1. Health, Accident, and Retirement Benefits

2. Health Insurance Types of insurance Traditional health insurance plans
Health maintenance organizations (HMO)
Traditional scheme
Point of service plan (POS)
Preferred provider organization (PPO)
State health insurance exchanges
Key part of Affordable Care Act (ACA)

3. ACA Health Insurance Requirements
Requires large employers to provide health insurance
Applicable large employers (ALE)
50 full time employees or more
Full-time employee definition: employed on average at least 30 hours per week
Seasonal workers are taken into account in determining the number of full-time employees
Determined each year by employer based on current number of employees
Employer shared responsibility (ESR)
Provide affordable health insurance to full-time employees that provides minimum essential coverage for at least minimum value
Method determining ESR: Monthly measurement or Look-back measurement

4. ACA Health Insurance Requirements
ACA includes
Patient Protection and Affordable Care Act
Health Care and Education Reconciliation Act
Dependent children up to Age 26 must be covered
Plan cannot limit coverage if dependent is married
Annual Reporting:
Form 1095-C
Generally given to employee by January 31
Extended in 2016 to March 2, 2017.
Filed with IRS by Feb 28 (March 31 if electronically filed)

5. ACA Health Insurance Requirements
Small employer HRA option
21st Century Cures Act
Small employers who do not offer health insurance to their employees
Offer a qualified small employer health reimbursement arrangement (QSEHRA)
QSEHRA
Provided on the same terms to all eligible employees
Funded solely by employer, no salary reduction contribution allowed
Pays single employees up to $4,950 and families up to $10,000 annually for medical expenses
Employers give annual notice at least 90 days before the start of the year or employee’s initial eligibility date
W-2 Reporting - value of benefits: Box 12, Code FF

6. ACA Reporting Forms Form 1094-C Form 1095-C Form 8809 Form 1094-B
Transmittal of Employer-Provided health Insurance Offer and Coverage Information Returns
Form 1095-C
Employer-Provided health Insurance Offer and Coverage
Form 8809
Application for Extension of Time to File Information Returns
Form 1094-B
Transmittal of Health Coverage Information Returns
Form 1095-B
Health Coverage

7. Tax Treatments: Contribution / Benefits
Employer-paid premiums
Exclude from income
Employee contributions
Under §125 plans
Exclude from income as allowed under plan
Without §125 plans
Include in income
Benefits received by employee
Either directly or indirectly are excluded from income

8. Tax Treatments: Contribution / Benefits
Life Partner contributions / benefits
Includes non-spouse cohabitant and domestic partner
Not excluded from income
Same-sex spouse contributions / benefits
Does not include registered domestic partnerships and civil unions
Excludable from income
W-2 Reporting:
Employer-sponsored health insurance: Box 12, Code DD

9. Medical Savings Accounts (MSA)
Health Insurance Portability and Accountability Act of 1996
Used by companies with 50 or less employees
Employees must be covered by a high deductible health insurance plan
Annual individual deductible: $2,250 - $3,350
Annual family deductible: $4,500 - $6,750
Maximum individual out-of-pocket expense: $4,500
Maximum family out-of-pocket expense: $8,250
Contributions can be made by employee or employer; not both
Limited to 65% of plan deductible by individuals
Limited to 75% of plan deductible by families

10. Medical Savings Accounts (MSA)
Tax treatment:
Employee contributions: deductible from income on personal tax return
Employer contributions: excludable from income
Must be established outside of a cafeteria plan, although can work in conjunction with a high deductible plan (HDHP) inside of a cafeteria plan
W-2 Reporting:
Employee contributions: Boxes 1, 3, 5
Employer contributions: Box 12, Code R

11. COBRA Health Insurance Continuation
Consolidated Omnibus Budget Reconciliation Act of 1985
Requires health plan sponsors to provide employees and their beneficiaries with the opportunity to elect continued group health coverage for a given time period should their coverage be lost due to a qualifying event
Time period is generally 18 or 36 months depending on qualifying event

12. Health Reimbursement Arrangements
Paid for solely by employer
Reimburses expenses incurred for medical expenses
Provides reimbursement up to a maximum dollar amount
Reimbursements are excluded from the employees gross income

13. Health Savings Accounts (HSA)
Employee must have a high deductible health plan (HDHP)
Annual deductible: Individual = $1,300; Family = $2,600
Out-of-pocket expenses: Individual = $6,550; Family = $13,100
Contributions:
Can be made by both employee and employer
Can be part of cafeteria plan
Annual Limits: Individual = $3,400; Family = $6,750
Catch-up option available for employees 55 or over
$1,000 maximum per year
Distributions are tax free when used for medical expenses
W-2 Reporting - employee / employer contributions: Box 12, Code W

14. Family and Medical Leave Act (FMLA)
Applies to private sector employers with 50 or more employees
Allows 12 weeks of unpaid leave in any 12-month period
Newborn or newly adopted child
Care for seriously ill immediate family member
Qualifying exigency (need) for immediate family member called to active duty
Allows 26 weeks of unpaid leave in any 12-month period
Care for military service members with serious injury or illness

15. Family and Medical Leave Act (FMLA)
Eligibility requirements
Employed at least 12 months
Worked at least 1250 hours within previous 12 months
Hours worked follows FLSA rules
Leave can be taken intermittently or consecutively
Employer can require:
Medical certification by a health provider
Medical certification of a qualifying exigency
Health benefits continue during leave
Employee must continue to pay their portion of benefits
Prepaid, paid during leave or paid after at employee’s discretion

16. Sick Pay Under a Separate Plan
Short-term or long-term disability payments
Employee provides Form W-4S to have federal income tax withheld
Tax Treatment:
Payments during first 6 months:
Subject to social security, Medicare, and FUTA taxes
No federal income tax withheld unless Form W-4S received
Payments after first 6 months:
Not subject to social security, Medicare, and FUTA taxes
W-2 reporting- nontaxable amounts attributable to employee contributions to premiums: Box 12, Code J

17. Cafeteria Plans Qualified benefits covered IRC §125
Accident and health insurance plans
Dependent care assistance plans
Group-term life insurance
Qualified adoption assistance
COBRA continuation premiums
Accidental death and dismemberment insurance
Long-term and short-term disability
§ 401(k) plans
Health Savings Account contributions

18. Cafeteria Plans Funded
Flex dollars / flex credits
Salary reductions
After-tax employee contributions can apply on specific coverages
Excluded from employee income
Benefit Elections
Open enrollment
First 30 days of employment
Qualifying event occurrence

19. Cafeteria Plans Nondiscrimination Testing Safe harbor Eligibility test
Looks at employee groups
Contributions and benefits test
Looks at benefit availability and benefit selections
Special health benefits test
Tests are performed at year end
Safe harbor
Requires that a cafeteria plan satisfy minimum eligibility and participation requirements and minimum employer contribution requirements.

20. Flexible Spending Arrangements (FSA)
a/k/a flexible spending accounts or reimbursement accounts
Employee pre-tax contributions
Contribution limit: $2,600
Reimbursement for health care, dependent care, etc.
Unused amount forfeited at the end of the year
Employee has 2 ½ months in new year to submit prior year expenses
Employer can amend plan to allow balances of $500 or less to carry over to the next plan year
Employer can amend plan to allow qualified reservist deductions (QRD)

21. IRC §401(a) Qualified pension plan Profit-sharing plan
Provides a benefit that is determinable when the employee retires
Payable over a period of years
Employers contributions are not based on profits
Can be either a defined benefit (DB) or a defined contributions (DC) plan
Profit-sharing plan
Allows employees to participate in company profits as a retirement planning vehicle with employer contributions based on a formula
Defined contribution plan only

22. IRC §401(a) Annual compensation limit: $270,000
Annual contribution limit: lesser of $54,000 or 100% of employees annual compensation
Catch-up contribution:
Employees age 50 or more
Annual limit: $6,000
Tax Treatment:
Subject to social security, Medicare, and FUTA Taxes
Not subject to federal income tax withholding

23. IRC §401(k) Cash or Deferred Arrangement (CODA)
Nondiscrimination Testing
Actual deferral percentage (ADP) testing
Actual contribution percentage (ACP) testing
Automatic salary reductions without an employee election is allowed
Qualified Automatic Contribution Arrangement (QACA)
Meets safe harbor provisions for ADP and ACP testing
Eligible Automatic Contribution Arrangement (EACA)
Does not meet safe harbor provisions for ADP And ACP testing

24. IRC §401(k) ROTH option available
Post tax deduction
Catch-up contribution available for ROTH
Pre-tax contributions and Post-tax contributions cannot exceed limits
W-2 Reporting – salary reduction:
Box 12, Code D
W-2 Reporting – ROTH:
Box 12, Code AA

25. IRC §401(k) Annual compensation limit: $270,000
Annual contribution limit: $18,000
Catch-up contribution:
Employees age 50 or more
Annual limit: $6,000
Tax Treatment:
Subject to social security, Medicare, and FUTA Taxes
Not subject to federal income tax withholding

26. IRC §403(b)
Tax-sheltered annuities for public schools, tax-exempt charitable, religious, and educational organizations
Automatic salary reductions without an employee election is allowed
Special provision for employees with 15 years of service
$3,000 in additional contributions in any year
$15,000 reduced by any amounts contributed under this special provision in earlier years
($5,000 x the number of years of service ) – total elective deferral from previous years

27. IRC §403(b) ROTH option available
Post tax deduction
Catch-up contribution available for ROTH
Pre-tax contributions and Post-tax contributions cannot exceed limits
W-2 Reporting – salary reduction:
Box 12, Code E
W-2 Reporting – ROTH:
Box 12, Code BB

28. IRC §403(b) Annual compensation limit: $270,000
Annual contribution limit: $18,000
Catch-up contribution:
Employees age 50 or more
Annual limit: $6,000
Tax Treatment:
Subject to social security, Medicare, and FUTA Taxes
Not subject to federal income tax withholding

29. IRC §457(b)
Deferred compensation plans for the public section and tax-exempt groups
IRC allows for plans to be provided in a discriminatory manner
Special rule when near retirement
For the last 3 years before the participant reaches the plan’s normal retirement age, the maximum annual deferral limit is the lesser of 2 times the amount determined by the participants annual deferral limit or the current year deferral limit plus the limits from previous years reduced by the participant’s deferrals for those years

30. IRC §457(b) ROTH option available
Post tax deduction
Catch-up contribution available for ROTH
Pre-tax contributions and Post-tax contributions cannot exceed limits
W-2 Reporting – salary reduction:
Box 12, Code G
W-2 Reporting – ROTH:
Box 12, Code EE

31. IRC §457(b) Annual compensation limit: $270,000
Annual contribution limit: $18,000
Catch-up contribution:
Employees age 50 or more
Annual limit: $6,000
Tax Treatment:
Subject to social security, Medicare, and FUTA Taxes
Not subject to federal income tax withholding

32. IRC §501(c)(D) Employee-funded plans
Annual contribution limit: lesser of $7,000 or 25% of employees annual compensation
Employee contributions are reduced by other CODA maintained by the employer
W-2 Reporting – salary reduction:
Box 12, Code H

33. Individual Retirement Accounts (IRA)
Employer-sponsored plans
Annual contribution limit: $5,500
Catch-up contribution:
Employees age 50 or more
Annual limit: $1,000
Employee contributions and compensation limits are reduced by other CODA maintained by the employer
Contributions allowed up to amount employer believes the employee can deduct on their personal tax return
ROTH option available

34. IRC §408(k) Simplified Employee Pensions (SEP)
For employers who do not have the means to sponsor or administer a qualified pension or profit-sharing plan
No ROTH option available
W-2 Reporting – salary reduction:
Box 12, Code F

35. IRC §408(k) Annual compensation limit: $270,000
Annual contribution limit: $18,000
Catch-up contribution:
Employees age 50 or more
Annual limit: $6,000
Tax Treatment:
Subject to social security, Medicare, and FUTA Taxes
Not subject to federal income tax withholding

36. Simple Plans
Savings Incentive Match Plan for Employees of Small Employers
Either an IRA or part of a §401(k) CODA
Annual compensation limit: $270,000
Annual contribution limit: $12,500
Tax Treatment:
Subject to social security, Medicare, and FUTA Taxes
Not subject to federal income tax withholding
W-2 Reporting – salary reduction:
CODA: Box 12, Code D
IRA: Box 12, Code S

37. Employee Stock Ownership Plans
ESOP is a stock bonus plan or combined stock bonus and money purchase plan designed to invest primarily in the employer’s stock.
Must meet the general requirements under IRC §401(a) regarding participation, vesting, nondiscrimination, etc.
Employer contributions not considered wages as long as the annual compensation limits or contribution limits are not exceeded (refer to IRC §401(a))
Nonleveraged ESOP: Buys stock either with funds provided by employer
Leveraged ESOP: borrowed funds

38. IRC §409A Nonqualified deferred compensation plans (NQDC)
Does not meet IRC §401(a) requirements for deferred compensation
W-2 reporting requirements are on hold for Box 12, Code Y and Code Z
Either funded (deferral is protected by Trust money) or unfunded (promise of monies)
Amount deferred tax treatment:
Not subject to federal income tax withholding at time of deferral
Subject to social security, Medicare, and FUTA taxes
Amount received from distribution:
Subject to federal income tax withholding at time of distribution

39. Taxation Summary

40. DO YOU KNOW???
What are the advantages of pre-tax benefit contributions?
What is the annual compensation limit for IRC §401(k)?
What are the characteristics of a defined contribution plan?
Name 3 examples of a qualifying event that allows an employee to change their elections in a cafeteria plan
Which IRC section code applies for deferred compensation for public schools?