Many employers have discovered the benefits of offering their workers premium-only plans (POP), which allow employees to pay their health insurance premiums with “before tax” dollars. This means the premiums are deducted from paychecks on a pre-tax basis, saving them money.
Of course, as with any other tax code provision, employers are subject to strict regulations when opting for POPs. In particular, the law states that the plan must be non-discriminatory, meaning the plans cannot discriminate in favor of key or highly-compensated employees with regard to eligibility, contributions, or benefits.
If the plan’s design benefits a reasonable cross-section of employees, and enrollment is available to all, the plan will most likely pass eligibility and benefits standards. Keeping the plan simple and uniformly available will cut down on the number of tests that the employer must pass. Therefore, in these cases employers only need to worry about the Concentration Test and Dependent Care Test.
The Concentration Test states that the non-taxable benefits received by “key employees” must not exceed 25 percent of benefits received by all employees in total. First, we must define key employees, according to IRC 416 (i):
- Officers of employer who earn more than $160,000 annually
- Those with at least one percent ownership in the company who earn more than $150,000 annually
- Those with more than five percent ownership in the company
Then, the test formula simply divides the total benefits of Key Employees by the total benefits received by all employees. If the resulting percentage is greater than 25 percent, the plan fails the Concentration Test.
The remedy is fairly simple: Key employees must simply pay more of the cost of benefits on an after-tax basis, in order to keep their percentage of benefits below 25 percent. Employers should run the Concentration Test regularly to ensure continuous compliance with the law.
Certain special rules do apply, regarding ownership percentages with regard to spouses or family members of key employees. In these cases, professional guidance is essential. For more information on non-discrimination testing and POP plans, please contact us and we’ll be happy to help.
It’s April, and that means tax refund season has arrived once again. Yes, a vacation or new furniture sounds tempting, but you might be wondering about ways to put your tax refund to its best use. We have a few suggestions that can help secure your financial future.
Consider Life Insurance
Whether you already have a life insurance policy, or you’ve been considering this important coverage, you know that the point is to offer long-term security to your family in the event that something happens to you. But many people face obstacles in securing a life insurance policy, such as:
- Fitting the monthly premiums into their budgets
- Remembering to pay premiums (and if you forget, your coverage could lapse)
- Wondering if they really have enough life insurance, especially when situations changeBy enrolling in a life insurance policy now and using your tax refund to cover the next year’s premiums, you can address all of these issues.
Contribute to a Health Savings Account (HSA)
If you have out-of-pocket medical costs, you can start or contribute to an existing HSA and use that money for future medical bills.
One nice benefit of an HSA is that the money you contribute is tax exempt. So not only do you save for expenses, but you also cut your tax liability. We can answer questions for you regarding HSAs and also help you to start one.
Contribute to a Roth IRA
You can contribute up to $5500 per year to a Roth IRA and this money will grow tax free. If you are married, both you and your spouse can contribute $5500 to a Roth IRA.
When you retire, the funds in your Roth IRA can be withdrawn without any tax liability, making a Roth IRA an advantageous retirement income source.
For more information on any of these solutions, please give us a call. We can help you decide what makes the best sense for you and your family and can answer any questions that you might have.
You might already know that Open Enrollment, offered each fall, provides us all with the chance to review our healthcare plans and make any necessary changes. Then, the decisions you have made during Open Enrollment will apply to the following year’s coverage. But what if your needs change outside of the Open Enrollment period? Is it ever possible to change your healthcare coverage?
Actually, yes. If you experience what is called a Qualifying Life Event, you will be eligible for a Special Enrollment Period. During this time, you can indeed alter your healthcare plan or enroll in a new one.
So, what are these Qualifying Life Events?
- You lose your healthcare coverage – from job loss, expiration of a student plan, or lost eligibility for Medi-Cal
- You turn 26 and “age out” of your parent’s plan
- You get married or divorced
- Adding a new child to the family (through birth or adoption)
- A death in the family
- You move to a different zip code, and your plan does not offer service there
- You’re a student, and move to or from the location of your school
- You’re a migrant worker, and move to or from your place of work
- Moving into, or out of, a shelter or some other type of transitional housing
- Release from jail or prison
- Changes in your income, that change the type of coverage for which you are eligible
- You become a US citizen
- You gain membership in a recognized Native American tribe
- Starting or ending your Americorps service
What do you do next?
If you believe you have experienced a Qualifying Life Event, and you wish to change your healthcare coverage, give us a call. We can review the details with you and help you determine the health insurance coverage options that are available to you. But don’t delay; your Special Enrollment Period only lasts 60 days from the date of the Qualifying Life Event. Get started right away, so that you have time to evaluate your options and choose the right plan for your needs.
When it comes to federal income taxes, nothing ever seems uncomplicated. But we do strive to bring you the latest news about changes in our tax code, so that you can avoid errors and plan appropriately. With that idea in mind, here are eleven new changes in various areas, that will affect both you and your employees in 2019.
These new figures took effect January 1, so make sure you’ve updated your records.
- 401(k) pre-tax contribution limit for 2019 has been increased from $18,500 to $19,000 this year. This limit also applies to 457, 403(b), and Thrift Savings Plans.
- The catch-up contribution limit for the same qualified retirement plans will remain at $6,000 for 2019. This type of contribution is available to those age 50 and over only.
- The IRA contribution limit has been increased from $5,500 to $6,000. The catch-up contribution limit for IRAs remains at $1,000.
- The new health savings account (HSA) contribution limit for individual coverage will be $3,500 in 2019.
- For those with family plans, HSA contribution limit will be $7,000.
- The HSA catch-up contribution limit for those age 55 and older will remain at $1,000 this year.
- The flexible spending account (FSA) contribution limit is increased to $2,700.
- The minimum deductible for high deductible health plans (HDHP) remains the same this year, at $1,350 for individual plans.
- The minimum deductible for HDHP family plans remains at $2,700.
- The maximum out-of-pocket expenditure for individual HDHPs will be $6,750 in 2019. This maximum applies to expenses other than premiums, such as deductibles and co-pays.
- The out-of-pocket maximum for family HDHPs will be $13,500.
If you have any questions about these items, please call our office to clarify. We’ll be happy to help you determine how these changes apply to you and your employees.
Owners of small and mid-sized businesses often face tough choices with regard to their operating budgets. This dilemma might lead you to concentrating too many tasks into one department, or even attempting to juggle it all yourself. While this pioneering mindset is admirable, setting aside your HR needs could be a costly mistake in the long run.
Let’s break down the two primary ways that a solid HR program will benefit your business, and help you to grow.
HR saves you money.
An experienced human resources department can help you detangle the web of costs and penalties associated with having employees. For example….
- The potential cost of lost productivity, rehiring, onboarding and training expenses from one bad hire: $50,000
- The potential penalty for wage and hour violation under the Fair Labor Standards Act: $10,000
- The potential cost of each Occupational Safety and Health (OSHA) violation: $7,000
And these are just a few examples of the liabilities faced by business owners. That’s why each dollar invested in HR saves 10 dollars in long-term investigation and litigation costs.
A good HR program can even make you money.
A key goal of an effective HR program is to successfully engage employees and boost productivity. But how do those goals translate to your bottom line? According to researchers at Cornell University, a review of several hundred companies found that those who invested in key HR practices saw…
- A 22 percent boost in sales growth
- 23 percent faster profit growth
- Turnover decreased by 67 percent
They also found that these companies enjoyed…
- Greater customer retention
- Higher productivity
- More operating income
- Increase in referrals
- Lower employee absenteeism
- Fewer safety incidents
Contact us to learn more about establishing an effective human resources program. It’s not as difficult as you might believe, and the benefits speak for themselves.
Sources for stats:
St Cloud University
Cancer is the dreaded word that no one wants to hear from their doctor. Unfortunately, according to the American Cancer Society, one in three of us will receive that diagnosis at some point during our lifetimes. The risk grows greater as we age, too; Nine in ten cases are in adults over age fifty.
Cancer comes in many forms, and can affect any system within the body with varying degrees of severity. However, the tips to reduce your risk are pretty straightforward, and include the following:
- Don’t smoke. One in three cancer cases is related to smoking.
- Avoid secondhand smoke.
- Avoid alcohol, or at least cut back.
- Maintain a healthy weight – those within their recommended weight range reduce their risk of cancer by 18 percent.
- Exercise regularly – at least 30 minutes of moderate activity every day.
- Avoid contracting viruses that can contribute to cancer, such as HPV, which is contracted by having unprotected sex.
- Talk to your doctor about lifestyle choices that increase your cancer risk. Be honest; your doctor is not there to judge you.
- Avoid radiation in all forms, and have your home tested for radon levels.
- Avoid using known carcinogenic chemicals. If you must use these chemicals, such as for work, follow all safety guidelines precisely.
- Women who breastfeed lower their risk of developing breast cancer, so consider this option if you have children.
- Avoid hormone replacement therapy unless absolutely necessary.
- Avoid sunburns – stay indoors during the middle of the day, use swimsuit cover-ups, wear sunglasses and a hat, and use sunscreen.
- Research medications carefully, prevent some health conditions by making responsible lifestyle decisions, and use only those drugs that are absolutely necessary. Occasionally we discover that long-term use of a drug can increase cancer risk.
- Eat a healthy diet – fruits and vegetables lower your cancer risk, while sugar, fried foods, and processed meats increase your odds.
And of course, make sure to schedule all recommended routine screenings. While cancer is sometimes the result of bad luck, and even occurs in people who carefully maintained their health, early detection makes an enormous difference in survival rates. Talk to your doctor about the screenings you should be attending, so that you can seek the earliest possible treatment if you ever do develop a form of cancer.
Finally, if you’re worried about your cancer risk and the cost of treatment, you should know that it is possible to add a supplemental cancer insurance policy to your coverage. These plans help to pay for expenses associated with cancer treatment, such as co-pays, deductibles, diagnostic tests, hospital stays, treatments, and procedures. Some even help with the cost of things like lost income, child care, travel, and lodging in the event that you need to travel to obtain treatment. Give us a call to learn more about this type of supplemental insurance, which can be purchased at any time throughout the year.
Good news abounds for our economy, but a changing business environment equals changes for employers. The low national unemployment rate means that workers have a bit more power in choosing jobs that best suit their needs and desires, and employers must become a bit more competitive in return.
While health insurance and other benefits will always remain at the top of most prospective workers’ wish lists, we’re definitely seeing some changes in those preferences. The one-size-fits-all approach to healthcare plans and wellness programs is increasingly being replaced by a smorgasbord of options. Today’s workers want a menu of options, so that they can keep their current physicians, seek specialized care, engage in specific wellness programs, and essentially structure their benefits plans to best meet their individual needs.
When you’re developing a health and wellness program for your company, consider the following three factors.
Check out the competition. You already know that in business, it’s important to keep your eye on trends. After overall compensation, benefits programs are the second most important important factor to workers looking for new employment. Investigate options offered by similar employers, and seek to keep your benefits program competitive.
Communicate with current and prospective employees. Good leaders know that involving the whole team in important decisions makes everyone happier with the final outcome. Ask employees what health benefits or wellness programs are most important to them, and how you can improve the workplace for everyone.
Offer customizable benefits. The team’s desires might sometimes overshadow the individual’s needs. Offering a customizable menu of health and wellness options is the best way to ensure that each employee is satisfied with their benefits package. And of course, we know that healthy, happy employees are loyal and productive workers.
Some of today’s popular customizable options include:
- Allowing employees to choose specific hospitals or doctors
- Different levels of healthcare plans (with different deductibles and premiums)
- Flexible work options
- Employee family leave
- Life and/or disability insurance
- Employee discounts to local retailers or attractions
- Wearable device allowances
- Health club memberships or onsite gyms
- Identity theft protection
- Financial planning resources
- Pet insurance
Contact us to learn more about customizable health and wellness benefits. We can help you put together a menu of popular options, to appeal to today’s diversified and discerning workforce.
Now that January first has come and gone, you might be getting started on your New Year’s resolutions. But what if you forgot to sign up for a health insurance plan during Open Enrollment? The deadline for coverage beginning January 1 was December 21… So what now? Are you going without health insurance for the next year?
No, you still have a chance to enroll for health insurance. The final deadline is January 15, for coverage that begins February 1. If you hurry, you can still get a health insurance plan in place beginning next month.
Otherwise, if you miss that deadline, then you might be out of luck until Open Enrollment begins in the fall. But under certain conditions, you could qualify for a Special Enrollment period. These conditions include, but are not limited to, these common circumstances:
- You are eligible for Medi-Cal (in this case, you can sign up any time during the year)
- You lose your current health insurance coverage, due to job loss or some other circumstance
- COBRA coverage expires (unless it’s because you didn’t pay your premium)
- You turn 26 years old, and can’t be covered under your parents plan anymore
- Your student health coverage expires
- You move and gain access to new plans
- You are released from prison
- You get married, divorced, or add a child to your family
If you do experience a qualifying event, please remember that you must apply for new coverage within 60 days of the event. Otherwise, you will miss the opportunity, and will have to wait until Open Enrollment begins on October 15 (for coverage beginning January 1, 2020).
What you apply for health insurance coverage, you will supply information related to your family size, income, home address. Based on these factors, you might qualify for a subsidy to help with the cost of your premiums.
If you need help enrolling in a health insurance plan, please contact us right away. We can also help you during the year, if you need to determine whether a situation qualifies you for a Special Enrollment period. If you’ve already enrolled, but know someone who hasn’t, please refer them to us! We can help get them enrolled before the deadline on January 15.
The deadline for sending out 1095 forms to your employees has been extended by roughly 5 weeks.
The new deadline applies to the 2018 Minimum Essential Coverage (Section 6055) and the Large Employer Shared Responsibility (Section 6056) reporting forms. The original deadline, by which forms 1095-B and 1095-C must be provided to employees, was January 31. Now, you have until March 4 to get these forms distributed.
Remember, this extended deadline only applies to the date by which you must send 1095 forms to your employees. You must still file these forms with the IRS by February 28, if you are filing fewer than 250 paper forms, or by April 1 if filing electronically.
If your employees have already filed their taxes before receiving their forms, they won’t be required to amend their returns. However, they should file forms 1095-B or 1095-C in their records, in case they are needed later.
Who is responsible for reporting?
If you have employ fewer than 50 full-time workers and self-fund your health plan, you only need to report the Minimum Essential Coverage for employees covered by the plan (using the 1095-B). Form 1095-B will be completed and mailed out by your insurance provider.
Large employers (more than 50 full-time employees or equivalent) must complete Form 1095-C for all full-time, covered employees and their dependents.
Large employers who self-funded a health plan will use Form 1095-C for all individuals covered under that health plan.
Contact us for more information.
Yes, these regulations can get confusing. If you have any questions about the forms you need to file, please don’t hesitate to contact us. Even with the deadline extension, it is always a good idea to get started early to prevent any missteps.
Healthcare Open Enrollment for individuals is in full swing, as you might already know. However, Open Enrollment for your group benefits might happen now, or at a different time of the year. Regardless of your time frame, watch out for these potential mistakes when it’s time to re-enroll in your group plan.
Forgetting your paperwork. Follow all reporting requirements to the letter; even those who self- fund employee health care must report certain information to the IRS.
Even companies that are not required to offer group health insurance must keep accurate records of hours worked. These records serve as your proof that you are complying with the law.
Offering inconvenient enrollment methods. Some employees are more comfortable with an old-fashioned paper approach, while others need the convenience of an online portal. Allow employees at least two different methods to complete their enrollment, and make sure they know whom to ask for help.
Restricting choices too severely. It can be tempting to pick one group health plan and go with it, for the sake of simplicity. But employees consistently report that health insurance options are more important than ever. Luckily we have ways to allow employees to opt into additional forms of insurance, or programs such as a health savings plan, that most business owners can accommodate within their budgets.
Even if they have to pick up the cost, many employees say that the option to add benefits to their packages will inspire company loyalty. Add-on options keep you competitive as an employer, so be sure to explore everything available to you.
Failing to communicate. Of course, you won’t know which benefits are important to employees, if you don’t ask. Keep the lines of communication open, encouraging employees to make suggestions. Ask questions at company meetings, or poll your employees on their preferences.
Finally, whether you offer group health benefits or not, the Affordable Care Act all companies subject to the Fair Labor Standards Act to communicate with employees regarding health insurance coverage. All employees must be notified regarding their group healthcare plan (or lack thereof) so they can make a decision.
For more information on employer requirements, such as communicating benefit options to employees, give us a call. We can help you sort out your benefits package regardless of when your Open Enrollment period occurs.