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A Section 125 premium-only-plan (POP), is a cafeteria plan which allows employees to pay their health insurance premiums with tax-free dollars. Traditionally, POP plans have been used in combination with employer-sponsored group health insurance plans. However, employees can also use POP plans to pay individual health insurance premiums with tax-free dollars. Using a Section 125 POP to pay for insurance premiums benefits both employers and their employees.
A Summary Plan Description (SPD) is a document that employers must give free to employees who participate in Employee Retirement Income Security Act-covered retirement plans or health benefit plans. The SPD is a detailed guide to the benefits the program provides and how the plan works.
The U.S. Department of Labor, Internal Revenue Service, and the Pension Benefit Guaranty Corporation jointly developed the Form 5500 Series, so employee benefit plans could utilize the Form 5500 Series forms to satisfy annual reporting requirements under Title I and Title IV of ERISA and under the Internal Revenue Code.
Once a Form 5500 is completed and filed, you must prepare a Summary Annual Report (SAR) for each of your welfare benefit plans subject to ERISA reporting. After submitting, the SAR summarizes Form 5500 information. Then notifies participants that Form 5500 and a copy is available to participants who request. SARs must be distributed to covered participants within nine months after the end of the plan year. A sample SAR format is accessible from https://www.dol.gov/.
If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an Applicable Large Employer (ALE) for the current calendar year and are required to provide medical insurance and submit ACA Reports annually to employees and the IRS to avoid penalties.
Determine ALE status for 2019 based on 2018 data. Identify full-time employees based on the ACA's definition of full time (averaging 30 hours of work or more per week during a month), considering special classifications such as staffing employees, independent contractors, temporary or short-term employees, and even interns. Assess whether the monthly measurement method or look-back measurement method to determine full-time status is best, based on the nature of the company's workforce.
Update plan documents and summary plan descriptions, if necessary, for the measurement method selected. Select the appropriate safe harbor the company will use for the affordability calculation: W-2, rate of pay, or federal poverty line. Make sure Social Security number request obligations are being fulfilled. Check reporting obligations for non-ALEs that self-insured group health plans. Review the instructions for required forms, noting changes from prior years.
HR Compliance entails:
The following are examples, to date, of requirements that employers have most frequently failed to follow:
You can change plans through August 15 due to the coronavirus disease 2019 (COVID-19) emergency. If you’re currently enrolled in Marketplace coverage, you may qualify for more tax credits. Learn more about new, lower costs.
If you’re currently enrolled in Marketplace coverage, you may qualify for more tax credits.
If you’re losing job-based coverage and haven’t signed up for COBRA, learn about your rights and options under COBRA HERE.
Generally, no. If you only have a cafeteria plan, you are not required to file Form 5500 or Schedule F. However, if you have a welfare benefit plan, you may be required under Department of Labor regulations to file a return for that plan.
An HSA is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using un taxed dollars in a Health Savings Account (HSA) to pay for deductibles, co-payments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums.
You cannot contribute to your HRA. It is owned, defined, and completely funded by your employer. It’s one of the ways your employer helps you make healthcare more affordable.
A flexible spending account (FSA) is a type of savings account that provides the account holder with specific tax advantages.
You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you don’t itemize your deductions on Schedule A (Form 1040).
Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
The contributions remain in your account until you use them.
The interest or other earnings on the assets in the account are tax-free.
Distributions may be tax-free if you pay qualified medical expenses.
An HSA is "portable." It stays with you if you change employers or leave the workforce.
IRS contribution limits in 2020 allow you to set aside $2,750 into a medical or limited FSA and $5,000 into a dependent care FSA.
ICHRA allows businesses the option to offer employees a monthly allowance of tax-free money to buy health insurance that fits their needs. ICHRA also
addresses ACA compliance for employers with more than 50 employees.
ICHRA Helps Employer and Employee
Amounts contributed by employers are contributions to a health and welfare plan, and therefore are a qualified business expense.
Contributions by employers do not add to an employee’s income that now becomes a tax-free benefit.
Small employers who don't offer group health coverage to their employees can help employees pay for medical expenses through a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). If your employer offers you a QSEHRA, you can use it to help pay your household's health care costs (like your monthly premium) for qualifying health coverage.