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So far Jessica Rogers has created 107 blog entries.

IRS Warning: HSAs, Health FSAs and HRAs Cannot Pay for Personal Health and Wellness Expenses

The IRS recently issued a bulletin to remind taxpayers that tax-advantaged medical savings accounts, such as health flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs), cannot pay for personal expenses for general health and wellness. Similarly, health savings accounts (HSAs) cannot be used to pay for these personal expenses on a tax-free basis.

The IRS provided this reminder as a warning to taxpayers to beware of companies’ misrepresentation of when personal health expenses can be reimbursed by health FSAs, HRAs and HSAs.

Qualified Medical Expenses

Health FSAs, HRAs and HSAs can be used to pay out-of-pocket costs for qualified medical expenses that are not covered by a health plan. Qualified medical expenses must be incurred primarily to alleviate or prevent a physical or mental defect or illness. These expenses include payments for medical services rendered by physicians, surgeons, dentists and other practitioners. They include the costs of equipment, supplies and diagnostic devices needed for these purposes. They also include the costs of medicines and drugs prescribed by a physician. However, expenses that are merely beneficial to general health are not qualified medical expenses.

Nutrition, Wellness and General Health Expenses

The IRS maintains a set of FAQs addressing when costs related to nutrition, wellness and general health are qualified medical expenses. These FAQs clarify that these costs are qualified medical expenses only in narrow circumstances. For example:

  • The cost of nutritional counseling or a weight-loss program is a qualified medical expense only if it treats a specific disease diagnosed by a physician (such as obesity or diabetes).
  • The cost of nutritional supplements is a qualified medical expense only if the supplements are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician.

    • …

By |March 10th, 2024|Employee Communications, IRS|Comments Off on IRS Warning: HSAs, Health FSAs and HRAs Cannot Pay for Personal Health and Wellness Expenses
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Employers Must File ACA Returns Electronically by April 1, 2024

The Affordable Care Act (ACA) created reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. Under these rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees.

Under the original rules, any reporting entity that was required to file at least 250 individual statements under Sections 6055 or 6056 had to file electronically. However, on Feb. 23, 2023, the IRS released a final rule implementing a law change by the Taxpayer First Act of 2019, which lowers the 250-return threshold for mandatory electronic reporting to 10 returns. This means most reporting entities will be required to complete their ACA reporting electronically starting in 2024.

This ACA Compliance Bulletin describes the process for reporting electronically under Sections 6055 and 6056.

Action Steps

Employers that have not requested an extension or an electronic filing waiver, and that are subject to the ACA reporting rules should be exploring options for filing ACA reporting returns electronically to ensure filing is completed by the April 1, 2024, deadline. For example, they may be able to work with a third-party vendor to complete the electronic filing.

Reporting entities that may be in a position to perform their own electronic reporting can review the IRS’ ACA Information Returns (AIR) Program main page for more information on the reporting standards for composing and successfully transmitting compliant submissions to the IRS.

The IRS has designated the AIR Help Desk as the first point of contact for electronic filing issues (1-866-937-4130).

Electronic Reporting Requirement

In prior years, any reporting entity that was required to file at least 250 individual statements under Sections 6055 or 6056 had to file electronically, and this requirement applied separately to each …

By |March 5th, 2024|Affordable Care Act, Compliance, Health Care Reform, IRS|Comments Off on Employers Must File ACA Returns Electronically by April 1, 2024
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Fair Employment – Equal Pay Laws For New Jersey

The federal Equal Pay Act (EPA) requires that men and women receive equal pay for equal work in the same establishment. In addition to the federal EPA, many states, including New Jersey, have enacted their own equal pay laws prohibiting wage discrimination based on gender and other characteristics.

This Employment Law Summary provides an overview of New Jersey’s Diane B. Allen Equal Pay Act (NJEPA), which prohibits certain pay differentials between men and women, and the Law Against Discrimination (LAD), which was amended by the NJEPA to expand protections against unequal pay based on various protected traits.

COVERED EMPLOYERS

The NJEPA applies to virtually all employers in the state, other than nonprofit hospital associations or corporations, and generally protects all employees, both male and female. However, it does not protect volunteers providing service for a nonprofit organization, farm workers, or domestic servants in a private home or hotel.

The LAD is a broader anti-discrimination law that prohibits a variety of entities, including all employers with one or more employees in the state (other than employers of domestic servants), from discriminating in compensation or against employees or job applicants based on any of several characteristics.

PROHIBITED PAY PRACTICES

The NJEPA prohibits employers from discriminating in any way in the rate or method of payment of wages to any employee based on sex. In addition, the LAD prohibits employers from discriminating against employees or applicants in compensation or the terms, conditions or privileges of employment based on any of the following, which are known as protected traits:

  • Race (including “traits historically associated with race,” such as hair texture, hair type and protective hairstyles);
  • Color;
  • Age (18+);
  • Sex (including pregnancy or breastfeeding);
  • Affectional or sexual orientation;
  • Gender identity or expression;
  • Creed/religion;
  • Marital status;

    • …

By |March 3rd, 2024|Broad Reach Benefits, Disability, Employee Benefits, Employee Communications, Human Resources, Legislation, U.S. Department of Labor|Comments Off on Fair Employment – Equal Pay Laws For New Jersey
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Legal Alert- Judge Delays Effective Date of NLRB’s New Joint-employer Standard to March 11

On Feb. 22, 2024, a federal judge in the U.S. District Court for the Eastern District of Texas delayed the implementation of a National Labor Relations Board (NLRB) new joint-employer rule to Mar. 11, 2024. The NLRB’s joint-employer rule had been set to take effect on Feb. 26, 2024.

The New Joint-employer Standard

The 2023 joint-employer standard establishes new criteria for determining joint-employer status as applied to labor issues related to the National Labor Relations Act. It will rescind the existing 2020 joint-employer standard and replace it with a more inclusive law, making it easier for employers to be classified as joint employers. Notable changes to the joint-employer standard include the following:

  • A clarification of the definition of “essential terms and conditions of employment;”
  • An identification of the types of control that are necessary to establish joint-employer status and the types that are irrelevant to the joint-employer inquiry; and
  • A description of the bargaining obligations of joint employers.

The existing rule requires joint employers to “possess and exercise … substantial direct and immediate control” over one or more essential terms and conditions of employment. The new rule will require only that joint employers have the authority to control one or more essential terms and conditions of employment, regardless of whether such control is exercised or whether such control is direct or indirect.  This more inclusive rule may result in more employers—particularly contractors and subcontractors—being reclassified as joint employers by the rule’s effective date.

Terms and Conditions of Employment

The 2023 rule limits essential terms and conditions of employment to:

  1. Wages, benefits and other compensation;
  2. Hours of work and scheduling;
  3. The assignment of duties to be performed;
  4. The supervision of the performance of duties;
  5. Work rules and directions governing the manner, …
By |February 25th, 2024|Uncategorized|Comments Off on Legal Alert- Judge Delays Effective Date of NLRB’s New Joint-employer Standard to March 11
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Legal Alert- DOL Releases Audit Results of ERISA Enforcement During 2023

The U.S. Department of Labor (DOL) has released the results of its Employee Benefits Security Administration’s (EBSA) enforcement actions during fiscal year (FY) 2023.

Through its enforcement of the Employee Retirement Income Security Act (ERISA), the EBSA oversees approximately 2.8 million health plans, 765,00 private pension plans, and 619,000 other welfare benefit plans. According to the audit, these plans cover 153 million workers, retirees and dependents.

Enforcement Statistics

In FY 2023, EBSA recovered over 1.4 billion dollars for plans, participants and beneficiaries. Other key EBSA enforcement results include the following:

  • EBSA closed 731 civil investigations. Of these, 69% resulted in monetary results for plans or other corrective actions;
  • EBSA referred 50 cases for civil litigation and closed 196 criminal investigations; and
  • EBSA’s criminal investigations led to the indictment of 60 individuals—including plan officials, corporate officers and service providers—for offenses related to employee benefit plans.

Compliance Assistance Statistics

The DOL audit fact sheet also includes statistics for the EBSA’s compliance assistance programs, the Voluntary Fiduciary Correction Program (VFCP) and the Delinquent Filer Voluntary Compliance Program (DFVCP).

The VFCP allows plan officials who have identified specified ERISA violations to take corrective action to remedy the breaches and voluntarily report the violations to EBSA without becoming the subject of an enforcement action. In FY 2023, EBSA received 1,192 applications through the VFCP.

The DFVCP encourages plan administrators to bring their plans into compliance with ERISA’s filing requirements. EBSA received 18,955 annual reports through this program in FY 2023, and the EFAST2 Help Desk handled over 16,000 inquiries to help filers meet their reporting obligations.

Enforcement Resources

The EBSA has a dedicated enforcement webpage, which includes outlines of ERISA civil violations and criminal provisions, as well as enforcement accomplishments and national enforcement priorities and projects. There …

By |February 14th, 2024|Compliance, Legislation|Comments Off on Legal Alert- DOL Releases Audit Results of ERISA Enforcement During 2023
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IRS Releases ACA Pay-or-Play Penalties for 2025

On Feb. 12, 2024, the IRS released updated penalty amounts for 2025 related to the employer shared responsibility (pay-or-play) rules under the Affordable Care Act (ACA). For calendar year 2025, the adjusted $2,000 penalty amount is $2,900, and the adjusted $3,000 penalty amount is $4,350. This is a decrease from the penalty amounts for the 2024 calendar year, which are $2,970 and $4,460, respectively.

Pay-or-Play Penalty Calculations

Under the pay-or-play rules, an applicable large employer (ALE) is only liable for a penalty if at least one full-time employee receives a subsidy for Exchange coverage. Employees who are offered affordable, minimum-value (MV) coverage are generally not eligible for these Exchange subsidies.

Depending on the circumstances, one of two penalties may apply under the pay-or-play rules: the 4980H(a) penalty or the 4980H(b) penalty.

  • Under Section 4980H(a), an ALE will be subject to a penalty if it does not offer coverage to “substantially all” (generally, at least 95%) of its full-time employees (and dependents) and any one of its full-time employees receives a subsidy toward their Exchange plan. The monthly penalty assessed on ALEs that do not offer coverage to substantially all full-time employees and their dependents is equal to the ALE’s number of full-time employees (minus 30) multiplied by 1/12 of $2,000 (as adjusted) for any applicable month.

 

  • Under Section 4980H(b), ALEs that offer coverage to substantially all full-time employees (and dependents) may still be subject to a penalty if at least one full-time employee obtains a subsidy through an Exchange because the ALE did not offer coverage to all full-time employees, or the ALE’s coverage is unaffordable or does not provide MV. The monthly penalty assessed on an ALE for each full-time employee who receives a subsidy is …
By |February 13th, 2024|Broad Reach Benefits, Compliance, Human Resources, IRS|Comments Off on IRS Releases ACA Pay-or-Play Penalties for 2025
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Legal Alert- Medicare Part D Disclosures due by Feb. 29, 2024 for Calendar Year Plans

Each year, group health plan sponsors are required to complete an online disclosure form with the Centers for Medicare & Medicaid Services (CMS), indicating whether the plan’s prescription drug coverage is creditable or non-creditable. This disclosure requirement applies when an employer-sponsored group health plan provides prescription drug coverage to individuals who are eligible for coverage under Medicare Part D.

CMS Disclosure Deadline

The plan sponsor must complete the online disclosure within 60 days after the beginning of the plan year. For calendar year health plans, the deadline for the annual online disclosure is Feb. 29, 2024 (since 2024 is a leap year).

In addition to the annual disclosure requirement, the disclosure to CMS must be made whenever any change occurs that affects whether the coverage is creditable. More specifically, within 30 days after any change in the plan’s creditable coverage status or after the termination of a plan’s prescription drug coverage.

Online Disclosure Method

Plan sponsors are required to use the online disclosure form on the CMS creditable coverage website. This is the sole method for compliance with the disclosure requirement unless the entity does not have internet access.

The disclosure form lists the required data fields that must be completed in order to generate the disclosure notice to CMS, such as types of coverage, number of options offered, creditable coverage status, period covered by the disclosure notice, number of Part D-eligible individuals covered, date the creditable coverage disclosure notice is provided to Part D-eligible individuals, and change in creditable coverage status.

CMS has also provided guidance and instructions on how to complete the form.

Action Steps

To determine whether the CMS reporting requirement …

By |February 5th, 2024|Compliance, Employee Benefits, Employee Benefits Adviser, Medical|Comments Off on Legal Alert- Medicare Part D Disclosures due by Feb. 29, 2024 for Calendar Year Plans
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Legal Alert- DOL Updates Model Employer CHIP Notice

The U.S. Department of Labor (DOL), through its Employee Benefits Security Administration (EBSA), has released a new model Employer CHIP Notice with information current as of Jan. 31, 2024.

Background

As a reminder, the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) imposes an annual notice requirement on employers that maintain group health plans in states that provide premium assistance subsidies under a Medicaid plan or a Children’s Health Insurance Plan (CHIP).

An employer can choose to provide the notice on its own or concurrent with the furnishing of:

  • Materials notifying the employee of health plan eligibility;
  • Materials provided to the employee in connection with an open season or election process conducted under the plan; o
  • The summary plan description (SPD).

Covered Employers

An employer is subject to this annual notice requirement if its group health plan covers participants who reside in a state that provides a premium assistance subsidy, regardless of the employer’s location.

The DOL’s model notice, which employers may use for this disclosure, is updated periodically to reflect changes in the states that offer premium assistance subsidies. The DOL’s model Employer CHIP Notice includes information current as of Jan. 31, 2024.

Employers could also choose to prepare their own notices or modify the model notice. Employers should be sure to include at least the minimum relevant state contact information for any employee residing in a state with premium assistance.

Employer Resources

The EBSA’s CHIPRA webpage includes the latest model notice (English language and Spanish language versions are available), a fact sheet, a compliance assistance guide and other publications for employers and advisers.

By |February 4th, 2024|Broad Reach Benefits, Human Resources, U.S. Department of Labor|Comments Off on Legal Alert- DOL Updates Model Employer CHIP Notice
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Compliance Matters: 30-Day Grace Period Election Myth

Myth: 

Employees may change their pre-tax election if they do so within 30 days of when the election first becomes effective.

Ex: Peanut’s Pro Shop has open enrollment from 11/1-11/15 and benefi ts become effective 1/1. Peanut’s Pro Shop allows employees to make changes to their elections if made prior to 1/31.

Fact:

Although most carriers will allow insurance elections to be changed within 30 days, there is no 30-day grace period under Code §125 permitting a change to a pretax election. Once the period of coverage starts, elections are irrevocable and may not be changed during the plan year unless another permissible midyear change in status event as recognized by Code §125 occurs, permitting the change to a pretax election.

The IRS has informally indicated that when there is “clear and convincing evidence” a mistake has been made an employer may correct the mistake.

  • Ex: Peanut’s Pro Shop discovers after open enrollment when auditing their first invoice in January that an administrative error occurred. Charlie elected employee-only coverage on his enrollment form but he is showing enrolled in family coverage on the invoice.

However, when an employee changes their mind or it is unclear whether it was a genuine mistake (i.e. subjective vs. objective), there is no IRS guidance suggesting a change is permissible.

An employer permitting a change to an employee’s unproven mistake risks jeopardizing the tax qualifi ed status of the entire plan, not just the employee whom which the change was made.  In other words, according to the regulations, failure to follow the terms of the plan or otherwise failing to comply with the requirements of Code §125, the plan is not a cafeteria plan and employees’ elections between taxable and nontaxable benefi ts will result in gross …

By |January 15th, 2024|Compliance|Comments Off on Compliance Matters: 30-Day Grace Period Election Myth
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7 Key Employee Benefits Trends in 2024

Attracting and retaining employees has challenged employers since the onset of the COVID-19 pandemic. In 2024, the labor market is expected to cool slightly; however, competition for talent will remain. As such, employers must remain agile and adapt to developing labor and market trends that will shape the market in 2024. In particular, current labor challenges are forcing employers to find ways to balance rising health care costs and inflation while providing employees with benefits they value and need. Understanding this year’s key employee benefits trends can help employers attract and retain talented individuals in an evolving labor market.

This article discusses seven key employee benefits trends in 2024.

1.     Managing Health Care Costs

High inflation, provider shortages, an increase in serious chronic conditions and deferred care due to the pandemic continue to drive health care costs. According to several industry surveys and reports, employers anticipate health care costs to grow between 6% and 8.5% in 2024, the largest increase in more than a decade. This year, employers may struggle to mitigate skyrocketing health care costs while keeping benefits affordable for employees. Thus, many employers will plan and implement multiple cost-saving strategies in 2024 to mitigate rising health care costs, such as:

  • Modifying health plan designs
  • Incorporating health care analytics
  • Using artificial intelligence to streamline administrative workflows, help employees make informed benefits decisions and decrease costs
  • Implementing pharmacy management strategies
  • Maintaining full coverage of recommended prevention and screening services
  • Tailoring benefits to meet employees’ specific needs
  • Expanding voluntary benefits offerings
  • Improving employee health care literacy
  • Investing in more virtual health opportunities
  • Incentivizing employees to seek cost-effective care options
  • Revisiting cost-sharing arrangements

2.     Increasing Personalization and Flexibility

The modern workforce is comprised of four or five generations of workers from various …

By |January 9th, 2024|Employee Benefits, Employee Communications|Comments Off on 7 Key Employee Benefits Trends in 2024
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