Pondering the New Rules for "Employer Payment Plans"

Anytime a ruling is issued by “the departments”, (Treasury, IRS and DOL) it is met with excitement and anticipation. But on the rare occasion we're left scratching our heads. That's the case with the Friday the 13th ruling, handed down in September. 

This ruling took previous guidance on health reimbursement arrangements (HRAs) and expanded it to “employer payment plans”. The case was made, that to follow the affordable care act “employer payment plans” must conform with the no annual limit benefit provision, thus no longer pre-taxing individual policies through an employer. I can't quite wrap my head around the notion of why “the departments” would want to make a ruling that counters so much previous guidance by those same departments? 

By taking away the pre-taxing of individual policies through an employer payment plan, the government essentially made purchasing individual policies through the exchanges equal. Instead of figuring out a fair and adequate way to make policies eligible for pre-taxing through the exchanges, they eliminated it for hundreds of thousands of individual policyholders that enjoyed lower premiums, portable coverage and employer help in paying for those policies.

If we're all ready to have a conversation to sort this out, I have an opening Thursday.

The Author: Roger Jorgensen, RHU, REBC

Marketing - HSA/HRA/FSA & COBRA

abgncs.com/HSAFSAHRA

rjorgensen@abg-mn.com

HSA Reporting on W-2s

Ahhh January.  You’ve made it through open enrollment, the holidays and the first blast of cold weather.  Now it’s time to focus on the New Year!  Just as soon as you finish up those W-2’s, that is.

We often get questions this time of year about how health savings account (HSA) contributions are reported on the W-2.  Most employers know HSA contributions have to be included on the W-2 but they aren’t always sure where, how or which contributions to include.  If you’ve looked this one up before you know the answer isn’t exactly crystal clear in the W-2 instructions.  Don’t worry, ABGNCS can help!

Employers are required to report “employer” contributions to employees’ HSAs in Box 12 with the code W.  The catch is “employer” contributions include pre-tax employee contributions.  Why?  Because the IRS considers pre-tax salary reductions through a Section 125 plan to be employer contributions, even though they’re really employee contributions.  Confusing, right?  This is just a technicality because the funds have never been subject income tax. 

Bottom line… Box 12, code W = employer HSA contributions + pre-tax employee HSA contributions. 

The Author: Sadie Wuerflein, CFC

Account Executive - FSA/HRA/HSA

abgncs.com/HSAFSAHRA

swuerflein@abg-mn.com