by admin | Mar 9, 2018 | HSA/HRA, IRS
On March 5, 2018, the Internal Revenue Service (IRS) announced a reduction in the maximum annual contribution allowed for Health Savings Accounts (HSAs) in 2018. The change does not affect people whose HSA contributions are based on self-only health coverage, but it does affect those with family coverage under a qualifying High Deductible Health Plan (HDHP). Previously, the 2018 HSA contribution limit for persons with family HDHP coverage was $6,900. That limit is now reduced retroactively to $6,850.
In Revenue Bulletin 2018-10, the IRS explains that the recently-enacted tax reform law requires recalculating inflation-adjusted amounts under various tax code provisions. One of the affected provisions is § 223 pertaining to HSAs. Using the new required method of applying annual inflation adjustments, the 2018 HSA contribution limit for those with family HDHP coverage is $6,850, which is a $50 reduction from the amount previously announced.
HSA Summary
An HSA is a tax-exempt savings account employees can use to pay for qualified health expenses. To be eligible to contribute to an HSA, an employee:
- Must be covered by a qualified high deductible health plan (HDHP);
- Must not have any disqualifying health coverage (called “impermissible non-HDHP coverage”);
- Must not be enrolled in Medicare; and
- May not be claimed as a dependent on someone else’s tax return.
HSA 2018 Limits
Limits apply to HSAs based on whether an individual has self-only or family coverage under the qualifying HDHP.
2018 HSA contribution limit:
- Single: $3,450
- Family: $6,850
- Catch-up contributions for those age 55 and older remains at $1,000
2018 HDHP minimum deductible (not applicable to preventive services):
- Single: $1,350
- Family: $2,700
2018 HDHP maximum out-of-pocket limit:
- Single: $6,650
- Family: $13,300*
*If the HDHP is a nongrandfathered plan, a per-person limit of $7,350 also will apply due to the ACA’s cost-sharing provision for essential health benefits.
Originally Published By ThinkHR.com
by admin | Feb 16, 2018 | Compliance, Human Resources, IRS
IRS Releases Publication 15 and W-4 Withholding Guidance for 2018
On January 31, 2018, the federal Internal Revenue Service (IRS) released Publication 15 — Introductory Material, which includes the following:
- 2018 federal income tax withholding tables.
- Exempt Form W-4.
- New information on:
- Withholding allowance.
- Withholding on supplemental wages.
- Backup withholding.
- Moving expense reimbursement.
- Social Security and Medicare tax for 2018.
- Disaster tax relief.
Read Publication 15 and further details here.
EEOC Penalty Increases for Failure to Post Required Notices
On January 18, 2018, the U.S. Equal Employment Opportunity Commission (EEOC) released a final rule increasing the penalty amount from $534 to $545 for violations of Title VII of the Civil Rights Act (Title VII), the Americans with Disabilities Act (ADA), and the Genetic Information Nondiscrimination Act (GINA) notice posting requirements.
The final rule is effective February 20, 2018.
Originally Published By ThinkHR.com
by admin | Jan 24, 2018 | Hot Topics, Human Resources, IRS
WHD Revises Test for Unpaid Internships
On January 5, 2018, the U.S. Department of Labor’s Wage and Hour Division (WHD) released a Field Assistance Bulletin (FAB No. 2018-2) establishing that the primary beneficiary test, rather than the six-point test, will determine whether interns at for-profit employers are employees under the federal Fair Labor Standards Act (FLSA).
The primary beneficiary test requires an examination of the economic reality of the intern-employer relationship to determine which party is the primary beneficiary of the relationship. The following seven factors are part of this test:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee — and vice versa.
- The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
- The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job after the internship.
According to the WHD, under the primary beneficiary test, no one factor is dispositive and every factor is not required to be fulfilled to conclude that the intern is not an employee entitled to the minimum wage. The primary beneficiary test is a distinct shift in analysis because per the six-part test every intern and trainee would be an employee under the FLSA unless his or her job satisfied each of six independent criteria. Courts have held that the primary beneficiary test is an inherently “flexible” test and whether an intern or trainee is an employee under the FLSA necessarily depends on the unique circumstances of each case.
The WHD announced it will conform to the federal court of appeals’ determinations and use the same court-adopted test to determine whether interns or students are employees under the FLSA.
Read the field bulletin
Increased Penalties for Federal Violations
On January 2, 2018, the U.S. Department of Labor (DOL) announced in the Federal Register that penalties for violations of the following federal laws have increased for 2018:
- Black Lung Benefits Act.
- Contract Work Hours and Safety Standards Act.
- Employee Polygraph Protection Act.
- Employee Retirement Income Security Act.
- Fair Labor Standards Act (child labor and home worker).
- Family and Medical Leave Act.
- Immigration and Nationality Act.
- Longshore and Harbor Workers’ Compensation Act.
- Migrant and Seasonal Agricultural Worker Protection Act.
- Occupational Safety and Health Act.
- Walsh-Healey Public Contracts Act.
These increases are due to the requirements of the Inflation Adjustment Act, which requires the DOL to annually adjust its civil money penalty levels for inflation by no later than January 15.
These increased rates are effective January 2, 2018.
Read the Federal Register
OSHA Penalties Increased
On January 2, 2018, the U.S. Department of Labor announced in the Federal Register that Occupational Safety and Health Administration (OSHA) penalties will increase for 2018 as follows:
- Other-than-Serious: $12,934
- Serious: $12,934
- Repeat: $129,336
- Willful: $129,336
- Posting Requirement Violation: $12,934
- Failure to Abate: $12,934
These increases apply to states with federal OSHA programs; rates for states with OSHA-approved State Plans will increase to these amounts as well; State Plans are required to increase their penalties in alignment with OSHA’s to maintain at least as effective penalty levels.
These new penalty increases are effective as of January 2, 2018 and apply to any citations issued on that day and thereafter.
Read the Federal Register
Agencies Release Advance Copies of Form 5500 for Filing in 2018
The Employee Benefits Security Administration (EBSA) the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) released the advance informational copies of the 2017 Form 5500 and related instructions. For small employee benefit plan reports, advance short form copies of 2017 Form 5500-Short Form (SF) and 2017 Instructions for Form 5500-SF were also released with supplemental materials including schedules and attachments.
Read about and download the Form 5500 Series
Originally Published By ThinkHR.com
by admin | Jan 17, 2018 | Human Resources, IRS
On January 11, 2018, the Internal Revenue Service released its income tax withholding tables for 2018 reflecting changes made by the December 2017 tax reform legislation. The updated withholding information provides the new rates for employers to use during 2018. Employers are encouraged to use these tables as soon as possible but must use them by no later than February 15, 2018. Employers should continue to use the 2017 withholding tables until they implement the 2018 withholding tables.
According to the U.S. Treasury, an estimated 90 percent of paycheck recipients are likely to see an increase in their take-home pay by February. However, when employees see these changes in their paychecks depends on how quickly the new tables are implemented by their employers and how often they are paid (usually weekly, biweekly, or semimonthly).
To help individuals identify the correct amount of withholding, the IRS is releasing a revised withholding calculator by the end of February, which will be posted on IRS.gov. The IRS encourages taxpayers to use the calculator to adjust their withholding once it is released.
Changes for 2018 and Looking Forward
The new law makes many changes for 2018 that affect individual taxpayers, including an increase in the standard deduction, repeal of personal exemptions, and changes in tax rates and brackets. In relation to Form W-4, these new withholding tables are designed to work with employees’ current W-4, as filed with their employer; so, there are no steps employees must currently take regarding the new tables and law.
The IRS is also working on revising the Form W-4 to reflect the newly available itemized deductions, increases in the child tax credit, the new dependent credit, and repeal of dependent exemptions. However, there is no set release date for the revised form.
Once released, employees may use the new Form W-4 to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.
For Now
At this time, employers should be reviewing these new tables and implementing necessary changes. For 2019, the IRS has said that it anticipates making even more changes involving withholding. But don’t despair; the agency provides FAQs, which employers and employee may find useful, and pledges to work with the business and payroll community to encourage workers to file new Forms W-4 next year while sharing information on changes in the new tax law that impact withholding.
Stay tuned though, because 2018 has only just begun.
Originally Published By ThinkHR.com
by admin | Jan 5, 2018 | ACA, Compliance, IRS
The ACA requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on Form W-2 does not mean that the coverage is taxable.
Employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. This includes businesses, tax-exempt organizations, and federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families). Federally recognized Indian tribal governments are not subject to this requirement.
Employers that are subject to this requirement should report the value of the health care coverage in Box 12 of Form W-2, with Code DD to identify the amount. There is no reporting on Form W-3 of the total of these amounts for all the employer’s employees.
In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee. See the chart below from the IRS’ webpage and its questions and answers for more information.
The chart below illustrates the types of coverage that employers must report on Form W-2. Certain items are listed as “optional” based on transition relief provided by Notice 2012-9 (restating and clarifying Notice 2011-28). Future guidance may revise reporting requirements but will not be applicable until the tax year beginning at least six months after the date of issuance of such guidance.
|
Form W-2, Box 12, Code DD |
| Coverage Type |
Report |
Do Not
Report |
Optional |
| Major medical |
X |
|
|
| Dental or vision plan not integrated into another medical or health plan |
|
|
X |
| Dental or vision plan which gives the choice of declining or electing and paying an additional premium |
|
|
X |
| Health flexible spending arrangement (FSA) funded solely by salary-reduction amounts |
|
X |
|
| Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits |
X |
|
|
| Health reimbursement arrangement (HRA) contributions |
|
|
X |
| Health savings account (HSA) contributions (employer or employee) |
|
X |
|
| Archer Medical Savings Account (Archer MSA) contributions (employer or employee) |
|
X |
|
| Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis |
|
X |
|
| Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer |
X |
|
|
| Employee assistance plan (EAP) providing applicable employer-sponsored healthcare coverage |
Required if employer charges a COBRA premium |
|
Optional if employer does not charge a COBRA premium |
| On-site medical clinics providing applicable employer-sponsored healthcare coverage |
Required if employer charges a COBRA premium |
|
Optional if employer does not charge a COBRA premium |
| Wellness programs providing applicable employer-sponsored healthcare coverage |
Required if employer charges a COBRA premium |
|
Optional if employer does not charge a COBRA premium |
| Multi-employer plans |
|
|
X |
| Domestic partner coverage included in gross income |
X |
|
|
| Governmental plans providing coverage primarily for members of the military and their families |
|
X |
|
| Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government |
|
X |
|
| Self-funded plans not subject to federal COBRA |
|
|
X |
| Accident or disability income |
|
X |
|
| Long-term care |
|
X |
|
| Liability insurance |
|
X |
|
| Supplemental liability insurance |
|
X |
|
| Workers’ compensation |
|
X |
|
| Automobile medical payment insurance |
|
X |
|
| Credit-only insurance |
|
X |
|
| Excess reimbursement to highly compensated individual, included in gross income |
|
X |
|
| Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income |
|
X |
|
| Other situations |
Report |
Do Not
Report |
Optional |
| Employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers) |
|
|
X |
| Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of the year |
|
|
X |
| Forms W-2 provided by third-party sick-pay provider to employees of other employers |
|
|
X |
By Danielle Capilla
Originally Published By United Benefit Advisors
