios, you could qualify for a tax credit while using a flex plan such as the DCAP. However, no credit is allowed for any child care costs that are paid through a flex plan.


Even though we have already hit the Fourth of July (and summer is pretty much over), it’s never too late to save yourself some money. If you know of an employer that doesn’t offer this type of plan but think they would be a good candidate, please refer them to BASE®.  BASE® always offers a free benefit analysis for employers looking to see if one of our tax-advantaged plans is right for them. You can always learn more about our products by calling 1-888-386-9680 and speaking with a Benefit Specialist. 


Tom Stiles
BASE® - Digital Marketing Assistant

The Story Behind PCORI

July 31st is the deadline for paying the PCORI fee through a federal excise tax return (IRS Form 720). Many people are scratching their heads saying, “What exactly is PCORI?” Hopefully I can give you some information that will help you have a better idea of what this fee is for.


PCORI stands for Patient-Centered Outcomes Research Institute. PCORI was created as a non-profit corporation by the Affordable Care Act to support clinical effectiveness research. Now the next question is, “What is clinical effectiveness research?”


Clinical effectiveness research is set up to find out what works in medical and health care. So by phrasing it as, what works, the research is in place to determine real health benefits. This could be symptom relief, quicker recovery or even what helps to extend our lives. The research has also been initiated to study what doesn’t work or what may cause your body harm instead of fixing medical conditions.


Proof of clinical effectiveness can come from several different means such as laboratory research, animal testing, theories, etc.  Many other factors that may have an effect on a treatment are also studied. More than one specific test is usually needed to confirm the results or theories.


Ideas and theories need to be tested before they can be confirmed. You may have heard the phrase clinical trials. This is a way to isolate the effects of specific actions. Usually, more than one trial is needed to provide answers. So once several studies are done, the researchers involved analyze and review the information. This is called a systematic review. These reviews can lead to conclusions of what works.


BASE® is committed to keeping our customers up-to-date and in compliance with all the changes and new regulations in the Affordable Care Act. If you have questions regarding the PCORI fee as it relates to Health Reimbursement Arrangements and other tax advantaged plans, please contact us


Laura Radebaugh
BASE® - Administration/Adjudication Specialist

Pre-Tax HIP, High Deductible Plans, and ACA

Almost monthly (sometimes weekly) it seems we see new updates regarding the Affordable Care Act.  As of late there have actually been a few clarifications and modifications that have been introduced that continue to shape BASE® products.  First was the fact that individually owned health insurance premiums cannot be pre-taxed, and the other being the fact small employers can now continue offering higher-deductible health plans with HRAs and FSAs. 

 

BASE® has continued to stay up-to-date with the continuous changes, and in doing so has done away with products that did not comply with ACA.  These new law changes have also provided BASE® with a chance to recognize what consumers are missing in the marketplace today, and introduce new products to further assist employers in providing employee benefits.

 

No Pre-Taxing Of Individually Owned Health Insurance Premiums

This is definitely a hot topic.  There are still those holding out for a change on this, but the IRS has continued to release guidance on this and only further confirmed that you really (REALLY) can’t reimburse individually owned health insurance premiums.  In May they went as far as to emphasize the penalties involved for not following market reforms.  


  • BASE® HRA - BASE® had already made the necessary modifications to our BASE® HRA plan for self-employed business owners, as this change did affect businesses based on the size of their business and plan design.

  • o    BASE® HRA clients with 1 employee participant can still reimburse health insurance premiums.  However, if the client obtains coverage through the Federal or State Exchange/Marketplace these premiums are not eligible, and this is regardless of whether or not a subsidy is obtained.

    o    BASE® HRA clients with 2 or more employee participants are not eligible to reimburse health insurance premiums, and that includes Medicare.


    • NEW – BASE® Choice Incentive Plan - BASE® recently introduced the Choice Incentive Plan as a new benefit option, which has been very well received by employers.  While it is a taxable benefit, it is the only legal way for employers to provide a monthly allowance to employees to pay for qualifying insurance premiums, including health insurance premiums (on or off Exchange), supplemental insurance premiums (all types including disability), and life insurance (Term, Whole, Universal).  The BASE® Choice Incentive Plan is exempt from the Affordable Care Act and other applicable guidance, including IRS Notice 2013-54 and DOL Technical Release 2013-03.


    • Offering High-Deductible Health Plans With HRA & FSA

      Cost-sharing caps imposed on small group health plans by Section 1302(c)(2) of the Affordable Care Act were eliminated.  This basically means that employers will be able to continue offering higher-deductible health plans with HRAs and FSAs – reducing overall costs of health care.

       

      Prior to this change, small businesses were not going to be allowed to purchase a health plan with greater than a $2,000 deductible for a single employee or $4,000 deductible for family employees.  This change will only drive consumerism and will make the idea of implementing consumer-driven account-based arrangements like the BASE® Integrated HRA and BASE® 125 Flexible Spending Account more attractive for employers.

       

      Call BASE® today to see what tax-advantaged benefit options can do for you!


      Anne Case
      BASE® - Director of Marketing & Communications