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  • June 2019

Blogs June 2019

  1. Expanded HRA Offerings Coming in 2020

    System Administrator – Thu, 27 Jun 2019 00:21:21 GMT – 0

    A recently issued rule (published jointly by the IRS, DOL, and HHS) that loosens restrictions on health reimbursement arrangements (HRA) creates two new types of HRAs effective January 1, 2020:

    Individual Coverage HRA (ICHRA)

    Employers will be able to offer reimbursement through an ICHRA for individual health insurance coverage for employees and their dependents, including individual health insurance policies and health insurance purchased on the Exchanges. Previously, employers were prevented from offering stand-alone HRAs providing tax-favored reimbursement for coverage on the individual market. 


    Excepted Benefit HRA (EBHRA)

    Employers that offer “regular” group health insurance coverage can also offer a special HRA to reimburse workers for health insurance expenses like deductibles, copays, dental, and vision costs.  The maximum annual benefit is $1,800.   

    The DOL has indicated that these new HRAs will increase coverage choices, increase portability of coverage, and generally improve worker economic well-being.  They expect this expansion of HRAs to benefit approximately 800,000 employers, including small businesses, and more than 11 million employees and family members, including an estimated 800,000 Americans who were previously uninsured.  Industry groups hailed the final rule, saying it would boost access to healthcare.   

    Vita will be providing additional details on these new HRA options to employers in the coming months.   

    • Pre-Tax
  2. 2020 Health Savings Account (HSA) Limits Announced

    System Administrator – Wed, 19 Jun 2019 03:31:17 GMT – 0

    The Internal Revenue Service has announced the 2020 dollar limitations for Health Savings Accounts as well as underlying qualifying High Deductible Health Plans. The maximum HSA contribution, out of pocket maximum limits, and the minimum deductible for high deductible health plans saw increases at both the family and individual levels.

    High Deductible Health Plan Policy Limits

      2019 2020
    Minimum Deductible Individual   $1,350 $1,400
      Family $2,700 $2,800
           
    Maximum Out of
    Pocket Limit
    Individual  $6,750 $6,900
      Family $13,500 $13,800

     

    Health Savings Account Limits

        2019 2020
    Maximum HSA Contribution Individual   $3,500   $3,550
      Family $7,000 $7,100
           
    Over Age 55 Catch-Up Contribution   $1,000  $1,000

     

    High Deductible Health Plan Policy Limits

    Any amount can be contributed to an HSA up to the maximum annual contribution, regardless of the actual deductible of the underlying HDHP plan. The HSA contribution rules assume that you will be enrolled on a high deductible health plan for 12 consecutive months.


    Embedded Deductibles on an HSA-Qualified HDHP

    Many qualified high deductible health plans have an aggregate family deductible so that if an employee covers any dependents on the plan, the family deductible applies and the individual deductible is not taken into consideration. However, there are some plans that have an embedded individual deductible such that if one member of the family meets the embedded individual deductible, then the plan coinsurance would start to pay once that individual deductible is met.  In order for such a plan to be a qualified HDHP the embedded individual deductible must be at least the minimum family deductible outlined above. As an example, these types of plans would need to have an embedded individual deductible of $2,800 to remain HSA qualified in 2020.

    2020 Pre-Tax Contribution Limits
    2020 Retirement Plan Limits

    • Pre-Tax
  3. LGBTQ-Inclusive Policies Benefit Employees and Business

    System Administrator – Thu, 13 Jun 2019 04:09:50 GMT – 0

    June is national LGBTQ Pride Month, and organizations across the U.S. are showing support through vibrant media campaigns and messages of diversity and inclusion, which is good for the LGBTQ community...and for business. A recent report by the U.S. Chamber of Commerce Foundation concluded that companies with LGBTQ-inclusive policies have higher employee retention rates and earn more revenue. It also outlined the steps these companies are taking to build an inclusive workplace.

    The report, released in partnership with the Gill Foundation, looked at the adoption of LGBTQ-inclusive practices and their outcomes. The research included online surveys, phone interviews, and focus groups with participating companies.


    Employee concerns

    While the report found that companies are increasingly addressing LGBTQ issues, it also found that, in spite of the growing resources available to LGBTQ employees, nearly half choose not to disclose their sexual orientation at work. This is likely because there are no federal laws that protect LGBTQ employees from discrimination and legal protections can vary by state.

    And many employees fear the social repercussions of disclosing this information. According to the report, 40% of LGBTQ employees said they have been bullied at work. Another 41% have left a job as a result of feeling bullied.

    A 2017 Deloitte study found that 80% of respondents said they look for employers that are inclusive. And, 72% are willing to leave their current job if they find another one that is more inclusive.

    Research shows that employees who work in inclusive workplaces report greater job satisfaction, regardless of their sexual orientation; and LGBTQ employees tend to be healthier, more productive and have better relationships with other employees.


    The impact on businesses

    The business community as a whole is increasingly supportive of LGBTQ-inclusive policies.

    In fact, the report found that 91% of Fortune 500 companies include sexual orientation in their nondiscrimination policies and 83% include gender identity.

    Studies also show that companies that adopt inclusion policies see their stock performance increase by an average of 6.5 percentage points. Plus, these companies are also able to create strong partnerships with community organizations and employee groups. Diverse teams solve problems faster and are more financially successful. This helps them outperform competitors.


    How companies are implementing these policies

    Given the ongoing legal inconsistencies, it’s up to businesses to foster an inclusive workplace.

    Nearly all of the companies that participated in the study have formal non-discrimination policies in place and some implement additional practices, including:

    • LGBTQ awareness training
    • Inclusive management strategies
    • Expanding the definition of paid family leave for all employees
    • Same-sex benefits coverage
    • Tax equalization
    • Reimbursement for fertility treatment

    Through implementing inclusive policies, these companies learned the value of investing in relationships with their LGBTQ employees. And company leaders learned that authenticity is key to building an inclusive workplace for all employees.


    LGBTQ Workplace Equality Resources

    Human Rights Campaign (HRC) Corporate Equality Index
    Out & Equal

    • Employee Benefits
  4. 6 Questions on Dependent Care Spending Accounts

    System Administrator – Thu, 13 Jun 2019 02:54:04 GMT – 0

    School’s out! Summer is here, and it’s the time of year when working parents have questions about using their Dependent Care Spending Accounts (DCSAs). Are summer camp expenses eligible? What about day versus overnight camps? Employers want to be ready with answers about this valuable benefit program.

    The following are the top summertime questions about DCSAs and reimbursable expenses:


    1. What are the basic rules for reimbursable expenses?

    Dependent care expenses, such as babysitting and daycare center costs, must be work-related to qualify for reimbursement. Work-related means the expenses are for the care of the employee’s child under age 13 to allow the employee to work. If the employee is married and filing jointly, the employee’s spouse also must be gainfully employed or looking for work (unless disabled or a full-time student).

    In some cases, expenses to care for a disabled dependent, regardless of age, may be reimbursable. This article focuses on expenses for children under 13 since those are by far the most common type of DCSA reimbursement.


    2. One of our employees and his family are taking a two-week vacation this summer, but his children’s daycare center will charge its regular fee. Are the expenses reimbursable even if the employee and spouse are off work?

    Yes. In most cases, expenses are not eligible unless the dependent care services are necessary for the parents to work, but some exceptions apply. The IRS rules for DCSAs provide that expenses during short, temporary absences are eligible if the employee has to pay the child’s care provider. Absences of up to two weeks are automatically considered short, temporary absences. Depending on the circumstances, longer absences also may qualify.


    3. During the school year, our employee uses her DCSA for her 10-year old’s after-school daycare center expenses. This summer, the child’s daycare will be provided by her 20-year old sister. If the older daughter bills for her services, are the costs eligible for reimbursement?

    The answer depends on whether the employee or spouse can claim the older daughter as a tax dependent. If the older daughter can be claimed as a dependent, whether or not the employee actually claims her, she is not a qualifying dependent care provider under the DCSA rules.

    If the older daughter cannot be claimed as a tax dependent, her charges for providing care are eligible expenses. The specific rule is that a child of the employee, whom the employee cannot claim as a dependent, may be a qualifying provider if the child is age 19 or older by the end of the year.

    Note that the employee’s spouse or the child’s parent is never a qualifying provider.


    4. One of our employees has to pay an application fee and deposit before her child starts attending a daycare center this summer. Are those expenses eligible for reimbursement?

    Prepaid expenses are eligible for DCSA reimbursement, provided the costs are required in order for the child to receive care. In this case, after the daycare center begins providing care, the employee can be reimbursed for the application fee and deposit she paid. On the other hand, if the employee cancels and her child does not attend, then the application fee and deposit are not eligible expenses.


    5. An employee will pay day camp expenses for his 8-year-old son and overnight camp expenses for his 12-year-old daughter this summer. Are both types of expenses eligible for reimbursement?

    The day camp expenses generally are reimbursable. Expenses for overnight camp, however, are not eligible since overnight care is not work-related.

    Under the IRS rules for DCSAs, expenses for food, lodging, clothing, education, and entertainment are not reimbursable. If, however, such expenses are small, incidental expenses that cannot be separated from the cost of caring for the child, they may be included for reimbursement. For instance, the day camp may include lunch, snacks, and some sports activities in its basic fee, which would be eligible for reimbursement.


    6. An employee’s children go to private year-round schools. He pays tuition for one child’s grade school and fees for the other child’s nursery school. Are both types of expenses eligible for reimbursement?

    Educational expenses are not reimbursable, unless the educational services are merely incidental as part of a child care service. Expenses to attend kindergarten or a higher grade are educational, so the older child’s school fees are not eligible for DCSA reimbursement. (Expenses for before- or after-school care, however, may qualify as reimbursable expenses.)

    On the other hand, expenses for a child in nursery school, preschool, or a similar program for children below the level of kindergarten are expenses for care. Such expenses are not considered educational even though the nursery school may include some educational activities.

    For detailed information about expenses eligible for DCSA reimbursement, the IRS provides a helpful guide: Publication 503 “Child and Dependent Care Expenses”. Have a fun summer!

    This article was originally published by ThinkHR.

    • Pre-Tax
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