IRS Reiterates Prohibition of and Penalty for Pre-Tax Employer Reimbursement for Health Premiums

Recently, the IRS issued a Frequently Asked Questions (FAQ) list that reiterates earlier guidance disallowing pre-tax employer reimbursements for employee health care premiums. The FAQ also calls attention to the $100 per day, per employee penalty for non-compliance. The initial guidance from last fall indicated that pre-tax employer reimbursements for healthcare premiums would be categorized as group health plans and, thus, would not be permissible as they would not comply with the requirements for group health plans under the Affordable Care Act. Since that time, however, many people have attempted to find alternate solutions in order to continue the practice of reimbursing employee premiums in lieu of providing a full health plan. This latest FAQ and penalty announcement clarifies that the IRS is serious about disallowing this arrangement. We recommend that employers who still utilize a pre-tax health care premium reimbursement benefit discontinue this practice. Any advice that employers have heeded with regard to these benefits still being allowed, should be carefully reexamined in light of this most recent guidance and penalty reminder.

California Minimum Wage Increases July 1, 2014

Effective July 1, California will raise its minimum hourly wage from $8.00 to $9.00. The increase will also affect the minimum salary requirement for several categories of employees that are exempt from minimum wage and overtime requirements. The minimum salary of exempt executive, administrative and professional employees will increase to $3120.00 per month (twice the state minimum wage). Commissioned, inside sales employees’ minimum hourly rate will increase to $13.50 per hour (in order to maintain the one-and-a-half times minimum wage requirement for their exempt status).

We recommend that employers review the pay rates of both their non-exempt and exempt California employees to ensure that they are in compliance with the new minimum rates by July 1, 2014.

Five Ways health care spending can be curbed

Top Stories

5 ways health care spending can be curbed   Choosing Wisely is a national campaign, supported by several physician groups, business coalitions and Consumer Reports, to encourage physician and patient conversations about overuse and misuse of tests and procedures to help patients make smart care choices.Here are five situations where employers can encourage employees to have conversations with their physicians to ensure they choose care that is supported by evidence, not duplicative of other tests or procedures already received, free from harm and truly necessary. READ MORE »

Health Care Reform with our HR platform

email us at info@amsinsure.com  , subject HR_ACA HR Demo    The Patient Protection and Affordable Care Act (PPACA) contains comprehensive health insurance reforms that require compliance by employer-sponsored group health plans. The material and links on this page is designed to help employers review their plan's compliance with the major health care reform requirements and to learn more about the topic. For even more information on Health Care Reform, please visit our library of trainings available for immediate viewing in the Training On-Demand section of the Training & Education tab above. Currently we have Health Care Reform trainings for small employers and large employers as well as a separate training all about the Employer Mandate. Please note that the lists on this page are for general reference purposes only and is not all-inclusive. These lists are also subject to change based on new government requirements or directives. If you have any questions regarding your company's obligations with respect to health care reform, please consult with an HR Professional or benefits insurance provider for specific guidance. Get our free HR platform and stay up to date and informed, its easy. info@amsinsure.com    subject   HR_ACA

Private health insurance exchanges gain traction with employers

Employers, others ditch old benefits model

For decades, the way employers offered health insurance coverage to their employees and retirees changed little. Now more and more companies are moving to a new health benefits delivery model using private health insurance exchanges.


Under the old model, employers, often with the assistance of consultants, brokers and agents, decided the insurers from which they would purchase coverage, the number and types of health plans they would offer employees, and how much they would contribute toward the cost of the coverage.
In addition, employers were deeply involved in plan administration, arranging and holding open enrollments for employees to choose one of the plans offered.


By contrast, with private insurance exchanges, employees and retirees select from a variety of health care plans and designs, with the employer's role largely limited to deciding how much of the premium it will pay.


While the move to private exchanges is not entirely new, there has been an accelerated shift in the past year, said Michael Thompson, a principal with PricewaterhouseCoopers L.L.P. in New York.
In the past few weeks, big and well-known industry-leading employers, including IBM Corp. and Walgreen Co., have disclosed that, starting next year, their employees or retirees will choose health care plans offered by insurers participating in private exchanges.


Rethink your companies choices and look to the Private Exchanges.