Section 125 Flexible Saving Plans are a great benefit to offer your faculty and staff with little impact on your budget. It’s almost like giving them a raise without having to adjust your financial plan. However, with the Health Care Reform Act underway, many of the attractive benefits of these plans has been lost. Changes have impacted how these funds can be used, and even how much an employee is allowed to save. Here’s a look at the changes the reform has already enforced and what’s to come in the future.
2010
Adult children up to the age of 26 are eligible dependents for the Health Flexible Spending, Health Reimbursement Arrangement, or Health Savings Account.
2011
Over-the-counter medication will not be reimbursed unless prescribed by a physician.
SIMPLE Cafeteria Plan for Small Businesses. This allows small business with 100 or fewer employees during either of the two preceding years to offer a cafeteria plan without requiring nondiscrimination rules.
It must allow all employees with at least 1,000 hours of service during the preceding plan year to be eligible for all benefits offered under the plan.
The employer must make a contribution to the plan of (a) 2% of the employee’s compensation for the plan year or (b) the lesser of 6% of the employee’s compensation or twice the employee’s salary reductions. This does not include key employees or highly compensated staff members.
2012
Summary of Benefits and Coverage (SBC) a four-page Summary of Benefits on the DOL/HHS Web site are required for stand-alone Health Reimbursement Arrangements are required for plan years starting after September 23, 2012.
W-2 reporting The cost of health insurance must be reported on 2012 W-2 for employers who issued 250 forms in 2011. Health Reimbursement Arrangements have transitional relief so reporting is optional, Health Reimbursement Arrangements in general not reported.
Clinical Effectiveness Research Fee (CER) For plan years ending after September 30, 2012–Health Reimbursement accounts will pay a $1 a participant for health reimbursement accounts and $2 a participant for Health Reimbursement Accounts for plan years ending after October 1, 2013.
2013
In tax year 2013, the maximum amount that can be reimbursed under a Health Flexible Spending Account is $2500. For employers not on a calendar year plan that means reduction to $2500 in the plan year that starts 2012. These totals will be indexed for inflation starting after December 31, 2013.
2018
Cadillac Tax There will be a 40% excise tax on high-cost employer-sponsored group health plans.
Individual Plan $10,200
Family Plan $27,500
A group health plan includes employer contribution to Health Savings Accounts and Health Reimbursement Arrangements, as well as medical, dental, and vision insurance plans and Health Flexible Spending Accounts that an employee or employer contributes to.
Beginning in 2020, the threshold would be inflation-adjusted.
Interested in Section 125 Plans for your employees? Learn more about ISM advantage here.
Additional ISM articles of interest
ISM Monthly Update for Trustees Vol. 10 No. 4 Finding Savings in Your Health Insurance Plans
Private School News Vol. 11 No. 2 Understanding the Differences Between HSAs, HRAs, and FSAs
Additional of interest for Consortium Gold members
I&P Vol. 33 No. 9 Will New Section 125 Regulations Impact Your School's Health Benefits Policies?
I&P Vol. 34 No. 3 Reducing Insurance Costs: Employee Benefits
