Author Archives: Mark Flanagan

House Votes to Repeal and Replace the ACA – What Does it Really Mean?

healthcare

On May 5, the House of Representatives narrowly approved the American Health Care Act (AHCA). The bill was hastily modified after the initial version from March was doomed to fail. The current Administration has been under enormous pressure to make progress on one of its biggest campaign promises. What began as repeal Obamacare during the campaign, morphed into repeal and replace post-inauguration and is now a huge unknown.

Some of the relevant healthcare provisions of the new bill include:

  • Repeal of the employer shared-responsibility penalties
  • Greater state control over health plan requirements
  • Further implementation delays of the Cadillac Tax until January 1, 2026
  • Increased limits on HSA contributions: $3,400 to $6,500 for individuals; $6,550 to $13,100 for families
  • Elimination of the health flexible savings account contribution limit
  • Authority given to states to allow insurers to charge higher premiums for individuals with pre-existing conditions
  • Medicaid revisions back to the pre-Affordable Care Act (ACA) framework

Many of the provisions are nothing more than reverting to pre-ACA standards. The bill’s next stop is the Senate where it will likely face significant opposition amidst a slow and methodical review process.

Virtually all involved with healthcare agree that various parts of the ACA need revisions, but it is difficult at this point to envision a complete dismantling of the ACA. Employees and Employers should continue to monitor legislative developments, while trying to avoid feeling every bump along the way. It has become increasingly difficult, if not impossible; to evaluate what is really going to happen and the eventual impact. Healthcare is a profoundly complicated issue that has been muddied by special interest groups, excessive political rhetoric, and sensationalized media coverage.

Individuals that anticipate consistent employer coverage should avoid some of the impact from future healthcare changes. However, individuals with spotty employer-based coverage could be greatly impacted by the eventual outcome, especially those with pre-existing conditions. Large employers should expect to fare better than smaller ones, with everyone receiving various forms of reporting and penalty relief.

The current healthcare structure in the United States is broken on many fronts, not just health insurance. It’s a complicated and dynamic issue that has certain tentacles, which are politically unappealing. Individuals and employers alike must accept that the next several years are fraught with uncertainty while continued focus on wellness and flexibility are key.

If you should have any questions, please contact Aronson Compensation and Benefits Practice Director Mark Flanagan at 301.231.6257.

New HSA Deduction Limits Released for 2018

HSA Deduction Limits

The IRS recently released the 2018 annual deduction limits for a Health Savings Account (HSA). Typically, these limits are adjusted each year for inflation. This is subject to any additional changes that become effective because of the proposed legislation modifying the Affordable Care Act.

The 2018 limits are $3,450 for an individual with self-only coverage and $6,900 for an individual with family coverage. Such deductible contributions can only be made to an HSA that is maintained in conjunction with a high-deductible health plan.

A high-deductible health plan is defined as a plan with an annual deductible of $1,350 or more for self-only coverage or $2,700 or more for family coverage. The corresponding maximum out-of-pocket expenses are $6,550 and $13,100, respectively.

HSAs continue to be a powerful tool in combating the rise in health costs especially for young healthy people. Employers should continue to evaluate their effectiveness as part of an overall health benefits strategy.

If you have any questions, please contact Mark Flanagan of Aronson’s Compensation and Benefits Practice at 301.231.6257.

New Retirement Plans Must Be Established by December 31, 2016!

One of the last great tax deductions for small businesses, including sole-proprietors and LLCs, is the ability to make tax deductible contributions to a retirement plan. If an entity does not currently have a plan in place and they expect to make deductible contributions for 2016, then a plan must be established no later than December 31, 2016.

At this time of year, as part of year-end tax planning, business owners strategize about possible retirement plan contributions and the establishment of a new plan if one does not currently exist. The most common types of plans established at year-end are solo 401k plans, profit sharing plans, which include 401k plans, and defined benefit plans (traditional or cash balance). While other plan types exist, these are typically the most popular at tax planning time. Frequently, the Simplified Employee Pension (SEP) is considered; however, SEPs can be established post year-end prior to the extended due date of the Employer’s tax return.

Each plan should be considered carefully so that the associated costs and benefits meet the business’ goals, objectives, and cash flow limitations. These plans require different levels of evaluation and time to set-up. The solo 401k plan for example, can be evaluated and set-up in a couple of hours, if not less. While a defined benefit arrangement could take several days at a minimum, given the need to consult with an actuary and the consideration needed to commit to potentially very large contributions; not to mention the other potential time drags that may occur as a result of needing to find an investment advisor or evaluate potential plan vendors. The spectrum of what is involved in getting a plan put in place is wide and varied.

As year-end quickly approaches, businesses should be well into tax planning, with new plan considerations in full force. Some plan vendors are nimble and have flexible deadlines for establishing plans by year-end, while others are extremely rigid and may require new plans to be set-up several weeks prior to year-end. Business owners should be mindful that plan establishment challenges increase exponentially the closer to year-end we get, especially with all of the holiday season demands.

Don’t wait if you are seriously contemplating establishing a new plan for 2016, you need to get the process going as soon as possible. For questions regarding retirement plans, please contract Aronson’s Compensation and Benefits Practice Director Mark Flanagan at 301.231.6257.

New Retirement Plans Must Be Established by December 31, 2016!

One of the last great tax deductions for small businesses, including sole-proprietors and LLCs, is the ability to make tax deductible contributions to a retirement plan. If an entity does not currently have a plan in place and they expect to make deductible contributions for 2016, then a plan must be established no later than December 31, 2016.

At this time of year, as part of year-end tax planning, business owners strategize about possible retirement plan contributions and the establishment of a new plan if one does not currently exist. The most common types of plans established at year-end are solo 401k plans, profit sharing plans, which include 401k plans, and defined benefit plans (traditional or cash balance). While other plan types exist, these are typically the most popular at tax planning time. Frequently, the Simplified Employee Pension (SEP) is considered; however, SEPs can be established post year-end prior to the extended due date of the Employer’s tax return.

Each plan should be considered carefully so that the associated costs and benefits meet the business’s goals, objectives and cash flow limitations. These plans require different levels of evaluation and time to set-up. The solo 401k plan for example, can be evaluated and set-up in a couple of hours, if not less. While a defined benefit arrangement could take several days at a minimum, given the need to consult with an actuary and the consideration needed to commit to potentially very large contributions; not to mention the other potential time drags that may occur as a result of needing to find an investment advisor or evaluate potential plan vendors. The spectrum of what is involved in getting a plan put in place is wide and varied.

As year-end quickly approaches, businesses should be well into tax planning, with new plan considerations in full force. Some plan vendors are nimble and have flexible deadlines for establishing plans by year-end, while others are extremely rigid and may require new plans to be set-up several weeks prior to year-end. Business owners should be mindful that plan establishment challenges increase exponentially the closer to year-end we get, especially with all of the holiday season demands.

Don’t wait if you are seriously contemplating establishing a new plan for 2016, you need to get the process going as soon as possible. For questions regarding retirement plans, please contract Aronson’s Compensation and Benefits Practice Director Mark Flanagan at 301.231.6257.

Deadline for ACA Reporting Extended

ACA Deadline Changed

On November 18, 2016, the IRS announced (Notice 2016-70) that the deadline for 2016 reporting requirements under Sections 6055 and 6056 have been extended. This extension is applicable to the distribution of the forms to employees and covered individuals only, not the filing of the forms with the IRS. An automatic extension of 30 days is granted if good cause exists with an additional 30 days available via an application to the IRS. The deadline for distribution of Forms 1095-B and 1095-C to employees and covered individuals has been changed from January 31, 2017, to March 2, 2017. While the deadline for filing forms 1094-B, 1095-B, 1094-C, and 1095-C remains February 28, 2017, if filed with the IRS on paper and March 31, 2017, if filed with the IRS electronically.

The notice also confirms that the IRS will continue to apply the good faith standard when it comes to issuing penalties resulting from incomplete or incorrect forms. Employers must make a good faith effort to comply with the requirement and meet the required distribution and filing deadlines.

If you have any questions regarding the extension of time or the ACA reporting requirements, please contact Aronson Compensation and Benefits Practice Director Mark Flanagan, at 301.231.6200.

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