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401(k) Qualified
Retirement Plans
A 401(k) plan
is a qualified deferred compensation plan, which enables participants
to save money, lower taxes, and invest in their financial future.
Under a 401(k) plan, elective contributions are made on a pre tax basis.
The
following are some advantages of a 401(k) plan: |
A
well-designed 401(k) plan can help attract and keep talented employees.
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It allows
participants to decide how much to contribute to their accounts on a before-tax
basis.
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Employers are
entitled to a tax deduction for their contributions to employees'
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The money
contributed may grow through investments in stocks, mutual funds,
money market funds, savings accounts, and other investment vehicles.
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Contributions
and earnings generally are not taxed by the Federal government or by
most State governments until they are distributed.
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A 401(k) plan
may allow participants to take their benefits with them when they
leave the company, easing administrative burdens.
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Section 125 POP
Section 125 is
a provision of the Internal Revenue Code that allows employees to pay
their share of the cost of certain group insurance benefits. Under
this provision, your paycheck is reduced by the amount of your
premiums. That money is removed from your salary structure before
Federal Income, State Income, and Social Security taxes are calculated.
Section 125 is
sometimes referred to as the Premium Only Plan (POP).
Also known as Flexible Benefit plan, Section 125 plans allow
employees to pay for premiums with pretax dollars
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Health
Reimbursement Account (HRA) Information Sheet
A Health
Reimbursement Arrangement (HRA) is an employer-funded account that is
designed to reimburse employees for qualified medical expenses that
are paid for out-of-pocket. There are no annual contribution limits
on HRAs; however, the employer usually sets the contribution below
the annual deductible. HRAs are often designed to operate with a high
deductible health plan (HDHP), thereby reducing premium costs while
encouraging employees to spend wisely. Your employer sets up
the HRA, determines the amount of money available in each employee's
HRA for the coverage period, and establishes the types of expenses
the funds can be used for.
What is a High
Deductible Health Plan (HDHP)?
A HDHP has:
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A higher
annual deductible than typical health plans; and
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A maximum
limit on the sum of the annual deductible and out-of-pocket medical
expenses that you must pay for covered expenses. Out-of-pocket
expenses include copayments and other amount, but do not include premiums.
Who is
eligible for an HRA?
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HRAs are
employer-established benefit plans. These may be offered in
conjunction with other employer-provided health benefits. Employers
have complete flexibility to offer various combinations of benefits
in designing their plan. You do not have to be covered under any
other health care plan to participate. Self-employed persons are not
eligible for an HRA. Certain limitations may apply if you are a
highly-compensated participant.
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An HRA may
reimburse medical care expenses only if they are incurred by
employees or former employees (including retirees) and their spouses
and tax dependents. HRA coverage must be in effect at the time the
expense is incurred.
Qualified
Medical Expenses
Qualified
medical expenses are those specified in the plan that would generally
qualify for the medical and dental expenses deduction. Examples
include amounts paid for doctors' fees, prescription and
non-prescription medicines, and necessary hospital services not paid
for by insurance. You can use your HRA funs for deductibles,
copayments and coinsurance.
Are my
benefits taxable?
The HRA plan
is intended to meet certain requirements of existing federal tax
laws, under which the benefits that you receive under the HRA Plan
generally are not taxable to you. Your employer cannot guarantee the
tax treatment to any given participant, since individual
circumstances may produces differing results.
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Health
Savings Account (HSA) Information Sheet
A Health
Savings Account (HSA) is an account that can be funded with your
tax-exempt dollars, by your employer, or both, to help pay for
eligible medical expenses not covered by an insurance plan, including
the deductible, coinsurance, and even in some cases, health insurance premiums.
Who is
eligible for an HSA?
Anyone who is:
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Covered by a
High Deductible Health Plan (HDHP);
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Not covered
under another medical plan that is not a HDHP;
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Not entitled
to Medicare benefits; or
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Not eligible
to be claimed on another person's tax return.
What is a High
Deductible Health Plan (HDHP)?
A High
Deductible Health Plan is a plan with a minimum annual deductible and
a maximum out-of-pocket limit as listed below. These minimums and
maximums are determined annually by the Internal Revenue Service
(IRS) and are subject to change.
When do I use
my HSA?
Your HSA
dollars can be used to pay your out-of-pocket expenses (deductibles
and coinsurance) billed by the physician, facility, or pharmacy or
you can choose to save your HSA dollars for a future medical expense.
For a full list of eligible expenses you may refer to HSA Eligible Expenses
What if I
enroll in an HSA in the middle of a year?
If you enroll
in an HSA in the middle of a year, you are allowed to make a full
year's contribution, provided that you remain covered by the HSA for
at least the 12-month period following that year.
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Flexible
Spending Account (FSA) Information Sheet
Flexible
Spending Accounts (FSAs) provide you with an important tax advantage
that can help you pay health care and dependent care expenses on a
pre-tax basis. By anticipating your family's health care and
dependent care costs for the next plan year, you can actually lower
your taxable income.
The Internal
Revenue Service set up FSAs as a means to provide a tax break to
employees and their employers. As an employee, you agree to set aside
a portion of your pre-tax salary in an account, and that money is
deducted from your paycheck over the course of the year. The amount
you contribute to the FSA is not subject to Social Security (FICA),
federal, state, or local income taxes - effectively adjusting your
annual taxable salary. The taxes you pay each paycheck and
collectively each plan year can be reduced significantly, depending
on your tax bracket.
Eligible
health care expenses for the Health Care Reimbursement FSA include
more than just your deductible and copayments. Generally, any
medically necessary health care expense that you can deduct on your
tax return is considered an eligible expense. Some examples include:
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Hearing
services, including hearing aids and batteries
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Vision
services, including contact lenses, contact lens solution, eye
examinations, and eyeglasses
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Dental
services and orthodontia
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Chiropractic services
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Acupuncture
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Prescription contraceptives
For more
information about eligible medical expenses, please refer to the
attached list of example eligible and ineligible expenses, or refer
to IRS Publication 502, Medical and Dental Expenses available at
http://www.irs.gov/publications/p502/index.html
Dependent Care FSA
The Dependent
Care FSA lets you use pre-tax dollars towards qualified dependent care.
Some examples
of qualified expenses can be:
In order for
dependent care services to be eligible, they must be for the care of
a tax dependent child under age 13 who lives with you, or a tax
dependent parent, spouse, or child who lives with you and is
incapable of caring for himself or herself. The care must be needed
so that you and your spouse (if applicable) can go to work. Care must
be given during normal working hours - Saturday night babysitting
does not qualify - and cannot be provided by another of your dependents.
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Individual
Medical Insurance Plans
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Individual
medical insurance is coverage that a person buys independently. It
can be sold to a single individual, to a parent and dependent
children, or to a family. The majority of Americans get their medical
insurance coverage through an employer or through a government
program, but five percent of the population purchases private medical
coverage on an individual basis. Each state separately regulates how
individual policies may be marketed and sold. |
Short Term
Medical Insurance
Provides
comprehensive temporary medical insurance coverage that protects
against catastrophic costs of unexpected medical bills.
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Coverage plans
range from 30 to 365 days (depending on state of residency)
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Now offers
prescription drug coverage
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Allows the
insured to use their own doctors and hospitals
Assurant
- Please click here to apply for short term medical insurance.
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Travel Insurance
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Travel
insurance is designed for problems that arise suddenly during a trip.
Basic coverage may include reimbursement for trip cancellation,
interruption and delay because of illness, bad weather, baggage loss
or delay, medical insurance and medical evacuation (in case of
illness or injury during travel), and a 24-hour assistance telephone line.
For more
information on travel insurance go to the U.S. Department of State -
Bureau of Consular Affairs Travel website at http://travel.state.gov/ |
Insurance
for International Business Travelers
Employers can
purchase insurance specific to employees they send overseas for
business purposes - even if the trip is short-term. Obtaining medical
treatment and hospital care abroad can be expensive. Generally,
American medical insurance is not accepted overseas, nor do the
Social Security Medicare and Medicaid programs provide coverage for
hospital or medical costs outside the United States. Instead
employers can purchase supplemental medical coverage for their
employees that their current health plan does not supply. Travel
insurance could turn out to be much more cost-effective for your
business as a whole.
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Legislative Topics
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Understanding
HIPAA
HIPAA stands
for The Health Insurance Portability and Accountability Act of
1996. HIPAA covers transactions, security and privacy of health
care data. The regulations apply only to information that
identifies an individual or "where there is a reasonable basis
to believe that the information could be used to identify that
individual." (Public Law 104-191) |
HIPAA has
three main goals:
1.To allow
people to transfer their health insurance to a new employer without a
waiting period, and to give them the right to buy a guaranteed
individual insurance policy when leaving an employer.
2.To provide
comprehensive protection for the privacy and security of patients'
health information.
3.To
standardize the electronic transmission of patient information.
One reason
this rule was conceived is the wide-ranging use of electronic
communication and records storage in the medical field. HIPAA
intends to make sure that security measures are implemented to
prevent unauthorized personnel from viewing those records.
Protected
Health Information (PHI)
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HIPAA covers
all forms of electronic record keeping - like emails, faxes and voice mail.
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HIPAA even
covers oral communications
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As a result of
the implementation of HIPAA, you will notice changes in your office
visits such as increased amounts of required paperwork.
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COBRA Administration
COBRA stands
for Consolidated Omnibus Budget Reconciliation Act of 1985.
COBRA is the
federal health care continuation law. COBRA requires that if an
employee or other "qualified beneficiary" loses
employer-provided health coverage due to termination of employment or
another specified "qualifying event," the group health plan
must offer continued health care coverage to the qualified
beneficiary. The qualified beneficiary is typically required to pay
the full cost of the COBRA coverage. |
In most cases,
the maximum COBRA period is 18 or 36 months from the date of the
qualifying event.
COBRA law is
applicable to groups of 20 or more employees. Employers are to count
all full and part-time employees on the payroll.
Medicare
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Medicare is a
health insurance program for:
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There are two
parts to Basic Medicare:
Part A -
Hospital Insurance
May assist in
payment of inpatient hospitals, critical access facilities, skilled
nursing facilities, hospice. Most qualify upon turning age 65. There
is no premium due because individuals or their spouses paid Medicare
taxes while in the workforce.
Part B
-Medical Insurance
Medical
coverage to assist in services such as outpatient hospital care,
physical and occupational therapists as well as possible home health care.
Part D -
Prescription Drug
Medicare-eligible
individuals now have the option of enrolling in a Part D
prescription drug plan. Medicare-eligible individuals include those
persons who are entitled to Medicare benefits under part A or who are
enrolled in Medicare Part B.
For more
information visit http://www.cms.hhs.gov/PrescriptionDrugCovGenIn/
