Health and Benefits

The National Emergency and whether it will or won’t come to an end in 2023 is on the mind of many health plan Sponsors and Administrators. The COVID-19 Public Health Emergency (PHE) is extended through January 11, 2023, and the National Health Emergency (NE) is set to expire March 1, 2023. 

The Council of the District of Columbia has approved a new transportation benefit law (D.C. ACT 23-305) that requires employers who provide parking benefits to also offer ‘clean-air’ transportation benefits to their employees. The law also requires the employers to submit annual/bi-annual reporting and plans to the city. The new law applies to every employer that employs at least 20 persons located in Washington D.C. and offers its employees free or discounted parking. Note, the ordinance does not apply if the employer owns the parking lot.

In recent years, the Federal Government has passed several pieces of legislation to offer relief and much-needed flexibility to employers that offer dependent care assistance programs (DCAPs). But many employers are struggling to make these benefits attractive to all levels of their workforce who may not see the value in putting away pre-tax dollars for care of children. However, DCAP assistance and the expanded Dependent care tax credit is a benefit many should reconsider.

The short answer is yes. If you are not currently conducting ongoing verification audits or requiring employees to provide documentation when they enroll in benefits, then you should audit your plan.

Background

The Health Opportunity Patient Empowerment Act, passed in 2006, included a provision which allows the owner of an Individual Retirement Account (IRA) to make a one-time, tax-free transfer into a Health Savings Account (HSA). This type of transfer is officially referred to as a qualified HSA funding distribution (QHFD) and gives HSA owners an additional way to fund their accounts and save on taxes while planning to cover future qualified medical expenses. Through this transfer, IRA assets are moved directly from the IRA trustee to the HSA trustee as a regular contribution. The election to make a qualified HSA funding distribution is irrevocable.

On November 14, 2022, the IRS has Notice 2022-59, announcing the adjusted applicable dollar amount for determining the Patient-Centered Outcomes Research Trust Fund (PCORTF) fee for policy years and plan years ending on or after October 1, 2022, and before October 1, 2023.

On October 18, 2022, the IRS issued Revenue Procedure 2022-38, which address annual inflation adjustments for more than 60 tax provisions. Included are new limits for Flexible Spending Accounts, Commuter Benefits and various other code provisions, as follows:

On August 16, 2022, President Biden signed the Inflation Reduction Act. Employer-sponsored health plans are only indirectly impacted by the Act, but there are three main points to consider.

• Enhanced ACA premium tax credit
• Reduction on Prescription Drug Prices for Medicare
• Expanded Safe harbor for High Deductible Health Plans (HDHP)

There has been a focus on Health Savings Accounts (HSA) in recent years. This is a valuable vehicle that extends even beyond the "triple-tax-free" benefit that most employers are aware of. HSAs can reduce taxable income in retirement, which may affect Medicare premiums and the portion of Social Security benefits subject to federal income tax.

Earlier this year the proposed regulations updating deadlines and ending good faith relief for Affordable Care Act (ACA) reporting became law. (See Federal Register : Information Reporting of Health Insurance Coverage and Other Issues)

Among other things, the regulations require that:

• The deadline for furnishing IRS Forms 1095-C to employees will be March 2 (or March 3 in a leap year) – which is 30 days more than what was previously allowed; and
• The transitional “good faith relief” for employer ACA reporting would no longer apply to tax years after 2020.