Benefits Buzz: November 2019

IRS Increases Health FSA Contribution Limit for 2020, Adjusts Other Benefit Limits

 

IRS Releases Draft 2019 ACA Reporting Forms and Instructions

 

Summary of the 2019 Employer Health Benefits Annual Survey

 

Using Voluntary Benefits to Entice Millennial Talent

 

IRS Increases Health FSA Contribution Limit for 2020, Adjusts Other Benefit Limits

On November 6, 2019, the Internal Revenue Service (IRS) released Revenue Procedure 2019-44, which raises the health Flexible Spending Account (FSA) salary reduction contribution limit by $50 to $2,750 for plan years beginning in 2020. The Revenue Procedure also contains the cost-of-living adjustments that apply to dollar limitations in certain sections of the Internal Revenue Code.

Qualified Commuter Parking and Mass Transit Pass Monthly Limit Increase

For 2020, the monthly limits for qualified parking and mass transit are $270 each (up $5 from 2019).

Adoption Assistance Tax Credit Increase

For 2020, the credit allowed for adoption of a child is $14,300 (up $220 from 2019). The credit begins to phase out for taxpayers with modified adjusted gross income in excess of $214,520 (up $3,360 from 2019) and is completely phased out for taxpayers with modified adjusted gross income of $254,520 or more (up $3,360 from 2019).

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) Increase

For 2020, reimbursements under a QSEHRA cannot exceed $5,250 (single) / $10,600 (family), an increase of $100 (single) / $150 (family) from 2019.

Reminder: 2020 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

Earlier this year, the IRS announced the inflation adjusted amounts for HSAs and high deductible health plans (HDHPs).

 2020 (single/family)2019 (single/family)
Annual HSA Contribution Limit$3,550 / $7,100$3,500 / $7,000
Minimum Annual HDHP Deductible$1,400 / $2,800$1,350 / $2,700
Maximum Out-of-Pocket for HDHP$6,900 / $13,800$6,750 / $13,500

The ACA’s out-of-pocket limits for in-network essential health benefits have also increased for 2020. Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage if the family out-of-pocket limit is above $8,150 (2020 plan years). Exceptions to the ACA’s out-of-pocket limit rule are also available for certain small group plans eligible for transition relief (referred to as “Grandmothered” plans). Unless extended, relief for Grandmothered plans ends December 31, 2020.

 2020 (single/family)2019 (single/family)
ACA Maximum Out-of-Pocket$8,150 / $16,300$7,900 / $15,800

ACA Reporting Penalties (Forms 1094-B, 1095-B, 1094-C, 1095-C)

The table below describes penalties related to returns filed in the applicable year (e.g., the 2020 penalty is for returns filed in 2020 for calendar year 2019). Note that failure to issue a Form 1095-C when required may result in two penalties, as the IRS and the employee are each entitled to receive a copy (increased for willful failures, with no cap on the penalty).

Penalty Description2021 Penalty2020 Penalty
Failure to file an information return or provide a payee statement $280 for each return with respect to which a failure occurs$270 for each return with respect to which a failure occurs
Annual penalty limit for non-willful failures$3,392,000$3,339,000
Lower limit for entities with gross receipts not exceeding $5M $1,130,500$1,113,000
Failures corrected within 30 days of required filing date$50$50
Annual penalty limit when corrected within 30 days$565,000$556,500
Lower limit for entities with gross receipts not exceeding $5M when corrected within 30 days$197,500$194,500
Failures corrected by August 1$110$110
Annual penalty limit when corrected by August 1$1,696,000$1,669,500
Lower limit for entities with gross receipts not exceeding $5M when corrected by August 1$565,000$556,500
Failure to file an information return or provide a payee statement due to intentional disregard$560 for each return with respect to which a failure occurs (no cap)$550 for each return with respect to which a failure occurs (no cap)

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IRS Releases Draft 2019 ACA Reporting Forms and Instructions

The IRS has released draft forms and instructions for the 2019 B-Series and C-Series reporting forms (Forms 1094-B, 1095-B, 1094-C and 1095-C) used by employers and coverage providers to report certain information to full-time employees and the Internal Revenue Service (IRS).

As background, the Affordable Care Act (ACA) added Sections 6055 and 6056 to the Internal Revenue Code. These sections require employers, plans, and health insurance issuers to report health coverage information to the IRS and to participants annually. Section 6055 reporting requirements apply to insurers, employers that sponsor self-insured group health plans, and other entities that provide minimum essential coverage (such as multiemployer plans). Section 6056 reporting requirements apply to “applicable large employers” or “ALEs” (generally, employers with 50 or more full-time employees) and require reporting of health care coverage provided to the employer’s full-time employees.

Reporting under Sections 6055 and 6056 involves two sets of forms: the “B-Series” (Forms 1094-B and 1095-B); and the “C-Series” (Forms 1094-C and 1095-C). Each includes a transmittal form (Form 1094-B or 1094-C), which serves as a cover page and provides aggregate information, and an individualized form (Form 1095-B or 1095-C) for each employee for whom the employer is required to report.

The forms for calendar year 2019 are due to employees by January 31, 2020. Forms are due to the IRS by February 28, 2020 if filing by paper and by March 31, 2020 if filing electronically. The forms that must be filed and distributed depend on whether the employer is an ALE and the type of coverage provided. Employers filing 250 or more of a particular form are required to file with the IRS electronically. The following table summarizes the responsible parties and forms applicable to the ACA’s reporting requirements.

Responsible EntityFully Insured PlanSelf-Funded Plan
Applicable Large Employer (ALE)
50 or more full-time equivalent employees on average in prior calendar year
Forms 1094-C and 1095-C
(Parts I and II of Form 1095-C)
Forms 1094-C and 1095-C
(Parts I, II, and III of Form 1095-C)
Either B-Series or C-Series Forms for covered non-employees
Non-ALE
Fewer than 50 full-time equivalent employees on average in prior calendar year
Not required to file Forms 1094-B and 1095-B
Insurance CarrierForms 1094-B and 1095-BNot Applicable

The draft forms and instructions can be found here:

The draft instructions reflect the newly increased penalty structure (generally leaving the penalty at $270 per return, but increasing the penalty cap from $3.275 million to $3.339 million).

Note Regarding 2019 Form 1095-C, Line 15. The section 4980H “affordability” safe harbor percentage threshold is adjusted to 9.86% for plan years beginning in 2019, up from 9.56%.
Employers should continue to work closely with their insurance broker and other trusted advisors when determining how their organization will address the reporting requirements. Unless extended, 1095-C and 1095-B forms for the 2019 calendar year are due to participants by January 31, 2020. Forms 1094/1095-C and 1094/1095-B are due to the IRS by February 28, 2020 if filing by paper and by March 31, 2020 if filing electronically. Employers should endeavor to file timely, as the IRS has begun enforcing penalties against employers who have failed to file timely or file electronically when required.

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Summary of the 2019 Employer Health Benefits Annual Survey

Each year, the Kaiser Family Foundation and the Health Research & Educational Trust conduct a survey to examine employer-sponsored health benefit trends. This article summarizes some of its main points. Request a full summary from HealthSure Insurance Services, Inc. for more details.

Plan Enrollment Trends

  • Preferred provider organizations (PPOs)—44% of workers covered
  • HDHP/SOs—30% of workers covered
  • Health maintenance organizations (HMOs)—19% of workers covered
  • Point-of-service (POS) plans—7% of workers covered

Health Insurance Premiums

The average premium rose 4% for single coverage and 5% for family coverage—around $7,188 and $20,576 respectively.

Worker Contributions

In dollar amounts, workers contributed $1,242 and $6,015 toward their premiums for single coverage and family coverage, respectively.

Self-funding

Similar to the previous year, 17% of workers with small employers are elected in plans either partially or entirely self-funded, compared to 80% of workers with large employers.

Contact us for more information on benefit offerings or to learn what you can do to control your health care costs.

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Using Voluntary Benefits to Entice Millennial Talent

Millennials consistently cite elements like work-life balance and benefits packages as huge factors when considering employers. Salary, it seems, comes secondary in many cases.

You can capitalize on this market shift by offering more imaginative and comprehensive perks to reel in millennial talent. A good place to start is with voluntary benefits.

Here are some voluntary benefits to consider:

  • Pet insurance
  • Student loan repayment
  • Identity theft insurance
  • Elder care
  • On-site daycare

Offering even a few voluntary perks can signal to millennials that you’re taking their wants seriously and get them through the door.

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