NEWS

FSA Changes for 2013 Tax Year

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.

 

Transit Accounts: Compliance Update

Acceptable Transit Authorities: On January
1, 2012, IRS Revenue Ruling 2006-57 took effect. This ruling, which has been delayed several times, adds additional restrictions to the usage of Transportation Benefit Debit Cards. Beginning on January 1, 2012 any Transportation Benefit Debit Cards with HR Concepts are restricted for use at merchant terminals which only sell transit fare media. Details of the IRS rulings related to the use of commuter benefit debit cards in association to the IRS Section 132(f) Qualified Transportation Fringe Benefit can be found here.
The regulation indicates that the benefit card must be terminal restricted so that the transactions are limited to POS terminals that sell only transit fare media. Please review the acceptable transit ID list found here to determine which transit authorities are in compliance with
the IRS ruling.

Open Enrollment Reminders

News Update  November 1, 2011

As we begin the renewal process for many of our clients we would like each of our employer groups and partners to be aware of the benefits and advantages of setting up an automated file feed with your payroll vendor. HR Concepts has been working with payroll vendors such as ADP on a weekly file feed for a number of our clients that ensures accurate payroll deductions, teminations and additions are processed automatically. Once this feed is put into place with HRC all of these updates adn changes occur without the employer having to notify us. There is generally a small cost to this type of file feed but the time savings for HR staff and IT resources for each of our employers is significant. Along with ADP HR Concepts has also worked with a number of third party online enrollment and payroll vendors on a weekly eligibility file feed. Please contact our sales department for additional information regarding this functionality. 603-647-1147 option 4 or sales@hrconcepts.biz

CMS Reporting Changes

Announcement October 11, 2011

Updated Annual Benefit Level Reporting Threshold

HR Concepts would like to notify all of our clients and brokers that HRA reporting requirements are changing as of October 3, 2011. Per the latest alert from the Centers for Medicare & Medicaid services only HRA plans with a plan benefit of $5000 or greater are required to be reported to the CMS according to the section 111 guidelines. Please note that all rollover funds from the previous plan will be calculated into the threshold requirement. Any plans that have a total plan benefit of $5000 or more including funds from last year will be subject to mandatory reporting requirements. This is an increase from the $1000 threshold initially implemented by CMS. The official CMS Alert outlining the change can be found here.

What does this change mean to you?
If the total plan benefit for your participants is under $5000 there will be fewer concerns or issues around quarterly CMS reporting. HR Concepts will be responsible for calculating the total plan benefit along with any other reporting requirements in order to stay in compliance as a responsible reporting entity.

 

Text Message Alerts and Mobile Application Updates

System Enhancements - June 1, 2011

 

It is clear that Smartphone use is rapidly on the rise and has become an essential element for the daily lives of many consumers.  According to the Nielsen Company, the amount of mobile users with a Smartphone is projected to increase to 49% by Q3 2011. In a recent article, Apple reports to have sold 47 million iPhones in 2010 and, according to Google, 350,000 Android phones are activated every day. With the increased use of Smartphone's there is a corresponding demand from users to be able to access all of their personal data from a single device including their health and wellness information.  HR Concepts has answered this demand by partnering with industry leading technology providers to give you access to your information when and where you want!  Please forward this to your participants so they are familiar with our current offerings and future updates to our mobile technology platform.

 

The latest version of HR Concepts' Mobile Benefits  (version 1.5) includes enhancements which give participants greater insight into their benefit transaction details and history on their Apple or Android powered device.  

1.      Date

2.      Description

3.      Amount

4.      Available Balance

 

Upcoming Enhancements Version 2.0

By the end of July 2011 all participants will be able to download or update the HR Concepts Mobile Benefits application to add receipt images via their mobile devices for claims already submitted via the Consumer Portal. Additional Enhancements to the mobile apps will include: 

Participants with an iPhone , iPod Touch , or iPad will receive a notification via the App Store app on their device and via their iTunes desktop app. The consumer accepts the update, the update is downloaded and installed, and new functionality is available. Participants with an Android device will receive a notification in the notification bar via the Android Market app on their device. The participants accepts the update, the update is downloaded and installed, and new functionality is available.

Transit Plan and Dependent Care Legislation

Industry Update - March 1, 2011

Congress approved a one year extension through 12/31/2011 of the pre-tax mass transit benefit cap of $230 per month. Without the extension, the monthly maximum contribution would be reduced to the prior limit of $120.

The legislation also extends prior expiring changes to the dependent care tax credit, which has the following impact on dependent care benefits:

• Extends the increased tax credit amount for dependent child care expenses under Section 21 (remains $3000/6000 in lieu of $2400/4800)

• Extends the higher assumed earnings amount for an incapacitated or full-time student spouse (remains $250/500 in lieu of $200/400).

In Notice 2010-94, the IRS delayed the effective date for the transit plan debit card ruling (Revenue Ruling 2006-57) until January 1, 2012: http://www.irs.gov/pub/irs-drop/n-10-94.pdf. The delay is to provide transit systems more time to adapt their technology for compatibility with the requirements for vouchers.

HR Concepts' Mobile Benefits

System Enhancements - January 1, 2011

HR Concepts in partnership with Lighthouse1 Mobile is now offering a new way for our participants with an FSA, DCA, HRA, or an HSA account to easily check their available balances using an iPhone, iPod Touch, iPad, or Android powered device! Every consumer enrolled in our system is now enabled to securely access their account and view account balances from anywhere if they have one of these devices! With future releases, Lighthouse1 Mobile will be enhanced to allow consumers to submit claims for reimbursement and send receipts using their mobile device's camera. In addition, upcoming releases will enable consumers with any mobile device, including Blackberry and Palm, to receive account balances and configurable alerts via text message. Because the mobile application is built upon the Lighthouse1 platform, the same logic is used to determine and display active accounts and available balances. So, there's no additional training or support needed for participants to start making use of this new offering. When participants log into the Consumer Portal they will notice updated text referring them to the iTunes App Store and Android Market in order to obtain the application. HR Concepts is committed to providing our employers and partners the highest level of consumer technology in the benefits administration industry and we will continue to work with Lighthouse1 and our partners to ensure that all of our participants will be able to access their information in the most seamless way possible. We hope you appreciate HRC's ongoing efforts towards maintaining a secure and convenient system for managing your accounts with us. Please do not hesitate to contact your account executive if you have further questions.

 

 

 

 

Non-English Language Services now Available!

System Enhancements - February 10, 2011

HR Concepts is now working with a national interpreter service in order to assist all of our non-English speaking participants with questions related to their FSA, DCA, HRA, or HSA plan.   This service allows us to setup a conference call with an interpreter fluent in the language of the participant along with an HR Concepts customer service representative, and the non-English speaking participant.   This service provides interpreters for all of the following languages and dialects listed here.

This list of languages represents over 98.6% of the languages spoken in the world today!   HR Concepts will be able to assist virtually any language need in order to communicate with our participants.   With this added service HR Concepts will also be able to provide professionally trained interpretation that is both HIPAA and GLBA compliant, protecting the privacy of the participant's personal health information (PHI) along with other sensitive personal information (PI).    HR Concepts will continue to identify other ways in which to provide added services to make your benefit plans more efficient and easier to use. 

Medical Flexible Spending Accounts and Over The Counter (OTC) Expenses

  Industry Update - October 29, 2010

 

 

What you need to know about Healthcare Reform and your FSA account

1)     As of January 1, 2011, there are changes occurring in reference to OTC purchases and the use of your Medical Flexible Spending Account.  These changes are part of the Patient Protection and Affordable Care Act signed into law on March 23, 2010.

2)     Many OTC medicines and products will no longer be eligible for reimbursement without a doctor's prescription or Medical Necessity Form.

3)     If you are currently enrolled and using the HRC Total Access Card for your OTC medical expenses, you will no longer be able to use the card for certain expenses once the law takes effect on January 1.

4)     OTC items that are no longer eligible to be put on the card will need to be submitted manually.

5)     In order to be reimbursed manually for certain OTC medicines and products you will need a signed prescription from your doctor or have a Medical Necessity Form filled out.  The additional documentation required for submission will need to be sent to HR Concepts before the claim can be processed and paid in their system.    

The following OTC items are examples of items that require a doctor's prescription or Medical Necessity Form:  

• Acid Controllers                                    
• Digestive Aids
• Allergy & Sinus
• Feminine Anti-Fungal/Anti-Itch
• Antibiotic Products
• Hemorrhoid Preps
• Anti-Diarrheal
• Laxatives
• Anti-Gas
• Motion Sickness
• Anti-Itch & Insect Bite Pain Relief
• Anti-Parasitic Treatments
• Respiratory Treatments
• Baby Rash Ointments/Creams
• Sleep Aids & Sedatives
• Cold Sore Remedies
• Stomach Remedies
• Cough, Cold & Flu Meds 

The following list of OTC items is an example of items that are still eligible for purchase and will not require additional documentation:  

• Band Aids, Elastic Bandages & Wraps
• Birth Control
• First Aid Supplies
• Braces & Supports
•  Insulin & Diabetic Supplies
• Catheters
• Ostomy Products
• Contact Lenses and contact lens solution
• Reading Glasses
• Denture Adhesives
• Wheelchairs, Walkers, Canes
• Diagnostic Tests & Monitors   

HRC will continue to update materials and our web site to keep all of our participants informed of any additional changes based upon the Health Care Reform legislation.

You are can download a copy of the medical necessity form here:

http://hrconcepts.biz/pdf/Letter%20of%20Medical%20Necessity.pdf

 

HR Concepts Recognized by Lighthouse1 for Outstanding Achievements

Industry Update - September 7, 2010

 

 

 

HR Concepts was recently honored by Lighthouse1 with a 2010 Excellence Award for outstanding business achievements. HR Concepts received the Excellence Award for Market Maker at Partner Conference 2010, the annual Lighthouse1 partner conference held recently in Minneapolis.

HR Concepts was selected for this award because of its efforts in working with Lighthouse1 to reach-and surpass-new heights in the consumer-driven healthcare market. HR Concepts is utilizing innovation and creativity to increase plan adoption and revenue generation.

"HRC is committed to the CDHP space and we continually strive to blaze new trails in technology to enhance our clients and their participants' experience in using FSAs, HRAs, and HSAs. Providing the most advanced technology platform, coupled with excellence in customer service and an aggressive pricing model, has earned HRC the position as market leader and best in practice. We at HRC are proud to receive this award from Lighthouse1." (Peter H. Jennings, CEO/President HR Concepts, LLC)

The Excellence Awards, established in 2009, are presented yearly and recognize Lighthouse1 partners that have achieved notable accomplishments with the Lighthouse1 platform. Lighthouse1 partners and team members contributed Excellence Award nominations.

The 2010 Excellence Awards were presented in six categories: New Partner, Evangelism, Leadership, Market Maker, Service, and Partner of the Year. Lighthouse1 and its partners serve more than 2.5 million consumers, making Lighthouse1 the nation's largest web-based healthcare solution that manages HSAs, HRAs, FSAs, and Transit Plans.

 

Medicare Secondary Payer Mandatory Reporting 

  Industry Update - September 1, 2010

 

Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), added mandatory reporting requirements for certain insurers, self-insured entities, and third party administrators that will enable the Center for Medicare and Medicaid Services (CMS) to determine when the Medicare program does not have primary payment responsibility for expenses that are able to be reimbursed by Medicare. To comply with Section 111 reporting, HR Concepts has been tracking in greater detail the data necessary for these reporting requirements. The CMS Section 111 rules apply to different types of plans such as Healthcare Reimbursement Arrangements which would identify HR Concepts as a "Responsible Reporting Entity" or RRE.  Since HR Concepts is administering the HRA plan for a number of our clients we have been taking steps to ensure that we have the most current Medicare related information available to CMS.  Section 111 reporting is required for HRA plans that cover medical benefits though there are exceptions to this which include the following:

 

 

Any employer group who subscribes to an HRA plan with employer funding of at least $1,000 will need to be included with this reporting. This includes employees or dependents aged 45 and older who are enrolled in an HRA. It also includes covered individuals who have been receiving kidney dialysis or who have received a kidney transplant. In order for our systems to be able to identify potential Medicare claimants and to have the most accurate data, we may be requesting additional or updated information in the following areas: 

 
Employee Information:

•   Age
•   Current Medicare beneficiary (yes/no)
•   Medicare ID (HICN)
•   Dependents
•   Current Medicare beneficiary (yes/no)
•   Age
•   SSN
•   Medicare ID (HICN)

Employer Information:

•   Employer size (total # of employees)
•   Plan sponsor name
•   TIN
•   Corporate Address

If HRC is currently administering your HRA plan and you are offering a minimum of $1000 in employer funding our client relations teams will be reaching out to you in the coming weeks to update these data elements.  The initial reporting period designated by CMS will be October 1, 2010 for HRAs with plan years beginning October 1. The first reporting period for HRA plans with a calendar year plan year will be January 1, 2011 to March 31, 2011. We hope you appreciate HR Concepts ongoing efforts towards maintaining our compliance with federal regulations and apologize for any inconvenience this process may incur on your behalf.

The Continuing Extension Act of 2010

 Industry Update - April 22, 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.) 

 

 

Section 132 Parking and Transit Account Update

 Industry Update - March 7, 2009

 

GOOD NEWS: The Emergency Economic Recovery Act signed into law by President Obama on February 17, 2009 provides a significant increase in Commuter Expense allowances for employees from $120.00 to $230.00 per month. Parking Expenses for 2009 remain at $230 a month. These limits are indexed for inflation. 

Internal Revenue Code Section 132 and the Transportation Equity Act for the 21st Century (TEA-21) allows employers to offer employees the opportunity to set aside a portion of their salary to pay for certain transportation expenses. The employee will not be taxed on amounts set aside and used for qualified expenses (that is, pre-tax dollars are used to pay the commuting expenses). Under IRS Section 132 and TEA-21 qualified transportation expenses generally include payments for the use of mass transportation (for example, train, subway, bus fares), and for parking (see further details below).

For 2009 the maximum monthly pre-tax contribution for mass transit was $120.00, and $230.00 for parking; however the $120.00 Commuter Expense was increased to $230.00 on February 17, 2009 by President Obama when he signed The Emergency Economic Recovery Act.

 

How Section 132 Works:

The transportation fringe benefit is similar to the pre-tax flexible spending accounts available for medical expenses and dependent care. One important difference, however, is the transportation benefit does not include a "use it or lose it penalty," as is the case with medical/dependent care flexible spending accounts.

Before the start of the Section 132 plan year, individual employees elected to set aside a certain amount of pre-tax salary to cover qualified costs incurred in commuting to work. The employee will designate an amount (up to $230.00 per month) for mass transit expenses and a separate amount (up to $230.00 per month) for parking expenses -- separate reimbursement accounts are maintained for each category, and funds cannot be commingled or transferred between accounts (for example, amounts cannot be transferred from the mass transit to the parking account).

As the employee incurs Section 132 expenses during the year, a request form may be submitted to the plan administrator for reimbursement. If the employee does not use the full amount before the end of the program year, the left over amount is carried forward to the next year.

 

Who is Eligible Under Section 132:

As a general rule, the transportation fringe benefit can only be provided by employers to employees. Common law employees and officers of corporations are eligible (the law does not include non-discrimination requirements for the benefit). Sole proprietors, partners, independent contractors, and two-percent shareholders of S corporations are not eligible for this transportation fringe benefit.

Qualified Parking Expenses:

Parking expenses that can be paid with pre-tax dollars include the costs of (1) parking a vehicle in a facility that is near the employee's place of work, or (2) parking at a location from where the employee commutes to work (for example, the cost of parking in a lot at the train station so that the employee can continue his/her commute on the train).

 

Qualified Mass Transit Expenses:

Transit passes for mass transportation to and from work. Qualified amounts include costs of any pass, token, fare card, voucher, or other item that entitles the employee to use mass transit for the purpose of traveling to or from his/her place of work. However, when a transit voucher program is readily available, Federal regulations prohibit the use of cash reimbursement as a way to provide transit benefits. Section 132(f) (3) states: Transit Benefits can include cash reimbursement to an employee as long as the reimbursement is for any transit pass, and a voucher or similar instrument which can be used to purchase the transit pass is not readily available for direct distribution to the employee.

The mass transit can be a public system, or a private enterprise provided by a company/individual who is in the business of transporting people in a "commuter highway vehicle." Such a vehicle must have a seating capacity for six or more adults (not including the driver), and at least 80% of the of the vehicles' mileage must be from transporting employees to and from their place of work. Additionally, the vehicle must be carrying at least three passengers (not including the driver). Commuter highway vehicles may be owned or leased by an employer to be used by employees or a third-party provider for transportation purposes. Employees can also own and operate commuter highway vehicles.

 

Healthcare Reimbursement Arrangements (HRA) and COBRA

 

What is an HRA?
A Healthcare Reimbursement Arrangement (HRA) is a self insured health plan sponsored by an employer for the purpose of reimbursing an employee for certain out of pocket expenses associated with being enrolled in the group health plan. With the ever increasing premiums for healthcare coverage, employers are finding it necessary to offer a high deductible health plan to reduce their premium cost. Employers then offer to reimburse some or all of the deductible/co-pays associated with the high deductible health plan that a participant will incur. The HRA allows the employer to reimburse the employee for the covered expenses as outlined by the HRA legal document. Because an HRA is considered a self insured health plan, it is subject to the COBRA laws and regulations.
 
 
HRA and COBRA
Because the HRA is a company sponsored health plan, it is subject to COBRA. Under COBRA, employees have the right to elect to maintain their enrollment in the HRA. By electing to have their HRA while covered under COBRA, employees are able to submit their claims against the account for reimbursement. The real questions is not are employees allowed to have the account, but rather who is going to pay for the HRA expenses?
 
There are two schools of thought regarding who should be funding the HRA while it covers someone on COBRA. Most employers do not charge any premium assessment to the participant on COBRA because of the belief that no premium is being charged for regular employees who are enrolled on the HRA while employed. However, employers do have the right to charge a premium plus 2% to any COBRA participant who elects to have their HRA while on COBRA. To calculate the premium amount, several different methods have been developed; however, no specific guidance has been given by the government. The following methods appear to be the most popular:
 

If it is the first year of the HRA offering, an actuarially method must be used. Some guidance suggest taking the actual maximum claims that could be paid for each category of coverage (single, 2-person, family) and simply calculate this amount by 75%, add 2% for COBRA administration, and divide by 12 months to get a monthly premium per category.

Second year method might use an actuarially method or "past-cost" basis whereby a plan sponsor takes the past claims for the previous year per each category of coverage (single, 2-person, family) and adds the claims up, divide by the amount of covered participants per category, add 2% for COBRA administration, and divide by 12 to get the monthly premium per category.

 
All of the above rates would be calculated each year and rolled out to the COBRA participants. Regardless of which method is used, the entire balance of the annual election could be used from day one of the plan year by the COBRA participant.
 
HR Concepts strives to keep you updated in the regulations and changes that affect all your qualified plans. However, HR Concepts can never provide legal or tax advice. This outline is for discussion purposes only and should not be construed as legal advice or guidance. Any questions regarding COBRA laws and HRA's, an employer is directed to seek their own independent counsel.